Finding Number: 2024-019 Finding Name: Failure to Ensure Managed Care Organizations Properly Prepare Financial Reports Finding Condition(s): The Illinois Department of Healthcare and Family Services (DHFS) did not ensure the annual financial audits prepared during the year ended June 30, 2024, for M...
Finding Number: 2024-019 Finding Name: Failure to Ensure Managed Care Organizations Properly Prepare Financial Reports Finding Condition(s): The Illinois Department of Healthcare and Family Services (DHFS) did not ensure the annual financial audits prepared during the year ended June 30, 2024, for Managed Care Organizations (MCOs) of the Children’s Health Insurance Program (CHIP) and Medicaid Cluster programs met the requirements of the MCO contracts and federal regulations. Specifically, the auditors noted that the MCO annual financial reports were prepared on a statutory basis of accounting which is assumed to be materially different than Generally Accepted Accounting Principles (GAAP). Additionally, the auditors noted that the DHFS has not established internal control procedures to ensure the financial reports are prepared in accordance with GAAP. Name of Contact Person(s): • Helena Lefkow, Deputy Administrator - Illinois Department of Healthcare and Family Services, Division of Medical Programs, Bureau of Managed Care • Keshonna Lones, Bureau Chief, Quality and Compliance Operations Manager - Illinois Department of Healthcare and Family Services, Division of Medical Programs, Bureau of Managed Care • Jessica Pickens, Account Manager Supervisor - Illinois Department of Healthcare and Family Services, Division of Medical Programs, Bureau of Managed Care Corrective Action(s): Starting in calendar year 2025, the Bureau of Managed Care began receiving MCO GAAP reports that were determined to comply with the reporting requirements of 42 CFR 438.3(m) and the Managed Care Program Contracts. The MCOs that do not comply with the reporting requirements of the contracts, or 42 CFR 439.3(m), are subject to sanctions as outlined in the contracts, which include one or more of the following: initiating corrective action plans, monetary penalties, and suspension of enrollment. Note: As during its 2025 reviews, the DHFS noted that one MCO was deemed to be non-complaint for lack of a 2025 GAAP report submission. In addition to issuing sanctions to the MCO for reporting non-compliance, the DHFS’ Account Management team engaged in discussions with the MCO to determine the cause of the untimely report submission, next steps, and to identify a final report submission date. Per discussions with the MCO, the DHFS learned that the MCO’s board members required education on the distinction between statutory financial and GAAP financial reports. In addition, the MCO’s board is required to review and approve all financial reports prior to submitting them to the DHFS. That approval process was delayed, which resulted in the report not being available to submit to the DHFS timely. The DHFS has established a revised report due date that allows for the MCO’s Board to complete its review and approval process. As such, the MCO shall submit its final, approved 2025 GAAP report to the DHFS no later than Feb 20, 2026. Proposed Completion Date: December 9, 2024