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House | February 14, 2013 | Committee Room | Health Appropriations

Full MP3 Audio File

Thank you all know, again this morning on to join her creation submission of human services of 40 am no one else Leon pages, we have women simply celebration as a home for sale, just off like sponsored by Senator Brock and the Clare Langford spa storage and personnel some higher I am the person burgeoning Mobley of political ban on jail marking a Virginia bikers full and Cameron Sanders, Virginia more they killed him for certainly hope you've enjoyed its way up (SPEAKER CHANGES) And a research and arms are on done by work together some that the parish was the right but Steve Wells but all this morning, Mr. Begin this summer morning when to start on the presentation of a woman again with our staff, assuming some of background on the move from place to mature from the state auditor of the more money, the more mature from Secretary Bruce Morton office to respond to those on AT&T's presentation that that's a good, we can ask clarifying questions and more open eyes of the full weight we get through all these presentations before we get into discussions specific questions on the area on that of like pursue this morning (SPEAKER CHANGES) on a fake with other technical planes on movie and radio this morning on some or all but Mrs. Jacobs from the school research is chairman and a good morning, documenting it, just in the first of last year's event, which should have advice for you to specific language and rashes preparations tale set session on suite of cash from 22 that are rated offices they are sure to audit department health and human services division of banking systems and states that a partner in on the section 10.9 AII states and three are primarily without constraint on the street from signs including instructions are carried out by contracts and grants, standing o'clock agreements begin am an item four EI and four subsections A & D deliver production and distribution of information surrounding the forecast and and budget projections are sent section C health plan that Thomason and Harry plantains D & E deal with the collection and distribution of actor and am on the second ad NT said sections 10 , classes like to be completed by February 1, '20 to 20 13th and was committed by the subsection five sanctions provision was subsection 10.9 A and act like the health department of human services to transfer funds to the oddest thing on onto else to say on article about 5 seconds at this point, Mr. Chairman. Questions,(SPEAKER CHANGES) as my completion of the key appointments begin questions Stephen ?? that the bank to that of the member center for copies of the presentation on in their pockets, Waldo Emerson’s on a weekend will be able to move off four, apologized to include all this morning on promotion recognizer; that's one of 2% on the form of solid of the department make it very much for coming to the idea for you, (SPEAKER CHANGES) or George the morning and there was a maniac resend a study of 1 to 3, since warning the findings bomb our performance audits are on Medicaid is , in your pockets, we have put together the state auditor's office, publicity …………………….

I put together on one page on if you well what the findings are from as a result of this audit and then also included several tables that will refer to I think if you're this presentation is to help you get a better idea some the flight family be making additionally him on that one pager we have included page numbers from the audit report itself when the metaphor is Wednesday more details about finding and refer you back to pages in the are or revealing and angry and him like more details on so I have with me this morning on our subject matter experts that work with us on on this audit link here and when he was recognized Seesmic.php and also hierarchy Leicester on-again subject matter expert at work with us on this on performance I had a supervisor that was in charge of this are that logrolling after my staff and also my manager of the form submission category syllabi get through with all the presentations I get get into the first if there are specific questions are specific areas in what eventually help you with talk about authorization for doing this audit on it was requested by the general assembly and we looked at after talking and looking at all law itself in talking with our fiscal research staff we look at for areas on at and determined our objectives for this audit we were looking at determine if you divisions administrative functionsinternal and external complied with state and federal requirements and if they allow for efficient use of funds the second objective was to evaluate the divisions processes annual budget and monitoring their expenditures to determine if they accurately predicted and assess the program cost we also look at your process for state plan amendments and then reassess the level budget and expenditure information to stakeholders like the general assembly and like fiscal research studied anatomy look at lot you'll see that you are used on the findings of the together and and explanations and background information for together for subsections one was our administrative functions one is under budget and financial projections and you'll see that we laid out that one pager of findings and pretty much the same format the third area estate plan amendments and then reporting on the first area that we look at courses administrative functions and under that first bullet what you'll see is that here to other states with similar medical assistance payments North Carolina Medicaid administrative costs are significantly higher and in your pocket or is a table that shows we look at North Carolina in comparison to nine other comparable states annual zero North Carolina and all of that it was only an is nine there's only one other state that extended for administrative costs and we did and that was on Illinois and actually they extended him out for administer probably 3 billion more dollars the state of Carolina but if you just looked in the average at the very bottom of that table on the state North Carolina spent hundred $80 million more than the average of comparable states the reasons for these higher administrative costs DNA really only controls about 33% of the total administrative costs while the state stands 700+ million what you'll find is that DNA only spent about 256 million there are 10 other divisions in Department of Health and Human Services to actually stand administrative cost or or incur administrative cost him three of the highest our security DSS on Central Antman and Don mental-health with three extended the most of the cost and said him again DNA really doesn't have control over all the administrative cost and so they had at least a celery oversight DHHS really didn't provide any oversight to the extending of administrative cost additionally if you look at

