Hawaii SR 29: REQUESTING THE AUDITOR TO CONDUCT A MANAGEMENT AND FINANCIAL AUDIT OF THE STATE'S MEDICAID HEALTH CARE INSURANCE CONTRACTORS ON A BIENNIAL BASIS.

Bill Text

THE SENATE
THIRTY-THIRD LEGISLATURE. 2025
STATE OF HAWAII S.R. NO. 'Z-'l
MAR 0 6 2025
SENATE RESOLUTION
REQUESTING THE AUDITOR TO CONDUCT A MANAGEMENT AND FINANCIAL
AUDIT OF THE STATE'S MEDICAID HEALTH CARE INSURANCE
CONTRACTORS ON A BIENNIAL BASIS.
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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 Gare 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
2025-1769 SR SMA.docx

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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
2025-1769 SR SMA.docx
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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,
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 aud