Lawmakers probe allegations that NC health officials used false information to secure Medicaid funds :: WRAL.com

North Carolina lawmakers say they are looking into a long-overdue state Medicaid technology overhaul following the revival of a state audit into the project — and unsealed allegations that state North Carolina health officials used false information to secure federal funding for it.

State Sen. Benton Sawrey said Friday that he plans to meet with the North Carolina Department of Health and Human Services and the state auditor to learn more about the allegations and the nearly decade-old technology project. 

“A lot changed over the past several years and [we] just need to get to the bottom of it,” Sawrey told WRAL on Friday. “It’s hugely important. It’s imperative that we do that.”

Sawrey, R-Johnston, is the co-chair of legislative committees on healthcare and Medicaid oversight.

House Speaker Destin Hall is also looking into the situation, said Demi Dowdy, a spokesperson for Hall.

A DHHS spokesperson declined an interview request Friday. In a statement earlier this week, a DHHS spokesperson said: “We are committed to delivering high-quality care while responsibly managing public resources. Protecting the integrity of NC Medicaid is essential to both safeguarding taxpayer dollars and protecting the live saving care people depend on in North Carolina.”

North Carolina has spent hundreds of millions of taxpayer dollars trying to modernize the computer system that helps run the state’s Medicaid program. The U.S. Centers for Medicare & Medicaid Services, or CMS, has been distributing money to North Carolina and other states to do away with outdated legacy systems, mandating use of the Medicaid Enterprise System, or MES, to pay healthcare providers faster and give the state better tools to detect waste and fraud.

The new system was supposed to be fully installed by the end of June 2024. But state officials now say remaining work won’t be finished until the end of 2029. In the meantime, North Carolina is paying a contractor at least $600 million to keep its existing Medicaid system running. Documents obtained by WRAL Investigates show that concerns about the project emerged years before the state’s 2024 completion deadline passed.

In recent days, allegations from a worker tied to the project were unsealed in a now-dismissed federal lawsuit. Former North Carolina government workers alleged top state health officials used false information to secure federal funding for the Medicaid technology overhaul, according to the lawsuit. The whistleblowers also alleged that federal regulators kept approving funds for the state — despite lacking key information typically required for approval. 

North Carolina began planning its Medicaid system modernization in 2017. By 2022, the state had received $120 million in federal funds for planning and management — but a dozen of the planned upgrades were behind schedule, according to a draft state audit that was produced in 2022 but wasn’t released to the public. Federal oversight officials separately found that Medicaid services were deteriorating because of the delays, according to state and federal documents reviewed by WRAL and interviews with people directly involved in the project.

The state auditor is now reviving the investigation into the project, WRAL previously reported. 

“NCDHHS has addressed concerns from five years ago regarding the transition from NC Tracks to the Medicaid Enterprise System,” the DHHS spokesperson said earlier this week. “The department has made consistent and regular progress transitioning our systems through a phased approach, which was recommended and approved by CMS and funded in stages by the NC General Assembly.”

DHHS leaders have asked lawmakers for more state money to pay for Medicaid in recent years. The General Assembly provided $277 million in additional recurring funding and $100 million in one-time funding for Medicaid in the 2024-25 fiscal year. For 2025-27, lawmakers provided $600 million in additional recurring funding, then approved another $319 million in nonrecurring funding from the state’s Medicaid reserve.

The agencies’ leaders have said the increase in requests for funding reflects the increase in Medicaid enrollment, rising health care costs and new federal funding changes, among other factors.

That financial responsibility is expected to drive lawmakers’ reasons to examine the technology project’s costs and management.

“We’re going to be careful, do our diligence and make sure we do our oversight responsibilities,” said Sawrey, who is co-chair of the General Assembly’s Joint Legislative Oversight Committee on Medicaid, which is charged with examining the program’s budgeting, financing, administration and operations. The committee has the power to obtain documents and compel state officials or employees to appear before it.

A spokesperson for State Auditor Dave Boliek said Friday the auditor’s team is in the information-gathering and analysis phase of its renewed investigation into the project.

“[We are] working to understand what parts of MES have been implemented, what remains to be completed, how much has been spent to date, and the timeline and plans for completing the program,” Randy Brechbiel, a spokesperson for the auditor’s office, said in a statement to WRAL Friday. “They’re also looking at how the delays may be affecting Medicaid operations, providers, access to services, and DHHS’s ability to oversee the program, including efforts to prevent fraud, waste, abuse, and improper payments. We want to make sure the work is thorough, accurate, and supported by sufficient evidence.”