- The Washington Times - Monday, December 8, 2014

DENVER — A devastating state audit released Monday found a rash of problems with the Colorado health-care exchange’s handling of $32 million in taxpayer funds as well as possible violations of federal law.

The Colorado Office of the State Auditor cited numerous irregularities with the state’s Obamacare exchange, which is scheduled to receive a total of $177 million in federal funding — sloppy bookkeeping, inadequate oversight, overspending on contractors in excess of the agreed-upon amount, and others.

Republican state Sen. David Balmer said he worried that the exchange may have been operating on a use-it-or-lose-it basis.

“I am profoundly concerned that there may have been an attitude at Connect for Health Colorado that this early influx of tax dollars was money from the federal government and that the exchange felt they needed to spend quickly before it ran out,” Mr. Balmer told Health News Colorado.

Colorado is one of 14 states and the District of Columbia that operates its own state-based health-care exchange under the Affordable Care Act.

“We found that Connect for Health Colorado has not sufficiently ensured that public funds have been spent in accordance with federal requirements, that staff follow internal financial and accounting policies and procedures consistently, and that financial controls adequately safeguard its resources as its last federal grant enters its final stage and the organization moves to become self-sustaining,” said the 92-page report.

The audit found problems with 35 of the exchange’s 92 vendors, including a number of contractors that had been paid out of compliance with their contracts. For example, 25 of the 141 contractors were paid a total of $10.5 million more than agreed upon in their contracts. One vendor received $128,798 before signing a contract.

Another problem flagged by the audit was a $38,344 payment to a vendor for 100,000 tubes of lip balm to promote the exchange. The audit said such promotional activity is expressly prohibited under the ACA.

One contractor was paid $175 per hour for a total of $1.7 million for IT support that the audit says could have been performed by staff. The audit also found numerous instances of payments made to vendors without proper receipts or support.

The state audit was described as a “limited performance audit.” Republican legislators had fought to pass a bill earlier this year for a comprehensive audit, but Democrats killed the measure in the state Senate, which was controlled by Democrats.

Republicans, who won a one-member majority in the state Senate in November, have vowed to bring another bill to conduct a thorough audit when the legislative session begins in January.

“Sadly, I am not surprised,” said Republican state Sen. Dan Nordberg, who sponsored the audit bill. “I have had ongoing concerns about how Connect for Health Colorado was managing taxpayers’ funds, which is why I pushed so hard last year to expand the auditor’s oversight of this organization.”

“I hope Democrats will see the light and support my efforts this year to give the state auditor’s office the authority it needs to expose this kind of government waste and help us better protect taxpayer funds,” Mr. Nordberg said in a statement.

Connect for Health Colorado, which has spent $136.5 million, is required to be financially self-sustaining by January, but has requested an extension in order to spend the remainder of the $177 million in federal grants.

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