Health Benefits Program: Increasing medical costs require improved oversight
Published September 23, 2024
Health benefit costs increased by $10 million between Fiscal Years 2021 and 2024. With costs increasing, auditors reviewed how well the County managed the medical health benefit program. The objective of the audit was to to determine whether Human Resources staff oversaw the medical health benefits program to control costs and ensure that members received the best service.
What was found:
Though many aspects of the medical health benefits program were functioning well, several key issues emerged:
Funding of the Health Benefits Fund: Reserves were insufficient and fell below the level established by County policy. This shortfall indicated potential financial risk and highlighted the need to ensure the County has sufficient funds to pay claims.
Health Benefits Fund balance went below Contingency Level and neared the Claims Reserve.
Oversight of Data Security: During this audit, PacificSource accidentally shared sensitive medical information about other clients with Deschutes County auditors. The information included social security numbers and personal information about medical procedures for plan participants in more than 4,000 other organizations including the City of Eugene, Oregon State University, and Legacy Health. Human Resources did not request standard data security reports from the third-party administrator, PacificSource. This gap in oversight raised concerns about the protection of sensitive medical information and suggested a need for regular monitoring to safeguard data.
PacificSource Performance Monitoring: Human Resources did not request standard performance reports from PacificSource to assess whether performance met industry benchmarks. The absence of reviews impaired the ability to ensure that PacificSource was achieving optimal performance.
Invoice Payment Procedures: Payments to PacificSource were accurate, but the absence of documented procedures could undermine confidence in future payments.
We recommended that:
- County Administration conduct an after-action review regarding the drop in the Health Benefit Fund balance.
- Human Resources establish oversight of third-party administrator data security and performance.
- Human Resources document procedures for making payments to the third-party administrator.
Addressing these issues will strengthen the overall management of the health benefits program and help ensure that both financial and service-related objectives are met.
Audit Report
Health Benefits Program: Increasing medical costs require improved oversight
Follow-Up Reports
Scheduled for 2025.
Recommendation Status
Of the six recommendations
RESOLVED: 0
Recommendations have been fully implemented. Auditor will no longer monitor.
UNDERWAY: 0
Recommendations are in progress. Auditor will continue to monitor.
PLANNED: 4
Recommendations agreed to without progress. Auditor will continue to monitor.
NOT IMPLEMENTED: 2
Management accepted the risk of not implementing the recommendation.
