State auditors say inspector general failed to fully oversee Utah Medicaid; legislature refers audit for further review

Auditors from the Office of the Legislative Auditor General presented a performance audit finding that Utah’s Office of Inspector General (OIG) has not fully met its statutory oversight responsibilities for the state Medicaid program, a roughly $5 billion program, and recommended that the Legislature consider structural changes to improve accountability.

The presentation, led by audit manager Jesse Martinson and senior supervisor Matthias Boone, said the OIG concentrated largely on compliance and claims audits while conducting minimal performance oversight of Accountable Care Organizations (ACOs), which the auditors said account for about $1.4 billion — roughly 28% — of Medicaid spending in Utah. "We would have expected more work to be done to fulfill their mandate in Medicaid and in managed care organizations," Boone said.

Auditors flagged multiple reporting problems in OIG annual reports, including methodology inconsistency for the office’s cost-avoidance metric and arithmetic errors that, the auditors said, inflated results by more than $23 million. "We found major inconsistencies, errors, and omissions in the OIG's annual reports," an audit staffer told the committee. The auditors recommended the Legislature consider options ranging from improving governance to relocating or dissolving functions now in the OIG.

Interim Inspector General Neil Erickson and Elise Napper, the OIG’s policy and training coordinator, told the committee they consider many past recommendations addressed and said the office conducts additional activities beyond audits — investigations, training, and outreach — and has ongoing work including joint audits with federal partners. "We are trying our best to work with OLAG to identify how we could change the gaps and define the risk," Erickson said, and he asked for more direct follow-up from legislative auditors to align interpretations.

The committee pressed both sides on specific counts: auditors said they identified only one ACO-focused performance audit since 2018, while OIG staff said they had conducted several audits (they cited multiple ACO-related reviews and recoveries). Auditors said they had asked ACOs directly and that providers reported they had not been audited as the auditors would expect.

President Adams moved that the subcommittee refer the performance audit of the Inspector General’s Medicaid services to the Government Operations Interim Committee (lead) and to the Social Service Appropriations Committee (review). The committee approved the referral by voice vote. The referral will send the audit findings and the auditors’ recommended options for structural change to the named committees for further review.

What’s next: the audit materials will go to the named committees for additional study and possible legislative action; legislators asked for follow-up on how the OIG will operationalize recommendations and for clarity about which functions should remain in the OIG versus moved elsewhere.

Provenance: topic introduction at SEG 011; discussion and findings through SEG 253; OIG response SEG 506–586; referral motion SEG 1279–1288.