OHA Audit Report — Agency of Wasteful Spending

By Secretary of State Dennis Richardson

Today, my Audits Division released the long-awaited and detailed Oregon Health Authority (OHA) Audit Report entitled, “Oregon Health Authority Should Improve Efforts to Detect and Prevent Improper Medicaid Payments.” This report documents the failure of OHA and its previous leadership to meet the federal requirements for eligibility and the wasting of hundreds of millions of dollars that could have been spent caring for Oregon’s most vulnerable citizens or educating our youth.

To put this audit into perspective, on May 17, 2017, the Secretary of State Audits Division released our first Audit Alert. It informed Oregonians and their legislators that OHA had failed to disclose that 86,000 individuals had not had their eligibility evaluated within the one-year federal time limit. The actual number of unevaluated Medicaid recipients turned out to be 115,235. Of that number, it was finally determined that 47,600 were ineligible for the benefits being paid for them. There were various causes of ineligibility—higher than allowed income, individuals who had moved out of state, or those who merely failed to respond to written status inquiries.

Consider the magnitude of these expenditures spent on ineligible benefit recipients. At an average monthly cost of $383, the cost for benefits alone was more than $18 million per month or nearly $219 million annually, if the 47,600 individuals had been ineligible for only one year. The auditors specifically estimated in the attached OHA Audit Report that $88 million was misspent between March 1 and August 31 of 2017 alone.

The OHA Medicaid audit was a difficult audit to complete. Under its previous leadership, OHA’s delays, obfuscations, and failure to cooperate with the Secretary of State’s audit team was so blatant that the Audit Report was required by national standards to disclose such lack of cooperation. See the report’s special section entitled, Impediment to Audit Completion on page 14.

Before the new administration assumed the reins, OHA’s credibility had sunk to a new low with additional multi-million dollar disclosures of waste and incompetence.

Since the Secretary of State’s OHA audit was completed a month ago, The Oregonian reported information that was not disclosed to our auditors. The article reports that OHA misspent more than $74 million dollars of Medicaid funds on improper payments unrelated to audit findings contained in the audit report released today. Some of these unrelated improper payments disclosed by The Oregonian have already been repaid, and others will endanger Oregon’s already precarious budget situation.

On November 17, the Portland Tribune reported $112 million dollars of additional wrongful payments disclosed by OHA’s new leadership.

The information in the above articles is substantiated in a November 17 letter from OHA’s new Director, Patrick Allen. In the letter to Governor Brown, there are 18 examples of OHA programs where tens of millions of dollars have been misspent.

Public disclosure of the longstanding mismanagement of taxpayer funds is the first of many steps OHA needs to take to improve transparency, efficiency, and accountability to Oregon taxpayers.

The one positive point from such depressing news is that the 2017-19 OHA budget assumed the full 115,235 caseload. Thus, because OHA over-estimated its caseload by 47,600 Medicaid ineligible recipients, nearly $100 million of General Fund will now be available to the legislature for other purposes (47,600 x $383 x 24 months x 22.5% state G.F. portion of total cost of benefits).

In closing, today’s OHA Audit Report provides the best information the audit team could obtain from OHA’s previous uncooperative leadership and administration. The amount of wasteful and incompetent spending at OHA has been staggering and has gone on for at least the past four years. Soon Oregon voters will be considering whether or not to approve tax increases intended to provide additional funding to the OHA. With such abysmal examples of OHA misfeasance and obfuscation, OHA faces tough questions about its credibility and its ability to appropriately spend the money it is provided.