DNA activation line of their administrative costs on the screen at all contracting out the administrative function for the activation hundred $20 million was spent and what we navigate with back on ever contract cost overrun on for the last three years on the content on these administrative costs and in addition to bat DNA did not flat here contracting cost in what was supposed by the take and I'm not trying to has caused they really don't have any idea when the running of the cancer budget without texting there like it as it is really united and flag will then step not in and look at sedately doing something else not entering into additional contracts ultimately stopping some of what was going on this and contracts that they had let the last bullet under this section DHHS does not have a car or public assistance cost allocation plan began got several divisions on you are spending monies and charging it back to the Medicaid plan Medicaid program you don't have a cost allocation plan here indirect costs can be allocated on to all programs and of course Medicaid get charged is forced if you don't have a comprehensive cost allocation plan each division in the social services mental-health on dna there allocation plan to allow the cost may be allowable they may not necessarily be necessary and analog don't have centralization of the cost allocation plan and the of the administrative costs are being allocated that you don't have very much control over the cost under the next accent on budget and financial projections on dnase i heard budget have exceeded the certified project and actually incurred state general fund shortfall all all all hundred 18 million in 2012 403,000,000-11 to 16,000,000 in 20 and again you can go back to him that the agent that audiorecorded stealth page 36 napolitano seem to be off will send identified a country state statute dma retained hundred $31 million in federal funds i in 20 well unless that this was related to a drug rebate money on on was practice and dhhs for several years on general assembly and actually passed a statute that prohibited dhhs or dna from withholding or holding on drug rebate money out of here is that they north carolina receives rebates on currently scone through the medicaid program state north carolina just keep part of it mna on a portion of the night at and it was found that on that in the near total years state north carolina your help on this drug rebate money was a matter just holding on asked and then being able to just over this year in and get it back next year what happens is that if you are holding this drug rebate money and white dna does what making us is that they will deduct this from your next year's argument as cited in essence the state north carolina started out in 2013 with the deficit and hundred $31 million also directed to achieve the savings were not followed on was a legislative mandate to eliminate lectionary increases and nursing facilities on and it appears that really activists on evidence far audit that increases to the nursing homes was loud and the explanation for this was that there is a cost next within the nursing homes in has to do with sound facilities are housing people that are sicker than in other facilities i figure the cost next to allow this inflationary increase that

00:00 cost mix will be out of [??] and what our audit found is that there were quarterly inflationary increases that happened that were allowed and only one of the four actually had anything to do that would affect that cost mix so the explanation that DMA gave to the general assembly as to why they allow those inflationary increases was not exact and the next bullet directives to achieve I'm sorry the next DMA focuses on forecasts for medical payments financial projections do not include all relevant expenses what we found is that under the medicate budget there are 14 different categories of medicate expenses and what we found is that DMA was not really seriously projecting in fact they didn't really project and forecast a budget for one out of the 14 five of them we found that they didn't project a budget at all and when asked basically what their response was is that we don't know what the budget is gonna be for that particular category so the projected dollars were zero and that happened in 5 out of the 14 categories DMA does not follow best practices to improve its forecasting methodology there is a formula and there are components in this formula that have to be used to make sure that methodology or the forecast in the projections that are done make sense and they're reasonable to be obtained and what we found is that they really weren't using their best practices to achieve this in some areas one of the components would be consumption obviously controlling the consumption how much medicate do you administer and really for consumption on of the best on of the places I guess that can be looked at as how much fraud is occurring within its program and we have presented to you in other audits or presented to the general assembly in other audits about the programs and the methodologies that are being used by DMA to find this fraud and how unsuccessful those have been to date and then the other way to control consumption is whether or not you allow additional services to happen the pricing is another area where you can control the cost and again we just talked about the inflationary increases that were allowed by the general assembly specifically said there are not to be increases based on inflation is allowed to happen but again we saw that DMA did that anyway and the other area that we noted is that for even the projections that were done that there was no actual tracking of actual to the forecast or actual to the projection to decide or understand when there is a variance why was there a variance and what could be done to prevent that variance in the future and then the financial projections did not extend beyond the current [??] best practices recommend that you should do multi year projections and what goes into those projections again that is well thought out there's a good methodology that you're using information that makes sense and again what we found is that they really weren't DMA was not projecting more that one year at the time realistically and anything after that it was missing budgets altogether for some other categories and then others they weren't using a realistic consumption numbers or pricing numbers under the next grouping state plan amendments the general assembly mandated or requested that DMA come up with some savings in 2012 and what we found I think it was approximately 72 million dollars that they requested and the way they were going to achieve these savings was through plan amendments it would be amendments to the state's medicate plan and what we found is that what DMA submitted and said here's how we're gonna make up that 72 million was really not realistic a couple of areas they said basically when we make changes to the state's medicate plan. 05:00

