An Audit Report On Amerigroup Texas, Inc. And Amerigroup Insurance .

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An Audit Report onAmerigroup Texas, Inc. and AmerigroupInsurance Company, a Managed CareOrganizationNovember 2018Report No. 19-011State Auditor’s Office reports are available on the Internet at http://www.sao.texas.gov/.

An Audit Report onAmerigroup Texas, Inc. and AmerigroupInsurance Company, a Managed CareOrganizationSAO Report No. 19-011November 2018Overall ConclusionAmerigroup Texas, Inc. and AmerigroupInsurance Company (Amerigroup) accuratelyreported medical (fee-for-service) andprescription expenses totaling approximately 1.7 billion in its financial statistical reports forfiscal year 2016; however, it should improve itsprocesses to ensure that it accurately reportsother medical expenses and administrativeexpenses. Specifically, it should improve itsprocesses to ensure it reports only allowableexpenses and classifies expenses in theappropriate line items.Background InformationAmerigroup Texas, Inc. and AmerigroupInsurance Company (Amerigroup) providesthe Medicaid CHIP, STAR, STAR PLUS, andMMP – Dual Demo programs to eight servicedelivery areas in Texas: Bexar, El Paso,Harris, Jefferson, Lubbock, Medicaid RuralService Area–West, Tarrant, and Travis (seeAppendix 3 for additional information onthose service delivery areas).From September 1, 2015, through August31, 2016, Amerigroup received paymentsfrom the Health and Human ServicesCommission (Commission) that totaled 2.2billion for the STAR PLUS program.Approximately 1.9 billion of that fundingpaid for medical claims and prescriptiondrug claims for 1,645,865 people enrolled inthe STAR PLUS program.Amerigroup complied with certainrequirements in administering the TexasMedicaid program. Specifically, it paid claimsfor eligible members, according to the HealthSource: The Commission.and Human Services Commission’s(Commission) eligibility data. In addition, itpaid claims to enrolled providers, and itgenerally paid medical claims on time. However, it should ensure that itspharmacy benefits manager is paying pharmacy providers within the timeframerequired by the contract.Amerigroup should also ensure that it maintains adequate documentation tosupport reported expenses and the allocation methodology it used to reportcorporate administrative expenses. Table 1 on the next page presents a summaryof the unallowable and questioned costs that Amerigroup reported on its financialstatistical report for fiscal year 2016.This audit was conducted in accordance with Texas Government Code, Sections 321.0131, 321.0132, and 321.031(k)(2).For more information regarding this report, please contact John Young, Audit Manager, or Lisa Collier, First Assistant State Auditor, at(512) 936-9500.

An Audit Report onAmerigroup Texas, Inc. and Amerigroup Insurance Company, a Managed Care OrganizationSAO Report No. 19-011Table 1Unallowable and Questioned Costs, Per the Uniform Managed Care Manual, That Amerigroup Reported on ItsFinancial Statistical Report (FSR) for Fiscal Year 2016Type of Expense - FSR Line ItemSTAR PLUS - Medical (Fee-for-Service)STAR PLUS - Prescription ExpenseReported Costs for FiscalYear 2016TotalsTotal Questioned CostsIdentified 1,324,148,253 .8 million7.0 million 2,001,070,522 10.0 million 7.0 millionSTAR PLUS - Other Medical ExpensesAdministrative Expenses aTotal Unallowable CostsIdentified 56,370a Administrative Expenses cover all Medicaid programs and includes line items such as Salaries, Wages, and Benefits; and CorporateAllocations. 8.7 of 8.8 million identified unallowable costs and all of the identified questioned costs were reported under thecorporate allocations line item.Table 2 presents a summary of the findings in this report and the related issueratings. (See Appendix 2 for more information about the issue rating classificationsand descriptions.)Table 2Summary of Subchapters and Related Issue RatingsSubchapterIssue Rating aTitle1-AAmerigroup Accurately Reported Its STAR PLUS Medical and PrescriptionExpensesLow1-BAmerigroup Should Ensure That It Accurately Reports Other Medical ExpensesMedium2-AAmerigroup Should Improve Its Financial Reporting Process to Ensure That ItAccurately Reports Allowable Administrative ExpensesHigh2-BAmerigroup Should Ensure That It Appropriately Allocates Corporate Costs to theTexas Medicaid ProgramMedium3-AAmerigroup Paid Medical and Prescription Claims for Eligible STAR PLUSMembers, and It Paid Medical and Prescription Claims to Enrolled ProvidersLow3-BAmerigroup Paid Medical Claims Timely in Fiscal Year 2016; However, It ShouldWork with Its Pharmacy Benefits Manager to Ensure That Prescription Claims ArePaid Within Required TimeframesMediuma A subchapter is rated Priority if the issues identified present risks or effects that if not addressed could critically affect the auditedentity’s ability to effectively administer the program(s)/function(s) audited. Immediate action is required to address the noted concernand reduce risks to the audited entity.A subchapter is rated High if the issues identified present risks or effects that if not addressed could substantially affect the auditedentity’s ability to effectively administer the program(s)/function(s) audited. Prompt action is essential to address the noted concern andreduce risks to the audited entity.A subchapter is rated Medium if the issues identified present risks or effects that if not addressed could moderately affect the auditedentity’s ability to effectively administer program(s)/function(s) audited. Action is needed to address the noted concern and reduce risksto a more desirable level.ii

