Bill Text: HI HCR184 | 2013 | Regular Session | Introduced

Hawaii House Concurrent Resolution 184 (Prior Session Legislation)

Introduced

Bill Title: Financial Audit; Department of Human Services; Medicaid Program

Spectrum: Partisan Bill (Democrat 5-0)

Status: (Passed) 2013-04-24 - Resolution adopted in final form. [HCR184 Detail]

Download: Hawaii-2013-HCR184-Introduced.html

HOUSE OF REPRESENTATIVES	H.C.R. NO.	184
TWENTY-SEVENTH LEGISLATURE, 2013
STATE OF HAWAII

HOUSE CONCURRENT

RESOLUTION

REQUESTING THE AUDITOR to conduct a COMPREHENSIVE financial audit of the Department of human services med-quest division, with emphasis on the medicaid program.

WHEREAS, Medicaid is the most costly program within the Department of Human Services, currently covering the healthcare needs of 23 percent of Hawaii's residents, which translates to approximately one in four individuals; and

WHEREAS, Hawaii's Medicaid Program experienced an average monthly enrollment of approximately 290,496 members at the close of fiscal year 2012; and

WHEREAS, the Legislature finds that the Department of Human Services has contracted with managed care health plans for the State's Medicaid populations, which include both the QUEST health plans and QUEST Expanded Access health plans, with the State retaining federally-mandated accountability and oversight of these managed care health plans; and

WHEREAS, on January 1, 2014, the Patient Protection and Affordable Care Act (PPACA) will be implemented in Hawaii, with the intent of ensuring universal health coverage; and

WHEREAS, the House Committee on Finance reported in House Standing Committee Report No. 928, Regular Session of 2013, that PPACA-related requests within the Department of Human Services exceed $80,000,000 over the 2013-2015 fiscal biennium; and

WHEREAS, the Department of Human Services also requested $207,000,000 in general funds to cover Medicaid increases for the 2013-2015 fiscal biennium, bringing the total cost of health care payments to $4,009,721,975 over the 2013-2015 fiscal biennium, of which $1,781,864,231 represents general fund expenditures; and
WHEREAS, Hawaii offers a Medicaid benefits package that is among the nation's most generous; and

WHEREAS, Medicaid cost management and savings processes must accompany requests for increased budget requests; however, a lack of management processes, accurate systems of accounting, and internal controls put Medicaid on an unsustainable track; and

WHEREAS, the House Committee on Finance found it prudent to fund Medicaid at the fiscal year 2013-2014 level for both years of the fiscal biennium, an increase of $97,885,365 in general funds over the previous fiscal year, with the intent that the Legislature will be able to address ever-increasing budget requests for Medicaid at a later date; however, this strategy carries the possible risk of compromising other government program funding requests; and

WHEREAS, prior state audits of the Medicaid Program were conducted before the expansion of coverage for the Aged, Blind, and Disabled population under the QUEST Expanded Access Managed Care Health Plan and this population has been found to have higher than average health care costs; and

WHEREAS, prior state audits of the QUEST Managed Care Program within the Med-QUEST Division have found significant deficiencies: Auditor's Report No. 01-10, Financial Audit of the Med-QUEST Division of the Department of Human Services, May 2001, reflects the fifth specialized financial audit of the Med-QUEST Division, conducted by the Office of the Auditor and the independent certified public accounting firm KPMG LLP; and

WHEREAS, Auditor's Report No. 01-10 reported continued poor management control practices within the QUEST Demonstration Project, with page 6 of the report stating that:

(1) Program files lacked required documentation, certifications, and evidence of supervisory review;

(2) The Med-QUEST Division continued to be inconsistent in the collection of reimbursements and disenrolling those who failed to pay required co-payments; and

(3) The Med-QUEST Division's oversight of capitation payment reconciliations had diminished following the transfer of reconciliation responsibility to the health plans; and

WHEREAS, Auditor's Report No. 01-10 found pervasive non-compliance with established policies and procedures and the existence of weak internal controls that potentially could cost the State millions of dollars; and

WHEREAS, Auditor's Report No. 03-07, Follow-Up Audit of the Department of Human Services' QUEST Demonstration Project, May 2003, which is a follow-up audit of the Department of Human Services' QUEST Demonstration Project, found additional issues to those cited in Auditor Report No. 01-10: Med-QUEST Division's new processes of self-declaration and presumptive eligibility eased the application process but compromised the accuracy of data and eligibility determinations of clients; and

WHEREAS, the Department of Human Services has since adapted new eligibility verification processes which, along with possible ongoing issues with timely disenrollment of ineligible clients and any additional processes designed to address prior audit recommendations, are in need of current evaluation; and

WHEREAS, a current audit of the Med-QUEST Division's financial processes is needed in light of the projected growth and expansive budget requests for the Medicaid Program; and

WHEREAS, many of the Med-QUEST Division's financial management processes have been delegated to contracted managed care health plans and a full review of these processes is needed; now, therefore,

BE IT RESOLVED by the House of Representatives of the Twenty-seventh Legislature of the State of Hawaii, Regular Session of 2013, the Senate concurring, that the Auditor is requested to conduct a comprehensive financial audit of the Department of Human Services Med-QUEST Division, with emphasis on the Medicaid Program; and
BE IT FURTHER RESOLVED that the Auditor is requested to review:

(1) All applicable financial records and transactions;

(2) Related systems of accounting and internal controls;

(3) Test transactions and systems; and

(4) Procedures for compliance with laws and regulations for all processes that pertain to the Medicaid Program, which include QUEST health plans, QUEST Expanded Access health plans, remaining fee-for-service programs, claims processing, and the information system, the Hawaii Pre-Paid Medical Management Information System; and

BE IT FURTHER RESOLVED that the Auditor is requested to submit a report of findings and recommendations, including any proposed legislation, to the Legislature no later than 20 days prior to the convening of the Regular Session of 2014; and

BE IT FURTHER RESOLVED that certified copies of this Concurrent Resolution be transmitted to the Acting Auditor, Director of Human Services, and Administrator of the Med-QUEST Division.