MCOs did not properly document all non-covered services in financial reports
Managed care organizations (MCOs) can offer additional health-related services to Medicaid clients not covered by the state plan, known as case-by-case services. Insurers can provide these benefits without obtaining approval from HHSC and must not include them in the medical expenses HHSC uses to calculate capitation payments.
The OIG completed two inspections of MCO case-by-case services: Superior Health Plans (Superior) and Parkland Community Health Plan (Parkland). The OIG initiated these inspections to mitigate the potential of MCOs misclassifying encounters in their financial reports.
Both MCO inspections covered fiscal year 2022, finding that Superior and Parkland had misclassified encounter data for non-covered services and did not maintain documentation to support the provision of some case-by-case services. Specifically:
- Superior improperly coded 1,517 of the 6,604 reviewed encounters, overstating total medical expenses by $65,588.
- Parkland failed to properly code all 11,411 reviewed encounters, overstating total medical expenses by $450,329.
- Parkland did not have a mechanism to document the reason for providing non-covered services as case-by-case services, which is required.
The OIG recommended that the MCOs implement controls to correctly classify the non-covered services they provide as case-by-case services and properly report them on their Financial Statistical Reports. Inspectors also recommended that the MCOs consult with Texas Health and Human Services, Financial Reporting and Audit Coordination to determine how to correct the misreported medical expenses and develop and implement a process to document the reason for providing non-covered services.