An Audit Report onAmerigroup Texas, Inc. and Amerigroup Insurance Company, a Managed Care OrganizationSAO Report No. 19-011Summary of Subchapters and Related Issue RatingsSubchapterIssue Rating aTitleA subchapter is rated Low if the audit identified strengths that support the audited entity’s ability to administer theprogram(s)/function(s) audited or the issues identified do not present significant risks or effects that would negatively affect the auditedentity’s ability to effectively administer the program(s)/function(s) audited.Auditors communicated other, less significant issues separately in writing toAmerigroup management.Summary of Management’s ResponseAt the end of certain chapters in this report, auditors made recommendations toaddress the issues identified during this audit.Amerigroup agreed with the recommendations addressed to it. However, itdisagreed with certain findings in Chapter 2. Amerigroup’s detailed managementresponses are presented immediately following the recommendations in eachchapter.Amerigroup disagrees with a number of audit findings related to unallowable costs.Although Amerigroup had multiple opportunities to address those issues during theaudit, it was unable to provide appropriate documentation to change the findings.Amerigroup also attempts to diminish the significance of findings related tounallowable administrative expenses by discussing the Health and Human ServicesCommission’s administrative expense cap in its management responses. Theunallowable administrative costs that Amerigroup reported in its financialstatistical reports for fiscal year 2016 are due to deficiencies in Amerigroup’sprocesses and internal controls. Whether Amerigroup was over or under theadministrative expense cap in fiscal year 2016 does not alter its obligation toreport accurate and allowable administrative expenses in its financial statisticalreports.After review and consideration of Amerigroup’s management responses, the StateAuditor’s Office stands by its conclusions based on evidence presented andcompiled during this audit.iii

An Audit Report onAmerigroup Texas, Inc. and Amerigroup Insurance Company, a Managed Care OrganizationSAO Report No. 19-011Audit Objective and ScopeThe objective of this audit was to determine whether selected financial processesand related controls at a Medicaid managed care organization (MCO) are designedand operating to help ensure (1) the accuracy and completeness of data that theMCO reports to the Commission and (2) compliance with applicable requirements.The scope of this audit covered Amerigroup’s contracts with the Commission todeliver the Texas Medicaid program. It covered Amerigroup’s STAR PLUS andAdministrative Expense financial statistical reports and its reported medical claimsand pharmacy claims for fiscal year 2016.iv

ContentsDetailed ResultsChapter 1Amerigroup Reported Medical and Prescription ClaimsAccurately in Its Financial Statistical Report for FiscalYear 2016; However, It Should Improve Its ReviewProcesses . 1Chapter 2Amerigroup Should Ensure That It Accurately ReportsAllowable Administrative Expenses in Its FinancialStatistical Reports . 5Chapter 3While Amerigroup Paid Medical and Prescription Claimsfor Eligible Members and to Enrolled Providers, It ShouldImprove Its Processes to Ensure That Prescription Claimsare Consistently Paid Within Required Timeframes . 16AppendicesAppendix 1Objective, Scope, and Methodology . 20Appendix 2Issue Rating Classifications and Descriptions . 25Appendix 3Amerigroup’s Service Delivery Areas for STAR PLUS . 26Appendix 4Calculating Experience Rebates . 27Appendix 5Calculation of the Experience Rebate Amerigroup Owedfor Fiscal Year 2016 . 28Appendix 6Bonus and Incentive Payments Paid to AffiliateEmployees . 30

