A Closer Look at the Medicaid Audit, DHS Response and Senator Vinehout’s Reaction

As we noted in yesterday’s blog post, the Legislative Audit Bureau issued a comprehensive audit of the Medical Assistance (MA) program Tuesday. The LAB audit recommends that DHS should report to the Legislature’s Joint Audit Committee by next July on the department’s efforts to address the following seven issue areas raised by the audit:

• Ensuring adequate funding for contractual services before authorizing expenditures.
• Using bids to solicit the most appropriate and effective administrative services at the most competitive price.
• Reviewing existing contracted services to identify if cost savings could be achieved by using state employees.
• Considering potential benefits of enrolling recipients into HMOs more quickly.
• Developing separate accounting codes for administrative expenditures for the MA and FoodShare programs.
• Accounting for all Medical Assistance expenditures in determining total program costs.
• Developing a more detailed biennial budget request and financial reporting structure to allow for routine budgeting and accounting of all Medical Assistance costs by subprogram.

As is typically the case, the LAB publication concludes with a letter from the agency that was audited, in response to the audit findings and recommendations. In this case the response is from Secretary Smith, and most of his statements seem to support the changes proposed by the LAB.  One area of apparent disagreement is that he raises concerns about the recommendation to create separate appropriations for each Medicaid subprogram. I think the concerns and questions Sec. Smith raises merit careful consideration, and I agree with him that we might not want to hinder the ability of the department to move funding between one part of Medicaid and another. However, I don't think that concern should preclude the development of more detailed budgets and enhanced DHS capacity to track expenditures by subpopulation served. 

I particularly agree with the points made by Senator Vinehout today, urging additional transparency and accountability for Medicaid spending. Her press release says, “If DHS can’t answer such basic questions about program costs, how can officials make informed decisions on how to fix Medicaid?”  Vinhout calls on DHS to “get its own fiscal house in order before kicking thousands of citizens off health programs.”

Note that on Wednesday the link to the complete report wasn’t working, but one could at least access the 4-page summary of the highlights.             

Jon Peacock