Policy Watch Investigates

DHHS hearing leaves lawmakers frustrated

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The head of the N.C. Department of Health and Human Services spent Tuesday fielding tough questions about problems in the state’s largest agency, from high salaries given to her leadership team to a Medicaid billing system that’s delayed payment to some providers for months.

Aldona Wos faced a scenario that few other cabinet secretaries have undergone– a full day’s worth of difficult questions from legislators, many of whom are displeased with the performance of the agency in charge of $18.3 billion in state and federal money.

“All they see is what they see in the press and then we get blamed for your actions,” said Sen. Tommy Tucker, a Waxhaw Republican, about reports of high pay going to young former McCrory campaign aides. “We all have to serve North Carolina; we all have to serve constituents.”

Wos defended her decisions, telling Tucker that she was assembling a leadership team that she trusted.

“My obligation is to run the most efficient and effective way this enormous department,” she said. “My obligation is to find the right person for the right job.”

Wos, a Greensboro physician and significant Republican fundraiser appointed by Gov. Pat McCrory in January, also tried to assure skeptical lawmakers that the N.C. General Assembly would be consulted in her plans to change how the state manages the massive Medicaid program.

She told lawmakers a reform plan would be in front of them by next spring, but also sidestepped questions about whether she wanted to privatize the more than $13 billion health-care system for low-income families, disabled and elderly North Carolinians.

Any changes to the system will need to be approved by the state legislature and leading Republican have already expressed reservations about moving away from Community Care of North Carolina, a non-profit care system that’s earned national recognition for its system of pairing Medicaid patients with primary care doctors as a way of cutting costs and improving care.

Wos reiterated previous claims that the current Medicaid system, which has yearly cost overruns, is in desperate need of change.

“The most import part of this is the present system doing enough to make us healthier?,” Wos said. “Our system is truly broken. How do we plan on fixing it?

Wos and lawmakers tackled a number of issues, below is a quick recap.

Medicaid billing

A massive, multi-year Medicaid billing system that’s been steeped in controversy for years went live on July 1, and since then doctors’ offices and health providers around the state have said they can’t get the system to work, and are facing significant delays in reimbursement.

Tuesday’s hearing included testimony from a Cape Fear Valley Health System finance officer said that the new system, called NC TRACKS, has denied all of the chemotherapy drugs they’ve administered to Medicaid patients in the Sandhills health system, an estimated $4 million worth of payments.

Susan Fountain came from Jacksonville to tell lawmakers that the Medicaid billing problems in the radiology office where she works has left the small practice without needed revenue for work already performed.

“We are facing closing our doors because of this one thing,” she said.

Lawmakers from both parties expressed frustration with the response of CSC, the company contracted to build and run the new system.

“’Just fix it’ is where we need to get to,” said Sen. Jeff Tarte, a Cornelius Republican. “This is no past administration’s responsibility. This is ours, we own it.”

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Salaries

Some of the toughest questions of the day were directed at high-dollar hires and contracts Wos approved, and subsequently received attention from media around the state.

Legislators asked about  the $22,500 and $23,000 raises she gave to two 24-year-old members of her staff, high-dollar personal contracts that have awarded at DHHS and a $37,000 severance settlement that she made with her former chief of staff Tom Adams, who only worked for a month in the position.

Wos told legislators that she was paying her staff, including her communications director Ricky Diaz and chief policy advisor Matthew McKillip, both 24, at the same levels others in those positions were paid.

“The work they do is invaluable,” she said. “I trust them not only personally but I trust them that the work they do for the state and citizens is monumental.”

As for the $37,000 settlement paid to Adams after a month of work, Wos and her staff did not go into specifics about what led to settlement.

Wos did tell lawmakers that the money was not a severance, which employees in positions like Adams are not entitled to, but instead was for a “separation.”

The difference between the two was not explained.

Food Stamps

Lawmakers also heard more about the problems, and fixes, surrounding the state’s food stamp delivery system, which encountered major delays this spring and summer and left many waiting weeks or months for the emergency food supplements.

Lawmakers seemed pleased with the steps DHHS was taking to fix the food stamps IT problem, and were told that most of the bugs had been worked out.

