COLORADO: CHIP Audit Uncovers Waste, Overpayments
A state audit of Colorado's low-income children's health care plan, released Monday revealed a "cumbersome, wasteful program" and found the state had overpaid HMOs by at least $242,000 in one year due to dual enrollment in CHIP and Medicaid, the Denver Rocky Mountain News reports. With a "three-tiered bureaucracy" and a premium of $360 per year for a family of four earning $31,500, Colorado's CHIP is also one of the nation's most expensive programs, resulting in "slim enrollment" -- only one-third of the 70,000 eligible state children are enrolled -- and "huge overhead." Yesterday's audit released to the Legislative Audit Committee found that for every dollar spent on children's health care, Colorado spends 27 cents on the program's administration, totaling $6 million in administrative costs this year compared to $16.2 million spent on health care. In addition, the audit presented 27 ways to improve the program, which is set to lose $19 million of $42 million in federal funds next month due to the high rate of unenrollment among eligible children (Crowder, 8/1).
Meanwhile, Gov. Bill Owens (D) Monday postponed a plan to send collection agencies after poor families "delinquent" in paying their children's health insurance premiums, the Denver Post reports. The decision followed the audit's release, which also questioned the state's proposal to use collection agencies and to "lock out" children from the state's CHIP plan, CHP+, for three months if their parents missed premium payments. The report said that the program is expensive to administer because of its two "disparate values:" insuring as many poor children as possible while teaching "their parents to value the services of CHP+" through high premiums and punitive measures for delinquent payments. The audit stated, "The state cannot have it both ways," and cautioned that attempts to collect late premiums "may cost more than the premium itself." As of late April, nearly 4,800 families -- 37% of the 13,000 families enrolled in CHP+ -- were late in paying premiums by 30 or more days, the report found. These families represent almost 53% of all families required to pay premiums in the program.
Following A Commercial Model?
At a hearing of the legislative audit committee Monday, Jim Rizutto, executive director of the Department of Health Care Policy and Finance, said that his department's task "was to embrace a private insurance model as well as to insure all possible children," hence the high premiums and punitive measures. He said, however, that sick children who had been "locked out" of CHP+ could receive medical care at emergency rooms paid for by state funds earmarked for the medically needy. Rizutto also suggested that "killing funds for the medically indigent might increase the incentive to use CHP+." But state Rep. Bob Hagedorn (D) said at a news conference that he knew of no HMO that was as punitive as the CHP+ plan. Hagedorn and other Democrats called for lower premiums, a community service option for delinquent parents and streamlined rules for Medicaid and CHP+ (8/1).