A Performance Audit
An Audit Report on Texas Children’s Health Plan, a Managed Care Organization
June 2020
Summary Analysis
Texas Children’s Health Plan (Health Plan) accurately reported STAR Kids medical (fee-for-service) and prescription expenses totaling approximately $536.1 million in its fiscal year 2018 financial statistical reports (FSRs). In addition, the Health Plan accurately reported administrative expenses totaling $88.4 million and quality improvement costs totaling $32.5 million in its FSRs for fiscal year 2018.
While the Health Plan made some errors in its reporting, the net effect of those errors did not have a significant impact on the total amounts reported. The Health Plan should improve certain processes and controls to help ensure continued accuracy, completeness, and compliance with the Health and Human Services Commission’s (Commission) reporting requirements. Specifically, the Health Plan should:
- Strengthen its review process over the provider payment rates in its claims processing system to ensure that the Health Plan pays providers in accordance with their contracts.
- Document its process for periodically evaluating compliance with the Commission’s fair market value reporting requirements for affiliate provider claims.
- Strengthen its processes and controls to verify the completeness of the data it uses to prepare the FSRs and the exclusion of unallowable costs.
The Health Plan accurately reported its STAR Kids medical (fee-for-service) expenses totaling $435.6 million on its fiscal year 2018 FSRs and in its encounter data submitted to the Commission. However, the Health Plan should strengthen controls to ensure that it pays provider claims accurately.
In addition, the Health Plan did not have a documented process to periodically evaluate its compliance with the Commission's fair market value reporting requirements for affiliate provider claims.
The Health Plan accurately reported STAR Kids prescription expenses in its fiscal year 2018 FSRs and in its encounter data submitted to the Commission.
The Health Plan accurately reported administrative expenses totaling $88.4 million and quality improvement costs totaling $32.5 million in its fiscal year 2018 FSRs. However, the Health Plan should strengthen certain processes and controls to ensure that the data it uses to prepare its reports is complete and expenses reported are allowable.
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