FINDING 2025-001: PELL GRANT AWARD Condition In three of the forty-eight student files tested for compliance with Federal Pell Grant Program requirements, we determined the Institution miscalculated the student’s Pell award in one or more payment periods. The students involved were #s 1, 11, and 36. To gain a more accurate projection of the likely questioned costs from this finding, we expanded our testing to include another twenty-five Pell recipients and identified one student who was awarded the incorrect amount. The student’s ID number is 93547. Criteria Pell Grant awards are based on a student’s Student Aid Index (SAI), the academic year structure of the student’s educational program, and the cost of attendance (COA) for a full-time student for a full academic year. For term-based programs, awards are also based on a student’s enrollment intensity (EI). If the student does not begin attendance in all classes for a payment period, resulting in a change in the student’s EI, a school must recalculate the student’s award for that payment period based on the lower EI. Cause The students were enrolled in term-based programs. They did not attend the same number of credits that they were originally scheduled to attend (and on which their Pell payments were based), and the Institution neglected to recalculate the Pell awards and make adjustments to the student accounts. The Institution was not consistently utilizing its third-party servicer’s reports that are designed to identify these discrepancies. Effect and Questioned Costs As outlined below, the students were not paid the proper amount of Pell. Subsequent to our testing, the Institution corrected the Pell awards for each of these students. Over (Under) Student # Disbursed Eligible Award Award Year 1 $1,652 $2,465 $(813) 2024/2025 11 $2,046 $2,465 $(419) 2024/2025 36 $2,465 $1,652 $813 2024/2025 93547 $2,046 $2,465 $(419) 2024/2025 Total Questioned Costs: $2,464 The Institution disbursed a total of $387,481 to the seventy-three students in our original and expanded samples for an overall error rate of 5.5%. When applying these results to the entire population of Pell Grant recipients, we determined it is likely that questioned costs would exceed the $25,000 threshold established in 2 CFR 200.516(a)(3). Recommendation The Institution should follow its established procedures more closely to ensure that, in the future, Pell Grant awards are calculated and disbursed in accordance with the federal regulations. Views of Responsible Officials The Institution concurs with this finding.
Federal Program Title: Medical Assistance Assistance Listing Number: 93.778 Federal Award Identification and Year: 2405MN5ADM, 2405MN5MAP Compliance Requirement Affected: Allowable Cost and Activity Award Period: Year Ended December 31, 2024 Type of Finding: Material Weakness in Internal Control over Compliance and Other Matters Criteria or Specific Requirement: In accordance with Uniform Guidance 2 CFR 200.516(a), management is responsible for establishing and maintaining internal controls, including proper review of disbursements prior to payment being made with federal funding. Condition: As part of the audit, key controls over significant audit areas are reviewed to ensure they are properly performed. We were not presented with documentation for one of the forty disbursements tested to show that the disbursement was reviewed by a supervisor prior to payment. Questioned Costs: None. Context: During Allowable Cost testing it was noted that one of the forty transactions tested was not reviewed and approved by a supervisor. Cause: The County has a limited number of personnel and there was significant turnover at the County. Effect: The County controls are not operating as designed. Repeat Finding: No. Recommendation: We recommend the County implement procedures to ensure that all disbursements are reviewed and approved prior to payment. Views of responsible officials: There is no disagreement with the audit finding.
Federal Program Title: Medical Assistance Assistance Listing Number: 93.778 Federal Award Identification and Year: 2405MN5ADM, 2405MN5MAP Compliance Requirement Affected: Allowable Cost and Activity Award Period: Year Ended December 31, 2024 Type of Finding: Material Weakness in Internal Control over Compliance and Other Matters Criteria or Specific Requirement: In accordance with Uniform Guidance 2 CFR 200.516(a), management is responsible for establishing and maintaining internal controls, including proper review of disbursements prior to payment being made with federal funding. Condition: As part of the audit, key controls over significant audit areas are reviewed to ensure they are properly performed. We were not presented with documentation for one of the forty disbursements tested to show that the disbursement was reviewed by a supervisor prior to payment. Questioned Costs: None. Context: During Allowable Cost testing it was noted that one of the forty transactions tested was not reviewed and approved by a supervisor. Cause: The County has a limited number of personnel and there was significant turnover at the County. Effect: The County controls are not operating as designed. Repeat Finding: No. Recommendation: We recommend the County implement procedures to ensure that all disbursements are reviewed and approved prior to payment. Views of responsible officials: There is no disagreement with the audit finding.
Criteria 2 CFR 200 establishes that the auditee must establish and maintain effective internal controls over the federal awards that provide assurance that the entity is managing the federal awards in compliance with federal statutes, regulations, and the conditions of the federal award. 2 CFR section 200.516(a) require the auditee to collect financial information and monitor its activities under federal awards to assure compliance with applicable federal requirements and performance expectations are being achieved and report these items in accordance with the program requirements. Condition Final financial report were not completed and submitted for 5NU61TS000295-05 award by the due date. Cause CARD failed to file the final financial report on a timely basis. Context/Sampling The final financial report was filed late. Effect Lack of compliance with designed internal controls over reporting could result in CARD reporting incorrect or incomplete information. The required final financial report was not filed by the due date. Questioned Costs None reported. Recommendation We recommend that CARD submit all reports in timely manner. This will ensure CARD is in compliance with the award and CARS’s policies. Organization Response The Organization has added all report due dates to their calendars to ensure that reports are filed in a timely manner.
Finding 2024-001: Known questioned costs related to eligibility Major Program: Housing Choice Voucher Program Federal Agency: U.S. Department of Housing and Urban Development Assistant Listing Number: 14.871 Criteria: The OMB Compliance Supplement for the Housing Choice Voucher Program (HCVP) states that the HCVP regulations are found in 24 CFR parts 5, 982, 983, and 985. 24 CFR 982.306(d) states that “The PHA must not approve a unit if the owner is the parent, child, grandparent, grandchild, sister, or brother of any member of the family, unless the PHA determines that approving the unit would provide reasonable accommodation for a family member who is a person with disabilities. This restriction against PHA approval of a unit only applies at the time a family initially receives tenant-based assistance for occupancy of a particular unit but does not apply to PHA approval of a new tenancy with continued tenant-based assistance in the same unit.” 2 CFR 200.516(a)(3) requires an audit finding to be reported for known questioned costs that are greater than $25,000 for a type of compliance requirement for a major program. Condition: As a result of our audit of the HCVP eligibility compliance requirement, it was noted that one (1) out of forty (40) participants reviewed did not meet the eligibility requirement because the tenant was a relative of the owner of the unit. Homeowner’s may apply for a reasonable accommodation for a family member who is a person with disabilities, however the owner did not request a reasonable accommodation. The owner and tenant were approved in May 2018, and payments began in June 2018. Cause: The City approved a housing choice voucher to a tenant that was ineligible due to being a relative of the owner because the City was unaware of the relationship between the owner and tenant upon approval of the housing choice voucher. The was unaware of the unallowed relationship because the owner and tenant certified that they were not related by signing the HUD-52517 form Request for Tenancy Approval that includes an owner’s certification that the owner is not the parent, child, grandparent, grandchild, sister or brother of any member of the family, unless the PHA has determined (and has notified the owner and the family of such determination) that approving leasing of the unit, notwithstanding such relationship, would provide reasonable accommodation for a family member who is a person with disabilities. Effect or Potential Effect: The City issued payments for a housing choice voucher to an ineligible owner and tenant since June 2018. Known Questioned Costs: $69,019 from June 2018 through September 2024. Current fiscal year known questioned costs were $11,712. The questioned costs are all payments made to the owner on behalf of the tenant mentioned above. Context: The auditor believes that the audit finding is an isolated instance and not a systemic problem. The City has appropriate internal controls, including inquiry of applicants as to whether they are related and obtains signed certifications that the owner and tenant are not related. In addition, the relationship was discovered through procedures that are not required by the Department of Housing and Urban Development. The finding was due to misrepresentations provided by the owner and tenant, and through other audit procedures there were no indications that this was a systematic issue. The sample selected was a valid sample and the City is still in overall compliance with the eligibility requirement for the HCVP major program. Repeat finding: No Recommendation: We recommend the City continue to clearly communicate to housing owners that they cannot rent to relatives, and to implement additional procedures over eligibility compliance on a sample basis going forward with regards to potential ineligible relationships between the owner and tenant. Examples of potential additional procedures include internet searches of the owner and tenant. View of Responsible Officials: See corrective action plan on page 9
