Health Care Exchange (05/13/2015)

Final
STAFF SUMMARY OF MEETING

HEALTH CARE EXCHANGE

Date:	05/13/2015	ATTENDANCE

Time:	09:03 AM to 01:30 PM	Aguilar	E
		Kefalas	X
Place:	RM 271	Landgraf	X
		Lundberg	E
This Meeting was called to order by		Martinez Humenik	X
	Senator Roberts	Primavera	*
		Ryden	X
This Report was prepared by		Sias	X
	Elizabeth Haskell	McCann	*
		Roberts	X
		X = Present, E = Excused, A = Absent, * = Present after roll call

Bills Addressed:		Action Taken:
Opening Remarks & Update from Legislative Council Staff Update & Discussion of the CEO Search & Board Vacancies Previous Open Enrollments & Improvements for 3rd Open Enrollment Fiscal Matters & Sustainability Plan, including Fee Structure		Witness Testimony and/or Committee Discussion Only Witness Testimony and/or Committee Discussion Only Witness Testimony and/or Committee Discussion Only Witness Testimony and/or Committee Discussion Only

09:03 AM

Senator Roberts called the meeting to order. She discussed her expectations for the committee's activities and meetings during the interim, and she reviewed the meeting agenda (Attachment A).

150513 AttachA.pdf

09:07 AM -- Opening Remarks and Update from Legislative Council Staff

Amanda King, Legislative Council Staff, presented the Legislative Council Staff memorandum that provides updated cumulative statistics for the public feedback received concerning Connect for Health Colorado (the exchange) through a survey on the General Assembly website (Attachment B). She told the committee that through May 1, 2015, 52 responses have been received from consumers and insurance brokers across the state. Ms. King stated that most responses were from consumers locate in the metro area and the bulk of consumer respondents reported being highly dissatisfied with the exchange. She indicated that insurance brokers who responded to the survey were somewhat dissatisfied or neutral on the services provided by the exchange. Ms. King provided the committee's website address so that individuals who wish to complete the survey may do so -- www.colorado.gov/lcs/exhangereviewcomm.

150513 AttachB.pdf

09:10 AM -- Update on and Discussion of the Chief Executive Director Search and Possible Board Vacancies

Sharon O'Hara, Chair, Connect for Health Colorado Board of Directors (the board), Steven ErkenBrack, Member, Connect for Health Colorado Board of Directors, and Kevin Patterson, Interim Chief Executive Officer (CEO), Connect for Health Colorado, came to the table. Ms. O'Hara told the committee that the board decided to continue the management of the exchange with an interim CEO in order to maintain continuity during preparation for the third open enrollment period. She introduced Kevin Patterson who has been appointed as the new interim CEO.

Mr. ErkenBrack spoke about the search for a CEO to oversee the exchange. He told the committee that the board had identified a list of seven skill sets that the ideal candidate would posses knowing that it would be difficulty to find an individual will all seven skills. He highlighted the difficulty the board experienced trying to find a permanent CEO. He discussed the board's decision to put the search for a permanent CEO on hold and select an interim CEO. He explained that the board selected Kevin Patterson as the interim CEO because he was well qualified to fill the position. He also pointed out that, of the nine voting members on the board, five board members have terms that will end in July. Mr. ErkenBrack stated that the current board thought that since the CEO works closely with board, the new CEO should be selected by the board members that will be in place after July. Mr. ErkenBrack complimented Gary Drews performance as the interim CEO.

Mr. ErkenBrack responded to questions from the committee. He clarified the seven skill sets that the board was looking for in a CEO. He stated that the ideal candidate is someone who is knowledgeable of consumer issues, insurance operational issues, Medicaid procedures, information technology, finance management, internal organizational structure, and public accountability. He reiterated that the board is suspending the search for a CEO which will allow new board members to participate in the selection of the new CEO.