And what we've found is that they didn't really consider the time it takes from submission of a change in the Medicaid plan to CMS, which is the regional Medicaid office that would approve these changes. So they didn't really take into account 90 days when you submit a change in your Medicare plan, CMS has 90 days to approve that, and then if they have any additional questions, it may take longer than that, so the savings that they justified took into account unrealistic effective dates. It's another table, and it's under attachment two, and the information that I gave you, and it shows three examples of this. You'll look at the bottom of the page, under attachment two, and it's talking about State Plan Amendment 10-031. You see here that the submission date is October of 2010. It was planned to be implemented or the savings to occur, it had to be implemented in January of 2011. You'll see here that CMS' approval didn't even happen until April of 2011, so that implementation date is really not realistic. The next item on that list, the submission date was March of 2011. The budget implementation date was expected to be January of 2011, and you'll see that the CMS approval didn't even happen until January of 2012. So the savings that came about with the implementation of these planned amendments, it was never even achievable, based on the implementation.. these approval dates. And the other side of that is, when you have a planned amendment, and you're gonna retroactively implement the change, basically what DMA told us is that that was just unrealistic. So why they submitted this.. it was unrealistic, because what happens in a planned amendment that's retroactively implemented, is that you have, say, you go to a doctor and you have a service that's allowed by Medicaid, and you have this done in January. And say, the retroactive date might be December of the prior year. Well that means that you have to go back to that doctor whose provided that service, who got paid for that service, and get the money back from that doctor, even though in good faith, that service was provided. And so DMA told us, we never had any intention of retroactively applying these planned amendments is because what it would mean is litigation, problems, and then you stop and think about how practical is that, to go and ask a doctor who, in good faith, gave a service to somebody on Medicaid, provided a service that was allowed under Medicaid, and then go back and tell them they've got to reimburse you after they've done that. So the point here under state planned amendments, they're saying that the delays, the shortfalls and them not making their savings is the CMS process, and how this all works, but an audit shows the basically the information given to the general assembly was not even realistically obtainable. And then the last item, under reporting: DMA is not providing timely and useful reports and essential date to stakeholders. What we've found in our audit is that the general assembly, the legislators, fiscal research, needs information to make decisions, and while there's a lot of data given to them, none of it is in any kind of summarized or any kind of format that makes sense to be able to be used by anybody who could make decisions. And we found that to be true; there is a lot of data there, but again, none of it is summarized, and it's very time-consuming for whoever's trying to use the data to try to get it into some kind of format so they themselves can use it to make decisions about it. And that's a quick overview of what the findings were in this report. I'll call your attention to attachment three. This is a listing of the administrative resources; this shows you what DMA expends in administrative cost. It also shows you the other divisions within DHHS as far as other divisions that are spending administrative monies, and how much. And then on attachment four, the last table that I have there shows you that over a four year period, what the actual

Speaker: ?? medicate program what the certified budget was and lot of variances that you an see from 2009 2010 there is 60 percent spent over the certified budget now obviously the money is in ?? one of the things that you have remembered is federal and state money federal portion of state north Carolina spent 14 billion a year and medicate program about ten billion of that 10 plus billion of that is federal money and 3 plus billion is state money with in the state money federal money you have administrative cost and then you have medical plans so portions of this report just have administrative costs portions of this is just like the budget the money is over feral ?? with the state portion ?? four years is anywhere between 300 and 400 million short for overspending state money that is medicate and administrative themselves ?? do you have any question about clarification of any questions and orders Representative Speaker Changes: thank you Mr. Chairman this would ?? by surprise it was of the administrative difference cause between us and ?? sates ?? and multiply by two when you cut them off how carefully i guess or how you able to determine the compatibilities of the plan for instance ?? for also 100 percent managed care ?? with the state north Carolina administering the way we do our plans can you give some examples of the plans you listed here of areas were there was more specificity and more general more specific n areas what the differences were ??i will differ that question to you how much work done ?? comparable managed care versus non managed care for the other nine states that we compare north Carolina to Speaker Changes:we really don't have time to ?? make up the program ?? Speaker Changes: thanks further question Representative ?? Speaker Changes: thank you very much for the report i was just trying to figure out the positive here Speaker Changes: we are still looking i guess I'm still looking at the attachments three lie seven insuring program and integrity and i guess when we have this program in large we have a common program to have of complied standard auditors to in division whats in the insuring program integrity is there a staff with in the division that's monitoring complain with this rules and regulation or is that weakness withing the division Speaker Changes: the division this is probably a better question for secretary but understand that the division have a program integrity group some other issue that we are running through the other audit it appears that trying to ?? provide fraud ?? makes sense is been contracted out to a third party and there eave issue there with the audit that we did difference in issue that we did and other audit ?? looking for fraud looking for improper payments ??

