Scope and Methodology
The Audit Committee requested that the California State Auditor conduct an audit of Gold Coast to determine whether it was appropriately overseeing its contracted PBM. Also, we assessed the RFP process and the decision the commissioners made to award the contract to OptumRx. In addition, we reviewed DHCS’ oversight of Gold Coast and its PBM, and we evaluated Gold Coast’s role in setting reimbursements to pharmacies. The table below lists the objectives that the Audit Committee approved and the methods we used to address them.
|1||Review and evaluate the laws, rules, and regulations significant to the audit objectives.||Reviewed relevant laws, rules, regulations, and Gold Coast’s policies and procedures related to reimbursements to pharmacies and oversight of PBMs.|
|2||Assess the roles and responsibilities of any relevant state agencies, including DHCS, in overseeing Gold Coast’s responsibilities relating to its contracted PBM.||Determine the extent of DHCS’ oversight by reviewing its audits of Gold Coast and its policies and procedures related to oversight of its PBM.|
|3||Analyze Gold Coast’s RFP process that led to it awarding a contract in 2016 to OptumRx to manage prescription drug benefits for its members to determine, to the extent possible, the following:|
|a. Whether Gold Coast executed its contract with OptumRx with the best interests of its contracted pharmacies and member beneficiaries in mind.||Interviewed Gold Coast about the considerations it made for pharmacies and beneficiaries in its RFP process and reviewed documentation associated with those considerations.|
|b. Whether Gold Coast presented the most accurate and relevant information for the commissioners to consider when voting on the contract.||
|4||Determine whether Gold Coast has sufficient oversight procedures in place to ensure that its subcontractor for managing prescription drug benefits complies with laws and regulations relevant to reimbursements to pharmacies.||
|5||Evaluate whether Gold Coast’s policies, practices, and processes for establishing reimbursement rates for contracted pharmacies through its subcontractor are reasonable and appropriate. To the extent they are not reasonable or appropriate, determine what responsibilities, if any, fall on Gold Coast, DHCS, or other state agencies to address the issue.||
|6||Assess, to the extent possible, how Gold Coast and OptumRx’s reimbursements to contracted pharmacies compare to reimbursements by similarly situated Medi-Cal managed care organizations and their PBMs for similar drugs.||
|7||Review and assess any other issues that are significant to the audit.||
Source: Analysis of the Audit Committee’s audit request number 2018-124, as well as information and documentation identified in the table column titled Method.
Assessment of Data Reliability
The U.S. Government Accountability Office, whose standards we are statutorily required to follow, requires us to assess the sufficiency and appropriateness of computer‑processed information that we use to support our findings, conclusions, or recommendations. In performing this audit, we relied on electronic data from June 2018 that DHCS provided from its Management Information System/Decision Support System data warehouse to compare for a selection of medications the reimbursements under Gold Coast to those of other similar health plans that also serve Medi‑Cal beneficiaries. To evaluate these data, we performed logic testing of key data elements, and we interviewed an agency official knowledgeable about the data. Because DHCS’ database uses a paperless system, we were unable to assess the completeness or accuracy of these data. As a result, we found the data to be of undetermined reliability for our purposes. However, to gain some assurance about the reliability of the reimbursement claims data, we compared the reimbursement claims data for selected medications from DHCS to MAC lists of other similar health plans to ensure that the plans’ reimbursements according to the claims data were equal to or less than the amounts identified in the MAC lists. We did not identify any significant issues.
In addition, Gold Coast provided us with data regarding the beneficiary grievances it received from June 2017 through February 2019. We reviewed these data to identify whether Gold Coast received any beneficiary grievances related to access to covered pharmacy services and to assess whether Gold Coast’s responses to the grievances were adequate. Gold Coast also provided its prior authorization review spreadsheets for the period from June 2017 through December 2018. From these data, we reviewed a selection of OptumRx’s decisions on prior authorization requests to assess the adequacy of Gold Coast’s oversight. To evaluate these data, we performed logic testing of key data elements, and we interviewed agency officials knowledgeable about the data. We were unable to complete accuracy or completeness testing on the member grievance data because the system is primarily paperless. We also did not complete accuracy or completeness testing on the prior authorization spreadsheets because the system is primarily paperless and the volume of prior authorizations made these tests cost‑prohibitive. Therefore, for both systems, we found the data to be of undetermined reliability for our audit purposes. Although these determinations may affect the precision of some of the numbers we present, there is sufficient evidence in total to support our findings, conclusions, and recommendations.