Audit: Mismanagement costs NC Medicaid system millions

Posted January 31, 2013

— Inefficient management and lax oversight of contracts led to North Carolina spending much more to administer its Medicaid program than similar-size states, officials said Thursday.

State Auditor Beth Wood said North Carolina's administrative costs are 38 percent higher than the average of nine states because of "structural flaws" in how the Department of Health and Human Services operates the Medicaid program. The higher costs translate into an extra $180 million in North Carolina.

Although the Division of Medical Assistance is primarily responsible for processing Medicaid claims, two-thirds of the administrative costs were racked up by 10 other DHHS divisions, Wood said. Also, half of DMA's administrative costs were tied to contracts that weren't properly monitored.

Other problems found included a lack of budget forecasting – Medicaid spending was $1.4 billion over budget from 2009 to 2012 – and outright flouting of state law. Wood cited one instance where DMA withheld $131 million in drug rebate funds that were supposed to be transferred to the federal government and another where nursing homes received $13 million in inflationary adjustments.

DHHS Secretary Aldona Wos vowed changes in department operations under her watch.

DHHS Secretary Aldona Wos DHHS chief vows to run tighter ship

Beth Wood Audit finds problems in NC Medicaid program

"Cost overruns will not be tolerated and will not be accepted," she said. "There is a budget for a reason."

Wos said Carol Steckel, who was recently hired to run the Medicaid program, is already reviewing operations and establishing new policies and procedures.

Gov. Pat McCrory said his administration is working to fix what he called "a broken system," especially since DHHS is trying to implement new computer systems by this summer.

"Every dollar that is mismanaged at DHHS for Medicaid is $1 less that is available for medical services, education or things like road and bridge repair," McCrory said. "She cannot make good decisions and neither can I if we have bad information, and right now, there's a lot of bad information."

While McCrory said he hasn't made a decision about expanding Medicaid to accommodate people under the federal Affordable Care Act, Senate President Pro Tem Phil Berger said the mismanagement uncovered by the audit proves the state isn't ready to do that.

Legislation in the Senate would block any Medicaid expansion under the federal law and prohibit the state from establishing its own health insurance exchange, which would provide an online marketplace for people to shop for health coverage if they don't have an employer-sponsored plan.

House Speaker Thom Tillis said audit results are disappointing, if not surprising.

"The audit is further proof of inefficiencies and mismanagement at many levels of the Medicaid system that cannot be tolerated. It is apparent that improvements must be made to ensure that individuals dependent on Medicaid are adequately served by the system," Tillis said in a statement.


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  • HanginTough Feb 1, 2013

    Nobody much less a liberal would want to deal with this anchor that weighs our state down..Bev wouldn't because that eliminite her ablility to PANDER to her minority voting base. And if Pat does he will be called a racist...so it's a no win situation...if it was me I would cut everyone off and have everyone reapply...requiring VALID socials and non planned home visits...and random DRUG TESTING...if you are going to use people tax money to pay for blatant laziness then you are going to play by my rules...I am so sick of welfare paying for lotto cards and fast food. You want those things you your OWN MONEY and don't think they don't have it. They are lazy and entitled.

  • Come On_Seriously Feb 1, 2013

    "Problems identified by Medicaid audit largely result of NC Republican’s own budget."

    "the major finding in the audit, that NC’s Medicaid program wasn’t able to meet the budget set for it by the Republican majority in the General Assembly (and passed over former Democratic Governor Perdue’s veto)..."


  • Krimson Feb 1, 2013

    I guess its a good thing the State is not going to handle the Insurance Exchange thing...

  • superman Feb 1, 2013

    Unemployment benefits are for two years but welfare is for life. Why dont they cut welfare?

  • RustyDawg Feb 1, 2013

    I thought higher taxes was the answer? I hope this administration trims the fat and waste before sticking their hand out for more.

  • Wake1 Feb 1, 2013

    None of this should have been a surprise!

  • bmac813 Feb 1, 2013

    Where was Beverly When all this was going on. Oh She was shinning up her VETO PEN.
    Look at all the States that voted in Republican's , Now they have to Clean up the Mess that the Democrats left them.
    Purdue Had 440 and 540 Re Blacktopped, GEE GReat Job. They FORGOT ONE THING. FIX the Cracks and Broken sections of Highway before they Black-topped. Now what do you have , All the Cracks and Broken Section and coming Lose. Wast of TAX Payers Money.
    If you do something , DO IT RIGHT THE FIRST TIME, LESS COSTLY.
    But than again it's not their Money, Just Patt me on the Back, LOOK I did something, Even though it wasn't Right. I DID IT.

  • teleman60 Feb 1, 2013

    The fraud and waste in Medicare and Medicaid is not people seeing the doctor it's THE CORPORATIONS AND DOCTORS WHO (LIKE WAKEMED) Fraudulently bill and steal MILLIONS EVERY DAY!!!

    The people aren't billing the govt -- THE DOCTORS AND HOSPITALS ARE!!!

    Mismanagement is an easy word to throw around but the hospitals and doctors who are doing this DIDN'T START YESTERDAY, They've been padding bills (stealing) for decades!!! WakeMed, Rex Hospital, Duke Hospital, Raleigh Duke Hospital -- they are all stealing!

    And the rest of you with your stories of neighbors defrauding the system are probably making it up. If you're not turning these criminals in, you are as guilty as they are! It's the same as seeing your neighbor start a house on fire and complain here on WRAL and not to the police!!!

  • trishiaf Jan 31, 2013

    This state is so top heavy and there are no checks and balances. Greed and corruption.... We have deficits yet they still get raises on top of ridiculous salaries. Worse, they have no guilt taking the money in spite of the deficits and lack of adequate services. Medicaid is cutting services and leaving people with substandard care or nothing. Dual diagnosed clients are sent across state lines to transfer the cost of care to providers and families causing injuries and burdens that bring families to rock bottom. Our loved ones are suffering! The very people in this program who are supposed to help our loved ones are hurting them. Shame on NC! It is a disgrace!

  • kathyanddavid Jan 31, 2013

    Mismanagement goes right along with misuse! This program is in dire need of revamping! This money is meant for people that really need it. The food stamp card is a joke! I see it being misused at the grocery store all the time and friends of mine that work in grocery store have told me stories of misuse and they are not allowed to say anything!