Finding 2024-001: Significant Deficiency and known questioned costs related to activities allowed or unallowed and allowable costs/cost principles Major Program: HOME Investment Partnership Program Federal Agency: U.S. Department of Housing and Urban Development Assistant Listing Number: 14.239 Criteria: The City is responsible for ensuring compliance with all applicable provisions of the HOME Investment Partnerships Program (HOME) as prescribed by the U.S. Department of Housing and Urban Development. According to requirements included in the OMB Compliance Supplement, all HOME Funds may be used by participating jurisdictions to provide for: (a) incentives to develop and support affordable rental housing and homeownership affordability through the acquisition, new construction, reconstruction, or rehabilitation of non-luxury housing with suitable amenities, including real property acquisition, site improvements, conversion, demolition, and other expenses, including financing costs, relocation expenses of any displaced persons, families, businesses, or organizations; (b) tenant-based rental assistance, including security deposits; (c) the payment of reasonable administrative and planning costs; and (d) the payment of operating expenses of Community Housing Development Organizations (CHDOs). The housing must be permanent or transitional. The acquisition of vacant land or demolition can only be undertaken with respect to a particular housing project intended to provide affordable housing, and when construction is expected to begin within 12 months. Conversion of an existing structure to affordable housing is rehabilitation unless certain circumstances exist. Manufactured housing may be purchased or rehabilitated and the land upon which it is built may be purchased with HOME funds. HOME funds may be used to pay for development construction hard costs, refinancing costs, acquisition costs, related soft costs, CHDO costs, relocation costs, and costs related to the repayment of loans (24 CFR sections 92.205(a) and 92.206).” 2 CFR 200.516(a)(3) requires an audit finding to be reported for known questioned costs that are greater than $25,000 for a type of compliance requirement for a major program. Condition and Context: During testing of HOME activities allowed or unallowed and allowable costs/cost principles (AB) compliance requirements, it was noted that one (1) out of thirty-nine (39) disbursement transactions reviewed did not meet the AB compliance requirements. 2 CFR 200.305(b)(8) states that “a payment must not be made to a recipient or subrecipient for amounts that the recipient or subrecipient withholds from contractors to assure satisfactory completion of work. Payment must be made when the recipient or subrecipient disburses the withheld funds to the contractors or to escrow accounts established to ensure satisfactory completion of work.” The City requested reimbursement for retainage amounts that were not released as of September 30, 2024. Cause: The City had turnover in the project manager department related to HOME construction projects. The project manager turnover caused a miscommunication between the project managers and grant accounting employees which resulted in the request for reimbursement of retainage that had not yet been paid by the City. Effect or Potential Effect: The City received grant reimbursements related to expenditures that were not paid as of September 30, 2025. Known Questioned Costs: $112,539 from October 1st, 2023 through September 30th, 2024. These are for all projects that retainage was requested for reimbursement but the retainage was not released as of September 30, 2024. Repeat Finding: No Recommendation: We recommend the City continue to train its employees to on allowable activities and costs related to the HOME grant. View of Responsible Officials: See Corrective Action Plan on page 10
FINDING 2024-033 CCDF Cluster, ALN 93.575 and 93.596, Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Eligibility; and Matching, Level of Effort, and Earmarking - Client Eligibility See Schedule of Findings and Questioned Costs for chart/table. Condition MiLEAP and MDHHS did not ensure compliance with federal laws and regulations relating to client eligibility for CCDF Cluster child care payments for 5 (8%) of the 60 cases we reviewed. Our review disclosed: a. MDHHS case record documentation was inconsistent with client eligibility information entered in Bridges for 5 (8%) of 60 cases reviewed. For these cases, the authorized hours of care in Bridges exceeded the client's documented need for hours of child care services. b. MDHHS did not appropriately categorize the client's eligibility based on the supporting documentation in the case record for 1 (2%) of 60 cases reviewed, which is also reported in part a. We determined this did not affect the client's eligibility for child care services or level of benefits. Criteria Federal regulation 45 CFR 98.20 provides eligibility requirements for child care services and permits MiLEAP to establish eligibility requirements in addition to those outlined in the section as long as the additional requirements are not in violation of the regulation. Federal regulation 45 CFR 98.16(i)(5) requires MiLEAP identify additional eligibility requirements in its CCDF State Plan. MiLEAP's CCDF State Plan for Federal Fiscal Years 2022-2024 provides specific requirements for client, child, and provider eligibility. Also, CCDF program policy deems clients are either income eligible or categorically eligible if they participate in certain other programs such as Foster Care - Title IV. The client's income or categorical eligibility determines the client's level of benefits, and the child must be assigned to an eligible provider. Federal regulation 45 CFR 98.55 allows states to claim expenditures to be matched at the FMAP rate for allowable activities, as described in the approved state plan. In order to receive federal matching funds for a fiscal year, states must also expend an amount of nonfederal funds for child care activities in the state at least equal to the state's share of expenditures for the fiscal years 1994 or 1995 (whichever is greater) under Sections 402(g) and 402(i) of the federal Social Security Act as these sections were in effect before October 1, 1995, and the expenditures must be for allowable services or activities, as described in the approved state plan. Cause MDHHS informed us its internal control and monitoring activities were not sufficient to ensure MDHHS maintained or appropriately considered all required verification documentation in the client's case record to support eligibility. Effect MiLEAP may have made payments on behalf of ineligible clients. The federal grantor agency could issue sanctions or disallowances related to noncompliance. Known Questioned Costs Federal regulation 2 CFR 200.516(a)(3) requires the auditor to report known questioned costs less than $25,000 if it is likely total questioned costs would exceed $25,000. • $586 - federal share. • $257 - State share of costs MiLEAP inappropriately used as matching. Recommendation We recommend MiLEAP and MDHHS maintain sufficient documentation and ensure Bridges appropriately reflects documentation to support client eligibility was determined in accordance with eligibility requirements. Management Views MiLEAP and MDHHS agree with the finding.
FINDING 2024-033 CCDF Cluster, ALN 93.575 and 93.596, Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Eligibility; and Matching, Level of Effort, and Earmarking - Client Eligibility See Schedule of Findings and Questioned Costs for chart/table. Condition MiLEAP and MDHHS did not ensure compliance with federal laws and regulations relating to client eligibility for CCDF Cluster child care payments for 5 (8%) of the 60 cases we reviewed. Our review disclosed: a. MDHHS case record documentation was inconsistent with client eligibility information entered in Bridges for 5 (8%) of 60 cases reviewed. For these cases, the authorized hours of care in Bridges exceeded the client's documented need for hours of child care services. b. MDHHS did not appropriately categorize the client's eligibility based on the supporting documentation in the case record for 1 (2%) of 60 cases reviewed, which is also reported in part a. We determined this did not affect the client's eligibility for child care services or level of benefits. Criteria Federal regulation 45 CFR 98.20 provides eligibility requirements for child care services and permits MiLEAP to establish eligibility requirements in addition to those outlined in the section as long as the additional requirements are not in violation of the regulation. Federal regulation 45 CFR 98.16(i)(5) requires MiLEAP identify additional eligibility requirements in its CCDF State Plan. MiLEAP's CCDF State Plan for Federal Fiscal Years 2022-2024 provides specific requirements for client, child, and provider eligibility. Also, CCDF program policy deems clients are either income eligible or categorically eligible if they participate in certain other programs such as Foster Care - Title IV. The client's income or categorical eligibility determines the client's level of benefits, and the child must be assigned to an eligible provider. Federal regulation 45 CFR 98.55 allows states to claim expenditures to be matched at the FMAP rate for allowable activities, as described in the approved state plan. In order to receive federal matching funds for a fiscal year, states must also expend an amount of nonfederal funds for child care activities in the state at least equal to the state's share of expenditures for the fiscal years 1994 or 1995 (whichever is greater) under Sections 402(g) and 402(i) of the federal Social Security Act as these sections were in effect before October 1, 1995, and the expenditures must be for allowable services or activities, as described in the approved state plan. Cause MDHHS informed us its internal control and monitoring activities were not sufficient to ensure MDHHS maintained or appropriately considered all required verification documentation in the client's case record to support eligibility. Effect MiLEAP may have made payments on behalf of ineligible clients. The federal grantor agency could issue sanctions or disallowances related to noncompliance. Known Questioned Costs Federal regulation 2 CFR 200.516(a)(3) requires the auditor to report known questioned costs less than $25,000 if it is likely total questioned costs would exceed $25,000. • $586 - federal share. • $257 - State share of costs MiLEAP inappropriately used as matching. Recommendation We recommend MiLEAP and MDHHS maintain sufficient documentation and ensure Bridges appropriately reflects documentation to support client eligibility was determined in accordance with eligibility requirements. Management Views MiLEAP and MDHHS agree with the finding.
