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Obamacare makes it harder to fix insurance errors, expert says

By   /   January 14, 2013  /   News  /   1 Comment

By Kirsten Adshead  |  Wisconsin Reporter

MADISON – Don’t hold your breath, Wisconsinites, on recovering all of the $15.4 million the University of Wisconsin System overpaid on health insurance premiums in 2011 and 2012.

Poor communication between the University of Wisconsin System and Employee Trust Funds resulted in overpayments of $15.4 million in insurance premiums, money that largely cannot be recouped under the Patient Protection and Affordable Care Act provisions, according to the ETF.
Photo courtesy of 401(K) 2013 on Flickr

The overpayments, identified last week, often resulted from poor communication between the UW System and the Employee Trust Funds, which administers state contracts with the State Group Health Insurance, said Bill Kox, deputy administrator for the ETF’s division of insurance services.

But the federal Patient Protection and Affordable Care Act makes it more difficult to recoup that money once it goes out the door, Kox said.

“We think that the federal law simply prevents you from … going back and retroactively terminating coverage six months or whatever back just because you failed to do so originally,” he said.

The UW System has recovered $2.4 million.

Kox believes the state can recover overpayments that resulted from a former employee’s termination papers not being processed in time for premium payments to be made.

But he doesn’t know how much more can be recovered.

UW System President Kevin Reilly pledged in a statement to “identify exactly why and how these significant errors occurred, we will validate that steps we have already taken are working, we will take any additional steps that need to be taken, and we will make absolutely sure that similar errors do not happen again.”

In addition to the insurance overpayments, the System overpaid by $17.5 million its contributions to the Wisconsin Retirement System, according to the CAFR.

That entire amount has been credited to the UW System’s account in lieu of future payments owed to the ETF, UW System spokesman David Giroux said Monday.

As for any effect on the UW System’s budgeting for the coming biennium, Giroux said, “I don’t know the answer to that question.”

Reilly said the System has new procedures and new staff in place to help avoid future problems.

“I am nonetheless highly embarrassed and very disappointed by these errors and the resulting overpayments,” Reilly said in a statement.

The audit, which reviewed the State of Wisconsin finances for the fiscal year that ended June 30, 2012, also found:

  • Twenty-two people in the three UW institutions reviewed had access they shouldn’t have had to parts of the Human Resource System, allowing them “ to add an employee or student employee; enter, update, correct, and approve time worked or leave taken; update direct deposit information or generate paychecks; and process payroll or otherwise critically impact the payroll process.” All but one of them had the ability to make those changes at any of the UW institutions.
  • The UW System made a number of errors in its financial statements, including $59.7 million mislabeled as “sales and services of educational activities,” $25.2 million mislabeled as “local and private grants and contracts” and $46.8 million overstated in three categories.
  • The Department of Health Services allows its computer programmers who make program changes to also review and approve those changes. “The Department also notes that, due to staffing levels, most of the communications related to program changes have been done verbally and have not been documented.
  • Staff from the Office of the Commissioner of Insurance made several errors in compiling the financial statement for the Injured Patients and Families Compensation Fund, including understating the Fund’s future benefits and loss liabilities accounts and the benefit expense account by $79.1 million.

Contact Adshead at [email protected]

Edited by [email protected]


Kirsten formerly served as staff reporter for Watchdog.org.

  • Glen

    What an utter mess of an article. And what a nice lede, gratuitously slamming the Affordable Care Act for an effect it may or may not have on an overpayment that may or may not be recoverable. Then the other 2/3 of the article is about something else, entirely….