County controller warns $1.9 million variance in Northern Lakes CMH audit could expose counties to repayment

County Controller Paul Compo warned the Crawford County Board of Commissioners that a forensic audit of Northern Lakes Community Mental Health (NLCMH) identified potential misallocations that may create county financial exposure.

"Rehmann found a variance of $1.9 million over the first four months of FY 23," Compo said, telling commissioners the firm flagged instances where health-insurance monies were misallocated and co-mingled and that Medicaid could seek reimbursement for unallowable expenses. He said a full look-back across prior fiscal years is not expected until late August.

Compo summarized a multi-year chronology: the NLCMH CEO retired in 2021; a 2022 enabling act among six counties created a Board Dispute Resolution Committee; an interim CEO was appointed in October 2022; and staffing changes followed. In 2024 Rehmann was hired to perform a forensic audit and identified discrepancies that may have enabled improper Medicaid reimbursements.

Compo said the regional entity NMRE has asked member community mental-health boards to pursue cost-containment measures amid anticipated Medicaid funding cuts. "If NLCMHA does not have the reserves to reimburse CMS some believe the Counties will be liable," he said, describing the potential pathway to county liability but not stating a final legal determination.

The controller is awaiting a complete forensic look-back and additional details from Rehmann before quantifying total potential liability. Commissioners did not take a specific funding action during the May 22 meeting; Compo noted a fuller set of findings is expected later this summer.