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On April 30, 2021, state lawmakers passed House Bill 1004 which required the State Auditor’s Office to hire a third-party contractor to conduct a performance audit on the prescription drug coverage of NDPERS. The third-party contractor hired was Myers and Stauffer. The reason why a third-party contractor would be required for this audit was because of the complex and specialized nature of the report.

NDPERS is the organization that administers benefits to state employees. One of those benefits is healthcare. Sanford Health is the entity that provides healthcare to state employees. Sanford contracts with a third-party prescription benefits manager, called Optum Rx to manage pharmacy benefits for state employees. Their main responsibility is processing and paying prescription drug claims. They also negotiate discounts and rebates with drug manufacturers, contract with pharmacies, and maintain drug formularies.

In the audit, there were five different areas of opportunity to improve upon. These are called “findings” by auditors. All of the findings related to Optum Rx refusing to provide the information necessary to complete the audit. In the NDPERS contract with Sanford – as well as two sections of state law (N.D.C.C. 54-52.1-04.16, and N.D.C.C. 54-10-19) – both Sanford and Optum Rx are required to provide information and data upon request to complete this audit.

The number of people who fall under the NDPERS health plan totals over 49,000. This number includes state employees, retirees, and their dependents.

“The fact that an organization thinks it’s big enough to refuse to give information necessary for an audit is offensive.” Said State Auditor Joshua Gallion. “It’s offensive to the lawmakers, it’s offensive to state employees, and it’s offensive to North Dakota taxpayers who deserve to know how their money is being spent.”

The audit period was from January 1, 2019, through December 31, 2021. The full audit can be viewed here: https://ndsao.link/NDPERS  

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