NC DHHS secretary apologizes for privacy breach

By Michael Biesecker

Associated Press

Published: Tuesday, Jan. 14 2014 2:33 p.m. MST

RALEIGH, N.C. — The head of North Carolina's troubled health department apologized Tuesday for sending the Medicaid cards of tens of thousands of children to the wrong recipients, but told legislators her agency is dealing with unprecedented changes as a result of the federal health care overhaul.

N.C. Health and Human Services Secretary Aldona Wos told legislators at an oversight hearing that her staff has been in "crisis mode" to address the Medicaid card mistake and ongoing issues with a pair of problematic computer systems that process medical claims and benefits enrollments.

"I deeply apologize for the impact that this has caused to the citizens of the state," said Wos, making her first public comments since the cards were mismailed two weeks ago. "First and foremost, I firmly believe as secretary, that it is my obligation to ensure that the children and families we serve receive their health care ... in a protected and secure environment."

Democrats have called in the past week for Gov. Pat McCrory to replace Wos. The Republican governor has stood by his embattled secretary, a wealthy Greensboro doctor and major GOP fundraiser who served as the U.S. ambassador to Estonia.

Wos told lawmakers Tuesday she is focused on moving forward, not rehashing the past. However, she then suggested her agency's recent woes are the result of the mismanagement during past administrations and new regulatory requirements under the Affordable Care Act. She described the changes as an unprecedented "perfect storm."

"The implementation of the Affordable Care Act is creating a massive issue in the state of North Carolina," Wos said. "DHHS is the state agency involved in ACA implementation. And, frankly, DHHS is struggling."

New federal eligibility rules required the state agency to shift medical coverage for more than 70,000 children of low-income families from a state-run insurance program to Medicaid. But what caused the agency to misdirect new Medicaid cards for nearly 49,000 of those children was a programming error by a state employee, which resulted in envelopes being addressed to the wrong people.

The cards include the children's names, Medicaid identification numbers, dates of birth and the names of their primary care doctors — private medical information that is supposed to be closely safeguarded. Under federal law, the state could face substantial fines for mistakenly releasing it.

The agency waited at least four days to issue public notice of the massive privacy breach, acting only after a Charlotte television station broke the story. Wos reiterated Tuesday that the children will be issued new cards with new Medicaid numbers, and that the agency will monitor the affected accounts for potential fraud. Those who received the private information of others are being asked to cut the cards up into very small pieces.

The issue is the latest in a stream of bureaucratic missteps at the agency.

Wos said her staff is continuing to work through problems with NCTracks or NC FAST, massive computer systems launched in the summer. The pricey software for handling Medicaid enrollments and payments has frustrated both clients and medical providers who have gone weeks and sometimes months without receiving promised benefits or payments.

The U.S. Department of Agriculture issued a strongly worded letter to the state agency on Dec. 11, threatening to cut federal funding for food stamps over the backlog. USDA Regional Administrator Donald Arnette wrote that North Carolina officials failed to provide adequate response to questions and recommendations from federal authorities.

"These delays are completely unacceptable and a serious failure on the part of North Carolina," Arnette wrote.

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