A Follow-Up Audit Report on the Health and Human Service Commission's Administration of the Children's Health Insurance Program
July 2005
Report Number 05-045
Overall Conclusion
The Health and Human Services Commission (Commission) has made only limited progress in implementing recommendations for the Children's Health Insurance Program (CHIP) from a March 2003 State Auditor's Office report (An Audit Report on the Children's Health Insurance Program at the Health and Human Services Commission, SAO Report No. 03-022).
The Commission has not substantially changed its approach to CHIP drug rebates since our last audit. In 2003, the State Auditor's Office recommended that the Commission require drug manufacturers that provide drugs for the CHIP program to pay the State rebates on those drugs. However, the Commission is still relying on drug manufacturers to voluntarily agree to pay rebates. The Commission has not yet created a preferred drug list (PDL) for the CHIP program, even though House Bill 2292 (78th Legislature, Regular Session) required it to do so by March 1, 2004. Because drugs listed on a PDL are much more likely to be purchased and dispensed, drug manufacturers would have a significant incentive to be listed on a CHIP PDL, which would require them to pay the State rebates.
The Commission also has not strengthened its CHIP contracts by adding provisions the State Auditor's Office recommended in 2003. In addition, the Commission has not sufficiently monitored the cost-effectiveness of the CHIP drug benefit.
The Commission has improved its efforts to verify the accuracy of CHIP HMO data used to make program decisions. It also has contracted with outside auditors to verify the integrity of information it receives from contracted CHIP health maintenance organizations. Additionally, the Commission has begun to retain supporting documentation for premium rate changes, although it has not documented the retention procedures for this information.
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