Auditors: Comptroller’s Office Lacked Internal Controls For Insurance Payouts

A state division under the Office of the State Comptroller needs to improve its internal controls after making inaccurate calculations and payments to insurance beneficiaries, a recent audit recommends.

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The audit released this week for fiscal years 2020 and 2021 found inaccurate group life insurance benefit calculations and payments and delayed notifications and payments to beneficiaries in the Healthcare Policy and Benefit Services Division, which administers benefits programs for all state employees, retirees, and their families including medical, pharmacy and dental benefits.

The audit also found instances of noncompliance with laws, regulations, or policies and a need for improvement in practices and procedures that warrant management’s attention, auditors said in its summary report.

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In calendar year 2021, contractors refunded $7,803,428 in overpayments and adjustments to the state, according to the audit.

“The division did not have a process to reconcile overpayment credits and adjustments to supporting documentation on monthly healthcare contractor invoices,” according to the audit. “The division was unable to verify the total monthly credits were supported and applied correctly.”

Failure to verify the credits may result in overpayments by the state, and auditors recommend the agency implement better internal controls.

In its response to the audit, the division said it requested that the vendor provide detailed information supporting credits and adjustments applied to its invoices.

“In addition, the Division is seeking an outside audit firm to review, audit, and verify all fees and adjustments applied by our medical, pharmacy, and dental carriers which will further ensure proper payments moving forward,” the division said.

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The audit also said the state could be overpaying for benefits and services because of administrative fees and recommended that the division reconcile payments to healthcare contractors to ensure it pays the proper amount for benefits and services.

The division in its response said process and procedures have been updated since 2021 to correct an oversight on reconciling prescription vendor admin fees and that office staff will conduct an audit on prior payments.

“Going forward, an additional step has been added in the vendor payment process to confirm the administrative fees,” the division said.

During the years this audit covered, Dr. Thomas Woodruff served as director of the Healthcare Policy and Benefit Services Division. He served in this capacity until Feb. 14, 2022, when he was succeeded by Joshua Wojcik, auditors noted.

Kevin Lembo was state comptroller for part of the audited period, until his resignation in December 2021, when Gov. Ned Lamont appointed Natalie Braswell to succeed him. Sean Scanlon was elected comptroller in November 2022 and was sworn into the role on Jan. 4, 2023.