YELLOW SHEET
Office of the State Auditor of Missouri
Claire McCaskill
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YELLOW SHEET Office of the State Auditor of Missouri |
Report No. 2004-51
20-02-57
Missouri law requires Missouri Consolidated Health Care Plan (MCHCP) to provide healthcare benefits for eligible state and public entity employees and their dependents. During calendar year 2003, MCHCP provided group healthcare and prescription drug benefits for approximately 104,000 state members and 5,000 public entity members. Our audit showed MCHCP has taken steps to contain costs in the face of rising healthcare costs, but an examination into further cost cutting measures appears warranted.
More feedback from members could show if services are affordable, good quality
Our survey of active and retired state participants in plans offered by MCHCP shows while 63 percent of respondents rated MCHCP's management of the rising cost of healthcare as adequate, good, or excellent, 66 percent are also less or much less satisfied with MCHCP than they were five years ago. Common reasons for dissatisfaction were a lack of plan choices in some areas and increasing health care costs with no corresponding increase in pay or level of benefits. MCHCP’s cost containment efforts in the past several years are similar to those used by other entities, and have helped hold down premium cost increases and produced premiums similar to other states and entities reviewed, without a substantial decrease in benefits covered. (See page 10)
MCHCP does not routinely obtain formal or measurable feedback from its members. Instead, it relies on informal feedback from members through calls to the customer service center and comments or questions heard at open enrollment meetings, etc. Lack of a formal process makes it difficult to quantify the input for use by management, and may help explain why dissatisfaction remains high even when MCHCP appears to be doing a good job at cost containment. (See page 12)
MCHCP should review its structure for potential cost savings
MCHCP services significantly fewer members per employee than other states reviewed. For example, the Kansas state employee health system services 4,392 members per employee and appears to perform services similar to what MCHCP employees handle. MCHCP services only 1,375 members per employee, a difference of more than 3,000 members per employee. (See page 15)
One explanation for the large staff is that MCHCP offers healthcare programs to public entities. At one time, MCHCP serviced 59,000 public entity members. Increasing healthcare costs for that segment resulted in a decrease in members to approximately 3,900 in 2004. While the number of MCHCP employees rose when public entity enrollment increased, those increased staffing levels did not significantly change after public entity enrollment declined. (See page 18)
Considering staffing levels at other states, costs savings could possibly be achieved by reducing staffing levels as appropriate and/or discontinuing offering healthcare to Missouri public entities. MCHCP could save approximately $47,500 for every employee it reduces. MCHCP is required by statute to offer healthcare options to public entity members, so a legislative change would be needed to discontinue public entity offerings. (See page 21)
State funds are used for services to public entity members
Auditors found state funds are possibly being used to provide services to public entity members. Administrative fees paid by public entities served by MCHCP are supposed to cover the service costs of public entity members. When public enrollment was high, it appeared the administrative fees covered the costs of providing these services. However, the state has always paid the fringe benefits paid to MCHCP employees servicing public sector members, rather than having these costs reimbursed. These employee benefit costs equal approximately 28 percent of the base salary of each employee. MCHCP only estimates how much time employees spend on public entity business versus state member business and the accuracy is not documented. (See page 19)
Few other states have healthcare system run outside a state agency
In a review of 24 mid-continent states, we found only two other states had health care programs run outside a state agency. While MCHCP officials explain their organizational structure was modeled after the Missouri State Employees' Retirement System, placing MCHCP outside a state agency results in performing functions duplicated within state agencies, such as information systems, human resources, and receiving services. This arrangement might have been beneficial when MCHCP serviced a large number of public entity members, but a re-evaluation in light of the current small number of public entity members is warranted. (See page 16)
Eligibility for services should be monitored more closely
MCHCP has no process to ensure all members participating in the health care plans are actually eligible for coverage under the plans. Instead, MCHCP relies on personnel clerks within each state agency to monitor the eligibility of members. Documentation is only required in limited circumstances such as a disabled dependent over 23 years of age or covering a dependent through a court ordered divorce decree. Other states' eligibility reviews indicate more thorough checking, such as requiring marriage, birth and death certificates, may result in the discovery of ineligible members receiving services. (See page 25)
Written procedures needed to ensure contractors adhere to performance standards
MCHCP has no written procedures for monitoring contractor adherence to performance standards, which could cost the state if penalties are not paid. Contractors self-measure some standards and report to MCHCP, with MCHCP relying on the contractors to report non-compliance and apply the appropriate penalties. MCHCP does not periodically require or review documentation to support this self-measurement process. For performance standards monitored by MCHCP, the procedures used to measure performance are not documented. (See page 25)