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Health Law and Policy Update

This week's updates



Headlines of the week

Colorado Health Benefit Exchange Board gets down to business
Colorado's Health Benefit Exchange Board of Directors met Monday. State Rep. Bob Gardner, who will take over as chair of the Legislative Oversight Committee in January, reminded the board he had opposed Senate Bill 11-200 which created the governing structure for the exchange, including the board. He also talked about the importance of the board making comments on proposed federal regulations related to the operation of exchanges. There was some discussion about coordinating the comments of the board and the oversight committee. Gardner emphasized the need for state flexibility in establishing and operating exchanges.

Joan Henneberry, currently director of the Exchange Planning Grant, announced she does not intend to seek the position of exchange director. Board Chairwoman Gretchen Hammer reported the Attorney General's Office will act as counsel for the board at least for a period of time, and the board was briefed by the Attorney General's Office on open meetings laws. The board spent some time discussing federal rulemaking on exchanges and will spend much of its next meeting framing board comments on proposed exchange rules. Board members agreed to stress the need for maximum flexibility for states in their comments. The Department of Health and Human Services has issued proposed rules guiding state-based exchanges.

Board members discussed their decision-making process and then heard a presentation from consultant Jim Jones on eligibility, verification and enrollment. Jones outlined a continuum of options for the board to consider around systems and program integration and interoperability. Core issues relate to how Colorado chooses to build its exchange information-technology infrastructure, how those systems are designed to work with Medicaid and whether applicants for the exchange will also have the opportunity to apply for other public benefits programs, such as food stamps and cash assistance.

The Patient Protection and Affordable Care Act requires exchanges to determine whether people applying for tax credits through the exchange are eligible for Medicaid and the Children's Health Insurance Program (CHIP, known in Colorado as Child Health Plan Plus). If eligible, applicants are to be enrolled seamlessly into those programs. If not eligible for Medicaid/CHIP, the exchange will determine applicants' eligibility for federal tax credits for the purchase of private insurance and facilitate their enrollment in an insurance plan. The goal of the federal law is real-time enrollment, and a user experience that can be completed in 15 to 20 minutes to find, apply for and enroll in health insurance.

There are a lot of decisions to be made about how all of this will work in Colorado, and at least some of those decisions have to be made relatively soon for the state to go live by fall 2013. While many factors will play into Colorado's decisions about how to proceed, decision makers are going to have to take into account Colorado's dysfunctional public benefits eligibility and enrollment system - the Colorado Benefits Management System (CBMS). The Colorado Center on Law and Policy has said since initiating litigation in 2004 that the state should undertake a functional assessment of CBMS. In July, the Centers for Medicare and Medicaid Services (CMS) released a review of the Medicaid program, finding Colorado in violation of federal law in eight areas, most related to CBMS's inability to perform. CMS issued a serious threat of sanctions: If the state does not meet performance goals, the federal government may withhold federal funding for the operation of CBMS. The Colorado Health Foundation recently released a report examining what is needed to enhance Medicaid eligibility and enrollment functions in CBMS. CCLP is concerned that unless the state can address the continuing issues related to the performance of CBMS, that system will not only fail to deliver timely and accurate benefits, but also may negatively affect the performance of the exchange.

A significant decision item is whether applicants to the exchange should have an opportunity to be determined eligible for and enroll in public benefits other than Medicaid/CHIP. That discussion involves decisions about the core role and function of the exchange. Should it be just about health insurance, or should Colorado think more broadly than that given that many families are in critical need of a range of supports that go beyond health insurance and are often eligible for benefits programs if their incomes are low enough to qualify for Medicaid? And if state leaders think more broadly, what is the capacity to integrate systems and benefits programs?

The process of creating the exchange creates a unique opportunity for Colorado. There are significant federal dollars available to build the exchange, improve and enhance Medicaid/CHIP eligibility and enrollment systems, and improve any public benefits systems that use the same platform as Medicaid/CHIP. The questions are whether and how the state will take advantage of the opportunity and what, realistically, is the state's capacity for improvement and accomplishment - now and in the future.

