The chronology of failures to audit the DHS/HMO billion dollar relationship…

1) In 2008, the Legislative Auditor examined the financial management of Minnesota’s public health care programs and reported that, essentially, there was no oversight or supervision of these programs–and the Legislative Auditor didn’t audit them.


2) In August 2010, the U.S. Government Accountability Office reported that the actuarial standards of practice our HMOs claim they adhere to did, in fact, not exist–and the Legislative Auditor didn’t audit.


3) In January 2011, the American Academy of Actuaries issued a statement saying that actuaries did not look for false data nor did they audit information supplied by the HMOs–and the Legislative Auditor didn’t audit.


4) In March 2011, UCare returned 30 million dollars to the State of Minnesota revealing that UCare had been cross-subsidizing a state government program with Medicaid money which UCare characterized as an overpayment–and the Legislative Auditor didn’t audit.


5) In April 2012, The U.S. House of Representatives Committee on Oversight and Government Reform issued a report which stated that Minnesota provides a stunning example of how states are failing to properly ensure the appropriate use of taxpayer dollars spent on Medicaid programs managed by HMOs. That report also stated the federal government is likely owed hundreds of millions of dollars in additional overpayments made to HMOs, nationwide, over the past several years–and the Legislative Auditor didn’t audit.


6) In July 2012, the Minnesota Department of Commerce issued a letter stating that it

had never audited the HMOs’ use of public program money and did not think it was the Department of Commerce’s job to do so–and the Legislative Auditor didn’t audit.


7) In March 2013, the Segal Company did an actuarial review of Medicaid rate setting in Minnesota pertaining to HMOs. Segal’s written report stated, “. . .  we believe the Milliman* trend methodology produced a systemic overstatement of the trend, causing the program to exceed targets over time.” Segal also wrote, “…  it seems unreasonable that no one (DHS, Actuary, or CMS) ** called into question the pattern over the extended period of review.” –and the Legislative Auditor didn’t audit.


8) In September 2013, the Public Consulting Group Health firm reviewed HMO involvement in Minnesota’s public health care programs and noted that Minnesota ranked only behind the District of Columbia and New York in highest Medicaid expenditures per full-benefit enrollee–and the Legislative Auditor didn’t audit.


9) On February 28, 2014, in response to a 2012 legislative mandate that the Legislative Auditor should hire a third party firm to audit the HMOs, the Legislative Auditor issued a memo stating, ” . . . after many months of efforts, the Office of the Legislative Auditor (OLA) was unable to secure the services of a qualified accounting firm that was, in our opinion, adequately independent to conduct the audit.” The memo went on to say that the Office of the Legislative Auditor would be conducting the audit itself.


One year later, in 2015, the Legislative Auditor told the legislature that an audit was expensive, unnecessary and complex. The Legislative Auditor gave back the funds which had been set aside for the audit and recommended the audit statute be repealed. THE LEGISLATIVE AUDITOR DIDN’T AUDIT.


10) In January 2015, the executive director of the Minnesota Council of Health Plans published an article in the Star Tribune newspaper in which she wrote, “… HMO reserves are not cash on hand. In fact, more than half of what appears on paper to be HMO reserves is actually money the state has yet to pay the HMOs.” She further wrote, “…there is an HMO shift that totals more than $1.3 billion.” –and the Legislative Auditor didn’t audit.


11) In March 2015, The Government Accountability Office released a report which stated, “. . .  we recommended that CMS require states to conduct audits of payments to and by managed care organizations…” –and the Legislative Auditor didn’t audit.


12) In the years since 2014, a series of court cases have claimed HMO fraud based on hidden internal markups involving both Medicare advantage and ERISA *** employer plans–and the Legislative Auditor didn’t audit.


13) On August 14, 2017, news sources reported that over 200 lawsuits had been filed against Blue Cross of Michigan, identical in nature, based on hidden internal markups–and the Legislative Auditor didn’t audit.


14) On April 5, 2017, a group of 16 concerned citizens met with the Legislative Auditor and he informed them that he is aware of his fiduciary duty to the Federal government–and the Legislative Auditor didn’t audit.


 * Milliman is the actuarial company routinely hired by the State of Minnesota

 ** DHS = the MN Department of Human Services, our state agency overseeing Medicaid

   Actuary = Milliman

   CMS = the Center for Medicare and Medicaid Services, a federal agency

 *** ERISA = Employee Retirement Income Security Act of 1974.  It pertains to companies that create their own self-insured health benefits programs for their employees. 


This document produced in September 2017 by Health Policy Advocates,

a grassroots group of health care activists.

FFI:  Diane,

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