Angeline Sligh, director of the state’s long-delayed Medicaid payment processing system, collected $237,500 in overtime payments for which written authorization was never given, according to a state audit released Thursday.
In all, $580,758 in overtime compensation was paid, mostly to manager- and executive-level personnel in the Medicaid Management Information System from April 1, 2008, to July 31, 2012, without being sent through required procedural channels, the audit found.
The audit did not name the employees involved. That is a “longstanding practice,” Auditor’s Office spokesman Bill Holmes said. “It will be up to the governor and legislature to make any decisions about reimbursement or discipline.”
Neither the governor’s office nor the state Department of Health and Human Services would identify the others who collected the improperly paid overtime. Nor would they say whether reimbursement might be sought or disciplinary action taken.
Information from DHHS said that the audit was done to ensure proper procedures and processes are being followed rather than focusing on individuals. State law precludes release of any information regarding disciplinary action or reimbursement, according to the department information.
Managers generally are exempt from collecting overtime in state government. Exceptions can be approved for well-documented special and emergency circumstances, for which precise details and timelines are supposed to be spelled out.
“We found that Office of State Personnel verbally approved an exception but did not document the terms of the exceptions. We also found inadequate controls and reviews within the Department of Health and Human Services’ manual processing of overtime pay that led to overpayments and other leave and payroll errors,” state Auditor Beth Wood wrote in the preface to the audit report.
It is the second audit in two weeks that Wood’s department has released condemning DHHS operations.
An audit released Feb. 1 said the Medicaid program under DHHS deliberately violates General Assembly directives and potentially state statutes, costs taxpayers hundreds of millions of dollars in mismanagement, and is incapable of preparing accurate budgets or understanding data necessary to administer the program.
That earlier audit bolstered decisions by Gov. Pat McCrory and Republican leaders in the General Assembly to forgo creating a state health exchange and expanding Medicaid rolls under the federal Affordable Care Act, commonly called Obamacare. A House version of the Senate bill incorporating those rejections passed Thursday and was sent back to the Senate for concurrence before going to the governor to sign.
In a prepared statement released to the media, DHHS Secretary Aldona Wos said only: “I would like to thank Auditor Wood and her staff for their work on the audit. We take these findings very seriously and have already taken steps to ensure improved accountability within the department.”
A day earlier Wos gave an unvarnished assessment of her department’s shortcomings to an appropriations subcommittee of the Joint Legislative Oversight Committee on Health and Human Services.
There is “truly much work to be done in our department,” she said then.
DHHS officials told the appropriations subcommittee on Wednesday that the MMIS system should be able to roll out in July, replacing a 35-year-old system.
The new system was scheduled by August 2011 to begin processing Medicaid claims more quickly, reducing administrative costs, and tracking fraud. The original contract was for $265 million. Some estimates now project total cost will be as much as $851 million.
According to Thursday’s audit, “a significant portion of overtime payments were made to manager and executive level positions, not staff level positions.” In all, $510,235, or 87.9 percent, of the overtime was paid to nine manager and executive level positions.
Sligh’s $237,500 was the lion’s share of that, or 40.9 percent of all overtime. Despite the continual delays in bringing the system online, the cost overruns, and a 2012 state audit finding major problems with the MMIS project and intense resistance from DHHS to cooperate, Sligh gave herself an “A” for management of the contract when asked by lawmakers at a legislative hearing to grade herself.
Three employees holding staff positions received $70,523 total, or 12 percent of all extra time compensation, according to Thursday’s audit.
Though it is not clear which managers were subject of the audit, the website for the North Carolina Medicaid Management Information System lists its senior management as Rich Ham, deputy director; Paul Guthery, senior program director; Ed Riley, contract administrator/financial manager; Lee Chavez, senior program manager/technical; Vicki Medlin, program support/staffing resource manager; and Monica T. Jones, business transition manager.
The most recent audit reviewed policies and procedures at the Office of State Personnel and DHHS. Interviews were conducted with numerous personnel, payroll records were examined, and the Office of State Controller recreated payroll timesheets to compare with DHHS overtime records.
Four employees who received the most overtime pay and one who left the agency were “judgmentally selected” for the review.
The Office of State Personnel “lacks documentation of its verbal approval of an overtime pay exception” to DHHS in 2008 that led to the more than half-million dollars in overtime, the audit said.
“As a result, the Office cannot provide assurance that its approval was in the best interest of the state and that overtime payments made were consistent with the terms of the verbally approved exception,” the audit said. Nor was there documentation to allow exempt managers to collect overtime and a required written statement detailing why that was in the best interest of the state.
DHHS told the Office of State Personnel the MMIS project was “time-sensitive and requires many extra staff hours in order to meet various deadlines.” In that same draft policy DHHS said that “’regular staff’ (i.e. not managers and directors) and subject matter experts would be eligible for overtime payments under this policy exception.”
The exception was justified as saving the state up to $1.2 million per month. However, the audit found, the Office of State Personnel didn’t document an evaluation of those cost claims and there is no evidence it requested supporting documents from DHHS, the audit found.
The former personnel director, not named in the audit, said he recalled granting DHHS approval to either pay accumulated overtime as comp time, or pay earned overtime that exceeded 200 hours, but not both. Those provisions were supposed to end in August 2011, the expected completion date of the project.
However, the audit said, “DHHS implemented both overtime payout options (payout of accumulated comp time and future overtime payments) and the MMIS project did not meet its August 2011 deadline.”
Dan E. Way (@danway__carolina) is an associate editor of Carolina Journal.