Maryland may owe the federal government millions of dollars it used to established its insurance exchange because it waited longer than required to formally update its enrollment figures and projections, according to a report from HHS' Office of Inspector General.
As a result, $28.4 million was erroneously paid out by the CMS to Maryland. The findings come days after the exchange's executive director, Carolyn Quattrocki, revealed that she and her staff have several concerns about the exchange's ability to retain and attract new enrollees.
In February, Reps. Dr. Andy Harris (R-Md.) and Jack Kingston (R-Ga.) sent a letter to the OIG calling for an inquiry into how officials in Maryland spent more than $100 million in federal dollars to construct a website that remained dysfunctional more than four months after its launch.
A contractor for the exchange had initially estimated 147,233 qualified plan enrollees for the first open-enrollment period. The actual figure was approximately 70,000. The contractor later realized that its estimate mistakenly covered the entire calendar, not fiscal year, therefore including the start of the second enrollment period.
The state waited longer than required to readjust the formula it was using to determine what it should receive from the federal government once it was informed of the discrepancy, according to the OIG report. HHS is recommending that Maryland pay back $15.9 million it received because it used outdated enrollment data and $12.5 million it received for using a methodology for 21 months that included a material defect.
Exchange officials disagreed that it owes anything, noting in a statement that it believes it followed federal guidance on the frequency it needed to report changes to the formula for federal allocation of funds. The CMS will review the OIG's findings to determine if a cost reallocation is necessary, the agency said in a response to the audit's findings.
Exchange officials are concerned about their ability to enroll new individuals into coverage and retain the individuals they already have moving forward because exchange funds are running low for continued future in-person and call center assistance.
Beginning in January, state-run insurance exchanges were legally required by the ACA to be financially self-sustaining. However, it was expected states would continue to rely on some sort of federal funds in 2015.
“No matter how good the (site is), we've discovered that there will always be people who want to pick up the phone and want in-person assistance,” Quattrocki said at AHIP's Exchange Forum on March 13. “That presents us with some challenges. “We've gone through this era of having a lot of federal grants to stand all this up, but that's drawing up.”
She added that the state is also continuing to struggle to put in place passive readmission for qualified plan enrollees.
With the third open-enrollment eight months away, however, Quattrocki said she was optimistic that creative fixes could be developed to address these issues.