RALEIGH State Auditor Beth Wood is defending a pair of reports from her office this year critiquing financial practices within North Carolina's Medicaid agency and preparations to turn on a new billing system for processing medical claims.
Wood sent a pair of letters to legislative leaders on Thursday, two days after an oversight committee grilled top officials at the state Department of Health and Human Services about the NCTracks system and Medicaid spending.
The auditor specifically took issue with a response that DHHS Secretary Aldona Wos gave after a lawmaker asked if the agency had received any professional opinions indicating that the new billing system would not be ready to go live on its scheduled start date of July 1, 2013. Almost immediately after the launch, the state was flooded with complaints from Medicaid providers unable to get claims processed and expenses reimbursed.
"No, Senator," Wos replied.
Wood pointed to her office's May 22 audit of the new billing system, which warned that NCTracks had serious flaws and that DHHS should re-evaluate its decision to go live on July 1. Wood wrote that she met with Wos in March to talk about her concerns with the system.
Also on Tuesday, DHHS Chief Information Officer Joe Cooper told lawmakers that testing done by DHHS and technology contractor CSC in advance of the go-live date indicated that the system had met all benchmarks.
The May audit, however, warned that there were several shortcomings in the testing of the system. The audit found that out of 834 "critical" priority tests scheduled, NCTracks failed 123 tests and that 285 other critical test cases were not performed.
"If user acceptance testing is accepted without addressing these issues, a high risk exists that critical NCTracks functions could have major errors on go-live and possibly lead to a delayed CMS certification of the system," the audit said.
DHHS spokesman Ricky Diaz said Thursday that the agency took the May audit issued by Wood 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," Diaz said.
More than three months after the launch of the new system, several medical practice administrators came to Raleigh on Tuesday to tell legislators that persistent delays with processing claims through NCTracks could force them to stop seeing new Medicaid patients until they're reimbursed. Administrators of small medical practices said they are still waiting on hundreds of thousands of dollars of pending claims, forcing them to get loans to cover payroll for their staffs.
In a second letter Thursday, Wood said she stood by data in a January audit that asserted that administrative costs for North Carolina's Medicaid system were 38 percent higher than nine similarly-sized states.
Republican Gov. Pat McCrory has repeatedly cited Wood's audit as evidence that he inherited a "broken" system from his Democratic predecessor and has suggested privatizing management of the program.
The nonprofit web site North Carolina Health News reported this week that in January, McCrory's then-Medicaid Director, Carol Steckel, edited out additional data provided by her agency staff for a proposed response to the audit that showed the state's administrative costs were actually below average.
The difference came because several of the states at issue contract with for-profit managed care companies to run their Medicaid systems, and not all costs under those contracts were included in the figures used in the auditor's report.
For example, Arizona was reported to spend less than 2 percent of its Medicaid allotment on administrative overhead. When total costs under the managed-care provider's contract were included, however, DHHS staff estimated the true cost ratio for Arizona was nearly 14 percent.
Wood stressed that the audited figures used by her staff came straight from a federal agency that oversees Medicaid.
"Our audit makes a clear comparison by reporting each state's Medicaid administrative costs, not the administrative costs incurred by a state's Medicaid managed care organizations," Wood said. "In contrast, the draft DHHS response proposes to cloud the issue by including estimated administrative costs of each state's Medicaid contractors."
Diaz suggested that Wood's letter Thursday negated the notion that DHHS leaders squelched data that could have presented the state's Medicaid program in a more positive light.
"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 said.
Associated Press reporter Gary D. Robertson contributed to this story.
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