An Audit Report on the Children with Special Health Care Needs Services Program at the Department of State Health Services
August 2013
Report Number 13-046
Overall Conclusion
The Department of State Health Services (Department) has implemented effective processes for the Children with Special Health Care Needs Services Program (Program) to help ensure that it (1) determines that clients are eligible for the Program and (2) manages the Program's waiting list in accordance with applicable laws, rules, and Department policies and procedures. In addition, the Department has implemented effective processes for monitoring the Program's community-based contractors to determine whether they are providing allowable services to eligible Program clients.
However, the Department does not sufficiently monitor the contractor that processes and pays Program claims to ensure that expenditures for clients' medical services comply with applicable laws, rules, and Department policies and procedures. The Department relies primarily on the contractor to process and pay claims correctly. For example:
- The Department's monitoring does not focus on ensuring that Program claims the contractor pays are appropriate and accurate. The Department's procedures require it to select and review at least 30 various claims (claims with different statuses, claims with different provider types, and high-dollar claims) on a quarterly basis. However, the Department has not implemented those procedures. Instead, the Department reviews appeals of denied claims that it receives from clients or providers.
- The Department determined that, for 65 percent of appealed Program claims it reviewed in fiscal years 2011 and 2012, the contractor's original decision on the claims was incorrect. That underscores the importance of proactively monitoring claims the contractor pays and implementing procedures to regularly sample and review various types of claims.
- Auditors tested a sample of 90 pharmacy and medical expenditures associated with Program claims the contractor processed in fiscal years 2011 and 2012 and determined that expenditures were for active clients; were paid to providers enrolled in the Program; had appropriate prior authorization, if required; and were for allowable services. However, in two cases, the Department did not ensure that clients' other insurance was billed.
- While the Department monitored the contractor's call center, it did not do so consistently. The Department also did not maintain documentation to support that it consistently monitored provider enrollment and prior authorization of Program claims during fiscal years 2011 and 2012.
Auditors communicated other, less significant issues to Department management separately in writing.