EXTERNAL AUDITS OF CERTAIN MEDICAID CONTRACTORS BASED ON RISK

(a) In this section, "Medicaid contractor" means an entity that: (1) is not a health and human services agency as defined by Section 521.0001, Government Code; and (2) under a contract with the commission or otherwise on behalf of the commission, performs one or more administrative services in relation to the commission's operation of Medicaid, such as claims processing, utilization review, client enrollment, provider enrollment, quality monitoring, or payment of claims. (b) The commission shall contract with an independent auditor to perform annual independent external financial and performance audits of any Medicaid contractor used in the commission's operation of Medicaid. The commission regularly shall review the Medicaid contracts and ensure that: (1) the frequency and extent of audits of a Medicaid contractor under this section are based on the amount of risk to the state involved in the administrative services being performed by the contractor; (2) audit procedures related to financial audits and performance audits are used consistently in audits under this section; and (3) to the extent possible, audits under this section are completed in a timely manner. (c) If another state agency succeeds to the commission's operation of a part of Medicaid for which the commission used a Medicaid contractor, the successor agency shall comply with this section with regard to the Medicaid contractor, including the requirement to contract with an independent auditor to perform the external financial and performance audits required by this section. (d) An audit required by this section must be completed before the end of the fiscal year immediately following the fiscal year for which the audit is performed.