Appendix 7Related State Auditor’s Office Work . 31

Detailed ResultsChapter 1Amerigroup Reported Medical and Prescription Claims Accurately inIts Financial Statistical Report for Fiscal Year 2016; However, ItShould Improve Its Review ProcessesAmerigroup Texas, Inc.’s and AmerigroupInsurance Company’s (Amerigroup) financialreporting process provided reasonableassurance that it accurately reported to theHealth and Human Services Commission(Commission) certain costs in its financialstatistical report for fiscal year 2016 (see textbox for more information about financialstatistical reports). Specifically, Amerigroupaccurately reported STAR PLUS medical (feefor-service) and prescription expenses totaling 1.7 billion. However, Amerigroup shouldimprove its reporting of other medicalexpenses to ensure that it reports onlyallowable expenses that occurred in thereporting period.Financial Statistical ReportsThe Health and Human ServicesCommission (Commission) receivesfinancial statistical reports from managedcare organizations (MCOs) on a quarterlyand annual basis as required by theCommission’s contracts with the MCOs.Those reports are the primary statementsof financial results that the MCOs submit tothe Commission. The Commission uses thereports to analyze the MCOs’ membership,revenues, expenses, and net income byservice area and program. The reportsprovide a basis for calculating the amounta MCO may owe the State through theexperience rebate profit-sharingrequirement (see Appendix 4 forinformation on the experience rebate).Source: The Commission.Chapter 1-AAmerigroup Accurately Reported Its STAR PLUS Medical andPrescription ExpensesChapter 1-ARating:Low1The 1.3 billion in paid medical fee-for-service expenses that Amerigroupreported in its financial statistical report for fiscal year 2016 matched theamounts in Amerigroup’s claims processing system within less than 1.0percent. In addition, the 364.4 million in reported paid prescriptionexpenses matched the amounts in Amerigroup’s claims data within less than0.5 percent.Medical (Fee-for-Service) Claims Expenses.Generally, Amerigroup paid medicalproviders for services according to its contract with each provider. For 2 (6.7percent) of 30 claims tested, Amerigroup paid the 2 providers more than thecontracts required for the procedures included in those claims because1The risk related to the issues discussed in Chapter 1-A is rated as Low because the audit identified strengths that support theaudited entity’s ability to administer the program(s)/function(s) audited or the issues identified do not present significantrisks or effects that would negatively affect the audited entity’s ability to effectively administer the program(s)/function(s)audited.An Audit Report on Amerigroup Texas, Inc. and Amerigroup Insurance Company, a Managed Care OrganizationSAO Report No. 19-011November 2018Page 1

Amerigroup increased the provider reimbursement rates without updatingthe contract documents. For all of fiscal year 2016, that increase resulted inAmerigroup overpaying those two providers by a total of 56,370 for theprocedure types included in those 2 claims, resulting in questioned costs.Prescription Claims Expenses.For Amerigroup’s prescription expenses,Amerigroup’s pharmacy benefits manager ensured that it paid its providersaccording to contract requirements for all 30 claims tested. In addition,Amerigroup accurately reported medical and prescription expenses for the60 samples tested.Chapter 1-BAmerigroup Should Ensure That It Accurately Reports OtherMedical ExpensesChapter 1-BRating:Medium2Amerigroup reported 41.7 million inOther Medical Expenses in its STAR PLUSfinancial statistical report for fiscal year2016. However, it included expenses thatdid not occur in the fiscal year, and itmisclassified certain expenses.Amerigroup reported 397,054 in PersonalAttendant Services expenses in the OtherMedical Expenses line item. However, 395,825 of that reported amount was forallowable medical claims payments thatoccurred outside the reporting periodresulting in unallowable costs in thefinancial statistical report for fiscal year2016, according to the Uniform ManagedCare Manual (see text box for anexplanation of unallowable andquestioned costs). Amerigroup’s stafffollowed procedures to report PersonalAttendant Services expenses based on thedate it paid a claim instead of the date theservice was provided, which does notcomply with contract requirements. Thisprocess creates a risk that Amerigroup2Unallowable CostThe Commission’s Uniform Managed Care Manualdefines the cost principles that establishallowability of expenses related to selectedMedicaid programs that a MCO can report on itsfinancial statistical report (FSR). A designation of“allowable” or “unallowable” does not generallygovern whether the MCO can incur a cost or make apayment; allowability reflects only what isreportable on the FSR. To be allowable, expensesmust conform to the requirements of theCommission’s cost principles, which include beingreasonable, allocable, and reported as they areincurred.Questioned CostAccording to the Code of Federal Regulations, a“questioned cost,” is a cost charged that MCOmanagement, federal oversight entities, anindependent auditor, or other audit organizationauthorized to conduct an audit of a MCO hasquestioned because of an audit or other finding. Acost may be questioned because: There may have been a violation of a provision ofa law, regulation, contract, grant, or otheragreement or document governing the use ofMCO funds. The cost is not supported by adequatedocumentation. The cost incurred appears unnecessary orunreasonable and does not reflect the actionsthat a prudent person would take in thecircumstances.Sources: Title 45, Code of Federal Regulations,Section 1630.2(g).The risk related to the issues discussed in Chapter 1-B is rated as Medium because they present risks or results that if notaddressed could moderately affect the audited entity’s ability to effectively administer program(s)/function(s) audited.Action is needed to address the noted concern and reduce risks to a more desirable level.An Audit Report on Amerigroup Texas, Inc. and Amerigroup Insurance Company, a Managed Care OrganizationSAO Report No. 19-011November 2018Page 2

