- A new audit criticizes Utah's Medicaid watchdog for poor governance and lack of transparency.
- The Office of Inspector General has failed to implement 2018 audit recommendations, according to the new audit.
- Interim Inspector General Neil Erickson accepts recommendations and plans organizational changes.
SALT LAKE CITY — A new report found multiple failures within the Utah office tasked with overseeing and identifying fraud in the state's Medicaid system and says leadership "has not made adequate effort to improve" since a similar audit in 2018.
Leadership of the Office of the Inspector General of Medicaid Services, or OIG, has "been delinquent in fulfilling its duties," the office has provided "insufficient oversight" of some care organizations and had "inconsistent" practices and "some low performance outcomes," according to a 46-page audit presented to state lawmakers Thursday.
The report states that the agency has struggled with "poor governance, ineffective leadership and a lack of transparency and accountability," and has "failed to improve" performance despite previous recommendations.
"At over $5 billion, Medicaid manages the largest line item in the state budget," the audit states. "The Legislature created the OIG to independently monitor Medicaid. Unfortunately, the office's lax oversight has left the program providing services without someone helping it to improve. ... The OIG has demonstrated significant shortcomings and has failed to adequately deliver services for which it is charged in state statute to perform."
Legislative auditors presented a similar report on the inspector general in 2018, which found that the state was falling millions of dollars short in recovering overpayments made by Medicaid to health providers belonging to accountable care organizations. That audit estimated that $22.7 million in overpayments could have been recovered between 2013 and 2015, whereas only $265,000 was actually retrieved.
At the time, auditors made several recommendations, including that the office conduct annual planning to find the best uses of resources, base metrics on "quantifiable, repeatable methodologies," and review the efficiency of accountable care organizations. Seven years later, auditors note that "these remain largely unimplemented."
"We believe this points to a failure in leadership to establish an office that acts effectively on its mandate or to produce a culture for continuing office improvement," the report states. "This inaction leaves the state of Utah open to potential risk and further negates efficiencies that could have been achieved had these recommendations been implemented seven years ago."
Return on investment for taxpayer funds spent on the office has "been inconsistent and, at times, negative," the auditors found. Since 2016, the office has had an average return on investment of $1.10, meaning $1.10 has been returned to the state for each dollar invested.
"In five of the past nine years, OIG has had a negative ROI and returned less than $1 to the state for every $1 the state has funded it," auditors wrote. "This demonstrates that despite continued investment, the OIG's return on investment to the state has not consistently been positive."
It's not just an inconsistent return on investment — auditors also said the agency's reports have lacked transparency and accuracy regarding the work being done.
Data reported in six fields were identical in both 2020 and 2021, auditors found, which they said "raises serious concerns" about the accuracy of the reports. Calculation errors in reports "may have inflated their reported activities by over 80%," auditors wrote.
Annual reports also retroactively decreased the stated financial recoveries in 2020 by about $2.7 million, with no explanation, according to the audit.
"This unaccounted-for decrease significantly impacts the reported savings for that fiscal year," it states.
Auditors ultimately made 12 recommendations to the agency and to lawmakers, including that the office improve transparency and accuracy, conduct regular performance audits of their work, and conduct a formal analysis to identify hurdles to improving return on investment. Lawmakers were urged to "consider a menu of options to improve the governance, accountability and effectiveness" of the office.
Neil Erickson, the interim inspector general, agreed with the recommendations for his office and outlined the steps his office is taking, or will take, to address the concerns in a lengthy response letter. He noted that the agency underwent "a complete change in leadership" on Aug. 25 and said the office is in the middle of significant organizational changes.
"The UOIG believed it had demonstrated efforts to meet or exceed the actions outlined in the 2018 UOIG audit response and welcomes continued collaboration with (the Office of the Legislative Auditor General) to implement new 2025 recommendations," he wrote. "It is the goal and mission of the UOIF to strengthen Medicaid program integrity and oversight functions, to protect taxpayer dollars and to mitigate risk; Medicaid members and Utah taxpayers depend upon the health and sustainability of the Medicaid program."
Erickson, who took over as interim inspector general just last month after working for the office for 10 years, told lawmakers his predecessor believed that the previous recommendations were being fulfilled, and suggested a follow-up or check in from legislative auditors might have helped address the issues.
That didn't sit well with lawmakers, who questioned whether Erickson was trying to deflect blame or say that a lack of communication from legislative auditors contributed to the findings.
"We have identified to them what an ACO audit would be," said Kade Minchey, the auditor general. "It's in the 2018 audit. And so I disagree that has not been communicated to them. It has been, and they have consistently failed to do it."
House Majority Leader Casey Snider, R-Paradise, said he heard "a lot more pushback" from Erickson, given that the interim inspector general broadly agreed with the suggestions made by auditors. Erickson said he wasn't "trying to push back" and simply wanted to give lawmakers "the full context" of the situation.
Senate Minority Leader Luz Escamilla, D-Salt Lake City, said she was "more alarmed now after listening to this interaction," and pressed Erickson on what the mission of his office should be.
"I really want to hear from you, as the interim director, sir, that you recognize that there's a gap, because I'm not hearing it yet," she said. "And that worries me, from a sense of transparency and that we are at least on the same page on what is missing to get us to that Utah code definition of Medicaid oversight."
Auditors gave lawmakers several policy options for addressing the issues, which could include giving another agency direct oversight of the office or dismantling the office entirely and give auditing responsibility to the Office of the State Auditor or the Office of the Legislative Auditor General.
Lawmakers referred the finding to the Government Operations Interim Committee for future action.
