Medicaid budget impossible to forecast due to ongoing computer woes

by Rose Hoban, Carolina Health News, published in Charlotte Observer, January 18, 2014.

After months of negative publicity about computer glitches in her department, Health and Human Services Sec. Aldona Wos apologized for a massive data-privacy breach that occurred at the end of December, when the state Medicaid program sent the wrong registration cards to more than 48,000 child Medicaid recipients.

At Tuesday’s meeting of the Joint Legislative Oversight Committee on Health and Human Services, Wos also apologized for problems with another computer system that has left thousands of food stamp recipients without benefits.

But what was also quietly revealed during Tuesday’s meeting was the revelation of a profound lack of data about Medicaid costs and utilization coming out of the troubled NCTracks Medicaid payment management system.

As a result, DHHS officials can’t say where the Medicaid budget is now or give a figure for any possible overrun to the program that spends almost $19 billion annually in state and federal money.

Data missing

The past few years have seen budget overruns reaching into the hundreds of millions of dollars. And in past years, DHHS officials were usually able at this point in the fiscal year to give lawmakers an indication of the extent of those overruns.

But no such information came out of Tuesday’s meeting.

Instead, in a presentation to lawmakers, budget forecasters from the legislative Fiscal Research Division said that because of problems with the NCTracks system, much of the data used for tracking how well Medicaid stays on budget is missing.

“On a weekly basis, we get asked about the current status of the Medicaid program. What is the size of the hole? Do we have a hole? Those are the questions we tend to get,” said the Fiscal Research Division’s Susan Jacobs.

“We monitor the Medicaid budget on a daily basis,” she said.

But she explained that because of delays in claims payments due to problems with NCTracks, Medicaid has at least a $300 million lag in paying health care providers.

Jacobs went on to explain that Medicaid costs are driven by factors that the legislature cannot control, such as changes in federal policy, the mix of enrollment in Medicaid, the prices of services based on national spending and utilization of those services.

What steps?

Even if those factors can’t be controlled, they can be tracked in order to give a budget forecast. Jacobs said her office tried all fall to track what was happening with the budget.

“What we did not know until probably November is that enrollment data does not appear to be accurate,” she told lawmakers. “Now, if we had either enrollment data or utilization data, we could try to figure out where we should or could be.”

“But given the fact that we now do not have claims data and we also do not have accurate enrollment data,” Jacobs said, “I’m not sure what steps need to happen from here.”

“But we are pretty much in the dark,” she concluded, in trying to figure out where the Medicaid budget now stands.

Jacobs said her office was working to create a budget forecast for the February oversight meeting.

Union County Republican Sen. Tommy Tucker said he didn’t know how DHHS could operate without knowing its budget.

Sen. Tommy Tucker (R-Union County)

He also said that according to his back-of-the-envelope calculations, the Medicaid budget looked to be at least $400 million in the hole.

“I couldn’t run a business like that,” Tucker told the committee.

Slightly lower spending

The legislative staff’s presentation on the budget was followed by a presentation by DHHS staff, who said spending rates are slightly lower than the spending “burn rate” from last fiscal year.

According to DHHS Chief Financial Officer Rod Davis, in the first five months of the last fiscal year, the agency spent 45 percent of appropriations and took in 35 percent of budgeted receipts.

“This year, we only spent 41 percent of the budgeted appropriations and collected 44 percent of the budgeted receipts, so we’re in a better situation now than we were last year,” Davis said. “The efforts we’re making in receipts and cash management, combined with the corrections to the budget that the General Assembly made last year, put us on target for the first five months.”

Wos called her staff’s analysis of the Medicaid data “exemplary.”

But after the meeting, Tucker said he just didn’t have any confidence in the numbers he was getting from either the Fiscal Research Division or officials at DHHS.

“All budget projections are fluid,” he said. “But right now, in January, we have nothing. We’ve got teacher salaries and state employees and everything in the world to fund, and if we know that we are five-hundred to six-hundred million over budget, we’re just going to dig a worse hole, and we at least need to know it.”

Sen. Jeff Tarte (R-Mecklenburg), who has spent his career in health care information technology, said he believed that data from the federal Centers for Medicare and Medicaid Services could offer some perspective on budget projections.

“There’s data that comes in on patient claims, billing information. We can take that information and aggregate it, and there’s methodologies to go through and build forecast models that are pretty accurate.” he said, noting that since CMS is paying North Carolina, it must be getting enough data to pay those claims.

“Let’s engage someone,” Tarte said. “Let’s get outside consulting help. We’ve got all the firms around who can do those things – IBM, SAS, Accenture – they all have skill sets to help us build those models.

“Is it a bit of an effort? Yes. Is it insurmountable? No. Would it take a long time? No.”

Apologies for food stamp, Medicaid card problems

Wos started the oversight meeting by apologizing for what she called a “human error” that resulted in more than 48,000 children receiving Medicaid cards intended for other people at the end of December.

“I deeply apologize for the impact that this has caused to the citizens of the state,” Wos said, noting that Social Security numbers were not included on the Medicaid cards, and that children’s access to care has not been hampered. “My expectation when it comes to work of the department is that we get it right 100 percent of the time. We did not meet that expectation, and I am terribly disappointed.”

“We took this situation extremely seriously and personally,” Wos said.

According to DHHS spokeswoman Julie Henry, the issue was not raised to senior management when the cards were mistakenly sent. She said that DHHS workers who interact with county social service departments sent emails to county workers to warn them of the mistake before warning DHHS leaders of the problem.

Wos said her agency is doing a review of the Medicaid card snafu, asking the state’s Office of Information Technology Services as well as DHHS’ human resources office to see how the mistake was made and how to prevent further problems.

Wos also apologized to thousands of food stamp recipients who have had difficulty receiving benefits since the rollout of the NC FAST system in October. Several thousand recipients still have not received their benefits.

The secretary laid some of the blame for problems with DHHS’ computer systems on prior administrations, saying that when she arrived at DHHS a year ago, “I found a massive department  with enormous issues and challenges.”

“We were faced with two huge IT projects that were underway that the state had already invested tens of millions of dollars to develop,” she said, calling the intersection of implementation of the IT projects and the rollout of the Affordable Care Act a “perfect storm.”

“The  implementation of the Affordable Care Act is creating a massive issue in North Carolina. DHHS is the state agency involved in the ACA implementation, and, frankly, DHHS is struggling,” Wos said, arguing that the federal government is also struggling to implement the massive law.

“Now I understand why there have been five secretaries in the last six years at the department,” Wos told the committee.