FINDING 2024-033 CCDF Cluster, ALN 93.575 and 93.596, Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Eligibility; and Matching, Level of Effort, and Earmarking - Client Eligibility See Schedule of Findings and Questioned Costs for chart/table. Condition MiLEAP and MDHHS did not ensure compliance with federal laws and regulations relating to client eligibility for CCDF Cluster child care payments for 5 (8%) of the 60 cases we reviewed. Our review disclosed: a. MDHHS case record documentation was inconsistent with client eligibility information entered in Bridges for 5 (8%) of 60 cases reviewed. For these cases, the authorized hours of care in Bridges exceeded the client's documented need for hours of child care services. b. MDHHS did not appropriately categorize the client's eligibility based on the supporting documentation in the case record for 1 (2%) of 60 cases reviewed, which is also reported in part a. We determined this did not affect the client's eligibility for child care services or level of benefits. Criteria Federal regulation 45 CFR 98.20 provides eligibility requirements for child care services and permits MiLEAP to establish eligibility requirements in addition to those outlined in the section as long as the additional requirements are not in violation of the regulation. Federal regulation 45 CFR 98.16(i)(5) requires MiLEAP identify additional eligibility requirements in its CCDF State Plan. MiLEAP's CCDF State Plan for Federal Fiscal Years 2022-2024 provides specific requirements for client, child, and provider eligibility. Also, CCDF program policy deems clients are either income eligible or categorically eligible if they participate in certain other programs such as Foster Care - Title IV. The client's income or categorical eligibility determines the client's level of benefits, and the child must be assigned to an eligible provider. Federal regulation 45 CFR 98.55 allows states to claim expenditures to be matched at the FMAP rate for allowable activities, as described in the approved state plan. In order to receive federal matching funds for a fiscal year, states must also expend an amount of nonfederal funds for child care activities in the state at least equal to the state's share of expenditures for the fiscal years 1994 or 1995 (whichever is greater) under Sections 402(g) and 402(i) of the federal Social Security Act as these sections were in effect before October 1, 1995, and the expenditures must be for allowable services or activities, as described in the approved state plan. Cause MDHHS informed us its internal control and monitoring activities were not sufficient to ensure MDHHS maintained or appropriately considered all required verification documentation in the client's case record to support eligibility. Effect MiLEAP may have made payments on behalf of ineligible clients. The federal grantor agency could issue sanctions or disallowances related to noncompliance. Known Questioned Costs Federal regulation 2 CFR 200.516(a)(3) requires the auditor to report known questioned costs less than $25,000 if it is likely total questioned costs would exceed $25,000. • $586 - federal share. • $257 - State share of costs MiLEAP inappropriately used as matching. Recommendation We recommend MiLEAP and MDHHS maintain sufficient documentation and ensure Bridges appropriately reflects documentation to support client eligibility was determined in accordance with eligibility requirements. Management Views MiLEAP and MDHHS agree with the finding.
FINDING 2024-012 Medicaid Cluster, ALN 93.775, 93.777, and 93.778 and Children's Health Insurance Program, ALN 93.767 - Beneficiary Eligibility See Schedule of Findings and Questioned Costs for chart/table. Condition MDHHS did not ensure or demonstrate compliance with federal laws and regulations relating to beneficiary eligibility for 7 (12%) of 60 Medicaid and 33 (55%) of 60 CHIP cases. Our review disclosed: a. MDHHS did not determine beneficiary eligibility in accordance with eligibility requirements for 2 (3%) of 60 Medicaid and 10 (17%) of 60 CHIP cases reviewed. b. MDHHS did not maintain case file documentation supporting the beneficiary eligibility determination; examples of documentation include MAGI-based income verification results, other income support, and signed applications for 4 (7%) of 60 Medicaid and 23 (38%) of 60 CHIP cases reviewed. c. MDHHS did not determine beneficiary eligibility within the required time frame for 1 (2%) of 60 Medicaid cases reviewed. Criteria Federal regulations 42 CFR 435.1002(b) and 42 CFR 457.622(d) indicate federal funding is available only for services provided to eligible beneficiaries. Federal regulations 42 CFR 435.914 and 42 CFR 457.965 require case record documentation be maintained to support the eligibility decision. Federal regulations 42 CFR 435.10, 42 CFR 457.50, and 42 CFR 457.70 require MDHHS to specify in its State Plan the groups to whom Medicaid and CHIP are provided and the conditions of eligibility for individuals in those groups. Federal regulation 42 CFR 435.912(c) requires MDHHS to determine eligibility and provide notice of the decision within 90 days for applicants who apply for Medicaid on the basis of disability and 45 days for all other applicants. MDHHS Bridges Administrative Manual 300, The Case Record, indicates a case record includes documents and information related to a given case arranged in a series of packets and contained in a folder identified by a case name, grantee ID, or case number. A case record consists of both paper case records and electronic case files (ECF). The paper case record and ECF contain all forms, documents, and other evidence relevant to the group's current and past eligibility. Unless captured in Bridges the case record must document the facts essential to the eligibility determination and actions taken by the local office regarding the case. Cause MDHHS's internal control and monitoring activities were not sufficient to ensure MDHHS maintained or appropriately considered the required documentation in beneficiaries' case records to support eligibility determinations. Also, MDHHS's internal control did not ensure county/district office caseworkers timely reviewed beneficiaries' case records. Effect We consider this to be a material weakness and material noncompliance because MDHHS may have made payments on behalf of ineligible beneficiaries and because of the 12% Medicaid and 55% CHIP error rates. The federal grantor agency could issue sanctions or disallowances related to noncompliance. Known Questioned Costs Federal regulation 2 CFR 200.516(a)(3) requires the auditor to report known questioned costs less than $25,000 if it is likely total questioned costs would exceed $25,000. • $6,697 - federal share. • $2,299 - State share of costs MDHHS inappropriately used as matching. Recommendations We recommend MDHHS properly consider Medicaid and CHIP eligibility documentation in accordance with eligibility requirements. We also recommend MDHHS maintain documentation to support beneficiary eligibility was determined in accordance with eligibility requirements. We further recommend MDHHS ensure eligibility determinations are made timely. Management Views MDHHS agrees with the identified exceptions for parts a. and c. of the finding. However, MDHHS disagrees that 3 Medicaid cases and 20 Children's Health Insurance Program (CHIP) cases with MAGI determinations cited in part b. did not have case file documentation supporting the beneficiary eligibility determination. The Centers for Medicare and Medicaid Services (CMS) has determined that a reasonable compatibility indicator can be used for CMS audit purposes to determine if the attested income information was electronically verified for MAGI cases and MDHHS disagrees that documentation was not maintained to support the eligibility determination. The SOM MiIntegrate system communicates with various State and federal electronic trusted data sources and sends the information from these sources, along with the beneficiaries' attested income, to the SOM MAGI Rules Engine where the MAGI eligibility determination is made. As part of the MAGI eligibility determination, a reasonable compatibility test is completed to determine if beneficiary/applicant attested income is within a specified percentage of the electronic trusted data sources or if the attested and verified income are below the threshold for the applicable program. The results of the MAGI eligibility determination are sent back to MiIntegrate using an Account Transfer (AT) packet that contains the results. MiIntegrate then communicates the results to the SOM MAGI Viewer and Bridges using an AT packet and Bridges stores the AT packet number only that can be used to view the details of the AT packet within the SOM MAGI Viewer. The version of the AT packet within the MAGI Viewer also contains a reasonable compatibility indicator that documents the outcome of the reasonable compatibility test and supports the SOM MAGI Rules Engine eligibility decision. MDHHS stores the AT packet information, including facts essential to the eligibility determination, within MiIntegrate and the MAGI Viewer instead of Bridges to help protect and secure the federal income tax data and unemployment data used for the determination. The AT packet for each individual determination can be retrieved from the MAGI Viewer using the AT packet number stored in each beneficiary's case file within Bridges. MDHHS is not aware of any federal regulations that preclude MDHHS from storing this information in a separate system to help secure the data and restrict access as required by federal and state law. Auditor's Comments to Management Views Regarding the MAGI beneficiary eligibility documentation cited in part b., the CMS's Payment Error Rate Measurement (PERM) Manual indicates if states use electronic verification to verify eligibility elements there should be an indicator in the eligibility system, i.e., Bridges, showing the State verified the element, including the result of the verification. Also, federal regulations 42 CFR 935.914 and 42 CFR 457.965 require MDHHS to maintain facts in the case file to support the eligibility determination. The AT packet number does not include the reasonable compatibility indicator. Therefore, it does not provide sufficient detail within the case file, defined by MDHHS as records captured in Bridges, to demonstrate MDHHS verified the income or the caseworker confirmed the result of the verification. Therefore, the finding stands as written.
