Federal government demands Nebraska to repay $22 million


January 23rd, 2014

Omaha, NE — News of the federal demand for reimbursement came from State Auditor Mike Foley. Foley released letters from the federal government to the state asking for the reimbursement for the period from July, 2010 through June, 2012. In an interview, the auditor said the state was unable to account for spending on foster care during a period when it was trying to privatize services.

“Its mostly a case of lack of documentation. You can’t show where the money was spent. We know the money went from HHS to the private contractors. But after that, HHS did not have the cost accounting in place,” Foley said. “It is HH’s obligation to account for those dollars even though they’re working with private contractors. Ultimately the  responsibility for tracking those costs rests with HHS and they just didn’t have the records.”

Nebrska Health and Human Services CEO Kerry Winterer acknowledged there were problems because the state had paid private contractors lump sums. But he held out hope that an acceptable accounting could be made.

“Documentation does exist and this is just the beginning of the process. It’s the initial notice. We will probably end up appealing it and then we’ll begin a process in which I would expect the federal government to allow us to substantiate those charges and ultimately we’ll come to some resolution of it,” Winterer said.

The privatization effort has now been cancelled in all parts of the state except the Omaha area. Foley was asked if that meant the problems were over.

“Well, that’s what I think HHS would likely say at this point. However, there’s yet another report in the process of being finalized. And while I can’t divulge the contents of that report, I can tell you from my perspective, these problems are not fixed,” Foley said.

Winterer disagreed.

“Well, I would say the auditor misspoke. He’s looking backwards and is responding to the letters which relate to the years 2011 and 2012. I think he’s got no basis at this point in time to come to the conclusion its an ongoing problem,” Winterer said. “I know what the problem is, and I know that we have changed our practice to resolve the problem and I can tell you there should be no future disallowances for this particular reason.”

However, Winterer said one reason for his confidence is that the state is not claiming federal matching funds for foster care in the Omaha area where the system is still managed by a private contractor – the Nebraska Families Collaborative, or NFC.

“We are not claiming them for NFC on an ongoing basis. That’s one of the reasons why we’ll not have a disallowance. The downside to that however is that its all state funds. We haven’t been able to be in a position to claim federal funds, because we are now playing by the rules,” Winterer said.

Winterer said he did not know offhand how much federal aid Nebraska had foregone, but said it amounted to “some dollars.” He added that the state is working on regaining access to those funds in the future. Foley, who is a candidate for the Republican nomination for governor, said his criticism of HHS had nothing to do with his campaign, citing the fact that it was the federal government which was requesting reimbursement from the state.

Meanwhile, Wednesday was the last day for bills to be introduced in the Legislature this year, and 103 were dropped in the hopper, along with two constitutional amendments.  Among the measures proposed was one by Omaha Sen. Sue Crawford that would decriminalize hemp oil for use by doctors for treating epilepsy. Crawford said she introduced the bill as a result of talking to a constituent whose son suffers from severe seizures that have been resistant to other treatments. She said the proposal would not be a general legalization of marijuana for medical or recreational use.

“We drew a very narrowly crafted bill because the issues in broader legalization require much more discussion, much more research. But the situation for these children is so dramatic that I thought it would be worthwhile to see if we could provide a tool that would allow the doctors to work with these patients in our state right away,” Crawford said.

Lawmakers spent a second day debating a proposal to ban the sale of novelty cigarette lighters. Supporters argue the measure would help protect children; opponents called it overregulation. Sen. Russ Karpisek of Wilber decried the amount of time the debate is taking.

“If we’re going to stick on every bill for this long, we’re going to get nothing done. We want property tax relief. We want water issues moved. We want all sorts of things. We can’t be doing this over such mundane things,” Karpisek said.

By Thursday, lawmakers could reach the informal eight hours of debate  needed before a motion to cut off debate and vote on the bill.


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