could report Personal Attendant Services expenses in the incorrect reportingperiod.Amerigroup also misclassified 2.4 million in allowable costs related toservice coordinator salaries in Administrative Expenses. Amerigroup staff didnot correctly identify and reclassify salaries for 170 service coordinatoremployees as an Other Medical Expense. As a result, Amerigroupunderstated its Other Medical Expense line item by 2.4 million andoverstated the Administrative Expenses by the same amount. Misclassifyingsalaries for service coordinators increases the risk of Amerigroup inaccuratelyreporting medical costs in the STAR PLUS financial statistical report andadministrative costs in the Administrative Expense financial statistical report.RecommendationsAmerigroup should: Develop and implement procedures to ensure that it reports claimsbased on the date of service, not the paid date. Improve its review process to ensure that it correctly classifies salaries forservice coordinator employees.Management’s ResponseDate of ServiceDate of Service versus date paid is a timing difference in accounting periodonly. The Personal Attendant Services are allowable expenses under thecontract.Amerigroup will strengthen internal review and controls to ensure that thiserror does not occur in the future.Person assigned the responsibility: Financial Accounting & ReportingManager – MedicaidTimeline for completion: August 29, 2019Service Coordinator EmployeesThis is a coding error. These costs are included in administrative expenses andare fully allowable costs under the Amerigroup Texas Medicaid contract. Themisclassification of these expenses has no cost impact on the Medicaidprogram.An Audit Report on Amerigroup Texas, Inc. and Amerigroup Insurance Company, a Managed Care OrganizationSAO Report No. 19-011November 2018Page 3

Amerigroup will strengthen internal review and controls to ensure that thiscoding error does not occur in the future.Person assigned the responsibility: Financial Accounting & ReportingManager – MedicaidTimeline for completion: August 29, 2019An Audit Report on Amerigroup Texas, Inc. and Amerigroup Insurance Company, a Managed Care OrganizationSAO Report No. 19-011November 2018Page 4

Chapter 2Amerigroup Should Ensure That It Accurately Reports AllowableAdministrative Expenses in Its Financial Statistical ReportsAmerigroup should improve its financial reporting processes and controls toensure that it accurately reports allowable administrative expenses in itsfinancial statistical reports. Auditors identified 8.8 million in unallowableadministrative expenses and 7.0 million in questioned costs thatAmerigroup reported in its financial statistical report for fiscal year 2016 (seeTable 3 for a summary of the unallowable and questioned costs discussed inthis chapter). The inaccuracies identified may affect the calculation ofAmerigroup’s net income, which the Commission uses to determine whetherAmerigroup owes money to the Commission under the experience rebateprofit sharing requirement (see Appendix 4 and 5 for more informationabout experience rebates).Table 3Unallowable and Questioned Costs Related to Administrative ExpensesType of Review or TestReportSubchapterDiscussing CostsTotalUnallowableCosts Identified aTotalQuestionedCosts IdentifiedAdministrative Expenses Cost Center Definition Review2-A 6.3 million 0.0Administrative Expenses Data Analysis2-A 473,399 0.0Administrative Expenses Sample Testing and Analysis2-A 400,301 78,930Executive Compensation2-A 1.5 millionCost Center Sample2-B 119,425 4.1 millionAllocation Methodology2-B0 2.8 million 8.8 million 7.0 millionTotals 0.0a Auditors identified bonus and incentive payments to affiliate employees that were unallowableduring the audit period according to the Uniform Managed Care Manual. The Commission updatedits Cost Principles, which are part of the Uniform Managed Care Manual, in May 2018 to allowbonus and incentive payments to affiliate employees to be reported in financial statisticalreports. Auditors did not include those bonus and incentive payments in this table (see Appendix 6for more information).Sources: Amerigroup and the Commission.An Audit Report on Amerigroup Texas, Inc. and Amerigroup Insurance Company, a Managed Care OrganizationSAO Report No. 19-011November 2018Page 5

