Washington Health Benefit Exchange

2014 & 2015 Operating Plan and Budget Robert Nakahara, CFO

Long-term Vision

WAHBE aims to become the best exchange in the country

2

Priorities for 2014 1. Meet/exceed our enrollment targets

▪ Improve website performance ▪ Develop standard operating processes ▪ 130,000 by Jan. 2014, 280,000 by Jan. 2015

2. Beyond customer service, begin managing the end-to-end customer experience and build our brand

▪ ▪ ▪ ▪

3. Develop the basis for longer-term financial sustainability

▪ Develop 2015-2017 budget and legislative strategy ▪ Prepare for self-sustainability in 2015

4. Codify and refine key business processes

▪ Identify high-risk administrative (e.g., financial) and customer-facing processes ▪ Document basic processes and risk mitigation strategies

5. Clarify and adjust roles to attract and retain talent

▪ Clarify employee expectations (values, performance, behaviors) ▪ Add detail/clarity around job responsibilities for key positions ▪ Create meaningful performance evaluation/review process

6. Maintain an entrepreneurial culture, capable of change

▪ Rally around a common vision for the future ▪ Celebrate instances of innovation and initiative ▪ Maintain a healthy balance between formalization and flexibility in key business processes ▪ Strengthen channels of cross-functional collaboration

Staff to meet customer demand Benchmark customer service standards to best practices Establish processes to improve data flow about customer experience 90% good or above in customer service survey

3

Combined Budgets and Projections ($000’s) 2011

2012

2013

2014

2015

2011-2015

Total Budget

Budget 2011

Audited 2011

Budget 2012

Audited 2012

Budget 2013

Actual thru 09/13 & YE 2013

Budget 2014

Remaining Grant Dollars 2014

Grant & Medicaid Revenue: Level 1 Grant & Medicaid Revenue: Level 2 Grant Revenue: IPA Grant Revenue: Level 2S Comm Grant Revenue: Level 2S IT & Staff Total - Grant Funding Sources Premium Tax/Assessment Revenue Medicaid Allocation TOTAL GROSS REVENUES

23,784 132,107 8,404 8,005 13,193 185,492 34,288 5,712 225,492

1,036

1,036

13,705 40,269

15,175 18,781

53,975

33,956

9,446 61,536 2,801 3,739 2,744 80,266

7,573 64,668 2,801 4,002 6,597 85,641

48,658 5,602 4,002 6,597 64,859

48,658 5,602 4,002 6,597 64,859

1,036

1,036

53,975

33,956

80,266

85,641

64,859

64,859

OPERATING EXPENSES Salaries & Benefits Marketing & Advertising Consulting & Professional Service IT Infrastructure & Communications General & Administrative Facilities Related Appeals Related HPF Systems/Operations TOTAL OPERATING EXPENSE

41,480 25,260 22,269 1,636 8,045 5,190 1,150 120,462 225,492

127

127

5,008 1,407 7,928 802 645 1,035

2,207

708 525

13,400 8,222 8,724 449 710 1,837

12,490 11,656 10,017 549 1,540 3,063

12,935 8,791 10,392 550 1,784 966

37,150 53,975

25,516 33,956

46,923 80,266

46,326 85,641

29,442 64,859

14,021 13,604 6,168 997 685 667 1,150 27,567 64,859

FUNDING SOURCE Premium Tax/Assessment Revenue Premium Tax Medicaid Allocation Grant Medicaid Allocation Federal Grant TOTAL FUNDING SOURCE

34,288 5,712 5,537 179,955 225,492

Budget 2015

Revenue 2015

34,288 5,712 40,000

34,288 5,712 40,000

12,635

12,635

1,083 90 5,105 934

1,083 90 5,105 934

20,152 40,000

20,152 40,000

34,288 5,712

34,288 5,712

40,000

40,000

GROSS REVENUES

GRANT DOLLARS SPENT

GRANT DOLLARS REMAINING

1,036

1,036

8

8

900 1,036

900 1,036

1,036 1,036

1,036 1,036

536 53,439 53,975

5,000

536 33,421 33,956

2,768 77,498 80,266

2,768 82,873 85,641

2,233 62,626 64,859

2,233 62,627 64,859

1,036 0%

34,992 16%

120,633 53%

185,492 82%

-

184,457 82%

150,500 67%

64,860 29%

0%

-

4

2014 Expense Detail by Category ($000’s) (Modified Cash Basis)

OPERATING EXPENSE

Actual YTD Projected 2013 September 2013

Budget 2014

2014 YOY Change $ %

Salaries & Benefits

$ 6,125

$ 12,490

$ 12,935

$ 445

4%

Marketing & Advertising

3,495

11,656

8,791

(2,865)

