Please contact me if you have any questions.
Sincerely,
Jeremy Otte, MSCIR, MSSMC
Director, Mission Delivery
National Multiple Sclerosis Society-Wisconsin Chapter
Referred to committee on Aging and Long-Term Care
__________________
Agency Reports
State of Wisconsin
Legislative Audit Bureau
Madison
December 20, 2011
A727
To the Honorable, the Assembly:
We have completed a review of the Department of Health Services' (DHS's) Medical Assistance program, as requested by the Joint Legislative Audit Committee. Total Medical Assistance expenditures increased from $5.0 billion in fiscal year (FY) 2006-07 to $7.5 billion in FY 2010-11, primarily because the number of recipients increased from 870,201 in January 2007 to 1.2 million in January 2011. DHS has increasingly relied on vendors to provide administrative support to the program, and vendor payments increased from $66.2 million in FY 2006-07 to $114.8 million in FY 2010-11. DHS has not always adequately assessed costs before contracting with vendors, and its extensive reliance on vendors raises concerns about DHS's ability to provide adequate program oversight. We include recommendations for DHS to improve its contracting and oversight practices.
Most recipients receive services through subprograms, such as BadgerCare Plus, which are often provided through managed care arrangements. It is widely believed that providing services through such arrangements is cost-effective. However, an estimated $3.6 billion, or 51.2 percent of all Medical Assistance expenditures, were incurred on a fee-for-service basis in FY 2009-10. We include a recommendation for DHS to consider enrolling recipients in managed care plans more quickly.
DHS's budgeting and financial management practices have not kept pace with the growth and increasing complexity of the Medical Assistance program, and DHS has not been able to readily produce the type of management information that is desired by legislators and needed for effective management. For example, DHS does not include all Medical Assistance expenditures as part of the program's budget or record them as the program's expenditures. In addition, it neither budgets nor routinely accounts for expenditures on a subprogram basis, which is typically how legislators and others deliberate the program. We include recommendations for DHS to better account for all Medical Assistance expenditures and to budget and track these expenditures by subprogram.
The federal Patient Protection and Affordable Care Act will impact Medical Assistance funding and participation, but its overall effects are difficult to predict because many provisions of the Act will not become effective until 2014. We include a recommendation for DHS to report to the Joint Legislative Audit Committee by January 2013 when more will be known about the likely effects of the Act.
We appreciate the courtesy and cooperation extended to us by DHS, health care providers, and other groups in completing this evaluation. DHS's response follows the appendices.
Respectfully submitted,
Joe Chrisman
State Auditor
__________________
State of Wisconsin
Legislative Audit Bureau
Madison
December 22, 2011
To the Honorable, the Assembly:
We have completed our financial audit of the State of Wisconsin as of and for the fiscal year ended June 30, 2011. The State's financial statements, and our unqualified audit opinion on them dated December 21, 2011, were included in the State's Comprehensive Annual Financial Report, which can be found on the Department of Administration's website.
During the course of our audit, we identified internal control concerns that are required to be reported under Government Auditing Standards. The enclosed management letter includes our report on internal control over financial reporting and on compliance. In that report, we make recommendations for various state agencies to improve their financial reporting and to strengthen internal controls, including those over security of computer programs and electronic data. The management letter was provided to the Department of Administration and to the other state agencies to which we made recommendations for improvement. We will follow up during next year's audit to determine the extent to which state agencies have addressed these concerns.
In addition, we followed up on certain budgetary accounting matters we reported in a January 20, 2011 letter to the Joint Legislative Audit Committee. In that letter, we identified $19.4 million in lapses during fiscal year (FY) 2009-10 from certain program revenue appropriations in excess of the available cash balances. In addition, we identified $25.9 million in expenditures that were paid during FY 2009-10 but charged to FY 2010-11 accounts.
During FY 2010-11, we found that the Department of Administration took steps to prevent lapses from program revenue appropriations in excess of available cash balances. However, a total of $567,500 was lapsed during FY 2010-11 from three program revenue appropriations due to an oversight. We also found during FY 2010-11 that state agencies appear to have discontinued the practice of paying for expenditures in one fiscal year but charging them to the next fiscal year. We found no FY 2010-11 payments that were inappropriately charged to FY 2011-12 accounts.
We appreciate the courtesy and cooperation extended to us by the Department of Administration and other state agencies during the audit.
Sincerely,
Joe Chrisman
State Auditor
