Cook Children’s Health Plan’s Financial Statistical Reports
Learn how the AI-generated research projects were createdOverall Conclusion
Cook Children’s Health Plan (CCHP) had a process for preparing financial statistical reports (FSRs), which included controls related to removing unallowable expenses and identifying the appropriate FSR sections for reporting allowable expenses. However, CCHP did not always sufficiently establish fair market value and incorrectly reported some expenses.
Source Document
Audit Scope
The audit scope covered selected expenses on CCHP’s FSRs for state fiscal year 2022, which covered the period from September 1, 2021, through August 31, 2022.
Key Findings Summary
CCHP did not sufficiently establish fair market value for four affiliates when negotiating rates or reporting $243,764,253 of these expenses on its FSRs; only one affiliate’s rate was supported as fair market value.
Understated overall salaries, wages, and benefits expenses by $212,870 on the FSRs.
Understated outsourced behavioral health services expenses by $59,742 on the FSRs.
View the Findings tab to see all 5 findings
AI-Assisted
AI Scope Summary
This audit assessed whether Cook Children’s Health Plan reported expenses on its FSRs in accordance with contract requirements and whether internal controls over FSR preparation were effective, covering state fiscal year 2022 (Sept 1, 2021 – Aug 31, 2022). The findings show weaknesses in fair market value establishment for affiliates and misstatements in salaries and outsourced services, with recommendations aimed at improving FMV processes, reporting accuracy, and alignment with FRAC guidance to protect program integrity and rebate calculations.
AI-Generated Insight
The audit highlights control gaps in FMV determination for affiliate expenses and misclassification of salaries and outsourced services, indicating a need for FRAC-guided adjustments and strengthened data controls to ensure accurate FSR reporting and fair rebate calculations.
Audit Objectives
Determine whether CCHP reported expenses on its FSRs in accordance with contract requirements
Determine whether CCHP designed and implemented effective internal controls over the preparation of its FSRs
Audit Findings (5)
CCHP did not sufficiently establish fair market value for four affiliates when negotiating rates or reporting $243,764,253 of these expenses on its FSRs; only one affiliate’s rate was supported as fair market value.
Understated overall salaries, wages, and benefits expenses by $212,870 on the FSRs.
Understated outsourced behavioral health services expenses by $59,742 on the FSRs.
Incorrectly categorized some salaries, wages, and benefits expenses on the FSRs.
Excluded affiliate expenses from an informational subsection on the FSRs.
Recommendations (4)
Implement a process to establish fair market value for affiliate expenses reported on FSRs.
Follow instructions from HHSC FRAC to determine the impact of not sufficiently establishing fair market value for the identified affiliates.
Implement a process to accurately report salaries, wages, and benefits expenses; outsourced services expenses; and affiliate medical expenses.
Follow instructions from FRAC to determine the impact of incorrectly reporting salaries, wages, and benefits expenses; outsourced services expenses; and affiliate expenses.