The patient wants that was supposed to come again five with four million when you're too small for programs that will mean when you're 27,000,000 in the first year and 4 to 127 from other and to pay the one for 27 means I'm nothing will be collecting mapping and 184000000 on its advice and counseling and collected only 420,007 while there is some efforts on-site for all its lead going back and we have gone in terms of specific rule, are preparing its market street for 12 Emmys against a cheery lead on without a moment from 2 to 7 will be a first thank you for regional report and receive your view against their name(SPEAKER CHANGES) questions, or suspect in the same instruments and eliminate the charges against the riverside Arizona their ministry distance away down 11.7% are about most is key to everything down one and 5% north Carolina’s of about 6.3 FM shiniest and used it to which you're doing something remarkably different players on it get their cost down 1.7% exports to receive and more and more and senior from a 5% and inland sea mining and get an opportunity to look into programs and see how they might be different under such a stark contrast here on I'm wondering if there's some explanation as to why North Carolina is where he uses 6.3 is compulsion to someplace like yours are they doing something vastly different in terms of management and organization and treasure, the Libyan troops and best practices (SPEAKER CHANGES) we haven't we not had a relationship would take another week and end at 4 to 12 two to make sure that we're looking at comparing apples to apples on the suggestion out with being thrown out the atomic clock back and look the other end of the fall of local initiatives five, seven men here in North Carolina we must admit some loaf own standards that we were complying internally extra ministry of culture they might again be given a commission is getting up to 6.3 is simply set standards 8% in only consider children 12 and 6.3 do we have many internal control employees and operationally that hurt in the history of cost and a certain percentage decline always be a minister of the understanding that they might have a different allocations for tradition programs that, and respecting seats and quickly as you read through our on-line and the town of record and a record 18 oz(SPEAKER CHANGES) basically said one of you may concentrate to not be any and all of skin and it is providing services on your brains out about one and 10¢ to say that 19 on to its market the wheel to try to recall the power and administrative cost in a certain area or close to server center whenever we're just looking at averaged a say in the states are 4.63% was seeking it happens to that part of its parts that we have on and any other side and two days the fact that you have on this division social services have mental health and sensual and in and out necklaces since the enables all four of these are charging administrative costs 7:00 AM cells are not even talking among themselves about on you,(SPEAKER CHANGES) had we need to do things better or by the contains costliest in 1991 overall and at home, charging administrative costs are they saw fit to which really didn't smart thing a single quotes on a low weakening its greatest during the weekend that well with one that led to the level of funding coming in is this magnitude would not have been smart stomach for some their organizational structure quality and cost appropriately on women's issues of all is well that would be able to set the general assembly ordered each day on our health insurers is to understate the 70…..