(25%)

Consulting & Professional Service

5,214

10,017

10,392

374

4%

IT Infrastructure & Communications

490

549

550

1

0%

General & Administrative

1,463

1,540

1,784

244

16%

Facilities Related

2,432

3,063

966

(2,097)

(68%)

Systems/Operations Related

40,745

46,326

29,442

(16,884)

(36%)

Grand Total

$ 59,965

$ 85,641

$ 64,859 ($ 20,781)

(24%)

5

2014 Expense Detail by Department ($000’s) (Modified Cash Basis)

Actual YTD Projected 2013 September 2013

Department

Budget 2014

2014 YOY Change $ %

Executive

$ 606

$ 897

$ 1,314

$ 417

47%

IT

44,303

57,396

17,731

(39,665)

(69%)

Operations

5,229

7,394

19,615

12,221

165%

Communication

5,130

12,439

16,885

4,446

36%

Policy

1,088

2,319

1,906

(414)

(18%)

Finance & Admin

2,320

3,155

4,932

1,777

56%

SHOP

956

1,281

1,193

(88)

(7%)

Legal

333

759

1,283

524

69%

Grand Total

$ 59,965

$ 85,641

$ 64,859 ($ 20,782)

(24%)

6

2014 Departmental Expense Projection ($000’s) (Modified Cash Basis)

OPERATING EXPENSE Salaries & Benefits

EXEC. OFFICE $

IT

ADMIN & FIN.

OPS (SHOP)

494 $ 4,103 $ 1,637 $ 2,396 $ 1,064 $ 1,583 $

988 $

2014 TOTAL

LEGAL

775

2,463

1,817

1,761

695

2,298

73

20%

8,791

14%

10,392

16%

550

1%

510

550

IT Infrastructure & Communications

Percent of Total

670 $12,935

8,791

Marketing & Advertising Consulting & Professional Service

COMM. OPS (NG) POLICY

General & Administrative

22

314

127

205

75

921

67

52

1,784

3%

Facilities Related

22

304

123

199

72

130

65

51

966

1%

9,998

4,390

15,054

29,442

45%

$ 1,314 $17,731

$16,885

Systems/Operations Related TOTAL OPERATING EXPENSE Percent of Total:

2%

27%

26%

$19,615 $ 1,906 $ 4,932 $ 1,193 $ 1,283 $64,859 30%

3%

8%

2%

2%

100%

7

2014 FTE YOY Count Change 2014 YOY Change % $

Sept 2013 Actuals

Year End 2013

Year End 2014

Admin & Finance

16

18

18

-

0%

Communications

12

17

17

-

0%

IT

33

35

35

-

0%

4

7

7

-

0%

19

30

30

-

0%

Operations (Shop)

8

9

9

-

0%

Policy

8

10

10

-

0%

Exec Office

3

3

3

-

0%

Department

Legal Operations (NG)

Total Total Salaries Total Benefits Total Salaries and Benefits

103 $ 4,818 1,306 $ 6,125

129 $ 9,618 2,873 $ 12,490

129 $ 10,053 3,016 $ 13,069

$ 435 143 $ 578

0% 5% 5% 5%

8

Open Positions as of 9/30/2013 Count 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26

Department OPS OPS OPS OPS OPS OPS OPS OPS OPS OPS OPS COMM COMM COMM COMM COMM POLICY POLICY ADM/FIN ADM/FIN ADM/FIN LEGAL LEGAL LEGAL IT IT

Vacant Position Title Business Issues Analyst Business Issues Analyst Data and Reporting Manager Reconciliation Specialist Lead Client Specialist Data Specialist Data Specialist Document Management Specialist Document Management Specialist Reconciliation Specialist Reconciliation Specialist Administrative Specialist Communications Assistant (Project) Communications Assistant (Project) IPA Specialist (Project) IPA Specialist (Project) Legislative Liason Policy Analyst Facilities Specialist Billing Specialist Billing Specialist Appeals Specialist Appeals Specialist Appeals Specialist Technical Documentation Specialist Technical Solutions Manager

Per Budget N/A* N/A* 2/1/2013 8/1/2013 N/A* N/A* N/A* 8/1/2013 8/1/2013 8/1/2013 8/1/2013 N/A* N/A* N/A* 10/1/2013 10/1/2013 N/A* N/A* 1/1/2013 6/1/2013 12/1/2013 9/1/2013 9/1/2013 9/1/2013 8/1/2013 8/1/2013

