Folwell Promises Crackdown on Health Plan Fraud | Eastern North Carolina Now

    Publisher's note: The author of this post is Dan Way, who is an associate editor for the Carolina Journal, John Hood Publisher.

    State Treasurer Dale Folwell strongly hinted some of the 601 people terminated from the State Health Plan after a recent eligibility audit could be investigated.

    "We have statutes on the books that allow us to go after folks like this," Folwell said Tuesday, May 1, during his monthly Ask Me Anything teleconference with reporters.

    First, the department must determine how much the scams cost the State Health Plan, and what to do about those "who willingly and knowingly were trying to defraud the State Health Plan," Folwell said. "We haven't gotten to that point yet, but it's on the tip of my mind, I can tell you that."

    The audit is part of Folwell's focus on creating procedures to combat fraud and abuse of the programs he oversees.

    The Dependent Eligibility Verification Audit began in May 2017. It required all subscribers with dependents under the age of 75 to submit documents verifying dependents' eligibility. Of 187,791 dependents, 186,477 dependents, or 99 percent of the audit population, were confirmed as eligible.

    Officials are working with some of the 601 people to verify dependents' eligibility.

    "An audit like this has been done in the past, but there's really no record of it anywhere," Folwell said. His goal was to create what he called a living, breathing document.

    "We want to make sure that people who were deemed ineligible for permanent reasons - like their kid is 27, or they're no longer married to that individual - to be an issue so that we have procedures and policies in place to keep people from simply going back through the open enrollment process, and getting the people on the plan" without being detected.

    For example, he said, if a State Health Plan member has a 10-year-old dependent, that information will follow the employee no matter what other state jobs he may take.

    Folwell said the State Health Plan is as large as the combined domestic employment base of Berkshire-Hathaway, Amazon, and J.P. Morgan. Yet the percentage of dependents removed because they couldn't be verified was lower than private industry standards.

    Folwell said in some states and private industry the numbers are higher because they require working spouses to sign up for their own companies' health insurance if they're eligible.

    North Carolina doesn't have that policy, he said, and he won't push for it. He said he has more pressing priorities.

    The treasurer also mentioned an April 17 Wake County indictment against Ben Hamilton Colvard III. His mother, Ruth Colvard, died in 2001. Her monthly pension benefits should have ceased that March. But the checks kept coming, and he cashed them through April 2016, totaling $266,747.

    Colvard was indicted on felony charges of obtaining property by false pretenses.

    "I have a duty to protect the pension plan so the people who deserve to get checks keep getting them," Folwell said. "The indictment shows that we're serious about making sure there are consequences for people who cash checks they don't deserve.

    In another matter, Folwell said the General Assembly needs to increase the state's contribution to the state pension plan, though he didn't cite an exact amount. Action by state pension boards automatically lowered the funded level of the plan by 2 to 3 percent.

    The Teachers' and State Employees' Retirement System and Local Government Employees' Retirement System boards of trustees voted unanimously April 28 to reduce the assumed rate of return on investments from 7.2 percent to 7 percent, retroactive to Dec. 17. Folwell backed reductions before taking office.

    Pension investment gains haven't met unrealistic expectations on average the past 20 years. Lowering the rate gives a more accurate value of the plan.

    The state would have to kick in more money over a three-year phase-in to fill the new gap in full funding. The move would shore up long-term obligations, and maintain the state's AAA bond rating, Folwell said.

    "This is the first real change that's happened the last 40 years" in North Carolina, Folwell said. National rating agencies already are using an assumed rate of return or 6 percent or less to judge the stability of state pension plans.

    "We are not going to be part of kicking the can down the road anymore," Folwell said. "We weren't fooling anyone, and it's the right thing to do."