2 million. Based upon investigations that were done, does it look as if we had people, when they were doing the planned amendments, that were just either functionally not understanding the process and understanding that it took the 90 days to get the approval and that it wasn’t practical to do the retroactive implantation, or was it just kind of an arrogant defiance? How would you classify it, because it’s disturbing to me that kind of directive is given, that we aren’t seeing that are consistent with that directive. [SPEAKER CHANGES] It’s hard, one of the hardest things in our job is to prove intent. And so all we can do is just show the facts and what I can tell you is that the mandates were there and we have it documented in our audit report that things like, I didn’t know what the budget expenditure was gonna be so I just put a zero for that line item, or the fact that there is a mandate and that same one for the 72 million, it basically says if you can’t find that savings with, I think one of them was CCNC, if you can’t find your $90 million with CCNC, was ?? savings that was projected in the budget. And the statute basically says if you can’t find it there, you need to look elsewhere. And again, all I can tell you is that the mandates were there, and they were not done. And we did document conversations about, well, this was not do-able. This was an unreasonable mandate from the General Assembly, so all I can tell you is that was the conversation and it didn’t happen, so I’ll have to leave the rest up to you. [SPEAKER CHANGES] I understand. One follow up, additionally. You mention that there was no multi-year budgeting. When that inquiry was made, organizationally, as to why there was no multi-year budgeting or planning for what costs might be beyond the current fiscal year, and I would reasonably assume that as best management practices that the federal government would want to see us do that, perhaps they don’t, but was there… they do. Okay. So, if the federal government requires it, what was the explanation for us not in fact having multi-year budgets in place that anticipated costs with some degree of validity to those projections and a better opportunity to benchmark what actuals were versus those projected. What explanations did you receive, or your staff receive? [SPEAKER CHANGES] Pretty much that if we exceed the budget, correct me if I’m wrong, Glen, Hugh, Laura. But pretty much DMA’s response was if we exceed the budget, OSBM’s gonna allocate, get the money to us anyway. And so there wasn’t a sense of urgency to be as accurate as possible so the General Assembly would understand what the true cost of running that program would look like. [SPEAKER CHANGES] And one last follow up, I think I said the other one was the last, and I apologize, but did the federal government at any point in time express concern about this, or send directives, or make inquiries about why things were being handled the way they are? Particularly as it relates to these budgets or other areas of concern? [SPEAKER CHANGES] Yes. The federal government has contacted my office with some concerns, yes. [SPEAKER CHANGES] Are you at liberty to discuss what they are? [SPEAKER CHANGES] I am not. [SPEAKER CHANGES] Well, let me thank you for a thorough report, we appreciate the information you’ve shared with us. I, for one, am greatly disturbed by the findings. I would like to think that things were operating far more efficiently, professionally, with best management practices, appropriate benchmarks, milestones, allocation of costs. It seems to me just what you would implicitly do if you were managing an organization professionally, whether you’re in the government sector or the private sector, so, I think we have some significant task ahead of us. [SPEAKER CHANGES] I would agree. [SPEAKER CHANGES] And we would appreciate you sharing with us at an appropriate time what recommendations you might have, and I don’t know that’s now about how we can better tackle things in light of your findings. [SPEAKER CHANGES] Senator McKissick, thank you again. Members of the committee, I now have six individuals who are in line for questions on this area, given the hour of the meeting, if we continue on that direction, we will not be hearing from the Secretary

They're benefits do not change so are we really can say that comes from this is some second on the four are because I believe the charred yes , I believe if it's something that can come from the john $41000 income they weekly benefits from the we could lead you will be capped at three CD Banks that were within 3/94 ms the login a difference 95 S and the weekly benefit the 737 brain 337 I said that (SPEAKER CHANGES) that this 1,000,000, down there a mammoth weekly benefit us to follow question that you get just a quick poll of the men and women from time to the recruiting that is the other question three relating to the band that are met and (SPEAKER CHANGES)we would call was to fund people to accept employment suitable employment if they were all three of 1520% more 120 visit more than the weekly benefit is to use of their four defeat in that $350 maximum weekly benefit you and you do in fact the age of 820% more timely yet if he lost a job paying 50,000 at least that lost a job at 50,000 atlas can't get three CD probably would be a ms better positioned to take that job , 22,000 from least tell me that have a job to get a job in our belief wrongful conduct a jumbo a death-seven summit this prestigious, coming as chairman of the members would also a yearlong wallet a good many normal home run with a cure for while some will pose from session at least two stories of us continue on display today that he set about that doesn't mean we have to use every moment in a crackdown in the good sources said Tillman five and $7.00 and five (SPEAKER CHANGES) you don't have to work queue nine and your committee said tucker you were here when we, should not only employers portion of the facts and remember we saw in this recession $400,000,000 was taken when going so flawed that it was going down in the recession hits and drop slightly above all that won the one we got six that came out that small business people dislike you call mail, and therefore they're only place in the Balkans are the people for mistaken about our goal is to focus all we all for the business community when we were years for this 78910 will we should go up on the senate action we should know you have marred, we will know what we tell them that's a lesson this will create a big are holding a bit too far down the road down the road again recession said longer we got a problem got to fix with that said, the motion for 5 to 4 take that motion they would collect money to see if there any additional comments and the senate would leave as chairman of which offered an image of bill and (SPEAKER CHANGES) Paul Wright times that the judge said in a screen pass allowed in the same one would be prepared to explain it and also how you'd like to balance the difference in dollars if that is what it is because all these pieces seem ?? to fit together if they has anybody, copy of this in this point might say women speak for the-art think you've got to work on this and (SPEAKER CHANGES) I follow show your work on this bill in the months to put into this month and appreciate you reflect the racial 1935 language and talk about the left wing of the surest be a short term bridge and that we've reached the obtained ...............

