In the most sweeping examination of the state’s largest government agency in nearly two decades, the Louisiana legislative auditor sharply criticized the management of the state Department of Health and Hospitals.

Auditor Daryl G. Purpera ticked off 14 points where DHH failed to follow legally required processes, costing taxpayers tens of millions of dollars, according to a report released Wednesday.

In an interview, Purpera said the Jindal administration had made major policy changes in the way health care is provided to roughly one-fourth of the state’s population, such as privatizing much of the work that had been done by the state. But Gov. Bobby Jindal, whose first government job was running the agency, failed to put in place controls that ensured accountability and transparency.

“Whenever you do bold initiatives, you’ve got follow it up with good processes and procedures,” Purpera said. “It appears that they have failed to do that, and where they did build controls, they failed to make sure those good controls were carried out.”

DHH Undersecretary W. Jeff Reynolds said the department generally agreed with the audit’s specific findings and saw the report as an opportunity to improve the workings of an agency that accounts for about one-third of the state’s budget.

“We have lots of programs and lots of responsibilities. We want to ensure that we’re running the programs the way we need to,” Reynolds said in an interview Wednesday.

Still, 14 findings is an awful lot, he said.

“There was one (audit) at the end of (Gov. Edwin W.) Edwards’ last administration with close to 25 findings. But I haven’t seen one this big in years,” Reynolds said.

In one finding, auditors discovered that quarterly reports of federal expenditures had $532 million in errors, including an entry on the wrong line that went uncorrected for 10 months.

Reynolds said that while the error temporarily threw off the reporting of payments in a few categories, it didn’t change the bottom line. The state is not going to have to repay the federal government.

“You have to remember, and I don’t want to use this as an excuse, but that quarterly report that they’re talking about is literally 750 pages long; there are 33 rows on each page. The staff got it on the wrong line on the forms, but it didn’t result in an overpayment with the federal government,” Reynolds said.

Reynolds pointed out that DHH has far fewer employees than it once did but said the agency makes do with the resources it has. There’s no direct link between the size of the staff and the way this audit came out, he added.

Purpera said: “Just because the administration decreases their staff doesn’t mean the administration gets out of the responsibility of properly safeguarding the public’s tax dollars.”

Medicaid uses some state, but mostly federal, dollars to pay doctors, clinics and other health care providers to care for the state’s low-income population. Medicaid has an enrollment of 1.4 million.

The audit report claimed DHH didn’t identify and recover paid claims in which a third party might also have to chip in for medical services provided to a Medicaid-eligible recipient. For instance, DHH didn’t pursue $29 million, already paid out, that a third party owed. The agency had contracted with a company to make those collections.

The company had identified the debt. But the state didn’t renew the contract in December 2014, according to the audit report.

“We don’t recover it, and we don’t contract anyone else. It seems that is a waste of public funds and not proper management of the program,” Purpera said.

But that’s not the whole story, Reynolds said.

The plan, he explained, had been to move all the patients into one of the private insurers under contract with the state to handle Medicaid, rather than the state doing it directly.

When that migration is complete, the private insurer will pick up the duty of seeing if any third parties could also owe money.

But that transfer of patients from the directly state-run Medicaid system to one managed by private insurers hasn’t happened as quickly as anticipated, so about 20 percent of Medicaid enrollees are still on the direct state system.

Meanwhile, the Division of Administration in March refused to let DHH hire a contractor to pursue third parties, Reynolds said. DHH will try again to get a contract after the new governor takes office.

The audit faulted DHH for numerous breaches in a laundry list of management issues, including:

Not implementing cost containment requirements for a nutritional program

Paying New Orleans East Hospital $10.6 million before eligibility was finalized

Paying Eastern Louisiana Mental Health System $6.6 million over the maximum allowed

Failing to install the proper checks to ensure timely filing and prompt payment of Medicaid claims

Neglecting to maintain an accurate listing of sub recipients of federal grants, causing a $17.2 million understatement.

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