Time:07:30 AM to 08:35 AM
Place:SCR 356
This Meeting was called to order by
Martinez Humenik
Senator Roberts
This Report was prepared by
Amanda King
X = Present, E = Excused, A = Absent, * = Present after roll call
Bills Addressed: Action Taken:
Opening Remarks
Historical Overview of the Legislative Committee
Introduction of Connect for Health Colorado Board Members and Staff
Presentation of Colorado Health Insurance Benefits Exchange Audit
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

07:31 AM -- Opening Remarks

Senator Roberts called the meeting to order. She announced that the committee would meet every other week throughout the remainder of the legislative session. She reviewed the meeting agenda (Attachment A). She discussed the role of the committee in providing oversight to Connect for Health Colorado (exchange). Senator Roberts stated that she will be requesting a late bill to expand the number of committee meetings allowed each year.

150318 AttachA.pdf150318 AttachA.pdf

07:39 AM

Committee members commented on the topics they would like discussed by the committee. Senator Roberts discussed setting up a function on the committee's website to allow for public feedback about the exchange.

07:41 AM -- Historical Overview of the Legislative Committee

Bill Zepernick, Legislative Council Staff, provided an historical overview of the committee. He outlined the following duties of the committee:

He referenced the following materials that were provided to the committee: the Overview of the Legislative Health Benefit Exchange Implementation Review Committee memorandum (Attachment B); the 2014 final report of the committee (Attachment C); Article 22 of Title 10, C.R.S. (Attachment D); Senate Bill 11-200 and the bill's fiscal note (Attachments E and F); House Bill 13-1245 and the bill's fiscal note (Attachments G and H); three issue briefs prepared by Legislative Council Staff (Attachments I through K); and materials from Connect for Health Colorado (Attachments L through O).

150318 AttachB.pdf150318 AttachB.pdf

150318 AttachC.pdf150318 AttachC.pdf150318 AttachD.pdf150318 AttachD.pdf150318 AttachE.pdf150318 AttachE.pdf150318 AttachF.pdf150318 AttachF.pdf150318 AttachG.pdf150318 AttachG.pdf150318 AttachH.pdf150318 AttachH.pdf150318 AttachI.pdf150318 AttachI.pdf150318 AttachJ.pdf150318 AttachJ.pdf150318 AttachK.pdf150318 AttachK.pdf150318 AttachL.pdf150318 AttachL.pdf150318 AttachM.pdf150318 AttachM.pdf150318 AttachN.pdf150318 AttachN.pdf150318 AttachO.pdf150318 AttachO.pdf

07:46 AM -- Introduction of Connect for Health Colorado Board Members and Staff

Sharon O'Hara, Chair of the Connect for Health Colorado Board of Directors, introduced herself. She stated that the board members are volunteers and not compensated.

07:47 AM

Nathan Wilkes, member of the Connect for Health Colorado Board of Directors, introduced himself. He stated he had been on the board since its inception. He stated he is the chair of the exchange's Operations Committee.

07:48 AM

Gary Drews, Interim Chief Executive Officer of Connect for Health Colorado, introduced himself.

07:49 AM

Ms. O'Hara answered questions about the role of the board. She stated the board reviews the exchange's budget. In response to a question, Ms. O'Hara discussed the other board members' areas of expertise. Senator Roberts asked for biographies and contact information for the board members. Senator Roberts and Ms. O'Hara discussed the best way for committee members to communicate with the exchange. Mr. Drews stated that he is happy to be contacted about questions from committee members. Committee members commented on the board and the exchange. The committee discussed providing questions to the exchange in a cohesive manner. Senator Roberts reiterated the meeting schedule for legislative session.

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.pdfAttachment 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.