FINDING 2024-040 Medicaid Cluster, ALN 93.775, 93.777, and 93.778, Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Eligibility; and Matching, Level of Effort, and Earmarking - Payments on Behalf of Ineligible Beneficiaries See Schedule of Findings and Questioned Costs for chart/table. Condition MDHHS did not ensure beneficiary eligibility was updated in CHAMPS. As a result, MDHHS issued $3,373 for 11 (37%) of 30 payments sampled from a $2,001,375 population of beneficiary payments with no corresponding Medicaid coverage. Criteria Federal regulation 42 CFR 435.1002(b) indicates federal funding is available only for services provided to eligible beneficiaries. Cause MDHHS informed us that because of system issues in Bridges, inaccurate eligibility information from Bridges was interfaced into CHAMPS, resulting in beneficiaries appearing eligible in CHAMPS in error and payments being processed based on that eligibility. Effect MDHHS made payments on behalf of ineligible beneficiaries. The federal grantor agency could issue sanctions or disallowances related to noncompliance. Known Questioned Costs Federal regulation 2 CFR 200.516(a)(3) requires the auditor to report known questioned costs less than $25,000 if it is likely total questioned costs exceed $25,000. • $2,256 - federal share of payments made to providers on behalf of ineligible beneficiaries. • $1,117 - State share of payments made to providers on behalf of ineligible beneficiaries. Recommendation We recommend MDHHS ensure beneficiary eligibility is updated in CHAMPS. Management Views MDHHS agrees with the finding.
FINDING 2024-041 Medicaid Cluster, ALN 93.775, 93.777, and 93.778, Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Eligibility; and Matching, Level of Effort, and Earmarking - Ineligible HHP Payments See Schedule of Findings and Questioned Costs for chart/table. Condition MDHHS did not prevent or timely recover payments, totaling $342, for 3 (20%) of 15 sampled clients who were hospitalized while receiving HHP services and no longer met eligibility requirements. Criteria Federal regulation 42 CFR 435.10 requires MDHHS to specify in its State Plan the groups to whom Medicaid is provided and the conditions of eligibility for individuals in those groups. MDHHS's Medicaid State Plan states it will provide personal care services under HHP. MDHHS has developed the Adult Services Manual (ASM) to further define specific policies and procedures for delivery of Medicaid HHP services. ASM Section 140 prohibits payment for HHP services on days a client is unavailable due to hospitalization, except the caregiver may receive payment of HHP services on the day a client is admitted to a hospital if HHP services were completed before the time the client was admitted to the hospital. Also, ASM Section 140 allows payment for HHP services on the day a client is discharged from the hospital. Cause MDHHS informed us the post-payment review process is complicated by the lag time (up to one year) associated with MDHHS receiving and processing hospital claims and delays in changes to clients' level of care. Also, MDHHS indicated staff oversight impacted the timeliness and accuracy of recoupments. Effect MDHHS paid a total of $342 from October 1, 2023 through September 30, 2024 for sampled clients who did not qualify for HHP services because they were hospitalized. The federal grantor agency could issue sanctions or disallowances related to noncompliance. Known Questioned Costs Federal regulation 2 CFR 200.516(a)(3) requires the auditor to report known questioned costs less than $25,000 if it is likely total questioned costs would exceed $25,000. • $223 - federal share of amounts paid for HHP services while sampled clients were hospitalized. • $119 - State share of costs MDHHS inappropriately used as matching. Recommendation We recommend MDHHS prevent or timely recover payments for HHP services when clients no longer meet eligibility requirements. Management Views MDHHS agrees with the finding.
FINDING 2024-042 Medicaid Cluster, ALN 93.775, 93.777, and 93.778, Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Eligibility; and Matching, Level of Effort, and Earmarking - Ineligible Home Help Assistance See Schedule of Findings and Questioned Costs for chart/table. Condition MDHHS did not obtain an updated medical needs form to ensure the HHP beneficiary met eligibility requirements for 1 of 3 HHP payments sampled. The specified time frame for needed services, as indicated on the beneficiary's initial medical needs form, elapsed before the date of the HHP payment and an updated medical needs form was not completed as of the date of our review. Criteria Federal regulation 42 CFR 435.10 requires MDHHS to specify in its State Plan the groups to whom Medicaid is provided and the conditions of eligibility for individuals in those groups. MDHHS's Medicaid State Plan states it will provide personal care services under the HHP. MDHHS has developed the ASM to further define specific policies and procedures for delivery of Medicaid HHP services. ASM Section 115 requires most HHP clients to obtain certification from a Medicaid-enrolled medical professional of the clients' medical need for services only at the initial opening of a case before qualifying for services unless special circumstances exist, such as the medical needs form has a specified time frame for needed services and the time frame has elapsed. Cause MDHHS informed us it did not consistently track and document when medical needs forms with a specified time frame were expected to expire. Effect MDHHS may have made payments on behalf of an ineligible HHP beneficiary. The federal grantor agency could issue sanctions or disallowances related to noncompliance. Known Questioned Costs Federal regulation 2 CFR 200.516(a)(3) requires the auditor to report known questioned costs less than $25,000 if it is likely total questioned costs would exceed $25,000. • $910 - federal share made to a provider on behalf of an ineligible beneficiary. • $492 - State share of costs MDHHS inappropriately used as matching. Recommendation We recommend MDHHS obtain an updated medical needs form to support beneficiary eligibility for HHP payments. Management Views MDHHS agrees with the finding.
