Summary

The Agency for Health Care Administration (Agency) is designated as the Medicaid Agency for the State[1].  Federal Medicaid regulations require states to maintain a system to identify third-parties, such as private health or accident insurers, that may be legally obligated to pay for medical services provided to Medicaid recipients.  This operational audit for the period July 2005 through February 2007, focused on these Agency responsibilities and its monitoring of the contractor engaged to perform most of the third-party liability (TPL) functions. 

With the exception of the following findings, our audit disclosed that for the controls and related transactions tested, the controls were operating effectively, the transactions were accurately recorded in applicable records, and the Agency demonstrated compliance with applicable significant laws, rules, and other guidelines.

Finding No. 1:     The Agency’s TPL contract monitoring procedures could be improved through the use of checklists or similar documentation to evidence that the monitoring was completed and conducted in accordance with established criteria and standards.

Finding No. 2:     The Agency should address in its monitoring reports the significance of monitoring findings to better assess the TPL contractor’s performance and whether liquidated damages should be assessed. 

Finding No. 3:     The Agency should periodically review the TPL contractor’s list of insurance carriers to evaluate its sufficiency for identifying and locating liable third-parties.  The Agency should also request a waiver for modifications to related Federally-required processes.

Finding No. 4:     To ensure that amounts collected by the Agency’s TPL Unit are timely deposited and accurately recorded in accounting and other management records, the TPL Unit should reconcile amounts collected to the amounts recorded.

Finding No. 5:     Leads letters are sent to Medicaid recipients for whom claims may identify potential third-parties.  The Agency should consider the cost-effectiveness of sending follow-up letters to Medicaid recipients who do not respond to initial leads letters.

Finding No. 6:     The Agency should continue to monitor the impact on TPL activities of a recent United States Supreme Court ruling.

The Secretary's response is included in its entirety at the end of this report as Appendix A.