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How Changes To Response Of Medicaid Audit Fit McCrory’s Message

CHUCK LIDDY — cliddy@newsobserver.com

The North Carolina Department of Health and Human Services has been under fire this week. On Tuesday, the department's secretary received a day-long grilling in legislative committee hearings. That same day, the website North Carolina Health News reported that the McCrory administration and the department had done some extra spin to make the state's Medicaid program look particularly broken. Morning Edition host Kevin Kniestedt spoke to WFAE's Michael Tomsic about what's going on here. The following is audio and a transcript of their conversation:

Kevin: This latest news revolves around a scathing audit of the Medicaid program done by the state auditor who is independent of the McCrory administration. How exactly did it come together?

Michael: Last year, Republican lawmakers asked the state auditor, Beth Wood, to check out the state's Medicaid program. She released her findings in late January of this year. The audit showed the state Department of Health and Human Services had been horrible at managing administrative costs and budgeting for Medicaid. The spin we learned about this week has to do with how the department responded to that audit.

Kevin: Just to be clear, the audit itself hasn't come into question – just the administration's response to it?

Michael: Exactly. There have been misleading headlines that make it seem like the administration changed what was in the audit. That did not happen, and the auditor's office has defended the accuracy of its report

Kevin: So this comes down to the administration's response?

Michael: Right, and the timing of when the audit came out plays a big role in that response. Remember, it came out less than a month after Governor McCrory took office. But the auditor had been going back and forth with the previous administration, Governor Bev Perdue's administration, to double check numbers and get responses as it was putting the whole thing together. That's a normal part of the process.

And Perdue officials had prepared a defense, saying there's another way to look at our administrative costs and budgeting, and there's this whole part of the program called Community Care of North Carolina that's saving money and working well. But Perdue's term ended before the audit was released.

Kevin: What happened to the points that her administration wanted to make?

Michael: When McCrory got into office, his people saw the responses that were prepared by the outgoing team, and they decided really not to put up any fight against the audit.

For example, Perdue's health and human services officials pointed out that some research done by outside groups shows a huge part of the Medicaid program – Community Care of North Carolina – is saving money. But the person McCrory's administration brought into run the Medicaid program took that defense out and instead called Community Care's effectiveness into question.

Kevin: So what we ended up with was the Department of Health and Human Services basically accepting – and agreeing with – this scathing audit of Medicaid rather than challenging portions of it?

Michael: Yes, and keep in mind the department's response to an audit is important because it gets included in the appendix and functions as the other side of a story, basically.

Kevin: Why would the McCrory administration take out those defenses of the state’s Medicaid program?

Michael: Secretary of Health and Human Servics Aldona Wos says they just had a fresh pair of eyes. But Governor McCrory made a big deal out the audit when it was released. Here’s what he said at a press conference thanking the auditor for her work:

"The people of North Carolina have sent us here to fix a broken government system, and that's exactly what we're going to do," McCrory said.

McCrory and Wos want to overhaul the program and use a model that's different from what many experts say is already working under Community Care of North Carolina. And soon after taking office he had this audit fall into his lap as support for that change – to give private companies a chance to bid on managing the state's Medicaid program. Anytime McCrory talks about his plans, he brings up the audit. 

Kevin: But since nothing in the audit actually changed, is it really all that surprising that a politician would spin something to promote an agenda?

Michael: No, and that's not uncommon. Many people would argue, for example, that Governor Bev Perdue politicized the state's education department because it was a big part of her agenda.

But this spin on the Medicaid audit is another example of how particularly political the health and human services department has become under McCrory. His secretary for the department, Wos, has hired several people who worked on his campaign and given them big raises. The department now releases these slick infographics touting its achievements – the kind of thing you'd expect more from a political campaign.

And now North Carolina Health News uncovered that less than a month into taking over, the administration was already spinning its response to the Medicaid audit in a way that dovetails perfectly with McCrory's agenda.