Texas State Auditor's Office S.A.O.: Reports: An Audit Report on the Department of Health's Medicaid Contract With National Heritage Insurance Company

Health

An Audit Report on the Department of Health's Medicaid Contract With
National Heritage Insurance Company

July 2000

Report Number 00-036

Overall Conclusion

The Department of Health (Department) has not held National Heritage Insurance Company (NHIC) accountable for processing Medicaid claims accurately, for enrolling providers properly, or for completing a new Medicaid Management Information System on time. NHIC processed over $3.5 billion in Medicaid expenditures during fiscal year 1999.

Key Facts and Findings

• The Department has not had adequate controls to detect and correct problems with the claims payment process. For example, invalid provider identification information on paid claims resulted in approximately $35 million in improper payments over the life of the contract.
• The Department has been slow to address problems with the provider enrollment process- problems it has known about since June 1998. In May 2000, 205 active dental providers were without a valid license status.
• The Department's contract for Compass 21, the new claims processing system, did not base payments to NHIC on the completion of processes or activities. The Department has paid NHIC $69 million, the full balance of the contract. However, Compass 21 will not be implemented until December 2001-25 months after the original target date.

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