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Medicaid: 'In the black,' or not quite?

Posted September 9, 2014 4:19 p.m. EDT
Updated September 9, 2014 4:59 p.m. EDT

— Is the state’s Medicaid program in the black for the first time since 2006? The answer, according to Tuesday’s Department of Health and Human Services oversight meeting, depends on your perspective. 

But one thing was made very clear Tuesday: Despite expensive consultants, the new NCTracks billing program, and the new NC FAST benefits management program, the agency still doesn’t have a solid handle on exactly what it’s spending on Medicaid.

Division of Medical Assistance director Dr. Robin Cummings told a legislative panel the Medicaid program ended the year with $63 million in state funds that had not been spent. He said the money had been reverted, or sent back, to the state’s general fund.

Fiscal research staff said lawmakers had already sent the cash back to the agency in the 2014-15 budget, along with an additional $136 million for potential overruns expected in the current fiscal year. That budget cited a “net shortfall” for Medicaid in 2013-14 of $72 million, even after tens of millions in cash left on the bottom line June 30.

House senior budget writer Rep. Nelson Dollar, R-Wake, was jubilant.

“We ended the most recent budget year in the black in Medicaid,” Dollar said. “When was the last time we were in this great of shape in terms of our Medicaid budget?

“Moving from $600 million in the hole to $63 million in the black, to the good, is simply phenomenal,” he said.

Asked by reporters whether the Medicaid program is in fact in the black, DHHS Secretary Aldona Wos replied, "Oh, it's so black. Yes. Yes, we're ecstatic."

"This is the first time in five years that the Division of Medical Assistance has not asked for hundreds of millions of dollars extra," Wos added. "We are so proud of that." 

Fiscal expert Pam Kilpatrick with the Office of State Budget and Management was more cautious in explaining the balance. While she said the program has made great improvements in its budgeting process, she stopped short of calling the cash a surplus.

Kilpatrick said the agency’s budget was “closed out” after it wrote its last round of checks June 30.

State accountants, she said, did everything they could to make sure that the $63 million in cash left in the department’s fund on that date was not “encumbered” – that is, it wasn’t already pledged or owed to any creditor. 

But, she added, when the budget was drawn up, “there was the assumption made that some portion of money remaining in the account would likely be attributable to some form of a backlog" in provider claims not yet paid or Medicaid applications not yet processed, due to delays in both NCTracks and NC FAST.

Kilpatrick said claims on appeal, on hold awaiting information or not yet input as of June 30 wouldn’t have been included in the program's final budget number – and there's no good way to know how much of the $63 million might be needed to cover them. 

“I frankly don’t have an answer as to how to deal with claims that aren’t being recorded through the NCTracks system as obligations to the Medicaid agency,” she said.

Kilpatrick said she believes DHHS is developing "some sort of reporting mechanism or methodology” to account for backlogged claims.  But for now, she said, budget writers still can't create "an appropriate baseline" of spending in 2013-14 to serve as a starting point for 2014-15.

“We’re missing cleansed data and normalized data for this year to do what you’re saying, to be able to normalize the trends,” Kilpatrick said. “At this point, there is not enough information. I don’t think the agency is far enough along with doing that kind of data normalizing to tell us that just yet." 

"We need to clean up the data to have a pretty good idea," said Rep. Marilyn Avila, R-Wake. "All we have now is information.”  

Sen. Gladys Robinson, D-Guilford, said she's "still hearing hospitals aren't getting paid." 

Kilpatrick said the agency is making progress in merging data from its older Medicaid enrollment program and NC FAST.

"There’s always a lag, and because we’re on a cash basis, this is what our financial records are reflecting," she said.

DHHS Chief Information Officer Joe Cooper said NCTracks is actually paying out claims much more promptly than the system it replaced.

"At a macro level, we track very well over the past year," Cooper said.

Both Cooper and acting Division of Medical Assistance Finance Director Rudy Dimmling, a consultant with Alvarez and Marsal, said the available data on program spending and hardship requests from providers doesn't indicate any significant backlog problems.

"That doesn't mean that there is no backlog." Dimmling added. "I think there is. I think there are issues we have to take care of."  

Sen. Jeff Tarte, R-Mecklenburg, asked whether DHHS and Medicaid might function more effectively if the Division of Medical Assistance were made into a standalone entity, as Senate leaders had proposed.

"Absolutely not," Wos responded, saying that the entire medical world is moving toward "whole-person care" and away from compartmentalized services.

"It would be against common sense to do that, sir," she said. "The short answer is absolutely not."

Nonetheless, legislators are still considering that option. HHS Oversight co-chair Rep. Justin Burr, R-Stanly, announced the formation of a ten-member subcommittee to study DMA reorganization. That committee is expected to start work later this month.