A Performance Audit
An Audit Report on Medicaid Managed Care Contract Processes at the Health and Human Services Commission
January 2019
Summary Analysis
The Health and Human Services Commission (Commission) established new processes and controls related to Medicaid managed care contract management processes and made progress toward implementing the requirements of Senate Bill 894 (85th Legislature, Regular Session). For example, the Commission implemented a strategy for managing audit resources and a process to follow-up on negative performance audit findings.
However, the Commission should continue to implement its planned improvements related to conducting planned performance audits, including audits of pharmacy benefit managers; issuing corrective action plans based on agreed-upon procedure (AUP) engagements; and monitoring MCOs based on External Quality Review Organization information.
The Commission relies on audit activities to verify the accuracy and reliability of program and financial information reported by MCOs and it developed and implemented an overall strategy for planning, managing, and coordinating audit resources as required by S.B. 894. The Commission also established a corrective action plan process to (1) document how it follows up on negative performance audit findings and (2) verify that MCOs implement performance audit recommendations.
As of February 2018, the Commission had completed a risk assessment to determine which MCOs it would select for upcoming performance audits, as required by S.B. 894. Using its risk assessment, the Commission developed an audit plan that prioritized auditing the highest risk MCOs and included conducting performance audits of MCOs’ pharmacy benefit managers. However, as of November 2018, the Commission had not started the performance audits in that most recent audit plan.
The Commission developed policies and procedures specifying when a corrective action plan should be issued based on the results of an AUP engagement; however, as of November 2018, the Commission had not issued any corrective action plans based on its AUP engagements.
The Commission developed, documented, and implemented a billing process for MCOs to reimburse the Commission for audit-related services as required by S.B. 894.
The Commission developed, documented, and implemented a process to identify experience rebates deposited in its suspense account and it timely transferred those rebates when appropriate, as required by S.B. 894. However, the Commission had not established a process for resolving disputes over experience rebates claimed by MCOs.
The Commission developed a plan to enhance its monitoring of MCOs using external quality review organization (EQRO) information as required by S.B. 894. Specifically, the Commission established minimum performance standards for MCOs based on its EQRO’s Medicaid survey results for three Medicaid programs. According to the Commission’s Uniform Managed Care Manual, it will begin holding MCOs accountable for meeting minimum performance standards related to Medicaid survey results (1) reported in 2019 for three Medicaid programs and (2) reported in 2020 for its STAR Kids program.
As of October 2018, the Commission had not established minimum performance standards for MCOs based on the EQRO’s encounter data validation. According to the Commission, it plans to begin enforcing its minimum performance standards for (1) Dental Maintenance Organization results reported in 2020 and (2) MCO results reported in 2021.
The Commission strengthened user access controls over its Accounts Receivable Tracking System (ARTS) as required by S.B. 894. In addition, the Commission documented its daily reconciliations of deposits recorded in ARTS to transactions processed in the Commission’s accounting system and the Uniform Statewide Accounting System.
The Commission also developed, documented, and implemented a process to track programming changes to ARTS as required by S.B. 894. However, it should ensure it consistently documents that those changes were properly authorized and tested.
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