“We’re concerned whenever anybody doesn’t receive their benefits on time,” said Wayne Black, the states’ Social Services Directors. Compounding the problem at DHHS was a heavy backlog of cases, especially in urban counties like Wake.

DHHS hired on temporary staff to help deal with a backlog of food stamp cases, and Anthony Vellucci, the IT director of the program, said money to pay them came from previously unused funds for the project.

“Getting the issues addressed in this area has been a lot more efficiently and a lot more timely,” said state Sen. Earline Parmon, a Winston-Salem Democrat.

Critical audit edits

Wos was also asked about N.C. Health news article (click here to read) that published the day of the hearing and detailed how Carol Steckel, who was up until recently the state Medicaid director, changed the responses of a critical Medicaid audit to show the state agency in a less favorable light.

The result was an audit that Wos and McCrory both held up as proof the state’s Medicaid systems was “broken,” and drastic changes, like contracting with a private managed-care provider to take over the program, may be needed.

Wos said she hadn’t read the news article, but was confident that whatever changes in the editing process stemmed from the new administration’s willingness to accept the critical findings.

“The responses to the audit were based on a fresh set of eyes,” Wos said. She added, “I stand by whatever we signed off on.”

At the end of the hearing, state Sen. Ralph Hise, a Spruce Pine Republican, bristled at the questioned in by Democratic legislators and suggested the recent article was being used to unfairly bash Wos.

“You’re starting to see a witch hunt,” Hise said.

Drug testing of welfare participants

The head of DHHS’ division of social series said the agency plans on studying, but not yet implementing, the cots and methods for drug testing recipients of public benefits suspected of substance abuse. McCrory had vetoed the bill about the drug testing program, and said he wouldn’t set aside funding to carry out the legislator’s wishes.

A future showdown of the law could be coming between McCrory and the Republican-led legislature on this.

Privatizing Medicaid?

As mentioned above, Wos sidestepped some of the questions about her plans to change Medicaid, but did try to smooth some ruffled feathers by assuring lawmakers she would be coming to them for permission.

Tucker, the Waxhaw Republican, asked Wos,  “Are we or are we not looking at privatizing Medicaid in the state?”

Wos avoided answering the questioned directly, and instead implied it was too soon for her to say what the department’s plans are.

“I don’t think it’s a question that should be answered without full data,’ she said.

Lawmakers did learn a bit more about Bob Atlas, a consultant Wos brought on to help usher the state into the reform process. Atlas has more than two decades of experience working at private managed-care companies, which North Carolina could turn to if privatization plans move forward.

He also landed one of the biggest personal services contracts the agency has given out, earning $250 an hour. At that rate, he earned an estimated $3,000 at the 10 hours of Tuesday’s hearings, and would be earning well over $500,000 a year if he keeps a 40-hour a week schedule.

Atlas reassured lawmakers that he wasn’t bringing a bias to managed care companies that could privatize the state-run system.

“That doesn’t mean I promote managed care,” he said, adding that a managed care system could put to rest lawmaker’s desires to have a system that without yearly cost overruns.

What next?

The legislative oversight committee will be back Nov. 12, and updates on many of the issues discussed Tuesday are expected.

Tuesday’s hearing left some lawmakers with as many questions as they had before.

“I’m a little bit frustrated,” said state Rep. Beverly Earle, a Charlotte Democrat. “I don’t feel like I know a whole more coming in than I did before.”

Tarte, the Cornelius Republican with background in the IT profession, acknowledged the difficulties associated with running a massive agency like DHHS, a frequent subject of criticism both in the public and at the legislature.

He also said he understood the need to pay contractors at rates seemed exorbitant by the public, if the contractors can deliver superior work.

“You could not pay me enough to come work for you,” he said, earning a few chuckles in the room.

Want to see for yourself how the meeting went? Raleigh TV station WRAL has unedited video of the legislative oversight meeting available here.

Questions and comments about this article can be sent to reporter Sarah Ovaska at (919) 861-1463 or sarah@ncpolicywatch.com.

Photo: Screen grab from WRAL.com streaming video.

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