McCrory: No Medicaid expansion till vast fiscal woes fixed

North Carolina’s Medicaid program is in a major state of disarray, potentially violating state statutes and General Assembly directives, while costing taxpayers “hundreds of millions of dollars,” a state audit revealed. Gov. Pat McCrory said the fiscal and operational calamity reinforces his belief Medicaid rolls should not be expanded under Obamacare.

State Auditor Beth Wood said the 70-page audit contains 20 recommendations. Among its findings is that North Carolina spends 38 percent more — or $180 million — on Medicaid administrative costs than the average spent in nine peer states that were reviewed.

Contents of the audit were disclosed at a news conference among McCrory, Wood, Department of Health and Human Services Secretary Aldona Wos and Carol Steckel, the state’s new Medicaid director.

While the Division of Medical Assistance is the primary provider for Medicaid services, two-thirds of spending was done by 10 other divisions for which “there is no cost accountability,” Wood said. Tracking and monitoring of costs for contracted services is virtually nonexistent.

Without such monitoring safeguards, the state has an inability to properly budget Medicaid expenses and to know when budgeted allocations have been exhausted. That leads to perennial major budget overruns, she said.

The Division of Medical Assistance fails to provide budget projections for five of 14 categories. Two categories had more than $190 million in shortfall due to poor budgeting, Wood said. Another had a $127 million surplus.

In one instance, specific directives from the General Assembly to return $131 million in drug rebate money to the federal government were violated, even after the Division of Medical Assistance was warned that withholding the money would be a violation, Wood said. The situation has been going on for years, she said.

“The people of North Carolina have sent us here to fix a broken government and that is exactly what we are going to do,” McCrory said. “Every dollar that is mismanaged for Health and Human Services is one dollar less” for other state needs.

“At this time my total focus is going to be on reforming Medicaid,” McCrory said. Until that is accomplished, he said, it would not be prudent to expand the system under the Patient Protection and Affordable Care Act, the federal health reform law commonly known as Medicaid.

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