In a repeat performance yesterday of last week’s press conference, State Auditor Ralph Campbell explained his findings for a special panel of General Assembly members in a review critical of the North Carolina Division of Medical Assistance’s misuse of more than $1 billion in the Medicaid program. The program’s problems date back to 1997.

When he released his audit last Tuesday of DMA’s handling of the Disproportionate Share Hospital (DSH) Program within Medicaid, Campbell said as much as $414 million in improper Medicaid reimbursements may need to be repaid to the federal government.

Yesterday, Campbell and Department of Health and Human Services Secretary Carmen Hooker Odom, who oversees DMA, were peppered with questions about the audit. Odom has criticized Campbell since the audit’s release, claiming his findings were either inaccurate or that he was negligent in the timeliness of his discoveries.

In Tuesday’s testimony the finger-pointing between Campbell and Odom escalated.

“Almost eight years ago the auditor was aware of potential problems with the DSH program,” Odom told lawmakers yesterday, “yet he never followed up on those concerns.” Odom was appointed secretary by Gov. Mike Easley in February 2001.

Auditors found that the Division of Medical Assistance had surrendered control of the DSH program to Carolinas Medical Center near Charlotte, the hospital that benefits most from the program, and to the hospital’s attorney. The Division allowed the hospital and attorney, Wendell Ott of Greensboro, to design the repayment formula used for hospitals in North Carolina, analyze cost data and gather the cost data from other hospitals.

“We are talking about more than just conferring with the vendor,” said Wesley Ray, a deputy auditor.

Campbell said Carolinas Medical Center received 18 percent of all DSH money, and that all six hospitals represented by Ott received 48 percent, or $655 million, of the total $1.3 billion in DSH payments.

“This was clearly a scheme that existed for a number of years, going back to 1997,” Campbell said at the press conference on April 13. He said he would refer the report to federal, state, and local investigative authorities to determine whether laws were broken.

Yesterday Odom alleged that Campbell, in a draft audit report in 1996, discovered problems with $181 million in DSH payments. She said the findings were dropped from Campbell’s final report that year.

She also said Campbell, in the same draft report, determined that the DSH program was compromised because “one employee has nearly complete control over the administration of the program” and that “good internal control requires adequate segregation of duties.”

“But this finding suddenly and mysteriously was dropped in the final audit,” Odom told committee members.

According to an excerpt from a 1997 letter to then-DHHS Secretary David Bruton, Campbell promised to audit the DSH program in the upcoming audit of the Division of Medical Assistance. Odom said the auditor didn’t mention DSH in any of his annual audits until this year.

“Last week, the auditor said this was ‘the worst’ audit of his career,” Odom said yesterday. “Well, it would not have been that way he had acted on his own promise in 1997 to audit DSH in the coming year.”

Odom told the panel that since taking over DHHS, that the DSH program is “100 percent” under control of the agency, and that “today I want to tell you I feel good, and feel very proud, about our Division of Medical Assistance.” She assured the legislators that the problems were being rectified and that a settlement with the federal government because of overpayments was in negotiations. Despite Campbell’s warning that the state could be obligated to pay up to $414 million, Odom said she expected the figure to be closer to $12 million.

Odom said there had been problems in DHHS, “but I also believe there have been failures in the state auditors’s office.” Rep. Robert Grady, R-Onslow, pressed for answers about how the DSH program could have been entirely turned over to a private vendor, without oversight. Deputy DHHS Secretary Lanier Cansler said that all the former staff was gone from the department, but the best explanation he had was that DMA didn’t have sufficient staff to administer the rapidly growing Medicaid program, “and they offered to do it for us.”

The hearing clearly left an air of conflict between Odom and Campbell, even as Odom said she would welcome further audits of her department.

Campbell sarcastically thanked Odom “for her magnanimous gesture of working together, as I pull the daggers and arrows out of my back from the beginning part of that presentation.”

Paul Chesser is associate editor of Carolina Journal. Contact him at [email protected].