Auditor McGuiness’ Office Ranks No. 2 Nationally with Reports on Oversight.gov

DOVER, DEL. – The Delaware State Auditor’s Office has been ranked No. 2 on the list of Top 6 Agencies with Reports on Oversight.gov.

“My office works diligently, with a fixed determination, to provide independent, objective oversight of the state government’s use of taxpayer dollars,” Auditor Kathy McGuiness said. “It is a proud moment when you see the difference your efforts have made. I’m excited to keep with this momentum and continue serving the great State of Delaware.”

Alongside the Delaware Auditor’s Office, the top six agencies are Oregon’s Secretary of State (Audits Division), Indiana Office of the Inspector General, Chicago Office of the Inspector General, Arlington County Auditor, and Florida’s Office of the Chief Inspector General. Collectively, a total of 381 reports have been submitted, with Delaware’s Auditor’s Office accounting for 115 of those reports.

“Since the inception of the Oversight.gov State/Local page, the Delaware State Auditor has been one of our most active participants,” said spokesperson Shiji Thomas of the National Science Foundation Office of the Inspector General, who oversees the project. “Kathy McGuiness and her team provided critical support right from the start. Through the development and pilot phases, McGuiness’ team worked closely with the Oversight.gov team to make the page a reality.

“We are grateful for the contributions the Delaware State Auditor has made for the Oversight community.”

Oversight.gov is a website that contains publicly accessible reports, investigations and recommendations from state and local inspection offices. The site is managed by the Council of the Inspectors General on Integrity and Efficiency and is frequently updated by the Inspector Generals.

You can discover local and state offices’ recent data, trending reports and summaries at oversight.gov.

Learn more about the Delaware Auditor’s Office at https://auditor.delaware.gov.

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Contact:        

Anna Nuzzolese, Executive Assistant

Anna.nuzzolese@delaware.gov

302-857-3907

 


State Auditor McGuiness Finds Second Long-Term Care Facility to be ‘Unauditable’

DOVER, Del. – State Auditor Kathy McGuiness said today her office was unable to fully complete an examination of another long-term care facility because of a lack of proper documentation.

The Cadbury At Lewes Senior Living Community did not have the necessary documentation to support approximately $1.1 million – about 18 percent of the total costs – during 2016, McGuiness said.

“I certainly understand that all long-term care facilities were hit hard by the pandemic and needed to focus resources on caring for their residents, but the new management at Cadbury At Lewes was unable to access the necessary records that the previous administration used to support its Medicaid Cost Report,” McGuiness said. “That rendered portions of the cost report unauditable.”

Delaware Code requires the State Auditor’s Office to perform audits of long-term care facilities (LTCFs) each year for the state Department of Health & Social Services (DHSS). The state’s LTCFs are audited on a rotating basis, and the Cadbury At Lewes Residence was among six facilities audited in fiscal year 2020-21 for its 2016 Medicaid Cost Report and Nursing Wage Survey.

“I acknowledge that Cadbury At Lewes has undergone a transition since becoming an affiliate of Springpoint Senior Living Inc. in 2017,” McGuiness said. “However, keeping track of this type of financial documentation should be part of every transaction.”

Although LTCFs are usually audited only every five to eight years, McGuiness said, her office will examine the facility, now known as The Moorings at Lewes, again in fiscal year 2022 for its 2018 Medicaid Cost Report and Nursing Wage Survey.

Last month, McGuiness said her office could not complete an examination of the Jeanne Jugan Residence in Newark because of a severe lack of documentation. In that case, facility management was given 18 months – nine months before the pandemic and nine months after – to produce documentation supporting approximately $4 million in costs and did not do so.

The Cadbury At Lewes examination can be found on the Auditor’s Office website here.

Learn about the Delaware Auditor’s Office at https://auditor.delaware.gov.

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Contact:       

Anna Nuzzolese, Executive Assistant

302-857-3907

anna.nuzzolese@delaware.gov


Auditor McGuiness: Time to Reform Pharmacy Benefit Manager’s Oversight of State Employees’ Prescription Drug Plan

DOVER, DEL. – State Auditor Kathy McGuiness today released the following statement regarding proposed regulations for pharmacy benefit managers (PBMs):

“This month, I released a report titled ‘Lack of Transparency & Accountability in Drug Pricing Could be Costing Taxpayers Millions’ that listed the ways poor contracting with Express Scripts Inc. (ESI) cost Delawareans over three times the average drug inflationary rate. My team specifically discussed the financial impact on the State Benefits Office (SBO) and how ESI cost Delaware’s taxpayers over $24.5 million more than they should have paid for state employees’ prescription drugs.

“PBMs would like everyone to believe that legislative limits on their predatory practices would result in higher healthcare costs, but the National Community Pharmacists Association (NCPA) released a report, ‘Controlling PBM Conflicts of Interest Does Not Raise Healthcare Costs,’ that compares premium increases between 2015 and 2019 and notes that:

‘The premium increase in states with licensing authority over PBMs during that period was .3% below the national average, while states without licensing authority saw their premiums increase .4% above the national average.’

“The First State has a tremendous opportunity to have better oversight and administrative practices. Delawareans have already paid more than they should have.

“Failing to take action now continues a concerning trend that leaves Delawareans footing an inflated bill.”

