Medicaid reimbursement is what could really make or break Colorado’s health insurance exchange, interim CEO Gary Drews told The Denver Post. Drews is leaving his temporary position with the exchange this week and will be replaced by new interim CEO Kevin Patterson.
If revenue projections are on target, the budget for the 2015-2016 fiscal year could be as high as $54 million. At that level, according to Drews, the exchange would be able to operate at a high level. That budget is anticipating a 59 percent increase in enrollment between this year and next. So far in 2015, 143,000 people have enrolled and the exchange is projecting 217,000 enrollees by June 2016.
But there’s no guarantee the surge in enrollment will come, and that budget is dependent on other things as well, including a fee increase that will be passed to consumers.
The state marketplace, Connect for Colorado Health, currently charges carriers a 1.4 percent fee on the premiums of exchange health plans and recommended that it be increased to 3.5 percent. For consumers that means a $4,000-per-year plan would cost an additional $84 per year. As a result, the exchange would increase revenue by $5.8 million.
Staff at the exchange told The Denver Post that revenue models including the 3.5 percent fee, total expenditures and capital costs could support only $49 million. The $5 million shortfall would mean operating with fewer than the ideal number of employees and delaying technology upgrades.
Insurance carriers must file their plan rates for 2016 before May 29 and the recommended fee change will impact the rates. So that the carriers can make an informed decision, the exchange board will likely meet again this week to vote on the recommended fee change, according to The Denver Post. Exchange revenue is also dependent on the to-be-determined rates that carriers file for next year.
The saving grace could be Medicaid reimbursement. Unlike other states, Colorado’s exchange has not documented Medicaid enrollees and their costs to the exchange. Without documenting them, the exchange is not eligible for federal reimbursement, which can be substantial. The four state exchanges closest in enrollment to Colorado's receive from $15 million to $29 million in Medicaid recovery, according to the exchange. Revenue scenarios drafted May 1 estimate Colorado’s exchange will be able to recover $2.5 million in Medicaid costs.
If the early estimates are correct, there is a chance the exchange budget could fall short. Collecting the Medicaid reimbursement would at least narrow that gap.
"Zero is not the right number," Patterson told The Denver Post. Paterson started at the exchange Friday.