Lawmakers unanimously support sweeping CO exchange audit

Members of the bipartisan Legislative Audit Committee voted unanimously on Tuesday to do a comprehensive audit of Colorado’s healthcare exchange, Colorado Connect for Health, after a preliminary audit found problems with over a third of the sampled contracts, resulting in nearly half a million in “questioned costs.”

The exchange agreed to implement all of the auditor’s initial recommendations and to cooperate with a more comprehensive audit in the new year, saying they “welcome the input and the transparency.”

They also noted that the exchange has been audited or reviewed more than two dozen times in three years.

“A number of federal and state agencies have closely and continuously monitored us since 2011,” said Gary Drews, CEO at Connect for Health. “They have approved our operations, policies and procedures while we worked to create a new enterprise in a complex, evolving environment, under tight deadlines and shifting federal regulations.”

Many of the auditor’s critiques focused on issues with the exchange’s documentation of approved contracts, noting, for example, that one contractor was paid eight times the amount approved by the exchange’s board. In that case, the audit reads, “staff did not obtain Board approval for the overage.”

While folks at the exchange maintain that they agree with all of the auditor’s conclusions, they worry that some of those conclusions could be mis-read. According to Luke Clarke, Director of Communications at the exchange, the example the auditor pointed to in which an approved contract for $350,000 swelled by eight to a $3.4 million bill should not lead to the conclusion that the contractor, North Highland consultants, was overpaid.

“The payments – approved through change orders and through multiple levels of internal review, while under federal supervision – grew at a pace appropriate to the value of the work they continue to deliver,” wrote Clarke. “[T]here is no question that North Highland provided the services and the value, the valid criticism in the audit report goes to documenting Board approvals and vendor record-keeping for audit purposes.”

Clarke added that the exchange has since implemented better contract management processes and records.

Some at the legislature fear that the exchange’s issues go beyond regulatory documentation errors. Rep. Dan Nordberg (R-Colorado Springs), who sponsored the comprehensive audit bill last year before it died in a Senate committee, said the preliminary audit also raises serious legal concerns.

“[T]he Auditor indicated that in addition to mismanagement and wasteful spending, Connect for Health Colorado may have used tax payer funds to influence voters and retain lobbyists, which would be in direct violation of federal law,” Nordberg said in a release. Nordberg plans to re-run his comprehensive audit bill in the House next session.

Curtis Hubbard, a spokesman for the exchange, says that’s not the case.

“That references a contract with a company called FieldWorks, which does consumer and voter outreach. It was a typographical error. They were hired for consumer outreach, and submitted a contract that mentioned voter outreach, which no one caught. They did street and event “intercepts” – stopping and speaking with Colorado adults in public places such as festivals and stadiums, at theaters and restaurants, on the 16th St. Mall in Denver, etc. No “voter information” was collected or used.”

Rep. Jerry Sonnenberg (R-Sterling) will join the Senate next session and has promised to sponsor the bill in that chamber, where he says he’ll take a pragmatic, bipartisan approach.

“I’m more worried about us violating federal law and losing some of that money for the exchange. How are we going to pay that back if that happens?” said Sonnenberg. “We need to make sure, especially for this huge, new organization, that we find a way to help them put in the procedures and processes under which they can run efficiently and legally.”

 [Photo credit: Lending Memo]