State Auditor Crit Luallen Releases See the audit report for Full Details |
Crit Luallen |
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(Frankfort - December 17, 2007)
State Auditor Crit Luallen released today a performance audit of reporting practices and expenditures in Kentucky’s Medicaid program. Although program changes have been made, advertised savings of $120 million a year cannot be substantiated because of inconsistent and confusing reporting practices. The audit, which includes eleven specific recommendations to improve future reporting, will be sent to legislators and the Beshear administration in preparation for the coming legislative session.
The objective of the audit was to determine whether Kentucky’s Medicaid transformation under KyHealth Choices resulted in cost savings. The Kentucky State Children’s Health Insurance Program (KCHIP) is included in the analyses because it is included in Medicaid reports. “The Department of Medicaid Services deserves credit for its efforts to control the growth in Medicaid spending through its new Medicaid program, KyHealth Choices. However, this audit, coupled with the recently disclosed $389 million Medicaid shortfall in the current year underscore the need for transparency in Medicaid reporting. Budget deficits of this magnitude should not be a surprise to legislators. Hopefully this report can help policy makers implement a reporting process which is consistent, comprehensive, and user-friendly,” State Auditor Luallen said. Medicaid in FY 2007 covered nearly 711,000 persons, or 17% of Kentucky’s population, at a cost of $4.6 billion. According to the information provided by the Department of Medicaid Services, total Medicaid expenditures have increased more than $42 million in fiscal year 2007. The increase is over $56 million when administrative expenses are taken into account. Since Kentucky received federal permission to implement changes in May 2006, the Medicaid program has been known as KyHealth Choices. The Cabinet for Health and Family Services designed the new program after a 19-month assessment of every program and service provided by Kentucky Medicaid. The Cabinet indicated that KyHealth Choices would save between $120 million and $130 million a year and $1 billion over seven years. Unfortunately, the audit found that accurately charting progress of this transformation is not possible using existing reports and data. In fact, no reports substantiate Medicaid savings. Kentucky statutes require any savings achieved by Medicaid to be certified and placed into a trust fund to provide health care coverage to additional citizens. Since this provision became law in 1994, savings per the budget have never occurred. The Medicaid Quarterly Cost Containment Reports submitted to the Legislative Research Commission pursuant to the Budget Bill do not support Medicaid’s assertion of cost savings. The reports are based upon estimated savings, not actual budgeted amounts. There are no statutory requirements for Medicaid reporting. The audit also found that the reports that are issued provide little documentation of program performance. There is no means to determine whether the benefits and administration changes are on target. “Without reforms in reporting KyHealth Choices results, incomplete and potentially inaccurate reports will continue to be used to make decisions affecting Medicaid programs and budgets. True reform will be impossible to track or verify until significant improvements in reporting occur,” Luallen said. “One possible solution is readily apparent. The reporting standards required of Passport, the managed care plan for Medicaid in the Louisville area, could be a model for the state’s Medicaid system to emulate. In addition to Passport’s reporting requirements, the State of Florida has a mandated Medicaid reporting system that should be considered by Kentucky.” The audit recommends the Cabinet for Health and Family Services compile Medicaid and KCHIP data and periodically report progress and cost containment within these programs in a consistent, user-friendly, and comprehensive package. Among the eleven recommendations to accomplish that goal are to consider all costs when reporting cost containment and savings; follow Government Accountability Standards Board recommendations for reporting accomplishments; and carefully monitor important contracts. |
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