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Contact:
Anna Nuzzolese, Executive Assistant
302-857-3907
Anna.Nuzzolese@delaware.gov


State Auditor McGuiness Demands $24.5M in Overcharges Back From State Employees’ PBM, Express Scripts

DOVER, Del. – State Auditor Kathy McGuiness said today that Express Scripts Inc. should pay back the $24.5 million it overcharged the State of Delaware for its state employees’ prescription drug plan from 2018 through 2020.

“My special report found that Delaware paid three times the average drug inflationary price between 2018 and 2020 for state employee prescriptions,” McGuiness said, referencing her latest special report, “Lack of Transparency & Accountability in Drug Pricing Could be Costing Taxpayers Millions,” which was released Friday.

“While the national drug inflationary rate was 4.7 percent during those three years, Delaware paid a 20.1 percent increase in prescription costs,” she continued. “That’s an abuse of taxpayer dollars that should be returned to Delawareans.”

McGuiness said she was pleased to discover that House Bill 219, which passed the House unanimously Friday afternoon, is a comprehensive bill that addresses at least two of her special report’s recommendations.

“My team has been working on this project for two years,” McGuiness said, “and though we did the math on just one selected area showing how PBMs have taken advantage of Delawareans, it’s nice to know that we independently came to some of the same conclusions as legislators.”

McGuiness added that vague language in the Express Scripts contract with the state allowed the PBM to take advantage of the agreement.

“That’s why one of my report’s recommendations is for independent pharmacy experts to be included in contract negotiations with PBMs – so that they can provide the state’s legal team with expert guidance to ensure a sensible fee structure in the contract,” she said.

McGuiness reminded Delawareans that it is her job as state auditor to look for fraud, waste and abuse of tax dollars, and that she will continue to fight for accountable governance for them.

“I take the trust my constituents statewide have placed in me very seriously,” she said. “Imagine how much good that $24.5 million could do in the First State.”

The PBM special report can be located on the Auditor’s Office website found here.

Learn about the Delaware Auditor’s Office at https://auditor.delaware.gov.

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Contact:

Alaina Sewell, Chief of Staff

302-857-3931

Alaina.Sewell@delaware.gov


State Auditor McGuiness Estimates State Overpaid Its Pharmacy Benefit Manager by $24.5 Million over Three Years

DOVER, Del. – $24.5 million taxpayer dollars.

That’s how much Delaware appears to have overpaid its pharmacy benefit manager (PBM) for state employees’ prescription drugs over a three-year period, State Auditor Kathy McGuiness said today.

“For fiscal years 2018 through 2020, the State of Delaware spent hundreds of millions of dollars on prescription drugs for state employees,” McGuiness said. “But because of questionable and opaque practices and contract terms with its PBM, Delawareans spent more money than was necessary – most of it to line the PBM’s pockets.”

McGuiness released a new special report, titled “Lack of Transparency & Accountability in Drug Pricing Could be Costing Taxpayers Millions,” that looks at the role of PBMs, who serve as middlemen between insurance companies, pharmacies and prescription drug manufacturers. Due to the time involved in examining the contracts and need for supporting data, the report focuses on the relationship Delaware had with Express Scripts Inc. (ESI) as its contracted PBM for state employees for fiscal years 2018-2020.

“My team reviewed the state’s contract with ESI and compared pharmacy reimbursement data,” McGuiness said. “What we found was that Delaware’s drug inflation rate for 2018-20 was nearly three times the national inflationary rate.

“That equates to a 20.1 percent increase in total plan costs from 2018 to 2020 alone despite enrollment numbers remaining relatively flat,” she continued.

PBMs are hired by employers to manage prescription drug plans and are expected to contain costs by negotiating rates for prescription drugs with drug makers and pharmacies.

“My report focuses primarily on the impact of administrative fees and spread pricing to explore how poor contracting wastes state funds,” McGuiness said. “We identified over $104 million of administrative fees alone, and I have significant concerns about the impact these PBM middlemen have on our community.

“For example, my report shines a spotlight on predatory PBM practices that disproportionately affect our small pharmacies, as well as Delaware’s residents and state entities.”

The 15-page report also details the controversy surrounding how these organizations generate revenue from tax dollars by using practices such as claw-backs, gag clauses, rebate pumping and spread pricing – all of which significantly contribute to the skyrocketing of prescription drug prices.

The report contains five observations and five recommendations for how lawmakers can help prevent this kind of wasteful spending in future contracts.

“As your state auditor, I am committed to protecting taxpayer dollars and improving government for the people of the First State,” McGuiness said. “I seek to identify fraud, waste and abuse wherever it occurs to make government work for you.”

As of July 1, 2021, CVS Caremark will become the PBM for state employees.

“Although contract terms with CVS Caremark are already set, I urge lawmakers to review our recommendations and pass legislation that helps our small independent pharmacies, who deal with these Goliath-sized companies that force them to sign take-it-or-leave-it contracts that can put these pharmacies out of business.”

The new special report, “Lack of Transparency & Accountability in Drug Pricing Could be Costing Taxpayers Millions,” can be located on the Auditor’s Office website found here.

 

Learn about the Delaware Auditor’s Office at https://auditor.delaware.gov.

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Editor’s note: Auditor McGuiness, a licensed immunizing pharmacist, owned a small independent pharmacy business in downtown Rehoboth Beach from 1994 to 2002.

 

Contact:

Alaina Sewell, Chief of Staff

302-857-3931