SCR46

WHEREAS, the effective oversight of managed care organizations that are under contract with the Department of Human Services to provide managed care health insurance plans under the State's Medicaid Managed Care Program is essential to ensure the proper use of public funds and the delivery of quality health care services to Medicaid beneficiaries; and

WHEREAS, the Auditor plays a critical role in providing this oversight by conducting audits to assess the performance, compliance, and financial integrity of entities that receive state funds; and

WHEREAS, Medicaid is a significant component of the State's budget and ensuring the integrity and efficiency of Medicaid health care insurance contractors is crucial for the sustainability of the State's Medicaid Managed Care Program; and

WHEREAS, given the complexity and scale of Medicaid operations, it is imperative to have a robust audit mechanism to identify and address any issues related to financial management, service delivery, and compliance with federal and state regulations; and

WHEREAS, the Medicaid Program Integrity Manual, published by the federal Centers for Medicare and Medicaid Services (CMS), outlines the importance of audits in identifying and addressing Medicaid fraud, waste, and abuse, and emphasizes the need for proactive project development and collaboration between state agencies and auditors to ensure program integrity; and

WHEREAS, a report by the United States Government Accountability Office published on September 21, 2023, also highlights the critical role of state auditors in Medicaid oversight; found that state auditors identified an average of over three hundred Medicaid audit findings per year, including overpayments and payments to ineligible providers; and noted that nearly sixty percent of Medicaid audit findings were repeated from the prior year, indicating the need for more effective corrective actions; and

WHEREAS, specific incidents in the State also highlight the need for rigorous audits of its Medicaid health care insurance contractors. For example, the Department of Human Services identified multiple cases of Medicaid overpayments due to provider ineligibility, noncovered services, and lack of prior authorization in 2021 and 2022; and

WHEREAS, a 2023 CMS focused program integrity review found that the State's Medicaid Managed Care Program had several areas needing improvement in terms of fraud, waste, and abuse prevention, identifying issues such as inadequate oversight of managed care organizations; insufficient and ineffective mechanisms to detect and prevent fraud within managed care payments, including issues with incorrect fee-for-service payments and inaccurate state payments to managed care organizations; and lack of coordination between state agencies and managed care organizations, leading to inefficiencies and potential financial losses; and

WHEREAS, although a memorandum of understanding between the Department of Human Services and Department of Health was established to improve coordination and alignment, challenges remain; and

WHEREAS, the findings of the 2023 CMS focused program integrity review report necessitate a state audit to address the identified issues and ensure the integrity and efficiency of the State's Medicaid Managed Care Program; and

WHEREAS, the Auditor has had legal authority since 1975 to audit Medicaid health care insurance contractors but has never exercised this authority, making these audits long overdue; and

WHEREAS, auditing the State's Medicaid health care insurance contractors will promote transparency; ensure Medicaid funds are used appropriately and for their intended purpose; ensure Hawaii's Medicaid beneficiaries are receiving the requisite quality of care; ensure compliance with all applicable state and federal laws, regulations, and contractual obligations; and improve the efficacy and effectiveness of Medicaid health care insurance contractors, leading to better health care outcomes for beneficiaries; now, therefore,

BE IT RESOLVED by the Senate of the Thirty-third Legislature of the State of Hawaii, Regular Session of 2025, the House of Representatives concurring, that the Auditor is requested to conduct a management and financial audit of the State's Medicaid health care insurance contractors on a biennial basis; provided that the first audit is requested to be conducted within six months of July 1, 2025; and

BE IT FURTHER RESOLVED that all audits are requested to:

(1) Assess the financial integrity, performance, and compliance with all applicable federal and state laws, regulations, and contractual obligations of each Medicaid health care insurance contractor; and

(2) Review documents, including but not limited to any books, records, or other evidence, related to the financial and operational activities of each Medicaid health care insurance contractor; and

BE IT FURTHER RESOLVED that all Medicaid health care insurance contractors are requested to cooperate with and assist the Auditor as needed in conducting the audit, including promptly providing all records, documents, and any other information requested by the Auditor during the audit; and

BE IT FURTHER RESOLVED that the Auditor is requested to submit a report of findings and recommendations to the Governor, Legislature, and Director of Human Services no later than twenty days prior to the convening of the Regular Session of 2027, and every Regular Session thereafter following the year in which an audit is conducted; and

BE IT FURTHER RESOLVED that the Auditor may conduct additional audits as deemed necessary based on risk assessments or at the request of the Governor, Legislature, or Director of Human Services; and

BE IT FURTHER RESOLVED that, for purposes of this Resolution, "Medicaid health care insurance contractors" means managed care organizations that are under contract with the Department of Human Services to provide managed care health insurance plans under the State's Medicaid Managed Care Program; and

BE IT FURTHER RESOLVED that certified copies of this Concurrent Resolution be transmitted to the Governor, Speaker of the House of Representatives, President of the Senate, Auditor, and Director of Human Services.

	OFFERED BY:	_____________________________

Report Title:

State Auditor; Medicaid; Managed Care Organizations; Medicaid Health Care Insurance Contracts; Management and Financial Audits

THE SENATE	S.C.R. NO.	46
THIRTY-THIRD LEGISLATURE, 2025
STATE OF HAWAII