Sneak Preview: Colo. Agency Develops New Cost Allocation Method

June 14, 2018 | By Jerry Ashworth | Post a Comment

xsass_bookshot(The following was excerpted from a recent article in the Single Audit Information Service.) Officials with Connect for Health Colorado (CHC) recently stated they now have developed a cost allocation methodology for its health insurance eligibility determination system that is based on relative benefits to CHC and that tracks costs to the correct reporting period, in response to a recent audit recommendation from the Department of Health and Human Services (HHS) Office of Inspector General (OIG).

The Patient Protection and Affordable Care Act (Pub. L. 111-148), as amended by the Health Care and Education Reconciliation Act of 2010 (Pub. L. 111-152), established health insurance exchanges (i.e., “marketplaces”) to allow individuals and small businesses to shop for health insurance. The act also provided grants to states for planning, establishing and the initial operation of the marketplaces. CHC administers the health insurance marketplace for Colorado, and received $183.7 million in Centers for Medicare and Medicaid Services (CMS) funding from federal fiscal year (FY) 2012 through third quarter FY 2016.

For eligibility determination and enrollment services, CHC uses the Shared Eligibility System (SES) maintained by the Colorado Department of Health Care Policy and Finance (HCPF), which administers the state’s Medicaid program. CHC and HCPF established a cost allocation plan, which CMS approved in 2012, under which two-thirds of the SES costs would be allocated to CHC and one-third to HCPF. This cost allocation plan was established based on the estimated health insurance enrollments of those members of Colorado’s population who were eligible for either Medicaid through HCPF or for qualified health plans through CHC. In September 2014, the entities developed, and CMS approved, a revised cost allocation plan whereby the cost allocation percentages would be 50 percent for both CHC and HCPF.

In its audit, OIG found that CHC did not always comply with federal requirements when expending federal funds allocated for its SES costs. OIG determined that the SES costs were allocated to CHS based on an “arbitrary, 50/50 cost allocation ratio contrary to federal requirements and to CMS supplemental guidance.” OIG said that CHC allowed SES costs to be allocated to it that were not based on “relative benefits received,” in conflict with allocation provisions now addressed in the uniform grant guidance at §200.405. Likewise, CMS supplemental guidance issued in October 2012 requires that prospective adjustments to cost allocations be based on updated or better data and “should have some reasoning based on expected transactions, expected program population, etc., and cannot be arbitrary.”

(The full version of this story has now been made available to all for a limited time on Thompson’s Grants Compliance Expert site.)

As a reminder, we have all of our Federal Funding Training Forums scheduled for 2018. Please let me know if you have questions or can make any of these. We hope to see you there!

  • Wednesday July 25 – Friday July 27 in MINNEAPOLIS

http://www.federalgrantsforum.com/minneapolis/index.html?src=AT

  • Wednesday October 17 – Friday October 19 in ATLANTA

http://www.federalgrantsforum.com/atlanta/index.html?src=AT

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