Audit: Medicaid savings could be at risk

The Associated Press

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RALEIGH — North Carolina health officials' failure to get federal certification for a new, problem-plagued Medicaid payment system could jeopardize some of the system's nearly $10 million in expected annual savings as glitches still exist that could cause even further delays, according to a state audit released Thursday.

The system, called NCTracks, is supposed to save the state $9.6 million a year because the federal government will pay a larger share of the operating costs once the program is certified. The federal share would rise from 50 percent to 75 percent, the audit says.

The program started July 1, 2013, and the state Department of Health and Human Services said it would be certified by July 1, 2014. Now DHHS has pushed that certification review date to the end of October.

In response to the audit, DHHS Secretary Aldona Wos said the state will receive reimbursement back to July 2013 once the system is certified. The failure to obtain certification by July 1, 2014, "will not likely impact savings going forward and retroactively to as early as July 1, 2013, once certification is received," the DHHS said in its response.

However, state auditors added a cautionary note following her response.

State auditors said they are required to provide additional explanation when an agency's response "could potentially cloud an issue, mislead the reader or inappropriately minimize the importance of our findings." They provided that additional explanation for five of the DHHS explanations, including the one about reimbursement.

"While the state could receive retroactive reimbursement to as early as July 1, 2013, once certification is achieved, this is not guaranteed," the auditors said. "During the audit, auditors were told by CMS (the federal Centers for Medicare and Medicaid Services) that there have been instances where states do not receive retroactive reimbursement back to the operational start date."

The audit's key findings focus on the delays in obtaining certification and include this caveat: "Unresolved risks exist that could further delay NCTracks from obtaining federal certification."

State Auditor Beth Wood's office also audited NCTracks in May 2013 and again in December 2013. NCTracks replaced a system that began in the 1970s.

An outside vendor, Computer Sciences Corp., is being paid $484 million to build and operate the system. Problems with the system have prompted complaints from doctors' offices and hospitals over denied claims payments and little assistance from the vendor-run help desk.

Health officials have asked CMS to begin the certification review after Oct. 28, DHHS said in its response.

DHHS officials also disagreed with an audit recommendation that they update legislators on the status of the project, including the new estimated certification date. DHHS officials said they did so at a meeting in April of the Joint Legislative Oversight Committee. That review didn't provide any formal, updated or details plans, however, the audit said.

"A detailed follow-up plan will assist in the governance of the overall system certification project," the audit said. "This is especially important since the NCTracks certification process failed to meet its original schedule."

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