Expected

10/21/2013 11/1/2013 11/1/2013 10/7/2013 10/7/2013 11/12/2013 11/4/2013

Status Recruiting Recruiting Recruiting Recruiting Recruiting Recruiting Recruiting Recruiting Recruiting Recruiting Recruiting Recruiting Recruiting Recruiting Recruiting Recruiting Recruiting Recruiting Jason Stewart Recruiting Recruiting Natasha Chason Andre Gaston Recruiting Christian Welch Christina Caoili

*These positions are additional FTEs that were not included in 2013 budget (approved by CEO)

9

2014 IT Detail ($000’s) Deliverable Types

Breakout

Project Management and Consulting

Contractor

2014 Total

IRM, Ciber

$

2,463

6,475

Deloitte

$

9,998

1,528

Deloitte

System Maintenance and Operations - System Maintenance - wahealthplanfinder.org - System License - wahealthplanfinder.org

$

- Eligibility Services fees and other

790 DSHS/ESA

- Misc. IT Licenses - Oracle, eHealth, Competentum, PGS

892 Various

- IT Quality Assurance

313 Bluecrane

10

2014 Communications Detail ($000’s) Deliverable Types

Breakout

Contractor

Advertising Agency - Media Buy

$

- Other Marketing and Advertising

8,708

GMMB

83

Various

2014 Total $

8,791

$

1,817

$

4,390

Advertising Consulting - Campaign and Creative Development

GMMB

Contracts - In-Person Assister Lead Organizations - On-Line Print Store

$

3,990

Various

400 KP Corp

11

2014 Operations Detail ($000’s) Deliverable Types

Breakout

Contractor

Consulting - Quality Assurance

$

- Professional Services

261

1,500

- Print Services - Translation and other

$

$

1,761

$

15,054

Bluecrane

Cambria

Call Center and Other Operational Services

- Customer Service Center

2014 Total

6,815 Faneuil 8,000

KP Corp

239 Various

12

2014 Finance & Admin Detail ($000’s)

Deliverable Types

Breakout

Contractor

Consulting

- Accounting Services

$

$

180 Sage

- External and Internal Auditing Services

855 Protivity, Moss Adams

- Contracting Manager

167 John Flanagan

- Other Finance Contracts

2014 Total

1,096 Milliman and other consultants

13

2,298

For Illustrative Purposes Only

2015 Departmental Expense Projection ($000’s) OPERATING EXPENSE Salaries & Benefits

EXEC. OFFICE $

IT

COMM. OPS (NG) POLICY

ADMIN & FIN.

OPS (SHOP)

509 $ 4,173 $ 1,237 $ 2,398 $ 1,084 $ 1,556 $

998 $

LEGAL

2014 TOTAL

680 $12,635

Marketing & Advertising

Percent of Total 32%

0% 48

Consulting & Professional Service

854

181

1,083

3%

90

0%

90

IT Infrastructure & Communications General & Administrative

19

262

77

173

64

4,389

77

45

5,105

13%

Facilities Related

22

297

87

196

72

123

87

51

934

2%

10,504

1

9,648

20,152

50%

Systems/Operations Related TOTAL OPERATING EXPENSE Percent of Total:

$

599 $15,326 $ 1,402 $12,414 $ 1,220 $ 6,922 $ 1,161 $ 1%

24%

2%

19%

2%

11%

2%

957 $40,000 1%

100%

14

For Illustrative Purposes Only

2014/2015 Projected Expense By Category ($000’s) Category

2014 Budget

YOY Change

2015 Budget

$

$ 12,635

% ($ 300)

(2%) Removes 9 temporary and project related staff in 2015

(8,791)

(100%) Eliminates GMMB for Marketing and Advertising in 2015

Salary & Benefits

$ 12,935

Marketing & Advertising

8,791

Consulting & Professional

6,616

IT Consulting

2,463

IT Infrastructure

550

90

(460)

(84%) Reduces voice/data wiring & end-user/internal infrastructure by more than 80%

General & Administrative

1,784

5,105

3,321

186% Adds necessary bank fees, insurance, BOD meetings, ADP & Payroll, office supplies, etc.

