Christine Stuart file photo

An audit of the Medicaid program for low-income children concluded that the state is paying three managed care organizations too much money to run the program.

State Comptroller Nancy Wyman said the auditing firm of Milliman found that the state should be able to reduce the rate it pays to the three Husky managed care organizations by between $41 million to $49 million when it reopens the contract later this month.

The Department of Social Services and the managed care organizations disputed the auditor’s findings Tuesday, but Republican Gov. M. Jodi Rell didn’t.

Rell, who initially criticized Democratic lawmakers for proposing the audit, included about $41.9 million of those savings in the supplemental budget she released last week.

The savings are good news as lawmakers seek to close a $8.7 billion deficit over the next two years, but Sen. Toni Harp, D-New Haven, didn’t seem all that impressed. She said she thought the audit was going to look at the $100 million lapse in Medicaid accounts and the overall Department of Social Services budget which totals about $5.3 billion.

Wyman said the $80,000 her office was given to spend on the audit limited the scope. She said her office focused on the $800 million Husky program which is one of the state’s largest annual budget expenditures.

Harp said there had been some suspicion that the state was paying the managed care organizations more money than it had in the past because it was being asked to take on the unknown risk of Rell’s state-subsidized Charter Oak Health Plan in addition to the traditional Medicaid population. While the audit was silent on this issue, critics of Rell’s health insurance program continue to wonder if it made it harder for the state to negotiate lower rates.

Meanwhile, Harp said the state will accept any savings it can.

Ten months ago Democratic lawmakers said the audit would help them understand one of the “most complex and least transparent” agencies in state government.

But by Tuesday a week after the audit had been released, they seemed to have forgotten all about it.

“I haven’t gotten to this yet,” Speaker of the House Chris Donovan, D-Meriden, admitted Tuesday.

Sen. President Donald Williams, D-Brooklyn, was willing to talk about the audit after receiving a copy of the executive summary from a reporter.

“This is not small potatoes,” Williams said. “It was well-worth the tiny investment to find these savings,” he concluded. 

Wyman said each of the legislative leaders received copies of the audit and letters summarizing the results last week.

As part of the audit, the Department of Social Services submitted its own analysis concluding that if the state was able to negotiate lower rates it could be counterproductive since those lower rates could translate into lower reimbursements for medical providers.

Historically, Husky patients have had trouble finding medical providers that will accept the state insurance plan because the reimbursement rates are lower than those paid by private insurance plans. That issue was only compounded last year with the introduction of two new managed care organizations that had to build their networks of medical providers from scratch. Medical providers, including hospitals, were hesitant to sign up for the program because the reimbursement rates for the state-subsidized Charter Oak Health Plan were lower than anticipated.

Keith Stover, spokesman for the Connecticut Association of Health Plans which represents a number of managed care organizations, said the actuarial analysis of the savings touted in the audit is “highly problematic.”

“Some of their assumptions are just wrong,” Stover said. “It would be a grave mistake to formulate policy based on this cursory glance.”

But advocates like Ellen Andrews, executive director of the Connecticut Health Policy Project, have been raising the red flag over these rates for more than a year.

“This audit confirms our long standing concerns about the lack of accountability and lax financial oversight at DSS. The Comptroller should be commended for conducting this audit, protecting precious state resources, and ensuring that HUSKY families get all the care we are paying for.” Andrews said Tuesday. “This audit makes it even clearer that the state must implement alternatives to managed care plans for HUSKY, such as the Primary Care Case Management (PCCM) program.”

The contracts with the three managed care organizations will be re-opened at the end of the year and Jeff Beckham, spokesman for the Office of Policy and Management, said the administration is “committed to every effort to achieve these savings.”

It’s unclear at the moment if all three of the managed care organizations would be willing to continue to participate in the program, if the state lowered its rates.