Date: 03/18/2015
Final
Presentation of Colorado Health Insurance Benefits Exchange Audit
HEALTH CARE EXCHANGE
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08:01 AM -- Presentation of Colorado Health Insurance Benefits Exchange Audit
Jenny Page, Office of the State Auditor, discussed Senate Bill 15-019, concerning the authority of the State Auditor to conduct a performance audit of the exchange. She stated that after the bill is signed by the Governor the scope of the audit will be determined. She reviewed the Colorado Health Insurance Benefits Exchange: Connect for Health Colorado Limited Performance Report (Attachment P). She stated that Chapter 1 provides an overview of the exchange. Ms. Page highlighted page 18 of the audit that addresses the audit's purpose, scope, and methodology. She stated that federal law requires the exchange to be self-sustaining by the end of 2015. She discussed the aspects of the exchange that the auditor could not look at during the limited audit. Ms. Page referenced page 21 that outlines the severity of finding, and she stated that all four findings were determined to be significant deficiencies.
Attachment P.pdf
08:09 AM
Ms. Page reviewed the findings of the audit in Chapter 2 concerning the administration and use of public funds. She discussed the findings related to payments to vendors. She stated that there was an estimated $117.2 million in payments to about 300 vendors during FY 2012-13 and 2013-14. She told the committee that the audit looked at a sample of 66 payments to vendors totaling $9.7. She stated that the criteria to assess the sufficiency of the exchange's practices for using federal funds to procure goods and services from vendors are outlined in the audit starting on page 27. She outlined the list of the problems identified concerning payments to vendors that are listed in the audit starting on page 29. Ms. Page stated that the identified problems included a $38,344 payment to a vendor for lip balms for a promotional giveaway, which is prohibited by federal law; a payment using the "cost plus a percentage of cost" method, which is prohibited by federal requirements; seven payments totaling $109,355 that lacked evidence to support the amounts paid and services provided when paid; and 13 payments totaling $229,518 that were made without the required supervisory review. She discussed the lack of policies, procedures, and guidance for ensuring payments were reasonable and appropriate; the lack of staff knowledge or understanding of federal requirements for the use of grant funds; and the prioritization of quick payments within tight federal deadlines to implement the exchange.
08:16 AM
Ms. Page outlined the recommendations that begin on page 37 that the Office of the State Auditor made to the exchange concerning improving processes and controls over the purchase of goods and services by vendors. She stated the exchange agreed to all of the recommendations.
08:17 AM
Ms. Page discussed the findings concerning the administration of federally funded contracts, which begin on page 42 of the audit. She discussed the problems identified by the audit on page 47 regarding the exchange not administering its contracts in compliance with its internal policies and procedures or following all applicable federal requirements. She stated that the problems found related to the exchange's contracts totaled about $31 million. Ms. Page outlined the issues related to contract execution and compliance, board approval of contracts, and incomplete contracts. She stated these problems occurred due to insufficient monitoring of contract payments, lack of consistent and complete procurement and contracting policies and procedures, and inconsistent use of contract templates. Ms. Page reviewed the recommendation made on page 57 related to payments to contractors and contract administration. She stated that the exchange agreed to implement all of the recommendations related to contract administration.
08:22 AM
Ms. Page discussed the finding on page 61 concerning grantee payments and reimbursements. She told the committee about the Assistance Network Grant Program and the Navigator Grant Program that are administered by the exchange. She highlighted page 66 of the audit concerning the payment of seven grantees for navigator services from federal funds, which violated federal regulations. Ms. Page discussed payments to grantees that lacked evidence to support the costs, overpayments to grantees, and advanced payments that lacked the required demonstrated need. She relayed information from page 69 of the audit concerning payments that were not approved in the grantees' grant contracts. She stated that there was only one staff member at the time of the audit that was responsible for reviewing all of the grantee payments. Ms. Page reviewed the recommendations on page 74. She stated that the exchange agreed to implement all of the recommendation concerning reimbursements and payments to grantees. Senator Roberts stated that she would like Ms. Page to return on April 1 to continue her presentation and respond to questions.
08:28 AM
Ms. Page answered questions about the samples that were reviewed for the audit. Senator Aguilar provided a list of questions for Ms. Page to responded to at the next committee meeting. Ms. Page answered questions about whether information about the grantees, contractors, and vendors is available. Representative McCann asked whether the audit findings found any misappropriated funds. Senator Roberts asked Ms. Page to respond to the members questions at the next meeting.
08:35 AM
The committee adjourned.