A Follow-Up Audit Report on Managed Care Contract Administration at the Health and Human Services Commission
February 2005
Report Number 05-028
Overall Conclusion
The Health and Human Services Commission (Commission) has made an effort to correct the majority of weaknesses in its administration of Medicaid and Children's Health Insurance Program (CHIP) managed care contracts. However, it has not fully implemented the majority of recommendations made in three prior State Auditor's Office reports.
Of the 25 prior recommendations audited, the Commission has fully implemented 3 and substantially implemented 9; however, its efforts to address 10 recommendations remain incomplete or ongoing, and the Commission has not implemented 3 other recommendations.
The Commission has substantially completed implementation of the following:
- The Commission has re-evaluated the activities and resources needed for
monitoring managed care contracts in accordance with State Auditor's Office
recommendations, but it has not standardized the resulting processes across
all divisions.
- The Commission has established performance penalties to provide incentives
for contractors in accordance with State Auditor's Office recommendations,
but it has not maintained a standard process to impose performance penalties
or assess damages.
- The Commission has developed procedures to determine whether subcontractor services are necessary and related payments are reasonable in accordance with a State Auditor's Office recommendation, but it has not yet reviewed any managed care subcontracts using those procedures.
As part of its effort to implement prior State Auditor's Office recommendations, the Commission has developed a standardized contracting process for administering its contracts and is developing information systems to automate contract monitoring functions. However, only 1 of the 32 managed care contracts or amendments that the Commission executed between July 1, 2004, and November 9, 2004, was processed entirely using this established contracting process. The Commission processed the remaining contracts using its prior contracting processes or without following standardized processes. In addition, executive management has authorized two contractual-type documents that are not included in the standardized contracting process.
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