The audit highlighted the challenge confronting the Trust Fund and the CNMI government in funding the over $17 million in deficits for the last fiscal year. However, it clarified that the deficit fund balance does not take into account $28.75 million in unprocessed claims due to the Commonwealth Health Center.
In an earlier audit, it was reported that the Group Health and Life Insurance Plan, or GHLITF, had submitted unprocessed claims from the CHC and Hawaii Pacific Medical Referral that totaled $38.9 million that went down to $35 million as of Sept. 30, 2007. The report further stated that the ultimate liability resulting from these claims had yet to be determined.
The audit also stated that given a yet to be determined liability, claims were not recorded and amounts due to the CNMI government for these claims remained undisclosed.
The CNMI government would no longer be liable for claims with the privatization of the Group Health Plan in 2007, but it would only be liable for its share of the medical premiums, the audit stated.
Moreover, the Trust Fund had been requesting the CNMI Legislature to appropriate $3.1 million to secure funding for the run-off claims under the third party administrator or TPA arrangement with Aetna Global and Hawaii Pacific Medical Referral.
The latest audit revealed that the deficit fund balance was $17,465,694 as of Sept. 30, 2010.
The report also stated that deficits dwindled in the last three years: $18.27 million in 2008, $17.94 million in 2009, and $17.46 million in 2010.
Total operating revenues were $1.2 million, $595,607, and $1.86 million for years ended Sept. 30, 2010, 2009, and 2008.
It noted the Fund’s receipt of $503,000 transfer from the CNMI government that contributed to a $606,447 increase in total operating revenues for fiscal year 2010.
It also recognized $194,027 in life insurance premiums during the time the Trust Fund was without a third party insurance provider.
In FY’09 revenues dropped by $1.3 million as the CNMI appropriations shrunk to just $123,000 in 2009 from $1.2 million in 2008.
The privatization of the health insurance coverage resulted in the decrease in medical claims: $2.5 million, 2008; $147,169, 2009; and $5,049, 2010.
With funds from $503,000 “transfer-in” from CNMI government and $194,027 life insurance premiums, the Trust Fund paid $688,609 in death benefits in FY 2010 for those not covered by the third party provider.
The GHLITF came under the administration of the Retirement Fund when P.L. 10-19 was enacted in 1996 to ensure that government employees are given medical and life insurance benefits. The law also specifies that the CNMI government and not the Retirement Fund will assume the liabilities of the GHLITF.
However, on Nov. 1, 2007, the administration of the GHLITF was privatized with the insurance provider, and not the CNMI government, liable for cost of medical claims incurred.