FINDING 2024-012 Medicaid Cluster, ALN 93.775, 93.777, and 93.778 and Children's Health Insurance Program, ALN 93.767 - Beneficiary Eligibility See Schedule of Findings and Questioned Costs for chart/table. Condition MDHHS did not ensure or demonstrate compliance with federal laws and regulations relating to beneficiary eligibility for 7 (12%) of 60 Medicaid and 33 (55%) of 60 CHIP cases. Our review disclosed: a. MDHHS did not determine beneficiary eligibility in accordance with eligibility requirements for 2 (3%) of 60 Medicaid and 10 (17%) of 60 CHIP cases reviewed. b. MDHHS did not maintain case file documentation supporting the beneficiary eligibility determination; examples of documentation include MAGI-based income verification results, other income support, and signed applications for 4 (7%) of 60 Medicaid and 23 (38%) of 60 CHIP cases reviewed. c. MDHHS did not determine beneficiary eligibility within the required time frame for 1 (2%) of 60 Medicaid cases reviewed. Criteria Federal regulations 42 CFR 435.1002(b) and 42 CFR 457.622(d) indicate federal funding is available only for services provided to eligible beneficiaries. Federal regulations 42 CFR 435.914 and 42 CFR 457.965 require case record documentation be maintained to support the eligibility decision. Federal regulations 42 CFR 435.10, 42 CFR 457.50, and 42 CFR 457.70 require MDHHS to specify in its State Plan the groups to whom Medicaid and CHIP are provided and the conditions of eligibility for individuals in those groups. Federal regulation 42 CFR 435.912(c) requires MDHHS to determine eligibility and provide notice of the decision within 90 days for applicants who apply for Medicaid on the basis of disability and 45 days for all other applicants. MDHHS Bridges Administrative Manual 300, The Case Record, indicates a case record includes documents and information related to a given case arranged in a series of packets and contained in a folder identified by a case name, grantee ID, or case number. A case record consists of both paper case records and electronic case files (ECF). The paper case record and ECF contain all forms, documents, and other evidence relevant to the group's current and past eligibility. Unless captured in Bridges the case record must document the facts essential to the eligibility determination and actions taken by the local office regarding the case. Cause MDHHS's internal control and monitoring activities were not sufficient to ensure MDHHS maintained or appropriately considered the required documentation in beneficiaries' case records to support eligibility determinations. Also, MDHHS's internal control did not ensure county/district office caseworkers timely reviewed beneficiaries' case records. Effect We consider this to be a material weakness and material noncompliance because MDHHS may have made payments on behalf of ineligible beneficiaries and because of the 12% Medicaid and 55% CHIP error rates. The federal grantor agency could issue sanctions or disallowances related to noncompliance. Known Questioned Costs Federal regulation 2 CFR 200.516(a)(3) requires the auditor to report known questioned costs less than $25,000 if it is likely total questioned costs would exceed $25,000. • $6,697 - federal share. • $2,299 - State share of costs MDHHS inappropriately used as matching. Recommendations We recommend MDHHS properly consider Medicaid and CHIP eligibility documentation in accordance with eligibility requirements. We also recommend MDHHS maintain documentation to support beneficiary eligibility was determined in accordance with eligibility requirements. We further recommend MDHHS ensure eligibility determinations are made timely. Management Views MDHHS agrees with the identified exceptions for parts a. and c. of the finding. However, MDHHS disagrees that 3 Medicaid cases and 20 Children's Health Insurance Program (CHIP) cases with MAGI determinations cited in part b. did not have case file documentation supporting the beneficiary eligibility determination. The Centers for Medicare and Medicaid Services (CMS) has determined that a reasonable compatibility indicator can be used for CMS audit purposes to determine if the attested income information was electronically verified for MAGI cases and MDHHS disagrees that documentation was not maintained to support the eligibility determination. The SOM MiIntegrate system communicates with various State and federal electronic trusted data sources and sends the information from these sources, along with the beneficiaries' attested income, to the SOM MAGI Rules Engine where the MAGI eligibility determination is made. As part of the MAGI eligibility determination, a reasonable compatibility test is completed to determine if beneficiary/applicant attested income is within a specified percentage of the electronic trusted data sources or if the attested and verified income are below the threshold for the applicable program. The results of the MAGI eligibility determination are sent back to MiIntegrate using an Account Transfer (AT) packet that contains the results. MiIntegrate then communicates the results to the SOM MAGI Viewer and Bridges using an AT packet and Bridges stores the AT packet number only that can be used to view the details of the AT packet within the SOM MAGI Viewer. The version of the AT packet within the MAGI Viewer also contains a reasonable compatibility indicator that documents the outcome of the reasonable compatibility test and supports the SOM MAGI Rules Engine eligibility decision. MDHHS stores the AT packet information, including facts essential to the eligibility determination, within MiIntegrate and the MAGI Viewer instead of Bridges to help protect and secure the federal income tax data and unemployment data used for the determination. The AT packet for each individual determination can be retrieved from the MAGI Viewer using the AT packet number stored in each beneficiary's case file within Bridges. MDHHS is not aware of any federal regulations that preclude MDHHS from storing this information in a separate system to help secure the data and restrict access as required by federal and state law. Auditor's Comments to Management Views Regarding the MAGI beneficiary eligibility documentation cited in part b., the CMS's Payment Error Rate Measurement (PERM) Manual indicates if states use electronic verification to verify eligibility elements there should be an indicator in the eligibility system, i.e., Bridges, showing the State verified the element, including the result of the verification. Also, federal regulations 42 CFR 935.914 and 42 CFR 457.965 require MDHHS to maintain facts in the case file to support the eligibility determination. The AT packet number does not include the reasonable compatibility indicator. Therefore, it does not provide sufficient detail within the case file, defined by MDHHS as records captured in Bridges, to demonstrate MDHHS verified the income or the caseworker confirmed the result of the verification. Therefore, the finding stands as written.
FINDING 2024-040 Medicaid Cluster, ALN 93.775, 93.777, and 93.778, Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Eligibility; and Matching, Level of Effort, and Earmarking - Payments on Behalf of Ineligible Beneficiaries See Schedule of Findings and Questioned Costs for chart/table. Condition MDHHS did not ensure beneficiary eligibility was updated in CHAMPS. As a result, MDHHS issued $3,373 for 11 (37%) of 30 payments sampled from a $2,001,375 population of beneficiary payments with no corresponding Medicaid coverage. Criteria Federal regulation 42 CFR 435.1002(b) indicates federal funding is available only for services provided to eligible beneficiaries. Cause MDHHS informed us that because of system issues in Bridges, inaccurate eligibility information from Bridges was interfaced into CHAMPS, resulting in beneficiaries appearing eligible in CHAMPS in error and payments being processed based on that eligibility. Effect MDHHS made payments on behalf of ineligible beneficiaries. The federal grantor agency could issue sanctions or disallowances related to noncompliance. Known Questioned Costs Federal regulation 2 CFR 200.516(a)(3) requires the auditor to report known questioned costs less than $25,000 if it is likely total questioned costs exceed $25,000. • $2,256 - federal share of payments made to providers on behalf of ineligible beneficiaries. • $1,117 - State share of payments made to providers on behalf of ineligible beneficiaries. Recommendation We recommend MDHHS ensure beneficiary eligibility is updated in CHAMPS. Management Views MDHHS agrees with the finding.
FINDING 2024-041 Medicaid Cluster, ALN 93.775, 93.777, and 93.778, Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Eligibility; and Matching, Level of Effort, and Earmarking - Ineligible HHP Payments See Schedule of Findings and Questioned Costs for chart/table. Condition MDHHS did not prevent or timely recover payments, totaling $342, for 3 (20%) of 15 sampled clients who were hospitalized while receiving HHP services and no longer met eligibility requirements. Criteria Federal regulation 42 CFR 435.10 requires MDHHS to specify in its State Plan the groups to whom Medicaid is provided and the conditions of eligibility for individuals in those groups. MDHHS's Medicaid State Plan states it will provide personal care services under HHP. MDHHS has developed the Adult Services Manual (ASM) to further define specific policies and procedures for delivery of Medicaid HHP services. ASM Section 140 prohibits payment for HHP services on days a client is unavailable due to hospitalization, except the caregiver may receive payment of HHP services on the day a client is admitted to a hospital if HHP services were completed before the time the client was admitted to the hospital. Also, ASM Section 140 allows payment for HHP services on the day a client is discharged from the hospital. Cause MDHHS informed us the post-payment review process is complicated by the lag time (up to one year) associated with MDHHS receiving and processing hospital claims and delays in changes to clients' level of care. Also, MDHHS indicated staff oversight impacted the timeliness and accuracy of recoupments. Effect MDHHS paid a total of $342 from October 1, 2023 through September 30, 2024 for sampled clients who did not qualify for HHP services because they were hospitalized. The federal grantor agency could issue sanctions or disallowances related to noncompliance. Known Questioned Costs Federal regulation 2 CFR 200.516(a)(3) requires the auditor to report known questioned costs less than $25,000 if it is likely total questioned costs would exceed $25,000. • $223 - federal share of amounts paid for HHP services while sampled clients were hospitalized. • $119 - State share of costs MDHHS inappropriately used as matching. Recommendation We recommend MDHHS prevent or timely recover payments for HHP services when clients no longer meet eligibility requirements. Management Views MDHHS agrees with the finding.
