NC auditor: DHHS improperly paid $580K in overtime

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RALEIGH, N.C. (AP) — Twelve employees working on North Carolina's troubled computer system for processing Medicaid claims were paid $580,758 in overtime without proper approval or documentation, a state audit says.

The audit released Thursday said the majority of the employees at the North Carolina Department of Health and Human Services who received the payments in question were managers ineligible for overtime. However, the money was paid through an unusual policy exception for which the auditors were unable to find any written documentation of approval by Office of State Personnel, as typically required.

The audit said $237,000 was paid to the director of the state's Medicaid Management Information System, Angeline Sligh, as part of an effort to implement software changes that were supposed to save the state $1.2 million per month. Instead, the project is two years behind schedule and will cost at least $485 million, about twice the original price.

Sligh's current state salary is $135,000 a year, not including overtime.

In a statement, DHHS Secretary Aldona Wos thanked State Auditor Beth Wood.

"We take these findings very seriously and have already taken steps to ensure improved accountability within the department," said Wos, who was appointed last month to lead the agency.

According to the audit, 90 percent of the overtime cost was covered by the federal government, making the impact to the state's budget minimal.

Still, the auditors concluded the issue highlighted numerous deficiencies, saying the Office of State Personnel did not document its evaluation of the costs associated with the overtime or whether the extra pay was warranted.

"There is no evidence that the office requested any cost information related to implementing the policy exception from DHHS," the audit said. "Additionally, there is no evidence that the office requested documents to support projected savings. Furthermore, neither the office nor the former personnel director was able to provide any written documentation that any of the draft agency policy was approved. "

There has been widespread skepticism about the new Medicaid Management Information System following a 2011 audit critical of the project's management in Democratic Gov. Beverly Perdue's administration.

The current billing system, managed by HP Enterprise Services, processes 88 million claims and writes $11 billion in checks annually to cover more than 1.5 million Medicaid enrollees. Computer Sciences Corp. is building the new system, the completion of which is two years behind schedule.

DHHS officials have defended the delays and overruns, saying thousands of software changes needed to comply with federal and state laws have contributed in part to higher costs. The system is now set to go live July 1.

As she took office in 2009, Perdue named former Republican lawmaker Lanier Cansler as DHHS secretary. Cansler was then a lobbyist whose firm, Cansler-Fuquay Solutions, represented Computer Sciences Corp., which had just days earlier been named as the winner of the massive Medicaid software contract.

Perdue brushed aside questions about whether that arrangement presented conflicts of interests, saying Cansler wouldn't make any decisions or participate in discussions involving former lobbying clients.


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