Editorial: Maximum-strength HMO audit needed

Minnesota health plans' surprising profits from taxpayer-funded medical assistance programs have drawn scrutiny at the state and federal levels over the past year. Now, state lawmakers are poised to take a responsible step: authorizing an independent evaluation of the state's $3.8 billion-a-year Medicaid managed-care program.

Like many states, Minnesota pays private insurers to administer care and coverage for the poor, elderly or disabled. Bills calling for a limited "third-party audit" appear headed to the House and Senate floors, capping an unprecedented push this session for greater HMO transparency.

Legislators should swiftly pass this legislation. Failing to do so or weakening it would send the wrong message: that lawmakers don't want answers to the serious questions raised about the program.

Concerns about state health plan profits came to a head last spring when UCare, one of the insurers paid to administer Medicaid coverage, unexpectedly gave back $30 million to the state. The state's other big three nonprofits -- Blue Plus, Medica and HealthPartners -- declined similar givebacks. The average Medicaid operating margin for all four big plans was 8.9 percent in 2010.

There are now two separate federal inquiries into the state's Medicaid oversight. One is under seal.

The second is led by U.S. Sen. Chuck Grassley, R-Iowa. Key questions center on whether the state is overpaying the plans and whether it has manipulated payment data to improperly draw down matching federal dollars. (Medicaid is jointly funded by the state and federal governments.)

A report from the Minnesota Department of Health recently underscored the oversight concerns. The report relayed findings from a state advisory group working with an outside firm -- Deloitte Consulting.

The proposed state audit has drawn fire from state DFL Rep. Carolyn Laine, who said it's not broad enough in scope. However, it will still be a step forward if passed. The audit, which will begin with an evaluation of 2013 data, will ensure that the state Department of Human Services has robust processes to evaluate the plans and that the data reported by them -- such as that used to certify payment levels -- is reliable.

Having the respected Office of the Legislative Auditor oversee the outside auditing firm's work will significantly enhance its credibility. Republican state Reps. Steve Gottwalt and Jim Abeler, and Republican State Sen. Sean Nienow, who have championed the audit bill, smartly steered its oversight to an organization known for its integrity and tough-but-fair program evaluations.

Diluting the legislative auditor's authority or shifting its responsibility to another organization would suggest lawmakers aren't serious about this audit, and would raise a red flag for federal investigators monitoring the situation.

Gov. Mark Dayton has also been a strong champion of HMO transparency, pushing for an additional audit of the plans as well as a 1 percent cap on their 2011 earnings. It's time for the state's Republican legislative majority to do its part and pass the strongest audit bill possible.

------