Speech  Auditor Bump Highlights OSA Return on Investment in Budget Testimony

Boston — Good afternoon Chairwoman Spilka, Chairman Dempsey, and members of the Committee. It’s a privilege to share with you today some of the successes of the Office of the State Auditor and to highlight the ways our work is impacting spending and operations in state government.

Were my office being created in the 21^st century, it probably would not be called the Office of the State Auditor. It is more likely that I would be the Chief Accountability Officer. And, just as my office holds agencies and contractors accountable to the taxpayers, so am I accountable to you. 

What I hope to do today is impress upon you that investing in the resources of the State Auditor’s office produces meaningful and lasting savings throughout government…savings that help you balance the budget and meet the expectations of your constituents. 

So, let me start by demonstrating the truth of that assertion, and then explain how my office intends to the use the appropriations, amounting to $757,000 above the House 2 recommendations, that I am requesting here today.

We in the Auditor’s office are pledged to using our resources to make government work better. That means we must be more than finger pointers; we must be problem solvers. That’s why, when an audit produces findings of inefficient or ineffective spending or administration, we also provide suggestions for addressing these deficiencies. That state agencies report that they have implemented or are implementing 95% of our recommendations is a testament to the value of our work.

Since 2011, our audits have identified more than $1 billion in unallowable, questionable, or potentially fraudulent spending and savings opportunities for the Commonwealth. Yes, that is $1 billion with a “B”. When you consider the annual budget of our agency - less than $20 million - and compare it to the impact we have, it is clear that our work improves efficiency and accountability in government spending, and that diminishing our resources is counterproductive.

We in the Auditor’s office must be effective stewards of our resources. Unlike other constitutional offices, all the monies appropriated by the Legislature go toward staff and overhead costs. There are no discretionary grants, public-private partnerships or other initiatives on which our funds are expended. Therefore, when our budget is cut, and our core accounts have been substantially cut since 2009, it directly impacts our personnel count, our ability to offer competitive salaries, and the value that we can provide to the people of the Commonwealth.

Let me show you what we can do with more resources.

Last year you allocated an additional $300,000 for the Medicaid Audit Unit. With those resources we added 5.5 new staff members to tackle the audit topics and the suspicious provider patterns that our risk analyses identified. More auditors means more audits; whereas this unit had 7 audits in progress last year at this time, there are currently 15 in progress.

And, more audits means more savings. In fact, last June the MassHealth audit team produced an audit with the single largest finding in the last 27 years, at over half a billion dollars in combined improper payments and lost potential savings in the MCO program.

This team also identified $16 million in potentially fraudulent billings from a single a MassHealth contractor that provided wheelchair-van service. Identifying that company not only stopped that fraud in its tracks, but it also made MassHealth tighten its systems of controls so that it can’t be repeated. A single provider audit can make a big and lasting difference.

And in the coming months, we’ll release examinations of medical providers using the practice of “upcoding,” in which MassHealth clients who came to see their doctor for a standard check-up, were instead billed at a higher rate, as if they were having a severe medical emergency.

I know you need to keep spending growth in check. In the MassHealth program, the challenge is especially great. Governor Charlie Baker has a goal of limiting spending in this program to 5%. We are an invaluable resource in doing this.

It is with the responsible use of your investment last year in mind that I present our budget request for fiscal year 2017. We are seeking a total of approximately $757,000 above House 2 recommendations. The bulk of that, some $711,000 would go into our administrative line-item, 0710-0000, to enable us to add at least one more audit team, support the career ladder program, and fully deploy our data analytics capability.  It would also add small amounts to the Bureau of Special Investigations and the Division of Local Mandates.

As I said, more auditors means more cost-saving audits, but we hope to do more with the increase in our main line item. In prior appearances before this panel, I have spoken of our increased professionalism and audit proficiency. We have audit training staff and a professional education curriculum that responds to our need for talent, and we offer incentives for auditors to earn credentials in relevant areas of expertise.

