Audit Committee Probes Medicaid Problems

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Feb 7, 2012 1 Comment ›› Jamie

February 7, 2012

“What did we budget for BadgerCare? What did we spend for BadgerCare? What did we get for what we spent?”

I raised these questions at a recent hearing of the Joint Committee on Audit. The Medicaid program – the parent program of BadgerCare – came under scrutiny.

Medicaid (MA) is the largest single program in state government. BadgerCare, Family Care and other health programs provide vital health care to one in five Wisconsinites. Yet a recent audit showed serious problems with accountability and transparency.

The questioning of state officials by Audit committee members centered on such problems as an antiquated state accounting system, a lack of management information available to lawmakers and a ‘shadow agency’ run by contractors.

Auditors could not determine the actual cost of the billion-dollar BadgerCare program. Auditors found it impossible to assign $2 billion of the $7 billion Medicaid dollars to the appropriate state program – like BadgerCare or Family Care.

This inability to provide legislators with the most basic information about how much a program costs makes it very difficult to fully understand how funds are being spent.  These problems come to light at a time when the Department announced its plan to solve a deficit in the MA program by dropping tens of thousands of people off the MA program.

“Do we know how large the MA deficit really is?” I asked the Secretary of Health Services. “Do we know how we are progressing (in resolving the deficit)?”

“If we don’t know the program costs of say Family Care…how can you verify that $115 million will be saved through changes in that program?” I asked.

In his comments to the committee, the Secretary of Health Services expressed concerns about an audit recommendation to more accurately account for funds noting the flexibility to move money between programs was needed.

State officials want flexibility to move money between programs but the way this happens makes it very difficult for auditors to account for taxpayer dollars and for lawmakers to exercise adequate oversight.

Senator Julie Lassa raised questions about the practice of moving money between different programs and the Department’s inability to track use of those dollars

“It’s hard to say that taxpayers are getting their money’s worth when the Department can’t track where they’ve spent it,” Senator Lassa said. “The Legislature now has little oversight of how the Department runs the MA program and how they spend taxpayers’ money given the changes adopted in the last budget.”

Senator Lassa also questioned the extensive use of private contractors to do state work at a much higher cost – such as private contractors doing basic administrative functions like answering the phones for department staff.

This heavy reliance on outside contractors amounted something similar to a ‘shadow agency’ within the Department.

With so much of the administration of the state’s largest program done by outside contractors, committee members spent time probing the use of contracts and oversight provided by the state.

The state does not have detailed access to numbers needed to manage this large program because so much information on state expenses lies with the contractors. Questioning during the hearing even unearthed the possibility of contractors charging the state for access to the state’s own data.

Auditors explained problems in contract administration. Contracts were broadly written. Contract amendments were not tracked. Amendments did not specify the sources of money used to pay for them. Contract amendments were not competitively bid. The accounting, procurement and budgeting offices did not know about the contact amendments.

The effect of such loose oversight was seen in the extraordinary amount of money spent on contracts that was never authorized by the Legislature. Auditors found $54.8 million in unbudgeted commitments to contractors made by the Department of Health.

State money was moved to the Department of Health last spring in the budget repair bill to cover these expenses. Another $42 million in spending was authorized to cover these unbudgeted expenses to contractors.

When the Department spends money it doesn’t have on contracts, when contracts are broadly written and extended without a bidding process, when spending details lie only with contractors, it is very difficult for legislators to provide adequate oversight of this important program.

Contractors and state officials must be accountable for how state tax dollars are spent. Before the Department of Health Services dumps thousands of citizens off vital health programs the state should first get its own fiscal house in order.


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