DHS seeks retroactive review of public health care spending

August 1, 2012

Earlier this year, the Minnesota Legislature passed legislation that would – for the first time – subject Minnesota’s public health care programs to independent, third-party audits. This action occurred in the wake of mounting criticism over how the state’s “managed care” programs – which disburse public funds through non-profit HMOs – were being handled.

The legislatively mandated audits will begin in 2014, and will cover all program years going forward. For some critics of the managed care system, this audit regime has been viewed as a half-measure. Minnesota State Senator John Marty, for instance, has called for retroactive audits of prior program years, so that state lawmakers can gauge the programs’ cost effectiveness, and search for possible improprieties.

Since the end of the legislative session, additional lawmakers and candidates have called for an audit of prior program activity. The Minnesota Department of Human Services – which oversees the disbursal of program funds – has also been subjected to ongoing federal investigations.

In response to such scrutiny, DHS has issued an RFP for a review of managed care rate-setting from 2003-2011. According to a July 23rd letter to Minnesota State Representatives Abeler and Gottwalt, DHS Commissioner Lucinda Jesson intends for the review to establish “once and for all, whether the state’s payments to (HMOs) were higher than the amounts allowable under state and federal law.”

The RFP states that the contractor is intended to review the process that DHS used to set HMO payment rates in the past, as well as whether those rates were “actuarially sound.”
Proposals are due on August 13th, and the successful bidder is expected to start work at the beginning of September. The completion of the review is scheduled for 60 days from the start date, and a $1200.00 per day penalty is to be assessed for each day that the audit work remains uncompleted. Find the documents in our document archive.

PRM will be tracking this review process as it moves forward.