09:15 PM

In response to questions from the committee, Mr. ErkenBrack discussed the membership of the board and the changes that may occur in July 2015 when five of the voting members' terms expire and the continuity between the existing board and the board that will be appointed. Ms. O'Hara also responded by stating that the board has participated in training and board development activities which are expected to continue. She also discussed the other senior management positions within the exchange that need to be filled and told the committee that these positions are not appointed by the board, but rather the CEO selects the individuals to fill these positions. Mr. ErkenBrack responded to questions about the deliberation by board members to identify a CEO.

09:30 PM

Continued committee discussion and questions focused on the salary associated with the CEO position and the rate of employee turnover at the exchange. Ms. O'Hara responded by explaining that the board hired a compensation firm to conducted a salary survey to identify a competitive salary for the CEO. She stated that the board selected a salary at the lower end of the survey range. Ms. O'Hara told the committee that she would provide the list of the organizations that were surveyed as part of the salary survey. Committee discussion followed about the appropriate amount of compensation for a CEO of a public entity.

09:46 AM

Committee questions ensued about whether the board was effective as a part-time volunteer board and whether there was a need for statutory changes to alter the board structure or the exchange. Mr. ErkenBrack spoke about the structure of the different state exchanges. He agreed that a part-time volunteer board does face some challenges but also has advantages. He stated that the Colorado exchange is unique from other states' exchanges in that it allows individuals to select plans by physician participation or by formulary and the board is the only board with carriers as members. He suggested that it was a good idea to look at the structure of exchanges in other states.

09:54 AM

Ms. O'Hara responded to questions about which health insurance carriers were surveyed for the CEO salary survey by offering to collect information about whether health insurance carriers were surveyed and report back to the committee.

09:56 AM

In response to committee comments and questions about whether the the board should simply look at the short term needs of the exchange and the inherent difficulties associated with trying to hire a CEO candidate when the future of the exchange appears uncertain, Mr. ErkenBrack pointed out the advantages to exchange employees of having a permanent CEO rather than an interim CEO. Committee discussion continued regarding the need for the exchange to have a solid business plan and work plan.

10:04 AM

Mr. Patterson introduced himself to the committee. He spoke about his previous experience working in the public and private sectors. He told the committee that his previous work experience will benefit him in his new role as CEO. He told the committee that he believes in the mission of the organization and that his priorities are to address concerns about the customer experience and hire a chief financial officer. Mr. Patterson addressed many of the concerns raised by the committee during the previous discussion with Mr. ErkenBrack and Ms. O'Hara.

10:12 AM

In response to questions about the difficulty customers have experienced with the exchange and the need for a chief information officer, Mr. Patterson responded that he is focusing on getting all parties involved in the system to have the same priority list for improving the system, and then he will focus on adding the technology to address these priorities. He discussed his experience updating the Colorado Benefits Management System in a similar way.

10:14 AM

Committee discussion continued about the need to focus on the information technology problems experience by the exchange. Mr. Patterson responded that he is familiar with many of the IT vendors and that he is confident that he will be able to work with these vendors. Committee discussion followed about the increase in Medicaid enrollments.

Mr. Patterson discussed his approach to filling vacancies for executive positions and addressed options for restructuring the Medicaid eligibility determination process and the possibility of receiving reimbursement from the Centers for Medicare and Medicaid Services (CMS) for the work exchange employees do to identify individuals who are eligible for Medicaid. He also responded to concerns about compensation for exchange executives and stated that salary is one consideration when hiring individuals, but it is necessary to find people who believe in the mission of the organization.

10:24 AM

Committee members commented on improving the technology of the exchange prior to the next open enrollment period.

