OIG audit discovers MCO inaccurately reported $8.1 million in overstated expenses

Recently, an OIG audit of a managed care organization (MCO) found issues when determining the fair market value of outsourced services and behavioral health claims.

The audit reviewed multiple financial statistical reports (FSR) for UnitedHealthcare Community Plan of Texas, L.L.C. including Medical FSRs, which detail reports of expenses with reportable revenues and expenses that MCOs submit to Texas Health and Human Services, and a Combined FSR which reports the MCO’s administrative and quality improvement expenses.

Auditors determined that United Healthcare’s reported expenses did not meet the documentation requirements to support that affiliate outsourced services expenses were provided at fair market value. As a result, the OIG recalculated the fair market rate and found the MCO had inaccurately reported more than $7.9 million in affiliate outsourced service expenses.

The audit review of the Medical FSR for STAR Plus identified an additional $200,000 in incorrectly reported behavioral health claims. The inaccurate claims included 183 errors uncovered after an initial review by OIG auditor discovered a smaller sample of claims showed the MCO had inaccurately reported expenses above the contracted provider rate.

Auditors made recommendations to the MCO to help improve future FSR submissions, including:

• Ensure all subcontractors and affiliates are obligated, in writing, to provide OIG prompt, reasonable, and adequate access to any support that is related to the scope of the contract between the Texas Health and Human Services Commission (HHSC) and UnitedHealthcare, as required by the Uniform Managed Care Contract.
• Prepare and maintain documentation to support qualification to report at fair market value prior to the beginning of the state fiscal year.
• Report affiliate outsourced service expenses at or below fair market value, when using the fair market value method to report expenses.
• Work with HHSC Financial Reporting and Audit Coordination (FRAC) to determine the appropriateness of utilizing the HHSC Texas Medicaid and CHIP MCO rate setting packets as a basis for determining fair market value affiliate outsourced service rates and ensure all components of its fair market value calculations are supported by reasonable rationale.
• Ensure behavioral health claims expenses it reports on its FSRs are accurate in accordance with provider contracts.

United Healthcare has indicated the MCO is implementing corrective action to meet OIG recommendations.