Facility & Related

966

934

(31)

(3%) Primarily rent, utilities, repairs, maintenance, & janitorial – non-discretionary spending

Non-IT Contracts

4,643

233

(4,410)

(95%) Eliminates the In-Person Assistor Lead Organization contracts, as well as script writer and translation services, online print store, ESS Portal

IT Contracts

1,995

863

(1,132)

(57%) Eliminates and reduces Quality Assurance, DSHS fees and misc. system license fees. Quality Assurance - IV&V and Project Management in 2015

IT Maintenance

8,003

9,641

1,638

Call Center Operations

6,814

5,546

(1,268)

(19%) Reduces Call Center Budget to 80 seats as originally contracted and $600,000 for 1-800 usage, CRM licensing and training costs.

Printing Services

8,000

3,870

(4,130)

(52%) Reduces printing services cost by 50%. Will have to promote more electronic deliver of correspondence

Convenience Contracts

1,300

Total Exchange Expense

64,859

40,000

(24,859)

(38%)

Medicaid Allocable Expense

2,233

5,712

3,479

156%

1,083

(5,533)

(2,463)

(1,300)

(84%) Eliminates Finance and Admin, Communications and Operations consulting (100%) Eliminates 32 contractors in 2015, IT Project Management, PMO Lead, Project Staff, & Convenience Contracts w/Teksystems & Ciber

20% Maintains Deloitte IT maintenance & license renewal and DSHS Eligibility license fee in 2015

(100%) Eliminates convenience contract that have not been used to date, Milliman and others

Funding Source

62,626

34,288

(28,338)

(45%)

Total Exchange Expense

$ 64,859

$ 40,000

($ 24,859)

(38%) 15

For Illustrative Purposes Only

2015 Key Risk Factors The following represents risk factors to HBE’s ability to operate within a $40M operating budget in 2015 while meeting its business objectives: ▪ Enrollment assumptions may be jeopardized due to lack of a marketing and advertising budget ▪ There is no funding for Healthplanfinder platform new upgrade releases ▪ Ability of HBE to seamlessly transition skillsets of contractors and consultants to inhouse staff ▪ Call center workload to be managed per initial contract CSR headcount of 80 CSRs in Spokane with overflow capacity as required based on volume

▪ Does not include any operations and maintenance enhancements from additional Level 1 grant request (typically the annual operations/maintenance cost range from 15% to 25% of the IT upgrade build)

16

For Illustrative Purposes Only

2014/2015 FTE YOY Count Change ($000’s) Year End 2014

Department

Year End 2015

2015 YOY Change $ %

Admin & Finance

18

17

(1)

(6%)

Communications

17

12

(5)

(29%)

IT

35

35

0

0%

7

7

0

0%

30

27

(3)

(10%)

9

9

0

0%

10

10

0

0%

3

3

0

0%

Legal Operations (NG) Operations (Shop) Policy Exec Office Total Total Salaries Total Benefits Total Salaries and Benefits

129 $ 9,950 2,985 $ 12,935

120 $ 9,621 3,014 $ 12,635

*

(9) ($ 329) 29 ($ 300)

(7%) (3%) 1% (2%)

* Postions identified as temporary are not required at steady-state 17

For Illustrative Purposes Only

Contractor Headcount by Period ($000’s)

Department Admin & Finance Communications IT Legal Operations (NG) Operations (Shop) Policy Exec Office Total

YE 2013 YE 2014 YE 2015 Forecast Budget Budget Count Cost Count Cost Count Cost 2 $ 287 2 $ 347 15 1,740 15 2,558 8 2,805 8 1,761 4 47 4 189 2 185 3 775 31 $ 5,063 32 $ 5,630 -

-

18

Washington Health Benefit Exchange

Level 1 Supplemental Grant Request Robert Nakahara, CFO 19

Level 1 Supplemental Grant Request ($000’s) Deliverable Types System Enhancments - Healthplanfinder - Eligibility Services - Other Enhancements Call Center and Other Operational Services - Customer Service Center - Print Services - Other Operational & Consulting Services

Breakout $

$

38,699 5,704 7,451

13,318 9,401 3,684

Contractor

2014 Total $ 51,854

Deloitte DSHS/ESA Various $

26,403

Faneuil KP Corp Various

Marketing and Outreach

GMMB

$

2,699

SHOP Services

Various

$

1,636

$

2,491

$

7,005

$

92,088

Financial, Policy, Exec and Legal Consulting - Auditing and Accounting Services - Executive and Policy Services - Legal Services

Other Costs - Salaries and Benefits - Equipment, Travel, etc. - Other - Bank Fees, Training, etc.

$

$

1,595 790 106

Various Various LegalTrack

2,357 903 3,745

Total Request HBE expects to submit the Supplemental Grant Request to CMS in mid-November