FINDING 2024-042 Medicaid Cluster, ALN 93.775, 93.777, and 93.778, Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Eligibility; and Matching, Level of Effort, and Earmarking - Ineligible Home Help Assistance See Schedule of Findings and Questioned Costs for chart/table. Condition MDHHS did not obtain an updated medical needs form to ensure the HHP beneficiary met eligibility requirements for 1 of 3 HHP payments sampled. The specified time frame for needed services, as indicated on the beneficiary's initial medical needs form, elapsed before the date of the HHP payment and an updated medical needs form was not completed as of the date of our review. Criteria Federal regulation 42 CFR 435.10 requires MDHHS to specify in its State Plan the groups to whom Medicaid is provided and the conditions of eligibility for individuals in those groups. MDHHS's Medicaid State Plan states it will provide personal care services under the HHP. MDHHS has developed the ASM to further define specific policies and procedures for delivery of Medicaid HHP services. ASM Section 115 requires most HHP clients to obtain certification from a Medicaid-enrolled medical professional of the clients' medical need for services only at the initial opening of a case before qualifying for services unless special circumstances exist, such as the medical needs form has a specified time frame for needed services and the time frame has elapsed. Cause MDHHS informed us it did not consistently track and document when medical needs forms with a specified time frame were expected to expire. Effect MDHHS may have made payments on behalf of an ineligible HHP beneficiary. The federal grantor agency could issue sanctions or disallowances related to noncompliance. Known Questioned Costs Federal regulation 2 CFR 200.516(a)(3) requires the auditor to report known questioned costs less than $25,000 if it is likely total questioned costs would exceed $25,000. • $910 - federal share made to a provider on behalf of an ineligible beneficiary. • $492 - State share of costs MDHHS inappropriately used as matching. Recommendation We recommend MDHHS obtain an updated medical needs form to support beneficiary eligibility for HHP payments. Management Views MDHHS agrees with the finding.
FINDING 2024-012 Medicaid Cluster, ALN 93.775, 93.777, and 93.778 and Children's Health Insurance Program, ALN 93.767 - Beneficiary Eligibility See Schedule of Findings and Questioned Costs for chart/table. Condition MDHHS did not ensure or demonstrate compliance with federal laws and regulations relating to beneficiary eligibility for 7 (12%) of 60 Medicaid and 33 (55%) of 60 CHIP cases. Our review disclosed: a. MDHHS did not determine beneficiary eligibility in accordance with eligibility requirements for 2 (3%) of 60 Medicaid and 10 (17%) of 60 CHIP cases reviewed. b. MDHHS did not maintain case file documentation supporting the beneficiary eligibility determination; examples of documentation include MAGI-based income verification results, other income support, and signed applications for 4 (7%) of 60 Medicaid and 23 (38%) of 60 CHIP cases reviewed. c. MDHHS did not determine beneficiary eligibility within the required time frame for 1 (2%) of 60 Medicaid cases reviewed. Criteria Federal regulations 42 CFR 435.1002(b) and 42 CFR 457.622(d) indicate federal funding is available only for services provided to eligible beneficiaries. Federal regulations 42 CFR 435.914 and 42 CFR 457.965 require case record documentation be maintained to support the eligibility decision. Federal regulations 42 CFR 435.10, 42 CFR 457.50, and 42 CFR 457.70 require MDHHS to specify in its State Plan the groups to whom Medicaid and CHIP are provided and the conditions of eligibility for individuals in those groups. Federal regulation 42 CFR 435.912(c) requires MDHHS to determine eligibility and provide notice of the decision within 90 days for applicants who apply for Medicaid on the basis of disability and 45 days for all other applicants. MDHHS Bridges Administrative Manual 300, The Case Record, indicates a case record includes documents and information related to a given case arranged in a series of packets and contained in a folder identified by a case name, grantee ID, or case number. A case record consists of both paper case records and electronic case files (ECF). The paper case record and ECF contain all forms, documents, and other evidence relevant to the group's current and past eligibility. Unless captured in Bridges the case record must document the facts essential to the eligibility determination and actions taken by the local office regarding the case. Cause MDHHS's internal control and monitoring activities were not sufficient to ensure MDHHS maintained or appropriately considered the required documentation in beneficiaries' case records to support eligibility determinations. Also, MDHHS's internal control did not ensure county/district office caseworkers timely reviewed beneficiaries' case records. Effect We consider this to be a material weakness and material noncompliance because MDHHS may have made payments on behalf of ineligible beneficiaries and because of the 12% Medicaid and 55% CHIP error rates. The federal grantor agency could issue sanctions or disallowances related to noncompliance. Known Questioned Costs Federal regulation 2 CFR 200.516(a)(3) requires the auditor to report known questioned costs less than $25,000 if it is likely total questioned costs would exceed $25,000. • $6,697 - federal share. • $2,299 - State share of costs MDHHS inappropriately used as matching. Recommendations We recommend MDHHS properly consider Medicaid and CHIP eligibility documentation in accordance with eligibility requirements. We also recommend MDHHS maintain documentation to support beneficiary eligibility was determined in accordance with eligibility requirements. We further recommend MDHHS ensure eligibility determinations are made timely. Management Views MDHHS agrees with the identified exceptions for parts a. and c. of the finding. However, MDHHS disagrees that 3 Medicaid cases and 20 Children's Health Insurance Program (CHIP) cases with MAGI determinations cited in part b. did not have case file documentation supporting the beneficiary eligibility determination. The Centers for Medicare and Medicaid Services (CMS) has determined that a reasonable compatibility indicator can be used for CMS audit purposes to determine if the attested income information was electronically verified for MAGI cases and MDHHS disagrees that documentation was not maintained to support the eligibility determination. The SOM MiIntegrate system communicates with various State and federal electronic trusted data sources and sends the information from these sources, along with the beneficiaries' attested income, to the SOM MAGI Rules Engine where the MAGI eligibility determination is made. As part of the MAGI eligibility determination, a reasonable compatibility test is completed to determine if beneficiary/applicant attested income is within a specified percentage of the electronic trusted data sources or if the attested and verified income are below the threshold for the applicable program. The results of the MAGI eligibility determination are sent back to MiIntegrate using an Account Transfer (AT) packet that contains the results. MiIntegrate then communicates the results to the SOM MAGI Viewer and Bridges using an AT packet and Bridges stores the AT packet number only that can be used to view the details of the AT packet within the SOM MAGI Viewer. The version of the AT packet within the MAGI Viewer also contains a reasonable compatibility indicator that documents the outcome of the reasonable compatibility test and supports the SOM MAGI Rules Engine eligibility decision. MDHHS stores the AT packet information, including facts essential to the eligibility determination, within MiIntegrate and the MAGI Viewer instead of Bridges to help protect and secure the federal income tax data and unemployment data used for the determination. The AT packet for each individual determination can be retrieved from the MAGI Viewer using the AT packet number stored in each beneficiary's case file within Bridges. MDHHS is not aware of any federal regulations that preclude MDHHS from storing this information in a separate system to help secure the data and restrict access as required by federal and state law. Auditor's Comments to Management Views Regarding the MAGI beneficiary eligibility documentation cited in part b., the CMS's Payment Error Rate Measurement (PERM) Manual indicates if states use electronic verification to verify eligibility elements there should be an indicator in the eligibility system, i.e., Bridges, showing the State verified the element, including the result of the verification. Also, federal regulations 42 CFR 935.914 and 42 CFR 457.965 require MDHHS to maintain facts in the case file to support the eligibility determination. The AT packet number does not include the reasonable compatibility indicator. Therefore, it does not provide sufficient detail within the case file, defined by MDHHS as records captured in Bridges, to demonstrate MDHHS verified the income or the caseworker confirmed the result of the verification. Therefore, the finding stands as written.
