The treasurer hopes to save about $80 million in taxes on state medical bills by auditing who’s enrolled on the plans and purging those ineligible for coverage. It’s what Assistant Treasurer Dini Ajmani calls the wrong people.
“An example would be somebody got divorced and their ex-spouse is still on the plan. Or a professor at a university left the job, but we were never notified so they’re still on the plan,” Ajmani said.
The state’s Division of Pension and Benefits will also audit Medicare claims to ensure enrollees are actually eligible for coverage. Similar audits in 2009 uncovered 36,000 ineligible recipients and saved $400 million over five years. State employee union leaders admit that deleting the ineligibles makes sense. As do union members, like retired court clerk Carol Forman, grudgingly.
“There’s two sides to every story,” Forman said.
Taxpayers applaud the audit.
“If this is a way to cut our costs, we should do it. Why should taxpayers be paying for medical for people that shouldn’t be getting it?” asked Doris Ford.
The treasurer will also investigate whether it’s getting charged fairly for third-party medical coverage contracted through administrators like Horizon, Aetna and Optum. For example, is it paying for overpriced or unnecessary physical therapy? And, it’s requested data on fees it pays administrators to negotiate lower out-of-network medical bills. The savings could total $25 million.
“But without data, it’s so hard to know. They say, you cannot change what you cannot measure. And we cannot even measure, right now, the magnitude of what we we’re paying and what we’re saving,” said Ajmani.
The audit comes in the wake of a new $37.4 billion state budget. Senate Minority Leader Tom Kean demanded to know “… how or if these healthcare savings could have been factored into the State budget, which increased State spending by 5.4 percent. If these initiatives had been enacted, maybe these new, onerous tax increases could have been avoided. While I’m happy to see some action, these reforms are not nearly enough.”
But Senate Budget Committee Chairman Paul Sarlo noted the audits were part of recent budget negotiations, stating, “I welcome the administration’s responsiveness to some of the cost-saving ideas we identified and advocated for.”
“It becomes a little challenging to say how much of it should be included in the 2019 budget given that there’s some uncertainty around the timing of it. However, like I said, $50 million is included in the budget,” Ajmani said.
For now, the Treasurer’s Office will focus on these audits.
“This is a service we’re paying for. We are the customer,” Ajmani said.
While savings could top $100 million, don’t count on it just yet. This painstaking audit could take a year and a half before it yields results.