Health exchange disputes federal report

WASHINGTON — Nevada’s health insurance exchange disputes a federal report claiming it misallocated funds for creating its program and recommending it consider refunding $893,000 to the Centers Medicare and Medicaid Services.

A refund is not needed, the Silver State Health Insurance Exchange stated in a written response to the report from the Office of Inspector General, U.S. Department of Health and Human Services.

“We believe that this conclusion is based upon an erroneous interpretation of federal guidance regarding cost allocation accounting principles and the timing of cost allocation adjustments,” the state agency stated.

It also pointed to comments from CMS that not only back up the state agency’s take on the matter but are also included in the OIG’s own report.

As a result of a payment from the Nevada State Medicaid agency and an updated plan, CMS stated that the state’s health exchange “followed and complied with CMS cost allocation guidance.”

“In the end, the ‘misallocation’ represents nothing more than two federal agencies disagreeing on cost allocation accounting principles and the timing of cost allocation adjustments,” the state agency stated.

OIG, which selected Nevada as part of its ongoing series of reviews of state programs across the country, has not yet responded to a request for comment on the state agency’s statement.

In its report, however, the OIG was not swayed, stating it believes “our first recommendation is valid.” The OIG cited the Nevada agency for using outdated data when it was establishing its marketplace despite the availability of updated data, having no internal controls, allowing insufficient staff oversight, and having no written policy on the allocation process.

“The Nevada marketplace should have used the updated, better data to update its cost allocation methodology,” the OIG stated.

Still, it said the state agency now has the option of seeking CMS approval to claim a portion of the potential $893,464 refund.

In its response, the state agency said it will adopt written policies to allocate expenses consistent with CMS guidance and seek future guidance on cost allocations while it “looks forward to continuing to reduce the number of uninsured Nevadans.”

The agency also stated, “No significant changes are required to be made to exchange operations as the result of the report.”

Contact Jim Myers at or 202-783-1760. Find him on Twitter: @myers_dc

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