Here are some imperatives:

  • Colorado is required to build a functional exchange to enable hundreds of thousands of Coloradans to access health insurance by Jan. 1, 2014, when the health reform law's individual mandate goes in to effect.
  • Colorado is required to ensure anyone who comes to the exchange is screened for Medicaid/CHIP eligibility and enrolled in those programs if eligible so such an individual can meet the mandate requirement.
  • Colorado is permitted to include access to other benefits programs in the exchange.
  • Colorado must have systems that timely and accurately determine people eligible for and deliver benefits in our other public benefits programs. Thousands are going without food, cash and other assistance because of dysfunctional systems.

The next board meetings will be 9:30 a.m. to 1:30 p.m. Sept. 16 and Sept. 26 in the Mile High Room of COPIC, 7351 E. Lowry Blvd., Denver. Beginning Oct. 10, the board will meet 8:30 a.m. to 12:30 p.m. the second and fourth Monday of each month in the Mile High Room of COPIC. That schedule will remain through the end of 2012.

Legislative Audit Committee meets to discuss CMS audit
The Colorado Legislative Audit Committee met this week to hear responses from the Department of Health Care Policy and Financing (HCPF) and Office of Information Technology (OIT) regarding a recent audit of the Medicaid program conducted by the Centers for Medicare and Medicaid Services (CMS) at the U.S. Department of Health and Human Services.

The CMS Audit made eight findings that require corrective action or remediation:

  • Colorado is out of compliance with timely processing of Medicaid applications and redeterminations.
  • Colorado is out of compliance with rules requiring that HCPF as the single state agency under federal law maintain control over the operations of the Medicaid program.
  • Colorado is out of compliance with laws requiring that an applicant be provided with a reasonable opportunity period to present evidence of citizenship and identity.
  • Colorado is out of compliance with federal rules for citizenship and identity requiring termination or denial of an applicant who has not provided documentation.
  • Colorado is out of compliance for redetermination of Medicaid eligibility and impermissibly auto-terminates clients whose cases are delayed in processing.
  • Colorado is out of compliance with rules requiring periodic redeterminations of eligibility and has a high rate of denials.
  • Colorado is out of compliance with federal rules for client notices.
  • Colorado is out of compliance with maintenance of a complete Medicaid eligibility history.

The audit outlines steps for reporting and corrective action and notes that the state could face monetary sanctions for failure to remediate in the given timeframes. Many, if not all, of those problems have been known to HCPF and known to Medicaid advocates for many years. Further, the state auditor highlighted the dozens of times that these problems have been identified in previous state audits, along with the department's acknowledgement of the problems and timelines for resolution. It was noted during the meeting how discouraging it is to see serious problems like these highlighted repeatedly with no solutions actually forthcoming.

HCPF and OIT presented information to the audit committee surrounding new executive leadership and governance over CBMS. HCPF presented several projects that have been underway to help bring the state into compliance on many of these problem areas. For example, HCPF, in collaboration with the counties, has been working on business process improvements for some time. Those improvements have yielded successes in creating business process efficiencies that in turn help with timely processing. Further, several changes are being made in CBMS, like automatic verifications of income and citizenship and identity, that will yield administrative efficiencies in the Medicaid and Child Health Plan Plus (CHP+) programs. In fact, timely processing of new applications has improved over recent months. However, some of the state's responses were disappointing. For example, fixes to client noticing are not scheduled until June 2012, despite the fact that CBMS noticing and client correspondence have been a source of major confusion and anxiety for clients since CBMS went on line in 2004. The Associated Press reported on the audit committee meeting earlier this week.

State announces administrative simplification changes to CBMS
Several changes to the Colorado Benefits Management System (CBMS) will roll out Monday that will simplify the Medicaid and CHP+ eligibility process for clients and workers.

First, an applicant will be able to self-declare income and have it automatically verified through the state's income database.

Second, clients will also be able to provide their Social Security Numbers and self-declare citizenship and have it verified through an automatic link to the Social Security Administration. If a positive match is found, that verification will count for identity and citizenship. In the cases of either income verification or citizenship verification, if there are problems or discrepancies with the automatic verifications, then clients will be required to present information in paper form.