Defeated [??], and in this case, if you look at the programs administrative cost which an auditor would found is indeed the case, there are very low administrative costs, but actually the administrative cost functions are in the manage care entities. And if you look at what is termed the medical loss ratio which is what the manage care companies are allowed to use as administration. If you look at that for Arizona their administrative costs would actually be 13.74%. And we have a saying in Medicaid if you look at one state you see one state. So everything has its nuance, however I don't want you all to take away that we're not looking at this issue. How we both at the Medicaid agency monitor other sister agencies and work with them to ensure both that the administrative costs are appropriate but that all costs are appropriate in our memos of understanding. So we are engaging in a very aggressive review of the relationships and the contracts and the MOU's with the other agencies to make sure they are carefully reviewed and in compliance with both what you all expect of us, what the taxpayers expect of us and what both the state and federal laws require of us. [SPEAKER CHANGES] If there are any other questions? [SPEAKER CHANGES] I will begin the process back through the list that we kind of have to this point and I'll begin with Representative Farmer-Butterfield. [SPEAKER CHANGES] Thank you Mr. Chair. They say if you stay and listen long enough your questions will be asked by someone else. And senator McKissick did some of that. I wanted to find out, there was a mention about a last audit by the state auditor. Has there been a comparative of that last audit to this one, and are we seeing similar problems or not? [SPEAKER CHANGES] I'm not sure which, help me with - if you're talking about the one I was talking about on the fraud tools that are being used? [SPEAKER CHANGES] Just an audit on the department of health and human services in general. Has there been one and when was the last one? [SPEAKER CHANGES] No. We go in and audit the financial statements and all we're doing is apining [??] on those numbers, are they materially stated. Then we go in and we audit the major programs that they have, food stamps, Medicaid and are they administering the program in accordance with federal requirements. The federal grant audit that we did we had findings, had cash management drawing down money, not paying it back like they're support to, it was in that audit also. So we're finding similar findings but now the performance audit and the audit for the federal grants are in compliance with federal requirements are two entirely different thing. We had just a few like the cash management one that overlapped between the two. [SPEAKER CHANGES] That answers my question. And I appreciate the thorough report that the auditor has given and it was very easy to follow and that is commendable on such a complex issue. The other thing I wanted to ask, are there states that have best practices as it relates to our concerns and what are those states and are we going to communicate with them and see what can be done to enhance our state? [SPEAKER CHANGES] Representative, yes, we are actually working with getting information from other states on their best practices. And presently we are as our number one goal inside of the department of HHS is in reference to overhauling Medicaid and reforming Medicaid, and one of the things that we are in the process of is a request for information to the greater community of North Carolina in reference to working with them on their ideas. And we actually are in the middle of this project, we just have a few more days into the general community for the first phase for the request for information for the proposals. And - was there follow up? [SPEAKER CHANGES] I am a big believer in stealing good ideas from whomever has them. So and we work with our national association both of medicaid directors and there's also a national association of program integrity directors, and I've instructed our program integrity director to be part of that, to be very involved. The sharing of ideas is something that's so critically important in a complex program like medicaid and we do that and will continue to do that and seek out both not only from the Medicaid world nationwide but from the private sector also ideas that we can bring...

Speaker: And we use to help and oversee the oversee the program , Speaker Changes: the members of the committee are still sitting one member for question and i thin i will suspend taking questions on additional information ?? as we go the next one we got on our list please be mind of or our questions is well senator Robert, Speaker Changes: thank you Mr.Chair thank you madame auditor madam secretary for coming back and analyze for what people by serving and adding n this administrative cost i think we ?? by a system north Carolina past in terms of pulling n that data who duplicating shoes serving for administrative services for doing it a lot of those issues heard down to systems that hat ab;e to monitor but my question is you mention cause allocation secretary i mean madam auditor, Speaker Changes: ??, Speaker Changes: your mention cause allocation with D S S is that policy issue or department issue if that there is no cause allocation formula, Speaker Changes: the federal governor requires that there be a cost allocation plan so each one of us have division D S S one divisions ?? but each one of them have sort of coming out from their own cost allocation plan and administering it so you may not have consistency on how you may be Secretary ?? if allocated ?? system allocation and the other thing is may that ?? is that really necessary so if you got several divisions administering you own cost allocation plan ?? central over side and consistency and how that has been done, Speaker Changes: thank you senator ??, Speaker Changes: my question is sort of an answer thank you, Speaker Changes: thank you Representative ??, Speaker Changes: thank you Mr.Chairman don't have a statement make but i have if you do wanna introduce to ?? and say and i look forward to ?? both of you i just have asking questions that can be answered relatively one of the take part in how the department of ?? with the recommendations that have been made it's specifically I'm asking about the confrontation cost allocation of the other ??, Speaker Changes: we are working as specifically as we can ?? to the ?? some of the issue have been actually resolved this month because we are getting now policies and going forward in new organizations and ?? it's happening between this month and next month but the last pair would be very last sense of end date of this Speaker Changes: 230th of this year have already implemented better contract procedures monitoring on what we spending every single check right so lot of the issue were addressing immediately the coordinates between offices and ate management budget and the department budget's doing the cost allocation plans that will have some coordination and work but we will have everything completed June 30th of this year, Speaker Changes: follow up question, Speaker Changes: follow up, Speaker Changes: i don't know where the question is directed to i don't know ho many vacancies you have in ?? and why i had like to know why what is happening to this issue for this issues for ?? how many vacancies, Speaker Changes: well i never set for ?? Representative last year we have 200 vacancies beside of HHS beside of ?? i have that information on this desk but i have ?? it to you today we are in the mid stuff feeling critical positions we are looking at organizational structure though in order to insure efficiency and effectiveness so we are not rushing out to ?? vacant positions but we are looking strategically on where resources are necessary like programs had integrity some other things we know ,

