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Wednesday, June 25, 2008 02:20 pm

Dilatory government doesn’t get it done

Fights over accounting don’t help the Medicaid mess

Untitled Document Illinois Auditor General William Holland was so angry over the Department of Healthcare and Family Services’ delays in submitting information over the past year, he told them he was suspending all activity on his audit and wouldn’t resume until the “delinquent information” was provided. “For the first time in 15 years, I walked away from an audit,” Holland said in an interview. “I said, ‘You guys are just not being responsive.’ ”
The 2007 fiscal year audit, finally completed and released last week, reports 15 significant “findings,” problems with how the state’s largest department handles its finances. The primary problem, however, was foot-dragging: “The department did not provide the auditors with timely and accurate financial statements.” In the body of the report there is strong language: “The department’s actions resulted in significant delays in the financial reporting process, were dilatory, and were a disservice to the users of the state’s financial reports.”
The incident shows how sensitive the Blagojevich administration is to the large Medicaid deficit the state carries, at a time when the governor is trying to expand health-care programs. Last month the auditor general released a separate audit, this one showing that the amount the state has owed medical providers at the end of the last four fiscal years has averaged a whopping $1.5 billion. But if the administration hadn’t lost its accounting fight with the auditor general, the Medicaid deficit at the end of fiscal 2007 would have been only $851 million, the lowest in years. Instead, the official audited books show the deficit at $2.184 billion, the worst in years. At issue was how the new Hospital Provider Fund would be shown on the books. An invention of the federal government, the program collects money from hospitals, matches it with federal funds, then pays nearly all of it back to hospitals, leaving the state with a small “profit” for administering what is essentially a pass-through program. HFS was authorized to distribute $2.4 billion through the program in 2007, but the General Assembly only appropriated $1.2 billion for that year. So at the end of the year did the state “owe” the other $1.2 billion that was authorized but not appropriated? Though the comptroller’s office and the Governmental Accounting Standards Board agreed with the auditor general that the amount should be counted as a liability, the administration went to great lengths, resulting in long delays, to keep it off the books. According to the audit report, HFS brought in both a private law firm and a top private accounting firm to work on this issue, in addition to its own in-house legal counsel, a consultant from the governor’s office, and the chief internal auditor. “They spent untold amounts” to make their point, Holland says. The delay seemed intentional. On the very day Holland made his final demand for records, HFS contracted with the accounting firm to get another opinion. The financial statements for the year ended June 30, 2007, weren’t submitted until March 2008. In the end, the department conceded the point rather than settle for a less-than-favorable opinion on the audit. “They must have realized that their credibility was not so hot,” Holland says. All this seems like a childish spat until you reflect on how the Medicaid funding mess hurts both providers and recipients. HFS had a point but lost, and continuing to fight so hard over accounting seems obsessive and political. If the Blagojevich administration would spend as much time and energy working on real solutions as it did trying to make itself look better on the books, the administration would be more appreciated and the state would be better off. Accounting disputes and delays don’t get the job done.
Contact Fletcher Farrar at ffarrar@illinoistimes.com.
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