A Twins ballpark sponsorship. Million-dollar contributions to affiliated charitable organizations. Is this how Minnesotans want tax dollars dedicated to medical assistance programs to be spent?
For nearly two years, controversy has swirled over the $3.7 billion in state and federal Medicaid dollars spent annually in Minnesota on outsourcing public health plan coverage for the poor, disabled and elderly to the state's private, nonprofit health insurers.
A voluntary $30 million giveback to the state in 2011 by one insurer -- UCare -- triggered legislative and congressional scrutiny last spring. Key questions included whether the health plans were overpaid and whether the state improperly drew down federal funds to pay for state medical assistance programs under previous governors. State Department of Human Services Commissioner Lucinda Jesson's delay in returning the federal government's share of the UCare giveback also spurred scrutiny.
A new, high-level federal audit and the recent results of a state review ordered by Gov. Mark Dayton-- which spotlighted questionable administrative expenses by some plans for marketing, lobbying or charitable donations -- signal strongly to Minnesota policymakers that these long-simmering financial accountability concerns must continue to be taken seriously. Reforms to restore the public's confidence in management of these critical safety-net programs should be a priority.
Lawmakers last year took an important step when they passed legislation authorizing a deep audit of program finances by Legislative Auditor Jim Nobles. That work will get underway in 2013.
But the newly announced involvement by the federal Office of the Inspector General and the findings in the Dayton review point out areas for the Legislature to focus on this year. Specifically, lawmakers need to drill deeper into the state's poorly understood rate-setting process for paying the plans and identify areas for savings, improved transparency and policy clarity. The UCare giveback raised questions about how well the state officials who run the rate-setting process understand it.
The Office of Inspector General's involvement lends urgency to tackling this. The OIG works closely with federal law enforcement. In late November, it informed the state that it would audit Minnesota public health program data from 2008-09, specifically looking at whether the rate-setting process used by the state to pay for coverage was "reasonable, allocable and allowable." While the OIG conducts about 300 audits a year nationwide and has examined Minnesota health programs before, the agency's involvement takes the Medicaid controversy to a new level.
The results of the Dayton-ordered audit give lawmakers a productive place to start as they consider reforms -- what is an legitimate administrative expense that can be allocated to state public health programs? The review looked at the state's four big health plans -- Blue Cross, UCare, HealthPartners and Medica -- and mostly evaluated accounting processes for their 2011 books. HealthPartners' and Medica's audits were found to be in general compliance.
The audits for Blue Cross and for UCare (which discovered a $1.57 million error as it prepared for the audit) were more troubling. Auditors flagged both plans' allocation of some marketing costs -- such as Blue Cross's ballpark sponsorship -- back to public programs. Why are public dollars being used for promotional purposes? The auditors also highlighted both plans' large contributions to affiliated charitable organizations -- $10 million for Blue Cross and Medica, $7.4 million for UCare -- as an area for further discussion about appropriate expenses. It's troubling that the state doesn't seem to have established rules or expectations guarding against this.
What the Dayton audit did not do is make broader policy judgments about how the program is run -- such as how much the plans should profit from public programs, how much they should hold in financial reserves and how much of their executive pay should be allocated back to public programs. Clarifying policy on administrative expenses would be a good place to start grappling with big, thorny questions that have critical state budget implications.
The state's new DFL legislative leadership, particularly in the House, has an abundance of medical expertise. It needs to take the lead in allaying accountability concerns about the state's public programs. The questions aren't going away.