FINDING 2024-040 Medicaid Cluster, ALN 93.775, 93.777, and 93.778, Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Eligibility; and Matching, Level of Effort, and Earmarking - Payments on Behalf of Ineligible Beneficiaries See Schedule of Findings and Questioned Costs for chart/table. Condition MDHHS did not ensure beneficiary eligibility was updated in CHAMPS. As a result, MDHHS issued $3,373 for 11 (37%) of 30 payments sampled from a $2,001,375 population of beneficiary payments with no corresponding Medicaid coverage. Criteria Federal regulation 42 CFR 435.1002(b) indicates federal funding is available only for services provided to eligible beneficiaries. Cause MDHHS informed us that because of system issues in Bridges, inaccurate eligibility information from Bridges was interfaced into CHAMPS, resulting in beneficiaries appearing eligible in CHAMPS in error and payments being processed based on that eligibility. Effect MDHHS made payments on behalf of ineligible beneficiaries. The federal grantor agency could issue sanctions or disallowances related to noncompliance. Known Questioned Costs Federal regulation 2 CFR 200.516(a)(3) requires the auditor to report known questioned costs less than $25,000 if it is likely total questioned costs exceed $25,000. • $2,256 - federal share of payments made to providers on behalf of ineligible beneficiaries. • $1,117 - State share of payments made to providers on behalf of ineligible beneficiaries. Recommendation We recommend MDHHS ensure beneficiary eligibility is updated in CHAMPS. Management Views MDHHS agrees with the finding.
FINDING 2024-041 Medicaid Cluster, ALN 93.775, 93.777, and 93.778, Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Eligibility; and Matching, Level of Effort, and Earmarking - Ineligible HHP Payments See Schedule of Findings and Questioned Costs for chart/table. Condition MDHHS did not prevent or timely recover payments, totaling $342, for 3 (20%) of 15 sampled clients who were hospitalized while receiving HHP services and no longer met eligibility requirements. Criteria Federal regulation 42 CFR 435.10 requires MDHHS to specify in its State Plan the groups to whom Medicaid is provided and the conditions of eligibility for individuals in those groups. MDHHS's Medicaid State Plan states it will provide personal care services under HHP. MDHHS has developed the Adult Services Manual (ASM) to further define specific policies and procedures for delivery of Medicaid HHP services. ASM Section 140 prohibits payment for HHP services on days a client is unavailable due to hospitalization, except the caregiver may receive payment of HHP services on the day a client is admitted to a hospital if HHP services were completed before the time the client was admitted to the hospital. Also, ASM Section 140 allows payment for HHP services on the day a client is discharged from the hospital. Cause MDHHS informed us the post-payment review process is complicated by the lag time (up to one year) associated with MDHHS receiving and processing hospital claims and delays in changes to clients' level of care. Also, MDHHS indicated staff oversight impacted the timeliness and accuracy of recoupments. Effect MDHHS paid a total of $342 from October 1, 2023 through September 30, 2024 for sampled clients who did not qualify for HHP services because they were hospitalized. The federal grantor agency could issue sanctions or disallowances related to noncompliance. Known Questioned Costs Federal regulation 2 CFR 200.516(a)(3) requires the auditor to report known questioned costs less than $25,000 if it is likely total questioned costs would exceed $25,000. • $223 - federal share of amounts paid for HHP services while sampled clients were hospitalized. • $119 - State share of costs MDHHS inappropriately used as matching. Recommendation We recommend MDHHS prevent or timely recover payments for HHP services when clients no longer meet eligibility requirements. Management Views MDHHS agrees with the finding.
FINDING 2024-042 Medicaid Cluster, ALN 93.775, 93.777, and 93.778, Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Eligibility; and Matching, Level of Effort, and Earmarking - Ineligible Home Help Assistance See Schedule of Findings and Questioned Costs for chart/table. Condition MDHHS did not obtain an updated medical needs form to ensure the HHP beneficiary met eligibility requirements for 1 of 3 HHP payments sampled. The specified time frame for needed services, as indicated on the beneficiary's initial medical needs form, elapsed before the date of the HHP payment and an updated medical needs form was not completed as of the date of our review. Criteria Federal regulation 42 CFR 435.10 requires MDHHS to specify in its State Plan the groups to whom Medicaid is provided and the conditions of eligibility for individuals in those groups. MDHHS's Medicaid State Plan states it will provide personal care services under the HHP. MDHHS has developed the ASM to further define specific policies and procedures for delivery of Medicaid HHP services. ASM Section 115 requires most HHP clients to obtain certification from a Medicaid-enrolled medical professional of the clients' medical need for services only at the initial opening of a case before qualifying for services unless special circumstances exist, such as the medical needs form has a specified time frame for needed services and the time frame has elapsed. Cause MDHHS informed us it did not consistently track and document when medical needs forms with a specified time frame were expected to expire. Effect MDHHS may have made payments on behalf of an ineligible HHP beneficiary. The federal grantor agency could issue sanctions or disallowances related to noncompliance. Known Questioned Costs Federal regulation 2 CFR 200.516(a)(3) requires the auditor to report known questioned costs less than $25,000 if it is likely total questioned costs would exceed $25,000. • $910 - federal share made to a provider on behalf of an ineligible beneficiary. • $492 - State share of costs MDHHS inappropriately used as matching. Recommendation We recommend MDHHS obtain an updated medical needs form to support beneficiary eligibility for HHP payments. Management Views MDHHS agrees with the finding.
FINDING 2024-012 Medicaid Cluster, ALN 93.775, 93.777, and 93.778 and Children's Health Insurance Program, ALN 93.767 - Beneficiary Eligibility See Schedule of Findings and Questioned Costs for chart/table. Condition MDHHS did not ensure or demonstrate compliance with federal laws and regulations relating to beneficiary eligibility for 7 (12%) of 60 Medicaid and 33 (55%) of 60 CHIP cases. Our review disclosed: a. MDHHS did not determine beneficiary eligibility in accordance with eligibility requirements for 2 (3%) of 60 Medicaid and 10 (17%) of 60 CHIP cases reviewed. b. MDHHS did not maintain case file documentation supporting the beneficiary eligibility determination; examples of documentation include MAGI-based income verification results, other income support, and signed applications for 4 (7%) of 60 Medicaid and 23 (38%) of 60 CHIP cases reviewed. c. MDHHS did not determine beneficiary eligibility within the required time frame for 1 (2%) of 60 Medicaid cases reviewed. Criteria Federal regulations 42 CFR 435.1002(b) and 42 CFR 457.622(d) indicate federal funding is available only for services provided to eligible beneficiaries. Federal regulations 42 CFR 435.914 and 42 CFR 457.965 require case record documentation be maintained to support the eligibility decision. Federal regulations 42 CFR 435.10, 42 CFR 457.50, and 42 CFR 457.70 require MDHHS to specify in its State Plan the groups to whom Medicaid and CHIP are provided and the conditions of eligibility for individuals in those groups. Federal regulation 42 CFR 435.912(c) requires MDHHS to determine eligibility and provide notice of the decision within 90 days for applicants who apply for Medicaid on the basis of disability and 45 days for all other applicants. MDHHS Bridges Administrative Manual 300, The Case Record, indicates a case record includes documents and information related to a given case arranged in a series of packets and contained in a folder identified by a case name, grantee ID, or case number. A case record consists of both paper case records and electronic case files (ECF). The paper case record and ECF contain all forms, documents, and other evidence relevant to the group's current and past eligibility. Unless captured in Bridges the case record must document the facts essential to the eligibility determination and actions taken by the local office regarding the case. Cause MDHHS's internal control and monitoring activities were not sufficient to ensure MDHHS maintained or appropriately considered the required documentation in beneficiaries' case records to support eligibility determinations. Also, MDHHS's internal control did not ensure county/district office caseworkers timely reviewed beneficiaries' case records. Effect We consider this to be a material weakness and material noncompliance because MDHHS may have made payments on behalf of ineligible beneficiaries and because of the 12% Medicaid and 55% CHIP error rates. The federal grantor agency could issue sanctions or disallowances related to noncompliance. Known Questioned Costs Federal regulation 2 CFR 200.516(a)(3) requires the auditor to report known questioned costs less than $25,000 if it is likely total questioned costs would exceed $25,000. • $6,697 - federal share. • $2,299 - State share of costs