Secretary
State of Wisconsin
Legislative Audit Bureau
September 18, 2001
The Honorable, The Legislature:
At the request of the Department of Health and Family Services, we have completed a financial audit of the Health Insurance Risk-Sharing Plan (HIRSP) for fiscal year (FY) 1999-2000. HIRSP provides medical insurance for nearly 11,500 policyholders who are unable to obtain coverage in the private market. We have provided an unqualified opinion on HIRSP's financial statements and have followed up on issues raised in prior audits.
One of these issues relates to overpayment of prescription drug claims. From July 1998 through January 2001, the Department did not have controls in place to ensure that policyholders and pharmacies were reimbursed for prescription drugs at HIRSP-allowed rates. As a result, HIRSP overpaid drug claims by an estimated $5.5 million. The Department has reinstated system controls to reimburse drug claims at HIRSP-allowed rates, and it plans to begin recovery of overpayments in fall 2001. However, because of these efforts, at least 160 pharmacies have withdrawn from the program. The Department has recently implemented an on-line pharmacy claims processing system, which it expects will help to address pharmacy concerns and streamline the drug claims process.
Another major issue pertains to HIRSP's funding approach. In April 2001, the Board of Governors voted to implement an accrual-based funding approach in response to our prior audit recommendations, and following extensive debate. HIRSP's actuary projects that in fiscal year (FY) 2001-02, the change from a cash-based to an accrual-based approach will require policyholders, insurers, and health care providers to provide an additional $16.6 million to fund an accumulated accounting deficit. An excess policyholder premium reserve will fund the policyholders' share; the required contributions paid by health care providers are expected to meet their share; and insurers will fund their share through their semi-annual assessments.
We appreciate the courtesy and cooperation extended to us by the Department and the plan administrator for HIRSP. A response from the Department is Appendix 2.
Sincerely,
Janice Mueller
State Auditor
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Relating to supervision of precertification supervised practice of social work.
Submitted by Department of Regulation and Licensing.
Report received from Agency, September 14, 2001.
Referred to committee on Human Services and Aging, September 20, 2001.
Relating to the use of force to prevent escapes, pursue and capture escaped persons detained or committed under chapter 980, stats., and to provide security at facilities housing such persons.
Submitted by Department of Health and Family Services.
Report received from Agency, September 19, 2001.
Referred to committee on Economic Development and Corrections, September 20, 2001.
Relating to contact lens prescription release by optometrists.
Submitted by Department of Regulation and Licensing.
Report received from Agency, September 14, 2001.
Referred to committee on Health, Utilities, Veterans and Military Affairs, September 20, 2001.
The committee on Human Services and Aging reports and recommends:
Relating to the eligibility of nonparent relatives of children to receive kinship care benefits to help them provide care and maintenance for the children.
Report objection recommended:
Ayes, 6 - Senators
Robson, Moore, Wirch, Hansen, Roessler and Kanavas.
Noes, 1 - Senator
Welch.
Referred to joint committee for review of Administrative Rules, September 20, 2001.
Judith Robson
Chairperson
The committee on Labor and Agriculture reports and recommends:
Relating to the definition of unprofessional conduct of the practice of veterinary medicine.
No action taken.
David Hansen
Chairperson
