Critics: Washington Health Care Authority, Exchange Still Need To Shape Up

Critics: Washington Healthcare Authority, Exchange Still Need To Shape Up
The Washington Health Care Authority needs to do a better job on financial planning and management, say critics. Photo: 401(k) 2012.

The Washington Health Care Authority (HCA) administers the state Medicaid program, Apple Health. The Washington healthcare insurance marketplace, or “exchange,” is called Healthplanfinder. It aims to provide coverage options for those without work health plans, and also facilitates delivery of care for Apple Health clients. The exchange then gets reimbursed by the authority for services provided, from Medicaid funds appropriated by the federal and state governments.

However, as the HCA helps some Washingtonians access healthcare, and as it helps pay the bills using Medicaid, it continues struggling to better manage its own finances and conserve taxpayer funds. Meanwhile, the exchange can also find ways to better shepherd its financial resources. Challenges facing both entities have been highlighted in the legislature and a recent state report.

A healthcare insurance association executive and a key lawmaker say the HCA needs to work more closely with the legislature and adopt more accurate financial tracking to prevent further forecasting mistakes.

Financial Miscues Continue

A major miscalculation by the authority now estimated at $384 million, caught the attention of lawmakers earlier this year. More recently a goof tied to the HCA and the exchange’s managers, and costing as much as $90 million, was identified in a state performance audit.

Earlier this year, the authority faced criticism from state lawmakers after it underestimated low-income health care costs by $463 million in its 2015-19 operating budget. HCA Chief Policy Officer Nathan Johnson attributed the miscalculation to a rise in pharmacy costs for Medicaid patients.

The amount of that gap has been revised to $384 million over the four-year period, according to a legislative staff estimate provided to Lens. Sources say that this reduction can be partially attributed to the decision by lawmakers to prevent Medicaid care rates from increasing in 2017.

Yet, additional financial problems have come to light. Operating under a plan established by the HCA, the exchange found itself short by almost $90 million because it failed to seek full reimbursement from Medicaid in covering healthcare service delivery costs for qualifying Washingtonians.

The exchange did shift $51 million from remaining federal start-up grant funds to help offset the shortfall.

The problem was detailed in a recent report from the Washington State Auditor’s Office (SAO). The report also examined other potential management improvements at the exchange.

Leaving Money On The Table

State Sen. Randi Becker (R-2), chair of the Senate Health Care Committee, told Lens she is concerned about “HCA’s ability to do the job necessary to make sure that the dollars are being spent appropriately.”

Becker said the lost reimbursement funds were “left on the table,” and she doesn’t want additional taxpayer costs.

Becker added she is working to “make sure the HCA doesn’t commit the state to things” that Washington will ultimately be financially responsible for “without the legislative body having the chance to see if it will work within the budgeting process.”

SAO recommended the exchange pursue the reimbursement in order to “ensure its self-sufficiency” and said it could recover between $22.3 million and $44.6 million. On July 20, SAO presented its findings to the Joint Legislative Audit and Review (JLARC) Committee, offering suggestions on how to increase the sustainability of the exchange.

Recovering the reimbursable funds left on the table is not part of the exchange’s plan. Executives from the Washington Health Benefit Exchange (HBE), the nonprofit that runs the exchange, don’t believe full reimbursement is worth pursuing. They say it is simpler to move forward and work towards a more accurate cost forecast for 2017.

Pam MacEwan, CEO of the HBE, attended the meeting and told JLARC lawmakers, “because it’s grant funding, and would require the state to come up with a ten to 50 percent match on the payback, it seems like a lot of effort to reconcile one pot of money into another.”

Michael Marchand, director of communications for the HBE, said, “Now that we have better information we will have a more accurate forecast for our enrollment and more accurate ways to create cost allocation methods moving forward.”

Authority Needs To Manage Finances Better

Sydney Smith Zvara, executive director at the Association of Washington Healthcare Plans, told Lens that failure by the state to capitalize on opportunities for Medicaid reimbursement are “symptoms that the financial system” of the authority “hasn’t provided enough detailed breakdown to track costs well.”

Zvara added the HCA needs better data to work with as they approach their next budgeting cycle.

Other Improvements Eyed For Exchange 

MacEwan said Washington’s exchange is negotiating with Deloitte, its IT vendor, and looking to other state exchanges for how to be more cost-efficient.

The SAO recommended the exchange partner with Covered California, which utilizes the same call center vendor. If Washington’s exchange could achieve the lower contracted rate that the California healthcare exchange pays, it could save between $756,000 and $1.3 million per year, depending on call volume.

“We’re looking at a model in which we have first-call resolution of problems rather than handling as many calls as possible,” said MacEwan at the JLARC meeting.

Becker told Lens she met with HCA and it will work with the Office of Financial Management to make its forecasting more accurate.

As Lens previously reported, several insurance companies were forced to leave the individual market at the state exchanges in Washington, due to rising healthcare costs under the Affordable Care Act. Many state residents, especially in rural areas, are left with a limited number of provider choices.

“I think the biggest challenge is just continuing to meet the basic expectations of a state-based exchange. But we’re not quite there yet,” said DJ Wilson, president of Wilson Strategic, a strategy firm for healthcare and human service sectors.

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