Legislative Audit Bureau Reviews Two DHS Programs

Wisconsin’s independent Legislative Audit Bureau recently released its audits of the Wisconsin FoodShares program and the state’s Health Insurance Risk-Sharing Plan (HIRSP) Authority.

FoodShares Audit Summary

FoodShare Wisconsin is the state’s program implementing the federal Food Stamp Act of 1964 to assist low-income individuals and families in purchasing food. The program is administered by the Department of Health Services (DHS).

In February 2012, the LAB released a report on FoodShare benefits spent outside of Wisconsin which prompted further investigation into the program. The LAB’s full audit noted key facts about the program and its operations and provided suggestions for improvement.

FoodShare expenditures, including administrative costs, totaled $1.2 billion in fiscal year 2010-11. The number of FoodShare recipients increased from 462,204 in 2003 to 1.1 million in 2011. In addition to the economic recession, several factors account for the increase, including policy changes that have increased the number of individuals eligible for benefits, facilitated the application process, and decreased work- and education-related requirements.

In recent years, the accuracy with which FoodShare applicants’ eligibility is determined and benefit amounts are calculated has improved. However, the percentage of FoodShare applications processed within federal time limits decreased from 90.3 percent in federal fiscal year (FFY) 2005-06 to 74.9 percent in FFY 2009-10.

The audit recommends DHS report to the Joint Legislative Audit Committee by December 3, 2012, on:

  • its plans to verify the social security numbers provided by FoodShare applicants;
  • the results of its efforts to improve the timeliness with which eligibility determinations are completed;
  • its determination of whether the advantages of charging a fee for FoodShare replacement cards to discourage unallowable use outweigh related administrative costs and effects on recipients;
  • its plans to review and address instances in which frequent requests for FoodShare replacement cards appear to be an indication of unallowable use;
  • its plans to provide additional training to caseworkers to help prevent the cases of incarcerated individuals from being reopened while they remain incarcerated;
  • its efforts to implement an effective process to identify recipients who are ineligible because of incarceration and to seek repayment of FoodShare benefits provided to them;
  • its plans to implement a process for regularly identifying FoodShare recipients who are ineligible for benefits because they are fleeing to avoid prosecution or confinement for a felony offense or are in violation of a condition of probation or parole and to seek repayment of FoodShare benefits provided to them;
  • its plans to improve the training provided to state and local staff on the procedures to be used in disqualifying FoodShare recipients who have intentionally violated program rules; and
  • how it will administer fraud prevention and investigation services for the FoodShare program in the future.

HIRSP Audit Summary

The Wisconsin Health Insurance Risk-Sharing Plan (HIRSP) Authority provides medical and prescription drug insurance for individuals who cannot obtain coverage in the commercial health insurance market because of high costs or adverse health circumstances.

In the late 1990s, HIRSP was also designated as Wisconsin’s plan to meet federal Health Insurance Portability and Accountability Act (HIPAA) regulations and to provide health insurance to individuals who lose employer-sponsored group health insurance and meet other specified criteria. Since 2010, and under contract with the U.S. Department of Health and Human Services, the HIRSP Authority also has operated a temporary federal high-risk pool, which is known as the HIRSP Federal Plan.

The state-based HIRSP Plan is funded primarily through policyholder premiums, financial assessments on health insurance companies that do business in Wisconsin, and reduced reimbursements to health care providers for their services. None of the funding is obtained from general purpose revenue.

The LAB’s audit noted no major concerns with the current program, but noted there is great uncertainty about the future of the state-based HIRSP Plan as provisions of the 2010 federal health care reform legislation are implemented and the U.S. Supreme Court considers cases challenging the legislation.

Enrollment in the state-based HIRSP Plan increased from 16,381 policyholders as of December 31, 2009, to 21,317 policyholders as of December 31, 2011, or by 30.1 percent. However, recent premium increases may slow the rate of future enrollment growth. More than 80 percent of policyholders are enrolled in options with higher deductibles and lower premiums.

For several years, the state-based HIRSP Plan had net asset balances in excess of target balances. Actions by the HIRSP Authority to reduce these balances, as well as increases in claims costs, decreased the net asset balance to $9.5 million as of December 31, 2011, or $6.7 million less than the target balance. The HIRSP Authority is accepting the lower level of net assets, in part, due to uncertainty about the future of the state-based HIRSP Plan as provisions of the 2010 federal health care reform legislation are implemented and the U.S. Supreme Court considers cases challenging the legislation.

In July 2010, as part of the federal health care reform efforts, the federal government contracted with the HIRSP Authority to operate one of the 27 state-based temporary high-risk insurance pools for individuals who are uninsured because of pre-existing medical conditions. The HIRSP Federal Plan enrolled 998 policyholders at the end of 2011. The federal government funds costs in excess of the premiums collected from policyholders.

This post was authored by Emily Kelchen.