The Connect for Health Colorado staff has recommended more than doubling the fee that insurers pay on each policy purchased on the exchange — a charge that is passed on to consumers.
The state marketplace would increase the carrier fee from 1.4 percent to at least 3.5 percent of the premium charged on exchange health plans — the same rate charged through the federal exchange, under the recommendation made Monday.
For a consumer holding a $4,000-a-year health plan, the increase would be $84 a year. The estimated increase in revenue for the exchange would be about $5.8 million.
The staff also recommended Monday that the board increase the monthly assessment the exchange charges for each private insurance policy purchased on or off the exchange, from the current $1.25 to $1.80. The assessment, unless extended by legislators, ends next year, fiscal year 2016-17.
It applies to 1.2 million insurance policies statewide in a calendar year. For fiscal year 2015-16, the exchange estimates it would reap a total of almost $20 million, or about $2 million extra.
Exchange officials urged the board to make a decision in the next week so insurance carriers can file their 2016 premiums for the state health insurance exchange.
The board didn’t vote but will meet again — likely this week.
“The carriers need to submit their plan rates” by May 29, interim CEO Gary Drews said.
Ben Price, director of the Colorado Association of Health Plans, said the fees figure into the base price of a plan.
“The carriers have invested a lot into Connect and remain invested,” Price said. “Choose the right numbers. Do it very quickly.”
If revenue projections hold up, the exchange’s 2015-16 fiscal year budget could go as high as $54 million.
“This is a critical period. I think the next four weeks are going to be quite exciting,” said Drews, who is set to leave the exchange around May 15.
He also emphasized the board should work to maximize its reimbursement from Medicaid for its role in helping to sign up families for public insurance.
With fee changes and Medicaid costs recovered, Drews said, the exchange is “imminently sustainable,” even as it comes to the end of $177 million of federal startup grants. The exchange now gets no reimbursement for Medicaid.
“Zero is not the right number,” said the new interim CEO, Kevin Patterson, who started at the exchange Friday.
The exchange must document and justify costs it incurs because of Medicaid enrollees before it can be reimbursed by the federal Centers for Medicare and Medicaid Services, said Sue Birch, head of the Colorado Department of Health Care Policy and Financing, the state agency that administers the program.
Dr. Mike Fallon, a board member and emergency department physician, said other state exchanges with similar enrollment sizes are getting reimbursed far more for Medicaid-related expenses.
The four state exchanges closest in enrollment to Colorado’s receive from $15 million to $29 million in Medicaid recovery, according to figures from the exchange.
In early revenue forecasting, the exchange included $2.5 million for Medicaid cost recovery in 2016.
Drews worked on the draft budget but now is handing it to Patterson.
The board is scheduled to vote on the final exchange budget June 8, but that’s too late for carriers to know what fees to add to their rates. The Colorado Division of Insurance already has extended one of the deadlines related to rate filings from May 15 to 29.
Colorado has enrolled almost 143,000 people so far in 2015, of which it expects about 111,000 to keep and pay for their policies by year’s end. To try to estimate revenues over the next few years, the exchange staff is making what it calls fairly aggressive enrollment projections: 217,000 enrollees by June 2016; 256,000 by June 2017; and, 295,000 by June 2018.
Revenues also are dependent on the rates carriers will charge. The exchange has no control over that. Likewise, expenses are hard to pin down.
To estimate total expenditures, including some capital costs, for fiscal year 2016, the staff said revenue models based on a 3.5 percent fee could support $49 million. Yet to operate at a high level with optimal staff size and technology upgrades, cash outlay should be closer to $54 million, Drews said, according to the draft budget.
“Medicaid reimbursement … ends up making or breaking what level we function at,” Drews said.
He also commented on the small staff size, 48 to 50 positions, persistently plagued by high turnover. It has 13 unfilled positions — 14 considering Patterson is only interim CEO through the next enrollment period and the search for someone more permanent continues.
“The staff is too small,” Drews said. “It was the most obvious thing to me in my first week (in August).
“My biggest concern,” Fallon said, “is that last year at this time we sat around the table and talked about a budget for $26 million. Now it’s $54 million,” Fallon said. “There are states looking at $75 million. We are spending money at an incredible clip, and we have yet to prove our value proposition.”
Electa Draper: 303-954-1276 or edraper@denverpost.com
