Comptroller flags faulty payments at Health Insurance Administration

By The Star Staff

The Puerto Rico Comptroller’s Office issued a negative opinion on Monday regarding the fiscal operations of the Health Insurance Administration (ASES by its initials in Spanish), after uncovering payments exceeding $34 million for voided professional and consulting services contracts.

According to the comptroller’s report, “ASES granted retroactive amendments to pay contractors for services, even though the maximum limit established by the contract had already been reached.”

An analysis of a sample of 319 contracts and 314 amendments granted between 2016 and 2020, totaling over $10.3 billion, revealed that 16% of the amendments were issued retroactively. Additionally, 10% were made on expired contracts, and 5% were approved without the consent of the board of directors. The comptroller also noted that ASES did not conduct an open and competitive contracting process.

The report indicated that ASES justified its actions based on an erroneous legal opinion, which suggested that contracts could be amended after obtaining additional funds from the Office of Management and Budget. That interpretation facilitated retroactive payments, which are in violation of current regulations.

Between July and August 2018, ASES executed void amendments to expired contracts totaling over $34.3 million for public relations and pharmacy benefit management services. The Comptroller’s Office ruled those practices invalid under the law.

The audit revealed that ASES paid $2.9 million for unauthorized subcontracted services, $3,213 for services beyond the scope of contracts, and $1,751 in excess of contracted amounts. One company was even allowed to bill $8,970 for services rendered outside the contract, reallocating hours after the agreement had commenced.

The comptroller recommended that the ASES board of directors initiate an investigation into the compliance of the finance and administration staff and consider disciplinary actions if warranted.

Other deficiencies noted included authorization for work already performed, retroactive payments, a lack of regulations for advertising services, and insufficient risk assessments conducted between 2018 and 2022. Additionally, ASES paid up to $2.1 million for functions that were equivalent to regular positions, which could have saved $1.4 million if those functions had been compensated through payroll.

As of June 30, 2022, ASES insured 1,276,451 lives and managed a budget of over $19 billion, with disbursements totaling over $18.9 billion from 2017 to 2022.