Speaker: Not been very responsive too but i have the information amd can provided to, Speaker Changes: well i, Speaker Changes: follow up thank you thank you Mr.Chairman i know this several weeks ago there wwas 40 because i admit with the division director Watson and Austin what i didn't ask him is that why was the vacancies are there ?? very concerned about expertise and the lack of position filled and so i assumed some reason we can follow up that later the other thing which is also questioned ?? from mere experience working in medicate if you directed to save 72 million dollars in one year through measures you have to have us state plan amendments knowing that how could you do that in one yeast give the fact that yo cant get the $72 million dollars in year because you cant get the state amendments to in order to have $72 million dollar you should have state plan amendments or the service which you were actually would set you out of state plan amendments would cut more than $72 million can you how you would ?? Speaker Changes: i would rather not criticize ?? because i wasn't in their shows that time but i will tell you in the secretaries crystal clear instructions or to be all us of us that is to be transparent common sense speaker shown we talk about the program when we start this process of developing the budget ?? governor says expectation on us in secretaries we investigate both clearly ?? what we use to come up with the estimates what are functions are and what the process is we are achieving those goals so that nobody is surprised and that everybody understand both the feral rules and the state rule for anything i would do and again wild not criticize for say ?? that is very very important because medicate is one of the rare agencies what we cannot do or anything on our own it has to do through federal agency so that communication open this between your staff and us ?? and i cannot emphasize on who how much the secretary emphasize that Speaker Changes:so i would just like to make a very brief comment and i thank you all i think this is very valuable process and I'm very pleased that can we correct most of the ?? recommendations or have completely in place by June 30tth its' really important to indicate all are we moving fast i do think that we do have a full discussion during the budget process last year during the secretary process explain this issue of the delay in the state plan amendments and how if you don't get your state plan amendment approved by January 1 after the year is already gone and you ant save you can save had of 72 million but you are saving from January to June but you are bit saving from July 1 through December 31st and if you ?? couldn't have all the $72 million dollars next year you gonna be saving $102 million so that issue was explained to the committee last year and i think that's why they tried to put a plan of about retro active collections it was not either really professional or realistic i appreciate the time and look forward to Speaker Changes: thank you Representative ?? Speaker Changes: thank you Mr.Chairman my question is going to be directed ought it would with the measure that were taken to monitor would were we doing and recognize identify savings we have the IT side of it with the feature ?? we also have the ?? report that was all evaluations of money that saving through using C C N C i have a question in terms of you think to indicate that wasn't