Chapter 2-AAmerigroup Should Improve Its Financial Reporting Process toEnsure That It Accurately Reports Allowable AdministrativeExpensesChapter 2-ARating:High 3Auditors performed data analysis and tested samples of the administrativeexpenses that Amerigroup reported in its financial statistical report for fiscalyear 2016. That testing identified 8.7 million in unallowable administrativeexpenses and 78,930 in questioned costs.Administrative Expenses.Amerigroup’s parent company, Anthem, uses costcenters to capture administrative expenses based on support activities ofspecific divisions or functions. Anthem allocates those administrativeexpenses to the company’s business units that benefit from the cost centers’services, such as Amerigroup. Amerigroup reports allocated expenses in theadministrative financial statistical report under the corporate allocations lineitem. Auditors reviewed cost center definitions, performed data analysis onall administrative expenses, and tested a sample of administrative expensesallocated to Amerigroup to determine whether expenses were allowable,appropriate, and adequately supported.Administrative Expenses - Cost Center Definition Review.In its financial statisticalreport for fiscal year 2016, Amerigroup reported administrative expensesthat were allocated from 649 cost centers. Auditors reviewed the definitions(activity descriptions) for those cost centers and identified approximately 6.3 million in unallowable administrative expenses. Specifically: For 4.8 million of those expenses, the activities provided by the costcenters, such as lobbying, organization costs4, or costs of preparingproposals for potential contracts, were unallowable based on theUniform Managed Care Manual. For 1.5 million of those expenses, the activities were related toAmerigroup’s implementation of the STAR Kids program and should havebeen reported in fiscal year 2017, based on the Uniform Managed CareManual.Administrative Expenses - Data Analysis.In addition, auditors performed dataanalysis on the entire population of administrative expenses thatAmerigroup reported in its financial statistical report for fiscal year 2016.3The risk related to the issues discussed in Chapter 2-A is rated as High because they present risks or results that if notaddressed could substantially affect the audited entity’s ability to effectively administer the program audited. Prompt actionis essential to address the noted concern and reduce risks to the audited entity.4According to the Uniform Managed Care Manual, unallowable organizational costs include expenses related to theorganization or reorganization of the corporate structure of a business, resisting the reorganization of the corporate structureof a business or a change in the controlling interest in the ownership of a business, and raising capital.An Audit Report on Amerigroup Texas, Inc. and Amerigroup Insurance Company, a Managed Care OrganizationSAO Report No. 19-011November 2018Page 6

That analysis identified an additional 473,399 in expenses that wereunallowable under the contract, such as lobbying costs, litigation expenses,charitable contributions, entertainment costs, and employee event expenses.Administrative Expenses - Sample Testing and Analysis.Auditors also tested a riskbased sample of 60 administrative expenses allocated from the cost centersto Amerigroup. That testing identified an additional 400,301 in unallowableexpenses and 78,930 in questioned costs. Specifically: For 5 (8 percent) of 60 expenses tested, Amerigroup reported expensesfor private jet and lobbying costs, which the Commission’s UniformManaged Care Manual specifically prohibits as a reportable expense,resulting in unallowable costs totaling 59,479. Based on the unallowableexpenses identified in the sample tested, auditors performed furtheranalysis and identified an additional 123,884 in related unallowableexpenses. For 2 (3 percent) of 60 expenses tested, Amerigroup did not incur theexpense during fiscal year 2016, resulting in unallowable costs totaling 104,879. The Commission’s Uniform Managed Care Manual states thata MCO should report expenses in its financial statistical report based onthe dates it incurred a service. Based on the unallowable expensesobserved in the sample tested, auditors performed further analysis andidentified an additional 112,059 in related unallowable expenses. For 1 (2 percent) of 60 expenses tested, Amerigroup could not providesufficient supporting documentation, resulting in questioned coststotaling 78,930. The Commission’s Uniform Managed Care Manualrequires a MCO to maintain records for administrative services orfunctions and provide to auditors detailed records and supportingdocumentation for all costs reported.Auditors determined that Amerigroup’s financial reporting process lackedadequate controls to ensure that Amerigroup reported only allowableexpenses. Specifically, Amerigroup’s financial reporting and reviewprocesses and controls did not identify and remove the unallowable orquestioned costs discussed above from its financial statistical report for fiscalyear 2016.Executive Compensation.Amerigroup inappropriately included 1.5 million inunallowable executive compensation because the salaries for the top 5executives at Anthem that Amerigroup reported in the corporate allocationline item exceeded the limit on executive compensation that a MCO canreport in its financial statistical report. Amerigroup should have excludedAn Audit Report on Amerigroup Texas, Inc. and Amerigroup Insurance Company, a Managed Care OrganizationSAO Report No. 19-011November 2018Page 7

