City Auditor’s Office: Kansas City incorrectly paid $1.9 million for ineligible former employees

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KANSAS CITY, Mo. (KCTV) - An audit released by the Kansas City Auditor’s Office revealed nearly $2 million in incorrect payments to former city employees.

The audit, which focused on the city’s Human Resource Department’s termination of former employees’ benefits, found that between April 2021 and April 2023, 376 of 1,344 employees who left employment with the city remained on a BlueCross BlueShield administrative fee invoice 30 days or more from their last day of work.

“The city paid at least $516,317 in administrative fees and about $1,392,131 for health claims of former employees after they were no longer eligible for the city’s insurance,” the audit said.

According to the audit, BlueCross BlueShield’s monthly invoice charges are supposed to charge the city a set administrative fee for each active employee enrolled in health insurance through the city.

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“The process the Human Resources Department and BlueCross BlueShield established to communicate that employees were no longer eligible for city insurance did not always work as intended,” the audit claims. “This automated process did not always include all terminated employees. Even when communicated correctly to BCBS, invoices for employees on the city’s insurance sometimes continued to include employees no longer eligible.”

Procedures to monitor employee removal from the city’s health insurance program were not designed, the audit also claimed.

By the time the audit was released, the city claimed the HR department agreed with its recommendations. The city reported recovering $418,690 of the $1.9 million in incorrect payments by the time the audit was released.

You can view the full report here. The audit is scheduled to be presented to the Finance, Governance, and Public Safety Committee on Wednesday, Dec. 13, at 10:30 a.m.