State Auditor Beth Wood

By Rose Hoban

State Auditor Beth Wood’s office sent a statement to legislative HHS oversight committee chair Rep. Justin Burr (R-Albemarle) Thursday after reviewing two articles published by North Carolina Health News on Oct. 8 & 9 that allege the state Department of Health and Human Services strategically edited their responses to an audit of the Medicaid program by State Auditor Wood’s office delivered to Gov. Pat McCrory in late January.

In the response (see p.2 of full text below), the auditor takes issue with NCHN’s assertion that the scope of the audit widened in January, after McCrory took office.

In her response, Ms. Wood states that NCHN misrepresented or eliminated parts of an email between former Medicaid chief clinical operating officer Tara Larson and Laura Bullock from the state auditor’s office.

NCHN acknowledges that a sentence of the email was edited out for readability, and that edit should have been replaced with an ellipsis to note that elimination. In addition, while transcribing the email, an “s” was added to the word “finding” in the paragraph:

Tara Larson, outgoing state clinical operating officer for Medicaid, wrote to the audit supervisor, Laura Bullock, on the day the new findings were sent to DHHS, asking, “I don’t recall the discussion about the additional findings during our meeting in December? Am I off base – I want to make sure we get you everything.”

A screenshot of the actual email file is pictured below:

email screenshot
Screen capture of the email between Tara Larson and Laura Bullock, Jan 10, 2013.

However, the NCHN staff believe the changes in that email do not detract from the tone and thrust of the article, or the assertions made in it.

On Ms. Wood’s other points, we stand by our reporting on this series of articles and invite readers to make their own decisions based on the stories and the documents provided on NCHN.

State Auditor Beth Wood’s response to NCHN stories:

Wood Response Medicaid (Text)
Cover photo of Beth Wood courtesy NC State Auditor’s website.

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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...

3 replies on “State Auditor Responds to NC Health News Articles”

  1. 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.

    [This statement doesn’t make sense. If we were to evaluate one state’s health plan costs against another state’s then whether or not one state ‘outsourced’ part of its Medicaid program would directly affect admin costs. If our admin costs include paying CSC to pay ALL of the claims then we would have all claims admin costs in our bucket. If another state used ‘Americorps’ and AmeriCorps paid its own claims…then the admin costs for those claims would be in the payment made to AmeriCorps. If it is not included then this bucket has understated its claims admin costs. Put hyperbolically, if a state outsourced the entire plan then it would have NO claims admin expenses in its ‘state administrative costs’ because the state is not paying the claims.]

    In contrast, the draft DHHS response proposes to cloud the issue by including estimated administrative costs of each state’s Medicaid contractors.

    [How does this ‘cloud’ the issue? It is reasonable in any financial model to use ‘estimates’ as surrogates for actual data. ‘Estimated claims admin costs’ are easily calculated.]

    Our report used reliable Medicaid administrative cost data as reported to the federal Center for
    Medicare and Medicaid Services (CMS).
    [Reliable is not the same as accurate or ‘appropriately reflective’. ‘Reliable’ means it measures the same value in the same situation. A gauge that always reads 100 degrees whenever it is 70 degrees is reliable. What is important here is whether or not the comparison is ‘meaningful’.]

    This information is subject to federal audits and significant penalties can be incurred if the information is found to be inaccurate. [Again, even if it’s accurate it may not be set up to establish an appropriate ‘apples to apples’ comparison]

    In contrast, the DHHS draft response reported on October 8, 2013, in an article titled, “McCrory
    Administration Officials Suppressed Insight Into Medicaid,” does not use data reported to the
    federal government that would be subject to audit and penalties for inaccuracies. [To me, this seems irrelevant if the data is ‘reasonably correct’ and provides for a more ‘meaningful’ comparison’.]

    Instead, the draft response included DHHS staff calculations based on the medical loss ratio from each state and unaudited data from two separate reports issued by two separate entities. Neither the
    calculations nor the data has been audited to determine the reliability of the information

    [That does not mean that the comparison is invalid. It is merely a model to provide insight into the issue and how to appropriately compare. Sometimes, in order to make the best ‘comparison’, you have to work with the data you have to approximate that. This is why actuaries and CPS are different. Actuaries think and project; CPA’s memorize and monitor.]

    That is all she’s said. I find it very lacking.

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