Program misstated spending, audit finds

By Curtis Lum
Advertiser Staff Writer

The state improperly reported expenditures of federal money aimed at providing healthcare for low-income children and may have to repay more than $1 million, according to a federal audit.

The audit of the Hawai'i State Children's Health Insurance Program, or SCHIP, was conducted by the U.S. Department of Health and Human Services, Office of Inspector General. The program provides federal matching money to states to help them extend coverage to uninsured, low-income children.

The audit found that from July 1, 2000 to June 30, 2002 the state overstated SCHIP expenditures by $1.4 million, which led to a $947,411 over-claim of federal matching money. During that period, the state Department of Human Services, which administers the program, claimed $8.89 million in SCHIP expenditures and was given $6 million in matching money.

The audit said the state should credit the SCHIP program $1.4 million of overstated expenditures and refund $947,411 in matching money. The overstatement occurred because the state did not apply a $1 million credit for rate adjustments and also claimed $354,008 of unallowable managed-care expenditures.

State Human Services officials could not be reached for comment. But in a written response to the audit, the state "generally agreed" with the findings and has implemented many of the audit's recommendations. The state disagreed, however, with the audit's finding of the unallowable expenditures. The state contended that when the SCHIP participants were enrolled, they were eligible for benefits

"However, due to our severely limited staffing and resources, we have decided it is not economical to further pursue this issue," wrote Aileen Hiramatsu, Med-QUEST Division administrator. "The state will return the $354,008 claimed to the federal government."

Reach Curtis Lum at 525-8025 or culum@honoluluadvertiser.com.