approximately 2.1 million in executive compensation. Instead, it excludedonly 600,000.Misclassification of Administrative Expenses.Amerigroup reported some allowableexpenses in the wrong line item in its financial statistical report. Specifically: Amerigroup understated Salaries, Wages, and Benefits by 1.2 millionand overstated Bonuses by 588,934 and Corporate Allocations by 600,000. Amerigroup understated Legal and Professional Services and overstatedCorporate Allocations each by 1.4 million. Amerigroup understated other administrative expense line items by 6.7million and overstated Corporate Allocations by 6.7 million.RecommendationsAmerigroup should: Improve its processes and controls for reporting administrative expensesin its financial statistical reports so that it accurately reportsadministrative expenses and excludes unallowable costs. Improve its processes to ensure that it maintains records foradministrative services and functions and provides support for allreported costs. Adjust applicable amounts on its financial statistical reports for fiscal year2016 by the unallowable amounts that auditors identified. Discuss with the Commission how to resolve the identified questionedcosts, including what adjustments should be made to the financialstatistical reports for fiscal year 2016.Management’s ResponseChapter 2The items identified by the auditors did not affect the calculation ofAmerigroup’s net income. For calculating the cost of the Medicaid program,Amerigroup’s administrative expenses are limited (capped) by the Health andHuman Services Commission in the Texas Medicaid contract. The excessexpenses inadvertently reported in the Financial Statistical Report (FSR) didnot increase the cost of the Medicaid Program and were not reimbursed toAn Audit Report on Amerigroup Texas, Inc. and Amerigroup Insurance Company, a Managed Care OrganizationSAO Report No. 19-011November 2018Page 8

Amerigroup by the HHSC. Amerigroup will strengthen internal review andcontrols to reduce coding errors in our FSR process.Chapter 2AAdministrative ExpensesFor calculating the cost of the Medicaid program, Amerigroup’sadministrative expenses are limited (capped) by the Health and HumanServices Commission in the Texas Medicaid contract. The excess expensesinadvertently reported in the Financial Statistical Report (FSR) did notincrease the cost of the Medicaid Program and were not reimbursed toAmerigroup by the HHSC.The misclassification of these expenses has no cost impact on the MedicaidprogramAmerigroup will strengthen internal review and controls to ensure that thesecoding errors do not occur in the future.Administrative Expenses-Cost Center Definition ReviewAmerigroup recognizes that this expense is unallowable. However, it is theposition of Amerigroup that Auditors have misidentified this expenditure as alobby expense. Irrespective on any comments made by the Anthememployees who errored in coding these payments. Amerigroup maintainsthat these expenditures were a corporate affiliate allocation for a contractwith a law firm for consulting services that included work relating to a mergerand acquisition, communications, strategy and coalition building; allconsulting services.Amerigroup did not contract for these services and did not utilize this law firmfor any services in Texas.Amerigroup will obtain an affidavit from the law firm that verifies that nolobbying services were provided under this contract.In preparing the Financial Statistical Report (FSR) Amerigroup relied upon itsgeneral ledger accounts and reported 100% of the financial activity recordedin the general ledger. In addition, several of the cost centers in questionallocated less than 1,000 to the FSR, including one which allocated less than 1. In the future Amerigroup will strengthen internal review and controls toremove excess administrative expenses from the general ledger balancesbefore preparing the FSR.An Audit Report on Amerigroup Texas, Inc. and Amerigroup Insurance C

Amerigroup Texas, Inc. and Amerigroup Insurance Company (Amerigroup) provides the Medicaid CHIP, STAR, STAR PLUS, and MMP - Dual Demo programs to eight service delivery areas in Texas: Bexar, El Paso, Harris, Jefferson, Lubbock, Medicaid Rural Service Area-West, Tarrant, and Travis (see Appendix 3 for additional information on

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