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Audit of health marketplace finds clean transfer to agency

by Andy Davis | May 10, 2019 at 2:18 a.m.

The Arkansas Health Insurance Marketplace didn't make any unusual expenditures during its final days of existence as an independent state agency, a review by legislative auditors found.

Tom Bullington, a deputy legislative auditor, reported the results of the review Thursday during a meeting of the Legislative Joint Auditing Committee's executive committee.

Lawmakers had asked auditors to review spending by the marketplace before it was absorbed by the Arkansas Insurance Department on March 15, he said.

"We didn't find any issues that really caused us very much concern," Bullington said. "It looks like everything got transferred over cleanly."

Created by the Legislature in 2013, the marketplace was responsible for certifying the plans sold in the state through and helping consumers enroll.

Act 107, signed by Gov. Asa Hutchinson in February, transferred those functions to the Insurance Department.

Insurance Commissioner Allen Kerr has said the move will allow the state to lower a fee paid by insurance companies that offer plans through the website and passed along to consumers in the form of higher premiums.

This year, the fee is equal to 4.25% of the premiums sold through the website. That includes a 3% fee that goes to the federal government and 1.25% that had funded the marketplace's operations.

Insurance Department spokesman Ryan James said the department will propose eliminating the state's portion of the fee effective Jan. 1.

In the meantime, money from state's portion of the fee collected this year will go into a fund that will pay for expenses associated with carrying out the marketplace's duties -- estimated at about $500,000 a year -- through June 2021.

Money in the marketplace's bank accounts when the Insurance Department took it over is also going toward those expenses as well as paying the marketplace's outstanding bills, James said.

At the time the Insurance Department took over, the accounts had a balance of $1,698,857, Bullington said.

Sen. Jason Rapert, R-Conway, noted Thursday that marketplace board members, at their final meeting, did discuss transferring that money to another entity, such as Arkansas Children's Hospital, rather than leaving it to be transferred to the state.

He credited Kerr, an ex-officio member of the board, with convincing the board that that "would not be wise."

"They did the right thing in the end, but they absolutely had a discussion, a pretty intense discussion, about not sending over those cash reserves [to the state] as it was intended," Rapert said.

James said the department didn't need to create any new positions to take over the marketplace's duties, but did hire one of the marketplace's nine employees to fill a position within the department.

Bruce Donaldson, the marketplace's liaison to insurance agents and outreach workers, is now performing the same duties for the Insurance Department, James said.

The state's transparency website lists his annual salary at $56,264, a decrease of almost $20,000 from what he earned at the marketplace.

Bill Lacy, manager of the Insurance Department's compliance division, told the Legislative Joint Auditing Committee's Standing Committee on State Agencies that the department has been working with vendors to cancel services, such as cable service, that had been provided to the marketplace.

"Frankly, they're still crawling out of the woodwork," Lacy said. "Apparently, [the marketplace] did not pay everything prior to their dissolution."

Nate Bell, who served as interim director of the marketplace from late January until it dissolved, said after the meeting that the marketplace's attorneys interpreted Act 107 as prohibiting the agency from canceling its contracts with vendors.

The law called for the marketplace's contracts to be transferred to the department, which it authorized to renegotiate them.

Among the contracts that were transferred were ones for services such as cable, copy-machine service and water delivery, James said.

At its final meeting on March 14, marketplace Deputy Director Tangelia Marshall said the marketplace notified its vendors a month earlier about the impending dissolution and instructed them to submit invoices by March 1. She said that the marketplace had paid all of its bills for ongoing services, although some checks hadn't been cashed.

Bell said Thursday that he was "100 percent certain" that the marketplace had paid all of its vendors except for a couple that billed at the end of the month for a total of less than $500.

The Insurance Department could not immediately provide figures on how much it has paid the marketplace's former vendors since the department took over.

Metro on 05/10/2019

Print Headline: Audit of health marketplace finds clean transfer to agency


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