The third change that takes effect Monday affects the redetermination process. CBMS will automatically search client files for up-to-date information from a client's other public benefits cases such as food assistance or cash assistance. If there is current information from those programs, CBMS will automatically run a redetermination and re-enroll the client. If no current information is found, CBMS will generate a short packet of client case information which will be sent to the client. If there are no changes and the information is correct, the client need not take any action, and he/she will be automatically re-enrolled. If there are changes, the client needs to return the packet with the correct information. The highly automated process should reduce workload for county workers. Also, CBMS will no longer automatically terminate clients unless the client is found to be no longer be eligible. That will substantially help unnecessary "churning" on and off of the program and promote continuity of coverage and access to health care. An agency letter on the changes is forthcoming.

Colorado Springs will decide future of Memorial Health System
Colorado Springs officials will seek bids from nonprofit and for-profit companies to take over control of publicly owned Memorial Health System, the City Council decided Tuesday.

For many years, the Colorado Springs City Council has appointed members to a governing board for Memorial Health System, and council members have not exercised close oversight. Memorial receives no city tax funds. Still, the hospital system's ownership and governance has attracted increasing attention during the past year, in part because the City Charter calls for tax money to bail out the health system in the event of a financial crisis.

That arrangement has led a number of city officials to call for selling Memorial or otherwise relieving taxpayers of the potential liability. The City Council on Tuesday also approved a ballot question asking voters to drop the requirement that taxpayers cover losses Memorial, the Colorado Springs Gazette reported.

Memorial Health System includes three hospitals and a network of clinics. Its leadership favors conversion to a "community-based nonprofit."

What's new

Parties in the Exempla hospital transaction argue it's not subject to conversion statute
The parties in a transaction to transfer control of Exempla Lutheran Hospital filed documents with the Colorado Attorney General's Office last month arguing the deal is not subject to Colorado law governing hospital conversions.

Sisters of Charity of Leavenworth Health Systems, Inc. and the Community First Foundation filed the documents in response to a challenge of the transaction filed by several physicians at Lutheran Hospital. The deal would consolidate control of hospitals in the Exampla system, including Lutheran, with the Sisters of Charity organization. It involves a proposed payment of $285 million from Sisters of Charity to the Community First Foundation, which has announced it does not intend to use the money exclusively for health care purposes.

That shift of control and the shift of assets away from health care purposes are the basis of the physicians' contention that the transaction is subject to review by the Colorado Attorney General's Office under the Hospital Conversions Statute. Sisters of Charity and the foundation argue each of the steps in the transaction was not subject to the law, and the steps together do not come under the statute.

The physicians' attorney has indicated he intends to file a reply shortly in support of the physicians, holding the steps constitute a takeover, are covered by the law and that the parties to the deal have failed to comply.

Advancing the debate

Advocates will play a crucial role in protecting Medicaid
Health care advocates must emphasize to Congress the importance of protecting Medicaid as a so-called "super committee" forms a plan to reduce the federal deficit by $1.5 trillion during the next decade, FamiliesUSA said in an issue brief issued recently.

"Medicaid is an invaluable tool when economic crises or natural disasters hit, with its ability to expand to take care of additional people when needed. We shouldn't change the structure of Medicaid," the document says. "Simply cutting federal Medicaid funding is penny-wise and pound foolish. Less money to cover people means more visits to emergency rooms, sicker people, and overall higher health care costs, not savings."

Medicare premium increases squeezing seniors, report finds
Medicare premiums are rising much faster than the cost-of-living increases for Social Security recipients and eroding the ability of many low-income seniors to make ends meet, according to a study released Aug. 12 by the Urban Institute.

"Premium levels and increases are often burdensome at low income levels. Rising health care costs leave the entire population with less to spend on nonhealth goods and services, and older adults are affected most because so much of their income goes to health care," the study said.

The findings echo the Colorado Center on Law and Policy's 2009 research on health care affordability.

Health Law and Policy Update is issued weekly by the health staff of the Colorado Center on Law and Policy. Subscribe by e-mail or read previous editions.

Health Care Director
Elisabeth Arenales

Health Care Attorney
Adela Flores-Brennan

Special Counsel
Ed Kahn

Rice Fellow
Danny Rheiner

Communications Director
Perry Swanson

Released Aug. 26, 2011