10:27 AM -- Discussion of the Challenges of the Previous Open Enrollments and Plans to Improve the Third Open Enrollment

Gary Drews, outgoing interim CEO, Connect for Health Colorado, Marcia Benshoof, Chief Strategy and Sales Officer, Connect for Health Colorado, and Adela Flores Brennan, Member, Connect for Health Colorado Board of Directors, came to the table. Mr. Drews spoke briefly about the challenges the exchange faced during the previous two open enrollment periods and the plans to improve the third open enrollment. He spoke about the transition period between himself and Mr. Patterson. He provided the committee with a handout (Attachment C), and referred to the handout as he spoke about the sustainability of the exchange and the planning and budget process. He pointed to page 6 of the handout and discussed the significant variables used in planning the next budget. He told the committee that almost half of the customers who purchase insurance through the exchange do not receive financial assistance, but rather use the exchange for the ease and transparency of selecting plans. He expressed the need for the exchange to address the needs of both the customer population who applies for subsidies and the customer population who does not apply for financial assistance. He explained that the exchange is focused on increasing customer access, affordability, and choice. He also told the committee that the tax credit subsidy declined by almost 20 percent for almost all recipients. Committee discussion followed.

Marcia Benshoof, Chief Strategy and Sales Officer, Connect for Health Colorado, responded to questions about the role of brokers within the exchange. She told the committee that the insurance carriers continue to pay broker commissions, not the exchange. She stated that brokers can use the exchange or they can sell insurance outside of the exchange, but brokers' customers must go through the exchange in order to qualify for a premium subsidy. Committee discussion followed about the requirement that a brokers must use the exchange if their customer would like to qualify for a premium subsidy.

10:51 AM

Mr. Drews responded to questions about carrier market share of policies sold through the exchange held by the Colorado HealthOP and Kaiser. Ms. Benshoof told the committee that Colorado has plenty of licensed carriers in the general insurance marketplace, but there are dominate carriers which include Colorado HealthOP and Kaiser. She explained that the DOI is responsible for reviewing insurance rates and network adequacy. Ms. Benshoof further explained that the exchange provides all carriers doing business on the exchange with marketing strategy assistance and educates customers to choose a provider that fits with their health needs.

Further committee discussion centered on whether individuals between the ages of 18 and 32 purchase insurance. Ms. Benshoof told the committee that the exchange has focused on educating this population about the benefits of health insurance and that currently more individuals in this age group have purchased insurance than originally expected.

10:59 AM

Committee members discussed whether the exchange asks customers if they were previously insured and the benefits associated with asking this question. Ms. Benshoof responded that the question is on the application, but that it is not mandatory that the customer respond to the question. Additional questions from the committee focused on health care inflation and the cost of health care. Mr. Drews responded to questions about how the exchanges handles consumer complaints by telling the committee that there are dedicated staff who worked with these customers to resolve concerns.

11:23 AM

In response to questions about the sustainability of Colorado HealthOP, Mr. Drews stated that the question would be more appropriately directed to the Division of Insurance.

11:28 AM

Ms. Flores Brennan explained to the committee that exchange customers have access to brokers, health coverage guides, and service center staff who can help them make decisions about insurance coverage. She discussed the role of exchange staff in assisting customers who qualify for Medicaid and the potential for reimbursement from CMS for the time spent with these customers. She also discussed the number of small businesses that utilize the exchange and referred to page 26 of the handout (Attachment C).

11:40 AM

Mr. Drews referred to page 21 of the handout (Attachment C) in response to questions about individuals who qualify for Medicaid. He explained that exchange employees do not have access to Medicaid eligibility information for customers and that there is discussion about allowing exchange employee to have access to the Colorado Benefits Management System.

11:54 AM

The committee took a brief recess.

12:13 PM

The committee reconvened.

12:13 PM

Senator Roberts announce that the agenda item, Review of Policy and Procedures for Board and Staff Regarding Conflicts of Interest and Departing Employees, will be moved to the June 5, 2015, committee meeting. She also discussed whether having insurance carriers on the the board creates a conflict of interest. She suggested that the Commissioner of Insurance be added to the agenda for the June 5, 2015, meeting to discuss her experience as a member of the board, and that the board members provide information about the criteria for certifying brokers to sell insurance through the exchange.

12:20 PM -- Discussion of Fiscal Matters and Sustainability Plan, including Fee Structure

Mr. ErkenBrack discussed insurance premium rates and told the committee that for the first time since the implementation of the exchange premium rates will be based on the population of the exchange. He stated that he expects that it will take three to five years for premium rates to normalize. Committee members discussed the assessment rates charged by the exchange including the Health Insurance Carrier Assessment (HICA) and the Broad Market Assessment. Mr. ErkenBrack explained that many factors are considered when predicting future revenues for the exchange.

