The News & Observer

July 25, 2007
 

Audit:  Simple shift could give 10,000 kids insurance

The state could save nearly $16 million and use the money to provide about 10,000 more children with government-sponsored health insurance by switching responsibility for handling medical bills from one state office to another, according to a state audit.

The state Department of Health and Human Services can process claims for the state children's health insurance plan cheaper than the state health plan, said a report that State Auditor Les Merritt's office issued Tuesday.

The state employee health plan office processes the children's health insurance claims for the health and human services department. The insurance is for children from low-income families who don't qualify for Medicaid but whose parents cannot afford to buy insurance. The state and federal governments pay most of the costs.

The audit recommends that the state health plan office, whose main job is running the state employee health insurance programs, pursue a law that would give bill-paying authority for the children's insurance to health and human services.

George Stokes, executive administrator for the state employee health plan, wrote in response to the audit that it would be up to health and human services officials to ask for the change. He could not be reached Tuesday.

The department stopped short of saying it would suggest a change, but "this could be a good thing," said Brad Deen, a spokesman. "We would be happy to do anything the legislature decides needs to be done."

Effort lauded

Sen. Tony Rand, a Fayetteville Democrat, said the suggestion is worth considering. He expressed doubt that the audit accounted for all costs, but if it turns out that having the health and human services department process the claims would be less expensive, Merritt "has done us a real service," Rand said.

"I can't tell you the hours we've spent to do anything we could to increase efficiencies," Rand said.

About 114,000 children have the coverage, according to the audit, and they got about $260.2 million in doctors' visits, drugs and medical supplies in the 12 months that ended June 30, 2006.

The suggested switch would save in a couple of areas, the report said, including $8.4 million a year processing medical claims. That would free up enough money to insure 5,200 more children.

The health and human services department uses Electronic Data Systems Corp. to process Medicaid claims at a cost of 41 cents per claim. It costs about 12 times more, or $4.88, to process a medical claim through the state health plan, which uses Blue Cross and Blue Shield of North Carolina, the audit said. Processing claims for drugs and medical equipment also would be cheaper through the department than through the state health plan contractor Medco Health Solutions, the report said.

The Medicaid office, which is part of health and human services, gets better pharmacy rebates than the state health plan, the audit said. The nearly $7.5 million in added drug rebates would allow the state to add 4,500 children to the insurance program.

The program would also have a one-time gain of $3.5 million that DHHS gives to the health plan to hold in reserve in case monthly payments are higher than expected.

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