A sufficient in terms of freely given us the numbers that we needed and they were accurate I some wonder where what's the criticism there we are talking about an actuarial firm that looks at apples and apples and what squares the weakness for which we be looking for his is that they knew they were getting isn't an affect the tree savings throughout the city is introducing its neck.(SPEAKER CHANGES) Its troops and what exactly why didn't the report is based on actuarial information is case and that is based on assumptions and assumptions have to come true on your back is 60 project in the past, people need access to the assumptions have to come true and that is really an on discount, you can't say it's not that record rings, finding have in years and eight, backed by actual name and address with data on one hand and service under the CCC and Willard and while committing haven't seen the NFL issues people outside the system to you really have to pay (SPEAKER CHANGES) ,a 200 years since they not only is there a savings, to use that cents 17 better get to your budget and 8¢ Friday are several letters chairman(SPEAKER CHANGES) of the two part question first and only would you get the delivery room below report which is a social and financial management militia vision abuse that teach reading data will contact Sharon qualified 8¢ on the back of my knees are critical in stores down into the next on money rates by tracking a contract in expenditures against by did not properly and the other half are necessary to project on his country as you possibly can to budgets, (SPEAKER CHANGES) when he said on and I just have to be a good start to the call of nature of the bridge which chairman of the closures the books to only have two or more to do my own financial management of the local board on this and we look into the service is serving supposed to supply the list of most of the contracts of owned by $100,00 & 4,000,000 from one year for most of the contraptions reproach would to assess your social review and quality assurance issues of social egos adopted the new services to provide a concern is that people are great approach to the arctic ocean where social and if you don't know if the share of the previous three years and Bruce Riordan worst on my concern is that the usual company that paid much attention which would be concerned today , dropped in the context of the performance do searches, is reasonable to do was surely, better and improved search motion(SPEAKER CHANGES) where assure our number one goal right now and I think it's a protocol is we have two and over, I were passing Medicaid System has been seen from this audit and then we can really take a step back and assess what are the flexibility for the future is entertainment and Medicaid expansion with what we just heard when we not be the with right decision we really care needs to happen any manageable flexible accountable and Medicaid system and for the state of North Carolina we are at a lesson from the inside of the department of massively looking to make change that you will see quickly that will be able to adjust other needs to stay with senator AG, (SPEAKER CHANGES) I heard the word is starved I heard a grade of and I would not give this a grade C of my background is that ms takes an opera fans are the masters accounting program that can flag of……

Fiscal we teach ethics we talk about Sarbanes-Oxley that was the result of the Enron debacle and MCI and what I'm hearing here you can call it whatever you want to get it is a gross breach of fiduciary obligation to the foster children to the elderly to the taxpayers of North Carolina and I'm so glad it had an auditor you had the the courage to come forward and take this on and that you two are not running screaming from the building on my question is this you mention I'm so glad you did the private sector the private sector has taken some tough months lately because of behaviors like this people have gone to jail in the private sector probably less than the S.you mentioned that what kinds of private sector ideas are you you say stealing a recycling what kind of private sector ideas such as whistleblowing heard from folks in the DMV organization you're such a culture of the that they are afraid to come forward for fear of losing their jobs whistleblowing on the accountability I already tell this time from the top which we preach and preach and preach in the business school the time for the top as they are decidedly buy-in is not the implemented patient from the bottom up from the top to the bottom I like here just a comment or two about how you'll be looking at some of these issues since an earlier Thursday that Medicaid I think the contracts relative but they private sector on Medicaid I tireless present receiving antenna and working with some of that, with many members and our extended community Comment we can best find comments on NEPA information proposals we received will is information not just on how your mind benefits and also how at the financial responsibility that we have so little that we get some proposals and in the area program integrity yet we have to do is we have to get better and were so glad to have Jeff Cooper on what exactly I want to get better at finding the anomalies only make the payment and out lately 90% of the good providers are doing the right thing and doing everything properly are not in their child's harass fire forgetting the 10% that are trying to take management program silver working with young viaticum on it that we're doing is looking at this compliance function had bill in a state agency not just the program integrity component things in the sense of how you build from the top to the bottom a a mentality that we have a God-given right and responsibility to make sure mortality when something is not right we follow my suggestions I would like you to think about is on number seven this is called insuring program integrity well in the private sector is called in total on his like these folks via and I think that we get down to brass tacks I can tell you have and I think it's those kinds of initiatives also I don't see it as I do believe it's a God-given responsibility but I think it's a legal responsibility and ethical responsibility just like it is in the private sector even more so because we are entrusted with money the people that necessarily choose to give us that thank you Sen. Connie responds and viewpoints you made one of the many things that is urgently being done in restructuring actually our internal audit in reference to Medicaid. But members of the pixies are was approaching the last few minutes of the committee meetings about Accenture? Slightly private sector of regular monitor very much the committee of a think this is a preview of the exciting work we have in front of us are as sweet as general assembly began developing biennial budget for this agency on whether you just want to comment on really quickly on we do have the are several things that also concerned that greatly a list of other goods also concerned that there are several areas that exist out there that despite the matter of Slate wall including the drug reverse payments including nonprofits included mandated savings are the emergency department pastor chosen to ignore this I am a little nervous with the drug-related treatments were still being said yesterday that they were

In the budget shortfall for this year, but I think we can manage that pretty quickly despite the state law. I think we know what we have to do, I think we’ve got an incredible team that’s now committed to doing it and Madam Secretary, I probably most commend you for not taking a defensive posture in this matter for the department and making sure that we as the taxpayers of the state and the General Assembly get this resolved and moving forward. Thank to the auditor as well, this is incredible work. With that being said and no other comments, the meeting will stand adjourned.