Institutional Federal Compliance Report 2021

Management Response - DOH

Reports provided by the Department are subject to internal evaluation and a multi-level review process prior to being supplied to OSC. This includes evaluating current period figures for any recent programmatic changes, such as the use of 6 or 12-month lag factors to inform accrual levels, adjusting for outliers that inappropriately skew uncollectible estimates, and comparing current period amounts to prior periods for reasonableness. We continue to seek ways to improve upon these processes. For example, the Department began last year accumulating paid claim runout data to evaluate the performance of the IBNR methodology to develop lag triangles so that the model can be adjusted based on actual performance. Going forward we will continue to seek ways to improve internal processes and engage OSC to increase communication and share knowledge. We will also consider utilizing an actuarial specialist review of the IBNR calculations.

Management Response - OSC

OSC’s Bureau of Financial Reporting & Oil Spill Remediation (BFROSR), as the responsible party for the State’s financial statements, will continue to support the Department of Health in their efforts to improve their processes and evaluate existing methodologies in an effort to mitigate the risk of misstatement in the future. BFROSR will work closely with DOH to offer advice and accounting expertise as they formalize their policies and procedures to ensure transactions are treated accordingly.