12:26 PM

Mr. Drews stated that evaluation of the assessment rates and the revenue sources is currently in progress. He directed the committee to page 15 of the handout (Attachment C) regarding enrollment projections and discussed the projected cost of running the exchange. He stated that the budget process was still in progress and that planning work is continuing.

150513 AttachC.pdf

12:40 PM

Mr. Drews clarified that the exchange budget year is July 1 to June 30 and discussed the process used to forecast enrollments. Discussion followed about factoring in fluctuations in the insurance market when creating a budget.

12:49 PM

Committee discussion ensued about the budget. Referring to pages 45 and 47 of the handout (Attachment C), committee members questioned the use of the HICA. The committee discussed which customers are assessed the HICA, the definition of per member per month (pmpm), and the cost of administering the exchange. Further committee discussion centered on the number of individuals eligible for Medicaid and aspects of the Affordable Care Act.

12:57 PM

The committee discussed the revenue models detailed on page 44 of the handout and the transition of funding for the exchange from federal grants to other sources.

01:01 PM

Members inquired about the pass through of the cost of the assessments to customer. Mr. Drews explained that such fees are usually passed through to the consumer and are reflected in the carriers' operating costs. Discussion continued about the need to make statutory changes to the exchange to help it function more smoothly. Mr. Drews responded to the question by clarifying that there are currently two fees assessed on carriers by the exchange: the HICA, which is a carrier assessment based on the total number of plans sold by a carrier on the exchange, and the Broad Market Assessment, which is a general monthly assessment on all health insurance plans sold in Colorado that is itemized on monthly billing statements.

Mr. Patterson and Mr. Drews responded to questions about whether the exchange is actively exploring the option of receive funding from CMS to off-set the cost of assisting customers with Medicaid eligibility determinations. Mr. Drews explained that this revenue source in still in the research phase and that the exchange is working with the Colorado Department of Health Care Policy and Financing (HCPF) to identify the best course of action. He explained that there appears to be two kinds of reimbursements available: one for technology upgrades and one for operations. Mr. Patterson responded that he is scheduled to meet with a regional CMS representative within the next week to 10 days to discuss this issue.

01:11 PM

Further discussion centered on why the assessments are passed on to consumers in light of the millions of dollars in compensation received by insurance company CEOs. Mr. ErkenBrack responded that insurance laws apply to both not-for-profit insurance companies and for profit insurance. Discussion continued about the merits of spreading the assessment over the entire insurance market rather than assessing the fees only on those who purchase policies through the exchange. Committee members continued to raise concerns about assessing fees against those who do not use the exchange.

Discussion continued about the optimal expense level cash flow detailed on page 45 of the handout (Attachment C) and about whether exchanges in other states are sustainable. Mr. Drews stated that all state exchanges are working to become sustainable. The committee continued to seek clarification about the fees assessed against carriers. Ms. Benshoof clarified that the Broad Market Assessment of $1.25 is itemized on all monthly billing statements, but that the HICA, which is assessed on the total number of plans sold by a carrier on the exchange is built into the carriers administrative costs, similar to the fees paid to brokers, and is not itemized on a billing statement.

01:27 PM

Senator Roberts made closing comments and told the committee that the next meeting is scheduled for June 5, 2015. Mr. Drews told the committee that the exchange will bring a review of next year's operating plan and budget to the June 5 meeting. Senator Roberts reiterated that the remaining agenda items will be on the June 5 agenda and that the Commissioner of Insurance and the Executive Director of HCPF will be invited to be on the agenda. Additional requests for information to be presented at the next meeting included a list of specific recommendations from stakeholders about how to improvement to the current system as well as the pro and cons of maintaining the existing shared eligibility system utilized by the exchange and HCPF versus the pros and cons of separating the system.

01:30 PM

The committee adjourned.