THE Medical Referral Services Office or MRSO lacks internal controls pertaining to its contracts and agreements; does not have a legal basis to execute promissory notes; and is not compliant with applicable laws and internal policies, the Office of the Public Auditor said in its audit of the program.
OPA said it also found that MRSO’s organizational structure is unclear; and patients and/or escorts are sent on medical referral at high-cost unrestricted economy airfare rates.
OPA said these findings “revealed that MRSO lacks effective internal controls to ensure (1) proper cash management and (2) compliance with applicable laws and internal policies, which poses an ongoing potential risk for fraud, waste, and abuse.”
According to the internal policy, OPA said, “MRSO is responsible for facilitating the referral of patients to recognized referral health care facilities outside the CNMI for extended medical care. This includes lodging, ground transportation, and subsistence allowance…. Furthermore, MRSO exists to assist with financial obligations for individuals who meet certain eligibility criteria.”
OPA said the operation of MRSO “has incurred a large variance between the appropriated amount and the reported expenditures by MRSO.” This has “raised significant concerns regarding MRSO’s budget control and cash management” and “suggests that the program has either been (1) underfunded through the Budget Appropriations Act by the Legislature and/or (2) overspending its allocation,” OPA stated.
In previous statements to the Legislature, public health and medical referral program officials said the program was always underfunded.
In fiscal year 2019, for example, the program was provided a budget of $2.9 million, but its actual expenditure was $17 million.
OPA said MRSO spent $27 million over its budget in FYs 2018-2019.
According to OPA, the medical referral program was initially under the auspices of the Department of Public Health, and later, the autonomous Commonwealth Healthcare Corp.
It was transferred to the Office of the Governor through an executive order signed by the late Gov. Eloy S. Inos on May 2, 2013, but in June 2021, the Office of the Attorney General stated that Gov. Inos did not have legal authority to remove MRSO from CHCC and place it under the governor’s office. “As a result,” OPA said, “MRSO’s regulations, which were promulgated under the Office of the Governor, are without legal force and effect.”
OPA made the following recommendations to MRSO:
1) Develop a plan to meet with all stakeholders and establish proper internal controls to ensure an affordable, effective, and equitable program.
2) Collaborate with applicable stakeholders to review previously executed contracts and/or agreements and renegotiate terms to ensure a cost effective and equitable program.
3) Implement standard operating procedures to ensure proper reconciliation of all vendor billings and payments.
4) Seek additional assistance from the Office of the AG for further proceedings pertaining to the collection of promissory note(s) payments.
5) Implement standard operating procedures to ensure fair and equitable assessment of patient and escort eligibility in compliance with the applicable requirements established in MRSO’s laws and internal policies.
6) Negotiate and establish an agreement with applicable travel agencies to ensure cost-effective airfare rates for patients and escorts.
7) Implement standard operating procedures for the three medical referral offices (Saipan, Guam and Hawaii) to safeguard inventory of all used and unused checks.
MRSO said it agrees with OPA’s recommendations, but noted that since the inception of the medical referral program, there was no statute to establish it.
MRSO said it should be legally established as an independent executive branch and appropriately funded.
CHCC, for its part, noted that OPA itself has stated that “absent…enabling legislation, statutorily authorized regulations or adopted standard operating procedures, MRSO is left without proper guidance to ensure efficient operations.”
CHCC added, “Unfortunately, although the Attorney General believes that CHCC should be administering…Medical Referral, CHCC is unable to address this finding…as the repeal of subsection (v) of 3 CMC § 2824 by P.L. 19-78 took away CHCC’s specific authority to adopt regulations when off-island care is necessary and appropriate. Legislation needs to be passed to cure this organization structure finding.”
According to OPA, however, “CHCC should seek the opinion and advice from the [Office of the] AG to determine the legal entity for promulgating rules and regulations for MRSO.”
To read the OPA report, go to https://www.opacnmi.com/oockuvoa/2021/09/Audit-of-the-CNMI-Medical-Referral-Services-Office-1.pdf
