- Associated Press - Tuesday, January 14, 2014

RALEIGH, N.C. (AP) - The head of North Carolina’s troubled health department apologized Tuesday for sending the Medicaid cards of tens of thousands of children to the wrong recipients, but told legislators her agency is dealing with unprecedented changes as a result of the federal health care overhaul.

N.C. Health and Human Services Secretary Aldona Wos told legislators at an oversight hearing that her staff has been in “crisis mode” to address the Medicaid card mistake and ongoing issues with a pair of problematic computer systems that process medical claims and benefits enrollments.

“I deeply apologize for the impact that this has caused to the citizens of the state,” said Wos, making her first public comments since the cards were mismailed two weeks ago. “First and foremost, I firmly believe as secretary, that it is my obligation to ensure that the children and families we serve receive their health care … in a protected and secure environment.”

Democrats have called in the past week for Gov. Pat McCrory to replace Wos. The Republican governor has stood by his embattled secretary, a wealthy Greensboro doctor and major GOP fundraiser who served as the U.S. ambassador to Estonia.

Wos told lawmakers Tuesday she is focused on moving forward, not rehashing the past. However, she then suggested her agency’s recent woes are the result of the mismanagement during past administrations and new regulatory requirements under the Affordable Care Act. She described the changes as an unprecedented “perfect storm.”

“The implementation of the Affordable Care Act is creating a massive issue in the state of North Carolina,” Wos said. “DHHS is the state agency involved in ACA implementation. And, frankly, DHHS is struggling.”

New federal eligibility rules required the state agency to shift medical coverage for more than 70,000 children of low-income families from a state-run insurance program to Medicaid. But what caused the agency to misdirect new Medicaid cards for nearly 49,000 of those children was a programming error by a state employee, which resulted in envelopes being addressed to the wrong people.

The cards include the children’s names, Medicaid identification numbers, dates of birth and the names of their primary care doctors - private medical information that is supposed to be closely safeguarded. Under federal law, the state could face substantial fines for mistakenly releasing it.

The agency waited at least four days to issue public notice of the massive privacy breach, acting only after a Charlotte television station broke the story. Wos reiterated Tuesday that the children will be issued new cards with new Medicaid numbers, and that the agency will monitor the affected accounts for potential fraud. Those who received the private information of others are being asked to cut the cards up into very small pieces.

The issue is the latest in a stream of bureaucratic missteps at the agency.

Wos said her staff is continuing to work through problems with NCTracks or NC FAST, massive computer systems launched in the summer. The pricey software for handling Medicaid enrollments and payments has frustrated both clients and medical providers who have gone weeks and sometimes months without receiving promised benefits or payments.

The U.S. Department of Agriculture issued a strongly worded letter to the state agency on Dec. 11, threatening to cut federal funding for food stamps over the backlog. USDA Regional Administrator Donald Arnette wrote that North Carolina officials failed to provide adequate response to questions and recommendations from federal authorities.

“These delays are completely unacceptable and a serious failure on the part of North Carolina,” Arnette wrote.

As of the end of 2013, more than 30,000 North Carolina families had waited longer than a month to receive food stamp benefits through the NC FAST system, which was intended to streamline the process of receiving public assistance. More than 9,200 of those families had waited three months or more, according to the agency’s data.

Echoing statements by McCrory, GOP lawmakers on the DHHS oversight committee were largely supportive of Wos. She is the fifth secretary appointed to lead DHHS since 2001, and several Republicans suggested this week her departure would only trigger further chaos.

Democrats expressed frustration that they first learned about the December threat to cut off food assistance from news reports published last week. The ongoing issues with NC FAST outlined in the letter from the USDA are in sharp contrast to upbeat assurances from agency officials at an October hearing where legislators were told the problems had largely been fixed.

“We were led to believe that in terms of the NC FAST program all of the kinks had pretty much been worked out, that everything had pretty much been resolved,” said Sen. Floyd B. McKissick Jr., D-Durham. “I think it hurts the credibility and integrity of the agency when we can’t necessarily depend upon the information we receive.”

Wos apologized if legislators felt uninformed, but insisted that her agency had been upfront about the problems.

“We have been very transparent about our challenges on NC FAST,” Wos said, noting that the Dec. 11 letter from the USDA had been posted on the agency’s website.

But to find the letter, a visitor to the DHHS home page would have had to have known to click through a series of five Web links and then scroll down through a year’s worth of postings intended for county social services personnel to find a sixth link titled “USDA letter.” The agency issued no public notice about the federal cutoff threat or guidance about where to find the posted copy.

“Ultimately, the challenges facing DHHS come down to accountability,” said Senate Democratic leader Martin Nesbitt, D-Buncombe. “These aren’t political problems. They are real failures that are hurting real people. Again and again, we hear senior leaders of the McCrory administration offer statements diverting blame - but we never get a plan for a solution. When is Governor McCrory going to step up and demand a plan to solve these problems?”


Follow Associated Press Writer Michael Biesecker at Twitter.com/mbieseck

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