Politics & Government

State audit reports $350M in Medicaid liabilities

Beth Wood
Beth Wood

The state Medicaid program had accumulated $350 million in liabilities as of June 30 last year, about the same time that state health officials were boasting of a $63 million budget surplus in the government health insurance program.

The difference represents cash-on-hand vs. money owed.

The state Auditor’s Office released a two-year detailed balance sheet for the state Department of Health and Human Services, an accounting of department finances that state Auditor Beth Wood said had not been done in 20 years.

The Medicaid program had been accumulating unpaid expenses since at least 2009, said Rod Davis, DHHS finance director, and is slowly reducing them.

“The last two years, we brought it down,” he said. Liabilities dropped about $58 million between 2013 and 2014. Davis said the department was pleased with the audit results.

Legislators asked for the financial statements audit as a way to consider DHHS finances outside the annual budget request and periodic looks at cash-on-hand. Audits of the departments of public instruction and public safety will follow.

“This helps you decide, is the budget too high, is the budget too low, it gives you a better economic picture,” Wood told a legislative committee Monday.

Legislators closely examine the state Medicaid budget, which had been a source of frustrating overruns until last year. Estimates of the insurance program’s future costs helped hold up on-time completion of the state budget last year.

Davis said the department has refined methods to anticipate future Medicaid expenses; those new methods were used to craft Gov. Pat McCrory’s budget. “We have more detail on what we’re spending,” he said.

DHHS has an annual budget of about $18 billion, with Medicaid accounting for about $14 billion of that. The federal government pays about 65 percent of the state’s Medicaid bills, but the insurance program is still one of the state’s biggest expenses.

The audit was delivered as legislators are deep in negotiations over the future of the government health insurance program for poor children, some of their parents, the elderly and the disabled.

Rep. Nelson Dollar, a Cary Republican and the chief House budget writer, said the information was useful, but noted that Medicaid will always have claims to pay, so it will always have a negative fund balance.

Dollar is advocating for a change to Medicaid that would put health care providers in charge of managing patient care, while gradually ending the system where they are paid for each medical service or piece of equipment they deliver.

Leading Senate Republicans want to allow commercial managed care companies to cover state Medicaid patients. Sen. Louis Pate, a Mount Olive Republican, said legislators will be looking more closely at the audit as negotiations continue.

Bonner: 919-829-4821;

Twitter: @Lynn_Bonner

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