The state health insurance exchange needs better financial accounting, according to a legislative audit released Monday.
Auditors found Connect for Health Colorado hasn’t “sufficiently ensured” millions in public money was spent according to both its own and federal rules.
For example, they found most of the contracts over $150,000, totaling $23 million in all, were paid without board approval.
They identified problems with 38 percent of contracts and payments to vendors and grant recipients that they sampled.
State Sen. David Balmer, R-Centennial, said he was "troubled" by the report. He singled out one contract where the exchange paid nearly 10 times more than was approved.
“That’s wasting taxpayer money and that’s wrong,” said Balmer.
Other lawmakers echoed those concerns. “Just because it’s so much money, and it’s taxpayers’ money," said Rep. Dianne Primavera, a Democrat from Broomfield. "It’s a system that we are hopeful that will eventually work correctly and so that’s my trouble. I want it to work.”
The exchange’s interim director Gary Drews said he agrees with the audit’s findings and is working to improve financial controls, including hiring a new internal auditor.
In a statement, Drews said the exchange leadership and staff "take their stewardship of public dollars very seriously and agree with the guidance from the State Auditor's Office."
Connect for Health was created to provide health insurance options as part of the Affordable Care Act. It was funded by $177 million in federal grants. The audit report stated as of September of this year, Connect for Health had spent nearly $137 million, roughly 76 percent of that total.
Exchange spokesman Luke Clarke said the problems auditors found are due in part to starting an ambitious program quickly.
“We’re still new, we’re growing very fast, and I think it’s more a reflection of that,” Clarke said.
Auditors identified several key facts including:
- 38 percent of vendor and grantee payments sampled had "problems" resulting, in part, in $412,000 in questioned costs, which did not comply with federal or exchange requirements
- The exchange paid about $55,000 to vendors and $432,000 to grant recipients that were considered "unallowable or unreasonable" use of federal funds. It also paid vendors and grantees $185,000 with proper financial accounting.
- Connect for Health did not "consistently or accurately record all transactions" into a general ledger, or have sufficient controls to access to its accounting system by users.
- The exchange did not take steps to "contain administrative costs" in some categories.
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