🔒State auditors: Comptroller still lacks controls to verify millions in healthcare payments

A recently completed audit found the state Comptroller’s Office still lacks adequate controls to verify millions of dollars in payments and refunds involving healthcare contractors, repeating concerns raised in a previous audit.

The state Auditors of Public Accounts, in a report released Wednesday, said they examined state employee and retiree healthcare and other benefits for fiscal years 2022, 2023 and 2024. The Comptroller’s Office administers those benefits.

The auditors reported finding 26 payments that included nearly $18.9 million in administrative fees paid to four contractors that provide medical, dental, prescription and other health benefit services.

State auditors said they were unable to verify the accuracy of 22 of those fees, totaling nearly $9.6 million, because of insufficient supporting information.

“The state could be overpaying for benefits and services,” the report states.

The finding does not mean the state improperly paid $9.6 million. Instead, auditors said, the Comptroller’s Office lacked sufficient information to verify the contractors’ administrative fees and did not provide its methodology for doing so.

The Comptroller’s Office agreed with the finding in part, saying it currently reviews vendor invoices by comparing billed enrollment totals with state enrollment data for reasonableness and consistency. It acknowledged, though, that the medical carrier’s invoices do not include the participant-level information needed for a direct record-by-record reconciliation. It said the carrier is enhancing its reporting to provide that information.

Auditors responded that the Comptroller’s Office is ultimately responsible for paying administrative fees for all enrollment types and should obtain and document the information needed to ensure contractor bills are accurate

This issue also was identified in a previous audit, which covered fiscal years 2020 and 2021. That report similarly recommended the Comptroller’s Office reconcile healthcare contractor payments to ensure the state pays the proper amount.

Auditors also repeated a previous finding involving refunds of healthcare overpayments. Contractors are required to recover excess, duplicate or erroneous claims payments and return the money to the state.

State auditors, however, found the Comptroller’s Healthcare Policy and Benefit Services Division did not have a process to reconcile those credits with supporting documentation and therefore could not verify that monthly credits were properly applied.

Healthcare contractors refunded nearly $25 million in overpayments and adjustments to the state during calendar year 2025, according to the report.

The Comptroller’s Office agreed with that finding and said it has established regular reporting with the state’s health insurance carrier, but that those reports still do not contain sufficient detail to reconcile individual overpayments with credits. The carrier is working to provide more detailed information, it added.

The audit also identified accounting errors, including a $12.9 million payment recorded to the wrong fund in fiscal 2023 and a $54.4 million transfer incorrectly booked in fiscal 2024; both were subsequently corrected. Auditors recommended stronger review procedures for journal entries and financial reporting.

The Comptroller’s Office said it has implemented a second level of review for payment and journal entries.

A spokesperson for the Comptroller’s Office did not immediately respond to a request for further comment on the report.