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NJ Loses Nearly $8 Million in Standoff Over Affordable Care Act Funds


Banking and Insurance Commissioner Kenneth Kobylowski.

Banking and Insurance Commissioner Kenneth Kobylowski.

New Jersey lost a $7.67 million federal Affordable Care Act grant yesterday as state and federal officials failed to reach agreement on how the money could be spent.

Yesterday was the deadline for the state to come up with an acceptable plan for using the money.

In the letter, Kobylowski noted that the only requests that federal officials approved were for purposes that the state later found were unnecessary, such as a request for $600,000 to address a surge of inquiries to the state Office of Consumer Protection that never materialized.

“In short, we find ourselves with preliminary approval to use a small portion of this grant in ways that are unnecessary while we are unable to use the bulk of this funding to meet needs that are urgent and growing ever greater as we approach the end of the initial enrollment period,” Kobylowski wrote.

However, federal officials said that an earlier federal regulatory guidance ruled out that use.

After the July plan was largely turned down, the state submitted a revised proposal in October, reducing the computer system portion of the spending to $1 million and adding a $780,000 request to help residents with chronic infectious diseases maintain coverage as their income fluctuates. This request was also largely turned down.

Kobylowski made a final appeal for the state plans in December.

“We have reached out to the state numerous times over the last few months in order to avoid a last minute scramble, but unfortunately the state has yet to send us a request to re-scope their grant for any allowable activities,” Levy wrote in an emailed response to questions.

Kobylowski said the state FamilyCare program has hired 75 call center staffers through a combination of state and federal matching funds, but remains 25 staffers short of the level advised by the call center operator, which is straining to handle the large volume of calls while processing a significant influx of applications.

“Throughout the negotiations between our two departments, one recurring theme has emerged, in my view: New Jersey consistently has sought the flexibility to use this grant to meet the unique needs of our residents and we have been advised repeatedly that the permissible uses for this grant are limited – highlighting a fundamental flaw of the Affordable Care Act,” Kobylowski wrote in his letter. “Given the ease with which the federal government continues to grant itself flexibility in regard to myriad statutory and other provisions of the Affordable Care Act, it is my view that providing a modicum of flexibility to New Jersey should not be a burden.”

Castro sharply criticized Kobylowski’s stance, saying that if the state wanted flexibility, it should have opted for a state exchange. This would have led to up to $200 million in additional federal grants, Castro said.

He added that the state was already obligated as part of Medicaid to cover some expenses, such as updating its outdated computer system. And, Castro said, Kobylowski essentially admitted in the letter that the state isn’t upholding its responsibility.

“That’s really chutzpah, to even say that,” Castro said of the computer system plans. “It doesn’t make sense, because the state needed to do this anyway.”

“We’re going to try to get the state to do more,” Castro said. “We know that we don’t have the resources, particularly in the area of media (advertising), which can be costly – this particular fight is over, but the bigger fight is not.”

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