Auditor raises questions about DHHS answers on Medicaid IT
Posted October 10, 2013
Raleigh, N.C. — State Auditor Beth Wood said Thursday that officials with the Department of Health and Human Services offered incomplete answers when they testified before a legislative oversight committee earlier this week.
In a letter to senior lawmakers, Wood raises three issues with the testimony of DHHS officials, including Secretary Aldona Wos, offered to the Joint Legislative Oversight Committee on Tuesday. In it, Wood suggests that Wos and her chief information officer, Joe Cooper, ignored findings of a May audit that found the state wasn't ready to go live with the NCTracks system.
In a separate letter, Wood stands by an earlier audit of the Medicaid system, despite questions raised by a recent news report about the data her office used.
During Tuesday's hearing, Sen. Earline Parmon, D-Forsyth, asked leaders if they had any warnings that the NCTracks system, which processes Medicaid claims, might have problems if it began operating on July 1.
"Did you also have professional opinions that we were not ready to go live on July 1?" Parmon said.
Wos answered: "No, senator."
Wood said she was surprised, to say the least, with Wos' response.
"I know what we brought to their attention. I know what the audit says," Wood said.
She said the answer ignores a May 22 audit in which her office found:
- Independent assessments regarding system readiness and testing were flawed and put system readiness at risk
- Access control and security environment were at risk
- No formal criteria framework existed to determine if NCTracks was ready for go-live
The report concluded that the department should re-evaluate its decision to go live.
A second point raised by the auditor pointed out that the system had not met critical benchmarks before the go-live date. This contradicts testimony from Cooper, who told lawmakers that the system had passed its tests.
Cooper also told legislators that, after Feb. 28, the state had reached a point where it was committed to the new system built by Computer Science Corp. On July 1, Cooper said, the state had no choice but to turn on the new Medicaid billing system and could not delay getting rid of Hewlett-Packard, the old vendor.
"On Feb. 28, we reached a point of no return. The state had to cancel the HP contract," Cooper told the committee. He later explained that the federal government would not pay to operate two different Medicaid billing systems.
Wood said that DHHS officials assured auditors that Hewlett-Packard would continue its services as long as needed if NCTracks wasn't ready by July 1. There was no written agreement, she said, so it was unclear if that would really have happened or how much it would have cost the state.
"It is fair to say I was not surprised with the types of problems that were the result of going live July 1," she said.
"The fact that Mr. Cooper and the Department now characterize the contract termination as a 'point-of-no-return' indicates that the Department’s decision to go live did not take into account the actual readiness of the system or the critical risks that were raised between February 28 and June 30," she wrote in her letter to lawmakers.
DHHS spokesman Ricky Diaz said Thursday that all of the auditors' concerns were addressed before July 1.
“I want to reiterate the high professional regard Secretary Wos and her leadership team have for State Auditor Beth Wood," Diaz wrote in an email. "DHHS took the Auditor’s May report on NCTracks very seriously. The Secretary did not mention the State Auditor in her response because all the concerns raised in the report were addressed prior to NCTracks going live on July 1."
Even that stance surprises Wood.
"You'll see in their response to the audit report that they make the statement that there's not enough time to address everything we found," she said. "So, (I'm) a little surprised they say they did get to all of it."
Rep. Justin Burr, R-Stanly, chaired Tuesday's hearing and said Thursday that he was grateful to Wood for clarifying the input she had on NCTracks earlier this year.
"You can't un-ring the bell," Burr said when asked if he was concerned DHHS might have ignored the auditor's warnings. "Unfortunately, NCTracks is live, and we need to resolve the issues around it.
"The concern as I see it at this point is figuring out how to correct the problems," he said. "Yes, there is some question about whether it should have gone live, but like I said, you can't un-ring the bell."
But Sen. Mike Woodard, D-Durham, was less sanguine, saying there was "some discrepancy" that lawmakers should resolve.
"Even with the department saying they addressed it, it's clear to me there were concerns the department should have taken much more seriously," Woodard said. "I'm extremely frustrated with the decision to go live.
"You can't turn on a system that's this vital, this important, unless you have every assurance that it's going to work," he said.
Wood stands by audit
In a separate letter, Wood says her agency stands by an audit of the state Medicaid system despite questions raised by a news report earlier this week.
A central claim of the report by the North Carolina Health News website was that both Wood's office and DHHS ignored data that showed North Carolina's system was being managed in a cost-effective fashion.
"North Carolina Health News cites misleading information from the draft version of the DHHS response that was intended to de-emphasize the agency’s comparatively high administrative cost," Wood said, adding that the website relied on less reliable information than auditors used.
Diaz praised this second letter from the auditor.
"The auditor should be commended for setting the record straight. The allegation that the Department of Health and Human Services ‘sat on,’ ‘withheld’ or ‘distorted’ information in the state auditor’s report is false," Diaz wrote in an email.
Wood's letter addresses five separate points in the N.C. Health News story. Among other things, she rebuts the allegation that the scope of the audit widened as Gov. Pat McCrory took office. The scope of the audit, Wood writes, was set by the legislature. She describes several other points in the story as "misleading."
Burr said Wood's letter helps clarify information that surprised lawmakers on Tuesday.
"This is an issue that still affects the Medicaid discussion going forward," Burr said, saying he hoped N.C. Health News would update its reporting with the auditor's input.