The Colorado Health Insurance Marketplace's Financial Management System Did Not Always Comply With Federal Requirements

Connect for Health Colorado (Colorado marketplace), the health insurance exchange established by the State of Colorado under the provisions of the Patient Protection and Affordable Care Act, did not always comply with Federal requirements with respect to the administration of its financial management system for the establishment grant funds it was awarded. Specifically, the marketplace improperly transferred grants costs totaling almost $2 million that included 62 separate expenditures. The Colorado marketplace also transferred costs between grants totaling $3.2 million that included 352 other expenditures and that may not have been allowable, in part, due to a lack of certifications that the new charges were correct. In addition, the Colorado marketplace made 65 other payments totaling $568,987 that were unallowable because the marketplace used grant funds from its first two grants that it had not previously obligated within those grant periods to pay for expenditures outside of those grant periods. The Colorado marketplace also engaged in a number of financial management procedures and practices that did not provide for effective control over and accountability for establishment grant funds.

We recommended that the Colorado marketplace refund to the Federal Government the $2 million in improperly transferred costs and the $568,987 in payments related to obligations that were not incurred during the grant period. We also recommended that the marketplace work with the Centers for Medicare & Medicaid Services (CMS) to certify the cost transfers associated with the remaining 352 expenditures totaling $3.2 million, ensure that each expenditure transferred was allowable, and refund any unallowable expenditures to the Federal Government. We made an additional, procedural recommendation regarding the development and implementation of written policies and procedures for the administration of its financial management system.

The Colorado marketplace said that it reviewed the transactions for which we are recommending a refund and did not agree that these costs should be refunded. The marketplace also said that it would be able to provide evidence that the 352 expenditures (in our second recommendation) were allowable, and it agreed to work with CMS to certify the allowability of these expenditures. The marketplace agreed with the third recommendation. We maintain that all of our findings and recommendations remain valid and that all of the findings (in our first recommendation) are based on a correct interpretation of the grant criteria. The marketplace did not provide any additional documentation for us to consider.