An Audit Report on The Health and Human Services Commission's Monitoring of Its Contracted Medicaid Administrator
January 2005
Report Number 05-024
Overall Conclusion
The Health and Human Services Commission (Commission) did not have a comprehensive plan to monitor ACS State Healthcare LLC (ACS), the State's present Medicaid administrator, for the first nine months of ACS's operations. During that time period, the Commission was focusing on developing its new contract management organizational structure in the Medicaid/Children's Health Insurance Program (CHIP) Division. Although the Commission conducted monitoring activities during this period that identified issues in certain aspects of ACS's performance, it should finalize its monitoring plan to ensure that ACS is carrying out all of its responsibilities effectively. In addition to processing Medicaid claims, ACS is required by its contract with the Commission to perform a significant number of other key services such as provider recruitment and the operation of call centers.
ACS has been serving as the State's Medicaid administrator since January 2004 and, as of November 2004, had processed approximately $5 billion in Medicaid claims on the State's behalf. The Commission's contract with ACS requires it to pay ACS approximately $536.2 million in administrative fees over a period of four years.
Effectively monitoring ACS is critical, not only because of the size of the contract and the volume of Medicaid claims but also because serious issues were identified regarding the Commission's previous contracted Medicaid administrator.
In accordance with the requirements of the 76th Legislature, which mandated external audits of certain Medicaid contractors, the Commission has engaged contractors to conduct (1) a $174,880 attestation engagement to examine ACS's administrative services and (2) a $349,230 electronic data processing audit of the system that ACS uses to process Medicaid claims. Therefore, we did not fully pursue our original audit objectives in the areas of claims processing and administrative expenses.
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