A Performance Audit
An Audit Report on Cook Children’s Health Plan, a Managed Care Organization
July 2022
Summary Analysis
Cook Children’s Health Plan (Health Plan) accurately reported STAR Kids medical and pharmacy expenses in its fiscal year 2020 financial statistical report (FSR). In addition, the Health Plan complied with eligibility requirements for medical and pharmacy claims and accurately reported administrative expenses not shared with its parent company.
However, the Health Plan should strengthen its reporting of administrative expenses shared with its parent company. Of the total $60.6 million of administrative and quality improvement expenses the Health Plan reported, $11.4 million (19 percent) were allocated from its parent company. The Health Plan made some errors in its reporting of those shared expenses.
The Health Plan accurately reported $49.2 million of its $60.6 million administrative and quality improvement expenses. The remaining $11.4 million in expenses represented those shared with its parent company. However, those shared expenses were not always allowable. Specifically, the Health Plan reported shared expenses that were not allowed under the Health and Human Services Commission’s (Commission’s) cost principles, including expenses that exclusively benefited the Health Plan’s affiliate providers.
The Health Plan accurately reported its STAR Kids medical (fee-for service) expenses, totaling $168.5 million, on its fiscal year 2020 FSR and in its encounter data submitted to the Commission. In addition, the Health Plan’s 2020 STAR Kids contracted payment rates for its affiliate providers did not exceed fair market value.
The Health Plan accurately reported STAR Kids prescription expenses on its fiscal year 2020 FSR and in its encounter data submitted to the Commission. Specifically, data from its pharmacy benefit manager’s claims processing system supported the STAR Kids prescription expenses, which totaled $34.7 million.
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