The Montana Department of Public Health and Human Services (Photo by Eric Seidle/ For the Daily Montanan).
The Legislative Audit Division has issued a wide-ranging fiscal audit of the Montana Department of Public Health and Human Services, completing the biennial process, and it made recommendations ranging from changing what documentation the agency keeps to more major issues with the state’s foster program and Medicaid.
Among the findings was that the state did not have a system to stop those convicted of Medicaid fraud from receiving benefits; the state has not consistently verified eligibility for Medicaid and CHIP, the Children’s Health Insurance Program; and it may have overpaid some foster care subcontractors tens of thousands of dollars.
The report will go to the Legislative Audit Committee and provides a snapshot of the state’s largest department in terms of expenditures.
During Fiscal Year 2020 and 2021, Montana spent 18% more than it had during the prior period, generally due to the influx of federal COVID-19 funds, which were largely administered through DPHHS.
Legislative auditors recommended 19 different areas of improvement, 17 of which DPHHS either agreed with, or partially concurred. That number is lower than a previous audit, which contained 27 recommendations. The auditors reported that the state had implemented 15 of those, partially implemented another eight, but did not address four of them.
One of the most frequent concerns of lawmakers when discussing Medicaid and Medicare is fraud, so much so that there was a concerted push to eliminate the state’s continuous eligibility for the programs, which requires the state to check the eligibility status on a rolling basis instead of once per year.
While lawmakers remain concerned about fraud, the audit noted that in 2020, the department recommended DPHHS develop a system to receive notification of those who committed Medicaid fraud and a corresponding system to suspend individuals who have been convicted from receiving benefits.
“There is still no mechanism in place to notify the department of convictions,” the audit said.
Medicaid and CHIP eligibility
The report also pointed out inconsistencies and problems with how Montana verifies eligibility for the Medicaid programs and CHIP.
The auditors found that the state doesn’t consistently verify the eligibility, that some files lacked documentation of the decisions, and that some participants may be placed in the wrong program, leading to incorrect benefits.
Among the findings was that verifications were not completed or followed up as required by federal and state law, and that “case files did not fully support the information used or the department’s decisions in eligibility requirements.”
Some of those problems the auditors found in 120 cases that were sampled (60 from each program) was that income used to support the case was incorrect, or not fully supported.
“Based on the errors identified in our sample work, the department’s internal controls are not sufficient to ensure compliance with federal regulations related to Medicaid and CHIP eligibility,” the audit said. “The department is at risk of not making uniform eligibility decisions and potentially placing individuals in wrong eligibility categories without consistent application of the eligibility process.”
The audit also found that individuals in the CHIP system were not properly removed from the program when they turned 19 and “aged out” of the program. Two cases, show individuals who aged out in 2017 were still on the rolls, though not paid any benefits.
The department, through Director Adam Meier, responded to the audit in writing, which is standard practice. His comments are included in the report. He said the department is revising its policies and procedures to ensure CHIP and Medicaid cases are fully documented and supported, including a consistent calculation to determine household income and eligibility.
Foster care system
The audit also pointed to problems within the beleaguered foster care system which has, for years, drawn the attention of the public, lawmakers and state officials, looking to drive down the number of kids in the system, which often ranks among the highest per capita in the nation.
The auditors found that the state had often continued to make payments to tribes and colleges or universities without obtaining and reviewing documentation. The tribes and higher education institutions often are subcontractors within the foster care system.
In one case, auditors said that more than $1 million in compensation and benefits had been paid out but lacked the documentation to prove it went to staff. That included travel costs of more than $41,000 and supply costs of $34,600 were paid with no itemized receipts.
In another case, a tribe had billed the state for more than $110,000 in salary costs, but the tribe’s own internal accounting showed only $93,000 in salary costs.
“Because supporting documentation is not in sufficient detail, we question $2,002,503 in costs for the foster care program,” the report said. “Based on overall level of activity, we estimate likely questioned costs as $5.1 million, which represents projected in errors in payments to foster care.”
Child-care provider inspections
Auditors found that DPHHS was behind on inspecting child-care facilities for safety and health. Federal law requires yearly inspection of child care facilities. During COVID, some of those rules were relaxed, but audit staff found that even with the COVID exception, the state was still falling behind on inspections.
“Out of 40 childcare centers tested, we identified four providers without a current inspection completed within 12 months,” the report said.”As a result, the department is at risk of providing payment for childcare at providers who have not met all the health and safety requirements.”
Department auditors also questioned other payments to DPHHS subcontractors because of the lack of documentation. For example, contractor payments to programs related to epidemiology and laboratory services were incomplete.
“As a result, we question $2,144,872 in costs,” it said.
The department, via Meier, responded that it believes supporting documentation provided in the audit sample “are adequate to support that payments made to tribes and colleges.” However, it said that department agrees, “increasing the amount of documentation and review related to … payments is beneficial to federal and state programs.”
Auditors were also unable to test the low-income home energy assistance program, often referred to by its acronym, LIHEAP. Because of that the audit said they were not able to issue a finding, and told the department it was out of compliance with federal regulations.
“The department communicated they have controls in place to review the extracts out of the case management system as staff reviews reports for anomalies, comparing to prior year data,” the report said. “However, this process is not documented and we were not able to test it. As a result, the department is in noncompliance with federal regulations.”
Meier said the department agrees with the finding and is working on new internal controls, which are expected to be completed by Sept. 30.
One bright spot for the department occurred when auditors looked at was the “payment error rate measurement program,” which calculates the number of improper payments for Medicaid and CHIP.
“The improper payment rates are not a fraud rate, but simply an estimated measurement of payments made that did not meet statutory, regulatory or administrative requirements,” the audit said.
Still, Montana’s payment error rate has continued to track well below the national rate. For example, in Medicaid, the 2020 state payment error rate was estimated at 4.6%, while the national average was 13.9%.
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