Feds want their money back

atodd's picture

While you were toiling away these last few years struggling to pay off the high rates and deductibles associated with your health insurance purchase through the Colorado Exchange, state employees of the Exchange were using federal funds to throw baby showers, hand out excessive tips and generally misuse funds.
That's just the tip of the $9 million healthcare needle the Office of Inspector General has charged the state of Colorado with, in a December 2016 report, of not correctly expending Establishment Grant Funds to be used to create a health insurance marketplace in accordance with the Affordable Care Act, or Obamacare.
The feds want their money back.
The state is balking.
The Center for Consumer Information and Insurance Oversight, responsible for implementing many of the requirements of the ACA, awarded three establishment grants to the Colorado marketplace, which together totaled $183.7 million. Under the terms, the marketplace was to expend these grant funds by Dec. 31, 2014. In November of that year, the Colorado marketplace was granted an extension allowing it to expend remaining funds on design, development and implementation activities through December 2015.
The OIG found that the Colorado marketplace did not expend $9,678,635 of those funds in accordance with federal requirements. According to the report, the Colorado marketplace:
• did not adequately document $4,398,333 in costs that it charged to the establishment grants;
• charged the establishment grants $4,504,799 for unallowable hardware and software operational support and maintenance contract costs;
• improperly transferred costs totaling $312,449 from one establishment grant to another without demonstrating that these cost transfers were performed to correct bookkeeping or clerical errors;
• did not efficiently and effectively administer establishment grant funds totaling $463,054 consisting of improperly awarded executive and employee bonuses, overpayments to subgrantees, unallowable promotional giveaway items, excessive and unreasonable tips, and more; and,
• engaged in a number of procedures and practices contrary to federal and Colorado marketplace policies, including requiring use of personal credit cards to make purchases, permitting self-approval of purchases, permitting incomplete and inadequate disclosure of possible conflicts of interest, improperly documented inventory and allowing a previous chief executive officer to keep purchased equipment for personal use when the CEO left the organization.
The OIG made two recommendations. One, it has requested that the Colorado marketplace refund the federal government $9,678,635 and, two, it recommends the marketplace develop policies and procedures to ensure proper expenditures in the future.
Colorado marketplace agrees with the latter but insists it had proper documentation and can fix other shortcomings in documentation, all of which should satisfy the complaints. The OIG maintains its findings are correct and has rebuked the Colorado marketplace's assertion that any or all of the total that is recommended for recompense is not due.
Over $300,000 of contract work was performed and paid by Colorado marketplace without proper documentation. Many times a description of services was not included on invoices, hours performed were not detailed and calculations of charges were not put forth. The marketplace, without justification, just paid these invoices.
It also charged over $700,000 for 22 consultant services without proper documentation or detail as to work performed, hours spent or how rates were calculated.
Equipment was purchased without documentation identifying the business purpose of the purchases. Subgrantees were paid for work where explanation of the work was not provided. Executive and employee trips were reimbursed where no documentation exists supporting the business purpose of the trips or that the trips were pre-approved.
Examples of some of the unexplained bookkeeping and expenditures are:
• in one transfer of grant money to another establishment grant, the marketplace later described a $164,813 expense for "call center furniture" as "part of the adjustments supporting the conversion from one accounting software system to another;
• use of establishment grant funds to pay $211,891 in unallowable bonuses to executive staff and to employees from 2012 through 2014. Of 15 bonuses meted out in this period, only three were supported by documentation. However, none of the documentation was dated or included an employee signature. Bonuses included two for the CEO totaling $32,791; two for the CFO totaling $32,480; and, two for the COO totaling $32,480. Nine other employee performance bonuses were paid totaling $74,140;
• an additional $16,500 signing bonus and $23,500 for 10 retention bonuses, even though no provisions existed in the marketplace's policy for either type of bonus;
• a total of $164,170 in payments to subgrantees which exceeded the amounts allowable; and,
• purchases of $86,061 of promotional giveaway items such as sunscreen, water bottles, tee-shirts, pens and ink cartridges.
At one point in the Colorado marketplace's response to a specific expense, it cited a provision of a federal regulation to support its assertion that the costs for social activities being questioned were allowable. The subheading of the provision is "Employee morale, health, and welfare costs." Under this, the marketplace is trying to justify the purchase of "cake, punch, holiday cards and decorations." Also associated with this were charges for baby showers.
The OIG disagrees.
Lastly, the OIG disputed undocumented trips associated with one Colorado marketplace CEO. A $968 trip to Durango, for instance, lacked documentation supporting that the trip was necessary and reasonable for the proper and efficient performance and administration of the federal grant awards.
Of the $187 million in establishment grants, the federal government wants 5 percent of it back for sloppy bookkeeping, misuse and unexplained expenditures.
The Colorado Springs Gazette reports that "Obamacare…has mostly harmed Colorado." In funding "this debacle," the paper goes on to say, "state government has increased Medicaid spending so much it consumes 40 percent of the budget for the sake of about 20 percent of the population."
Now imagine that Colorado Amendment 69 had passed last November. A tax on every Coloradan would have generated $25 billion annually to set up single-payer health care in the state. If the state can't spend 5 percent of federal money properly, and can't run the exchange efficiently, then we assume we dodged $1.25 billion of annual fiscal abuse at the state level by defeating the amendment.
As the Gazette opined, we now "have an inside look at one of the country's premier health care exchanges, and it's not pretty." We agree with the Gazette's conclusion that "it's time to stop viewing government as the best steward of our health care assets."

Alan Todd is co-publsher of the Ouray County Plaindealer, and can be reached at atodd@ouraynews.com or 970-325-2838.