State audit slams NC DHHS's rollout of Medicaid billing system

Key findings from a new audit by the NC Auditor's Office on the NC Department of Health and Human Services' disastrous Medicaid billing system, NCTracks:

• "Since going live, the NCTracks system has encountered 3,200 defects.
• "The department has an inadequate framework for the timely resolution of NCTracks defects.
• "The state lacks a comprehensive action plan to address all NCTracks issues.
• "Federal and state government mandated changes have not been implemented within their target or mandatory implementation dates.
• "The state government 'revolving door creates a perception of bias or conflict of interest."

Among the audit's recommendations: "The General Assembly should consider a narrow change to state law to limit the ability of senior level state government employees to go directly to work for a vendor they directly managed whiled employed by the state."

Backstory.

Audit highlights:

A former DHHS employee who served for more than four years as the NCTracks senior program manager and associate program director now works for the NCTracks vendor, [Computer Sciences Corp.], as the NCTracks executive account manager. 

The established contract between the department and CSC requires the vendor to obtain approval from the state for all individuals considered "key personnel." CSC asked the department for approval of this appointment in August 2013. On August 21, 2013, the department approved CSC's request. Auditors found that DHHS and CSC followed established contract procedures.

Without a "cooling off" period, the North Carolina State Ethics Commission has stated that, "even if there is no legal or 'ethical' impediment to doing so, leaving public service to work for a private entity that will do business with the employee's former state employer, may create a perception of bias or conflict of interest. This potential for apparent bias attaches not only to the former employee's subsequent dealings with his former state employer but also to their actions and decisions immediately prior to leaving state employment."

Also,

A potential NCTracks certification delay by the federal Centers for Medicare and Medicaid Services (CMS) raises concerns that the state will not begin to save approximately $9.6 million a year at the earliest possible point, July 2014. The state currently pays 50% of NCTracks operational costs. Once the system is certified the federal government cost share will increase to 75% and the state will have to cover only 25% of the costs, resulting in $9.6 million in annual savings. The department has indicated that once the system is certified the state will also receive a federal retroactive reimbursement effective July 1, 2013. 

State auditor: WSSU employees may have violated IRS rules

Eleven employees in Winston-Salem State University's facilities management division received about $45,000 in off-the-books benefits through the use of university vehicles to commute between their homes and work, according to an investigation released by the NC Auditor's Office today.

The university justified the use of the maintenance vehicles for commuting on the basis that the facilities employees had been promoted to supervisory positions or had been assigned to respond to repairs at the Chancellor's home. But the report noted that the university paid for gasoline, maintenance, repairs, tires, insurance and license and registration fees for the vehicles.

"According to the university's payroll manager and internal revenue service wage and tax statements, the employees assigned to these vehicles did not reimburse the university for the fringe benefit they received," the report states. "As a result, these employees may have violated IRS regulations and state law."

The Chancellor's home is owned by the university, although it is not located on campus.

Chancellor Donald Reaves told the NC Auditor's Office in a Sept. 16 letter that, in response to recommendation from the agency, the university was ending the practice of permitting employees to commute in university vehicle that day.

Reaves also concurred with a recommendation to require either the repayment of benefits or the amendment of IRS wage and tax statements to reflect the vehicle usage as a fringe benefit of the private use of publicly-owned vehicles.

"We are currently researching the exact usage of university vehicles for private/commuting use using all available records," Reaves wrote. "We will complete the analysis by November 1, 2013 and take action to either gain repayment of benefits or amend wage and tax statements as appropriate by November 22, 2013."