Summary of Report 24-001

September 2023

The General Appropriations Acts enacted by the 87th and 88th Legislatures directed the State Auditor’s Office to conduct an actuarial analysis of the Health and Human Services Commission’s (Commission) fiscal year 2024 Medicaid managed care rates and report on the actuarial soundness of the rates, as well as provide an analysis of key factors that affect the rates. This is the third report that the State Auditor’s Office has released to address those requirements.

The State Auditor’s Office contracted with the actuarial firm Milliman, Inc. (Milliman) to evaluate the actuarial soundness of the rates and analyze key factors that affect the rates, including rate structure, historical cost and enrollment data, data validation, adjustments, trend assumptions, program changes, non-benefit cost assumptions, and COVID-19 impacts.

Milliman concluded that, overall, the Commission followed methods to produce actuarially sound fiscal year 2024 capitation rates. Additionally, Milliman did not identify a program-wide pattern of over- or under-funding or material issues that indicate the rates are not actuarially sound. However, Milliman made several recommendations to improve the actuarial process and mitigate the risk of future unsoundness.