Well, there is a downside to investing in staff development. It is that they enter your workforce, new and unformed, and then, when they are trained and capable, they leave to make more money.

To counter that and to grow the managerial talent we need to replace our retiring baby boomers, we have developed a career ladder program to reward achievement and compete for talent, not just with the private sector, but with sister agencies which pay more. Our career ladder presents auditors with a clear understanding of how they can improve their skills to further their career and earn promotions and pay increases. Some of the increase I seek will support the career ladder program.

Lastly, with regard to this line item, I am going to do some bragging. Our data analytics capabilities are unmatched in state government. What sets them apart are the 13 algorithms we have developed and can employ (with 9 more to be completed before the end of this year) and our increasing ability to integrate data from different data sources, even from different entities within and outside of government. This allows us to more effectively identify areas of risk and potential fraud.

Two weeks ago, we announced that we were working with Attorney General Healey and law enforcement at the state and federal levels to identify and shut down doctors who are over-prescribing opioids in the Commonwealth. To do this we are applying our algorithms to MassHealth data to identify patterns that signify potential over-prescribing practices, and examine similarities between victims of over-dosage to help us prevent future tragedies. We are at the table because the Auditor’s office is the only agency in the Commonwealth that has the ability to do this. Your help in funding this line item will expand our usefulness in this effort.

The second line item for which I am seeking more than level funding is the Bureau of Special Investigations, 0710-0200, where I am asking for funding at the pre-9C levels of FY15. The increase is less than $32,000, but in this tight line item, it will have an impact. Again, your investment in this unit, which is charged with investigating complaints of public assistance fraud, is paying off. Tomorrow, BSI will release its annual report. I will preview it by saying that in FY15 BSI examiners identified a record $13.7 million in fraud, a 44 percent increase from the previous fiscal year.

And, if I might anticipate the question that will naturally flow from this, the answer is, no, it doesn’t mean the level of fraud among recipients has increased by 44%. We are identifying ever-larger amounts of fraud because we are working smarter. We have improved our relationships with the agencies that provide benefits, and we handle their referrals more effectively; we have expanded the number of agencies with which we work; and, with your help, we have invested in technology and staff that enable us to analyze tremendous amounts of data, discern potential patterns of fraud, and act proactively and rapidly. Our BSI Data Analytics Unit, which you helped to create, with a budget of less than half a million dollars, identified more than $4.1 million of the $13.7 million total. That is a roughly 9-1 return on investment.

The final line item I would like to mention is 0710-0100, which funds the Division of Local Mandates. Again, I am asking to return funding to the pre-9C cut level of FY15. My goal in seeking this additional $6500 is to provide the staff an opportunity for a salary adjustment in the coming fiscal year.

DLM is celebrating its 35th anniversary this year. In honor of that, we will be issuing for the first time in DLM’s history a report that reviews all the statutory and regulatory changes over the past 5 years that have impacted local communities. This is a report that, while required statutorily every five years, has never before been produced.

My goal as State Auditor is to use our accountability mandate to make government work better. Through our work, we have not only a demonstrated return on investment, but also a proven history of making every dollar allocated to us stretch as far as possible. I believe that in order to effectively provide oversight to public entities, we must lead by example, and that is exactly what we have done.

I understand that these are difficult financial times and you have some challenges before you in weighing competing interests. However, this investment in my office will provide tremendous savings to the Commonwealth going forward. The budget request we put forward will allow us to build on our successful efforts that have already had a significant impact on government performance and spending. It will allow us to continue to more effectively root out fraud, waste, and abuse in our system. It will expand the potential of our existing staff. And perhaps most importantly, it will ensure that taxpayers of the Commonwealth have confidence that their money is effectively used to serve the people of this state.

I want to thank you for the opportunity to speak with you today, and your ongoing support for our agency, but more importantly, for your support of our efforts to make government work better. I’d be happy to answer any questions you may have.