Illinois used faulty methods for withdrawing federal Medicaid money, resulting in “a perpetual ‘treadmill effect’” of regular overdraws of dollars that the state later had trouble repaying, federal auditors said in a report released today.
The state’s withdrawals exceeded its actual Medicaid spending by an average of $60 million per quarter during the three years reviewed, according to the report from the U.S. Department of Health and Human Services’ Office of Inspector General.
The federal government may have lost as much as $792,000 in interest during fiscal 2010 through 2012 because the state repaid the money two to six months later, the report said.
* The Tribune explains why…
Because Illinois still relies on a 30-plus-year-old Medicaid software system, it is unable to provide real-time claims information. The state, therefore, must use historical claims data to estimate the federal government’s share of the payments by quarter, Casey said.
Each day the state pays hospitals, doctors and other health care providers, it submits the federal government a bill for its projected share of the costs. At the end of each quarter, it reconciles the difference.
Between fiscal 2010 and 2012, the state’s estimates missed the mark by at least $4 million per quarter, ranging from undrawing $28.6 million from the federal government in one quarter and overdrawing $193.7 million in another, according to the audit.
Even so, Casey said, “When you look at a $60 million variance per quarter, that’s not much of a variance on average when you consider we have $3 billion in claims each quarter.”
Casey said as Illinois moves more of its Medicaid patients into managed care programs, where it will be paid a fixed fee per-patient, per-month, it will be able to better estimate and manage the amount it draws from the federal government.
Illinois won’t have new software to correct this problem until 2017.
But none of that explains why the state was depositing federal Medicaid dollars into GRF, which is why the state couldn’t pay back the money right away at the end of the quarters.
The bumpy marriage between the state and the private company that operates the Illinois Lottery is ending in a divorce.
Gov. Pat Quinn’s office confirmed to me [Friday] that it is ending its contract with Northstar Lottery Group LLC to operate the $2 billion-a-year lottery system, seven years earlier than scheduled.
It is not yet certain whether the separation will be voluntary by both parties, but a decision to end the contract has been made.
“The governor’s office has directed the lottery to end its relationship with Northstar,” gubernatorial spokesman Grant Klinzman said in an email that he later verified in a brief phone conversation. “The administration has had serious concerns with Northstar’s performance. The governor demands every state contractor be held accountable for their performance.”
What’s most likely to happen is that Northstar will cease almost immediately to have any say in how the Lottery operates. Though there will likely be a short period of de-entangling transition, the 140 staffers or so staffers believed to work for Northstar will no longer be actively — or majorly — involved in charting the Lottery’s course.
In the short term, Jone’s own Lottery staff likely will take over management. And yes, there most likely will be a new private manager, as the Illinois state law that created a Lottery private manager function is still on the books and isn’t likely to be done away with anytime soon.
Northstar’s defense is that state meddling and inaction are to blame for much of the shortfall. The company contends, for example, that state officials endlessly delayed approval of a promising new Lottery game based on the board game Monopoly. Northstar also argues that later final audits will erase much of the supposed shortfall.
We’re loath to take sides too strongly on this one, seeing plenty of blame all around. We suspect Northstar overpromised from the start what it could deliver, but we also know how maddening it can be to get a government bureaucrat to make a decision or get out of the way.
The undeniable fact remains that Northstar grew Lottery sales far faster than the state did. Northstar’s own estimate is that sales grew by 3 percent a year for five years when the Lottery was administered by the state, then grew by an average of 12 percent a year after Northstar took over.