screen shot of Auditor's report front

Medicaid shortfall will be met – later

State lawmakers signaled yesterday the current Medicaid budget shortfall would be taken care of later this year.

In the last budget, legislators from the General Assembly directed the Department of Health and Human Services to cut hundreds of millions from Medicaid, the program, that provides health care for poor children, some low-income adults, people with disabilities, and some seniors in nursing homes.

But delays in making changes, federal restrictions, and lawsuits are slowing the process of making all the cuts, according to Secretary of Health and Human Services, Lanier Cansler. Now the program faces a budget shortfall of close to $149 million.

The drop dead date would be mid-May when we run out of money to pay the bills,” Cansler said in December. “We write checks weekly. Every time we do, it’s about $100 million in money going out the door.”

Republican lawmakers have contended it’s the governor’s job to free up money to meet the shortfall. Governor Bev Perdue’s office has said it’s not in her power to bridge the gap and the General Assembly needs to give her that power.

The standoff has been going for months, while the deficit has slowly grown.

But at a meeting of the DHHS appropriations committee yesterday, Rep. Nelson Dollar signaled the legislature would meet the shortfall – when it’s ready.

Dollar presented a document prepared by the Office of State Budget and Management detailing moves made last year to bridge a Medicaid gap of about $600 million.

This demonstrates that we were able to and had to close a much larger gap last year,” Dollar said.

It’s helpful for people to see what the gap was last year, what we did by the end of the fiscal year to address that. I’m sure we’ll take appropriate actions in May to address the shortfall at that time.”

HHS Secretary Defends His Department In The Wake of Audit

In what will probably be his last appearance before General Assembly lawmakers yesterday, Secretary of Health and Human Services Lanier Cansler launched a defense of his agency’s management of a multiyear information systems project.

A report released in December by State Auditor Beth Wood criticized the Department of Health and Human Services for what were characterized as ‘total overall costs exceeding estimates by $320.3 million,’ poor documentation of decisions made and delays totaling almost two years.

In addition, Wood criticized DHHS officials for their lack of cooperation during the audit process.

“It was one of the most difficult audits we ever tried to perform,” Wood said.

“Officials at DHHS were extremely critical of our process, in fact they asked us not to come in, they told us to postpone the audit indefinitely,” Wood said.

“Either we couldn’t get it (information), or we only got partial and then when we put the information together, based on what documentation that we could get our hands on, then it was heavily disputed and refuted and said to be wrong,” Wood said.

Cansler responded “it’s easier to throw stones than to do the actual work.”

Cansler and Wood were asked to sit at a table before the committee – the two placed themselves at opposite ends of 15 foot long table. Committee chairman Senator Louis Pate joked about a ‘demilitarized zone’ separating the two. But the questioning from legislators was at times tense, combative and critical.

In response to questions by Republican lawmakers, Cansler detailed the process of creating a complicated information systems project that’s subject to constant changes from external forces. The project was put out for bid in 2007.

“That was way before the election of President Obama,” Cansler said, “before health care reform, before new coding. None of that was on the drawing board.”

Cansler referred to changes in the coding system used by health care providers and insurers to classify diseases and medical procedures that’s due to be in place nationwide by the end of 2012.

According to Cansler the original cost of completing the information system project was for $90.8 million. He admitted some time delays and increased costs that bring the current tally to $298 million, close to two years behind schedule.

Almost 90 percent of the cost of the project comes from the federal government.

Cansler blamed the ballooning tab on changes and programs added by the federal government, state lawmakers, and the Centers for Medicare and Medicaid Services, all of which required an expanded contract.

“The additional costs have a lot to do with changes in what’s happened since that contract was done,” Cansler argued. “It’s unfair to call these cost overruns when they’re things that the legislature, that Congress has done, the federal CMS has done, that changes the rules on which the system is based.”

Cansler did acknowledge poor documentation of why decisions were made and apologized for poor communication between his department and the state auditor’s office.

From Wood’s account, communications between her office and DHHS went beyond ‘poor.’

“In the final meeting that my staff tried to attend, and the whole meeting was a dissertation on how unfair the audit was, how biased I am, how biased we are, and a witch hunt that the state auditor’s office was involved in.”

“I think it’s disconcerting for the general assembly when the state auditor comes before us and there are questions about whether or not an agency has been fully cooperative,” said Representative Nelson Dollar.

He called on DHHS and the state auditor’s department to hammer out a plan for corrective action.

“I would hope moving forward that there can be some dialogue between the state auditor and the department to come up with an appropriate and agreed upon plan of action along that line,” Dollar said.

Cansler and Wood each agreed their departments would create a plan to monitor the project more closely, and improve communication.

Any plan of action would be initiated by Cansler’s successor at DHHS.  His last day in the job is February 1.

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Rose Hoban is the founder and editor of NC Health News, as well as being the state government reporter. Hoban has been a registered nurse since 1992, but transitioned to journalism after earning degrees...