CNHI News Service
Thursday, May 2, 2012 —
Raleigh, N.C. -- Today, the Department of Health and Human Services and the Office of State Budget and Management released revised Medicaid shortfall estimates based on the recent discovery of a forecasting error made under the previous administration.
As part of an ongoing analysis of the Department's forecasting practices, it was discovered that in May of 2012, the Department of Health and Human Services' Medicaid forecast had overestimated the amount of federal receipts to North Carolina due to an error in the forecasting model. As a result, the previously stated Medicaid shortfall has been increased by $135 million, bringing this year's Medicaid shortfall estimate to $248 million.
Based on the corrected forecast, the Office of State Budget and Management has subsequently revised its estimates for the Medicaid rebase from $185 million in FY2013-14 to $434 million, and from $390 million in FY2014-15 to $587 million. The Office of State Budget and Management, working with the Legislature, has proposed applying expected increases in tax collections and reversions to offset the Medicaid shortfall and higher rebase for the next two years.
"We have been taking a close look at previous Medicaid forecasting practices in order to create a more transparent and accurate process going forward," said Dr. Aldona Wos, Secretary of the N.C. Department of Health and Human Services. "We are charting a new course of accountability within the Department of Health and Human Services and are seeking bold reforms to create a predictable and sustainable Medicaid system in North Carolina."
Dr. Wos is taking assertive action to address past forecasting practices and estimated shortfalls in the state's Medicaid program. The Department recently brought in a team of financial and industry experts from Ernst & Young to conduct an in-depth evaluation of Medicaid forecasting methodologies in the Division of Medical Assistance. In addition, the Department of Health and Human Services has retained the services of Les Merritt, CPA-CFP to provide financial expertise to the Department's Division of Mental Health. He brings experience in state government and Department of Health and Human Services to the role having been the first certified public accountant to serve as North Carolina State Auditor from 2005 to 2009.