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by: Rep.

AUSTIN – A new state audit raises questions about the management of the state Health and Human Services Commission (HHSC) and illustrates the need for legislative hearings, Texas House Speaker Joe Straus said Wednesday.

A report released this week by the State Auditor’s Office found that HHSC allowed Superior Health Plan, Inc. to report approximately $29.6 million in bonus and incentive payments paid to affiliates’ employees, even though those payments were not allowed under the state’s contract with Superior. The state agency also approved Superior’s request to report affiliate profits as costs without following the approval process contained in the state’s contract with Superior.

The audit reads, “By not following the written requirements in its contract with Superior, the Commission weakens its ability to consistently oversee the contract and creates a lack of transparency in its administration of Medicaid managed care programs. The Commission also included in its contract with Superior a limitation on reporting the cost of executive compensation that may not be enforceable.”

The audit continues, “Allowing Superior to report bonus and incentive payments, which are unallowable costs under the Commission’s cost principles, results in Superior understating its net profit in its financial statistical report. That affects the calculation that determines whether Superior owes money to the Commission.”

Superior provides the Medicaid STAR, STAR+PLUS, STAR Health, and STAR Kids programs to seven service delivery areas in Texas, including the San Antonio area.

“This audit highlights serious weaknesses in HHSC’s oversight of its own contracts,” Speaker Straus said. “Taxpayers have a right to expect that the Commission will hold providers to contract requirements. Unfortunately, this isn’t the first example of HHSC failing to properly enforce requirements in taxpayer-funded contracts. This audit shows that there is a lot of room for improvement at HHSC.”

Speaker Straus continued, “It would be appropriate for the House Appropriations Committee or the General Investigating and Ethics Committee to look more closely at HHSC’s contract oversight and the agency’s stewardship of taxpayer dollars. This agency receives billions of taxpayer dollars, and taxpayers need to know that their money is being properly managed.”

While no legislation will ensure an agency enforces contract requirements, the Legislature has passed and considered bills that would provide greater transparency to contracts involving managed care programs. In 2015, the Legislature passed HB 2084, by Munoz, which would have provided much-needed transparency to the rate-setting process for the state's Medicaid managed care programs. Governor Abbott vetoed HB 2084. In 2017, HB 20, by Capriglione, would have streamlined contract reporting requirements and removed an exemption for HHSC to post contracting documents. HB 20 passed the House, but it died in the Senate.

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