MDHHS inappropriately used as matching. Recommendations We recommend MDHHS properly consider Medicaid and CHIP eligibility documentation in accordance with eligibility requirements. We also recommend MDHHS maintain documentation to support beneficiary eligibility was determined in accordance with eligibility requirements. We further recommend MDHHS ensure eligibility determinations are made timely. Management Views MDHHS agrees with the identified exceptions for parts a. and c. of the finding. However, MDHHS disagrees that 3 Medicaid cases and 20 Children's Health Insurance Program (CHIP) cases with MAGI determinations cited in part b. did not have case file documentation supporting the beneficiary eligibility determination. The Centers for Medicare and Medicaid Services (CMS) has determined that a reasonable compatibility indicator can be used for CMS audit purposes to determine if the attested income information was electronically verified for MAGI cases and MDHHS disagrees that documentation was not maintained to support the eligibility determination. The SOM MiIntegrate system communicates with various State and federal electronic trusted data sources and sends the information from these sources, along with the beneficiaries' attested income, to the SOM MAGI Rules Engine where the MAGI eligibility determination is made. As part of the MAGI eligibility determination, a reasonable compatibility test is completed to determine if beneficiary/applicant attested income is within a specified percentage of the electronic trusted data sources or if the attested and verified income are below the threshold for the applicable program. The results of the MAGI eligibility determination are sent back to MiIntegrate using an Account Transfer (AT) packet that contains the results. MiIntegrate then communicates the results to the SOM MAGI Viewer and Bridges using an AT packet and Bridges stores the AT packet number only that can be used to view the details of the AT packet within the SOM MAGI Viewer. The version of the AT packet within the MAGI Viewer also contains a reasonable compatibility indicator that documents the outcome of the reasonable compatibility test and supports the SOM MAGI Rules Engine eligibility decision. MDHHS stores the AT packet information, including facts essential to the eligibility determination, within MiIntegrate and the MAGI Viewer instead of Bridges to help protect and secure the federal income tax data and unemployment data used for the determination. The AT packet for each individual determination can be retrieved from the MAGI Viewer using the AT packet number stored in each beneficiary's case file within Bridges. MDHHS is not aware of any federal regulations that preclude MDHHS from storing this information in a separate system to help secure the data and restrict access as required by federal and state law. Auditor's Comments to Management Views Regarding the MAGI beneficiary eligibility documentation cited in part b., the CMS's Payment Error Rate Measurement (PERM) Manual indicates if states use electronic verification to verify eligibility elements there should be an indicator in the eligibility system, i.e., Bridges, showing the State verified the element, including the result of the verification. Also, federal regulations 42 CFR 935.914 and 42 CFR 457.965 require MDHHS to maintain facts in the case file to support the eligibility determination. The AT packet number does not include the reasonable compatibility indicator. Therefore, it does not provide sufficient detail within the case file, defined by MDHHS as records captured in Bridges, to demonstrate MDHHS verified the income or the caseworker confirmed the result of the verification. Therefore, the finding stands as written.
FINDING 2024-040 Medicaid Cluster, ALN 93.775, 93.777, and 93.778, Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Eligibility; and Matching, Level of Effort, and Earmarking - Payments on Behalf of Ineligible Beneficiaries See Schedule of Findings and Questioned Costs for chart/table. Condition MDHHS did not ensure beneficiary eligibility was updated in CHAMPS. As a result, MDHHS issued $3,373 for 11 (37%) of 30 payments sampled from a $2,001,375 population of beneficiary payments with no corresponding Medicaid coverage. Criteria Federal regulation 42 CFR 435.1002(b) indicates federal funding is available only for services provided to eligible beneficiaries. Cause MDHHS informed us that because of system issues in Bridges, inaccurate eligibility information from Bridges was interfaced into CHAMPS, resulting in beneficiaries appearing eligible in CHAMPS in error and payments being processed based on that eligibility. Effect MDHHS made payments on behalf of ineligible beneficiaries. The federal grantor agency could issue sanctions or disallowances related to noncompliance. Known Questioned Costs Federal regulation 2 CFR 200.516(a)(3) requires the auditor to report known questioned costs less than $25,000 if it is likely total questioned costs exceed $25,000. • $2,256 - federal share of payments made to providers on behalf of ineligible beneficiaries. • $1,117 - State share of payments made to providers on behalf of ineligible beneficiaries. Recommendation We recommend MDHHS ensure beneficiary eligibility is updated in CHAMPS. Management Views MDHHS agrees with the finding.
FINDING 2024-041 Medicaid Cluster, ALN 93.775, 93.777, and 93.778, Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Eligibility; and Matching, Level of Effort, and Earmarking - Ineligible HHP Payments See Schedule of Findings and Questioned Costs for chart/table. Condition MDHHS did not prevent or timely recover payments, totaling $342, for 3 (20%) of 15 sampled clients who were hospitalized while receiving HHP services and no longer met eligibility requirements. Criteria Federal regulation 42 CFR 435.10 requires MDHHS to specify in its State Plan the groups to whom Medicaid is provided and the conditions of eligibility for individuals in those groups. MDHHS's Medicaid State Plan states it will provide personal care services under HHP. MDHHS has developed the Adult Services Manual (ASM) to further define specific policies and procedures for delivery of Medicaid HHP services. ASM Section 140 prohibits payment for HHP services on days a client is unavailable due to hospitalization, except the caregiver may receive payment of HHP services on the day a client is admitted to a hospital if HHP services were completed before the time the client was admitted to the hospital. Also, ASM Section 140 allows payment for HHP services on the day a client is discharged from the hospital. Cause MDHHS informed us the post-payment review process is complicated by the lag time (up to one year) associated with MDHHS receiving and processing hospital claims and delays in changes to clients' level of care. Also, MDHHS indicated staff oversight impacted the timeliness and accuracy of recoupments. Effect MDHHS paid a total of $342 from October 1, 2023 through September 30, 2024 for sampled clients who did not qualify for HHP services because they were hospitalized. The federal grantor agency could issue sanctions or disallowances related to noncompliance. Known Questioned Costs Federal regulation 2 CFR 200.516(a)(3) requires the auditor to report known questioned costs less than $25,000 if it is likely total questioned costs would exceed $25,000. • $223 - federal share of amounts paid for HHP services while sampled clients were hospitalized. • $119 - State share of costs MDHHS inappropriately used as matching. Recommendation We recommend MDHHS prevent or timely recover payments for HHP services when clients no longer meet eligibility requirements. Management Views MDHHS agrees with the finding.
FINDING 2024-042 Medicaid Cluster, ALN 93.775, 93.777, and 93.778, Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Eligibility; and Matching, Level of Effort, and Earmarking - Ineligible Home Help Assistance See Schedule of Findings and Questioned Costs for chart/table. Condition MDHHS did not obtain an updated medical needs form to ensure the HHP beneficiary met eligibility requirements for 1 of 3 HHP payments sampled. The specified time frame for needed services, as indicated on the beneficiary's initial medical needs form, elapsed before the date of the HHP payment and an updated medical needs form was not completed as of the date of our review. Criteria Federal regulation 42 CFR 435.10 requires MDHHS to specify in its State Plan the groups to whom Medicaid is provided and the conditions of eligibility for individuals in those groups. MDHHS's Medicaid State Plan states it will provide personal care services under the HHP. MDHHS has developed the ASM to further define specific policies and procedures for delivery of Medicaid HHP services. ASM Section 115 requires most HHP clients to obtain certification from a Medicaid-enrolled medical professional of the clients' medical need for services only at the initial opening of a case before qualifying for services unless special circumstances exist, such as the medical needs form has a specified time frame for needed services and the time frame has elapsed. Cause MDHHS informed us it did not consistently track and document when medical needs forms with a specified time frame were expected to expire. Effect MDHHS may have made payments on behalf of an ineligible HHP beneficiary. The federal grantor agency could issue sanctions or disallowances related to noncompliance. Known Questioned Costs Federal regulation 2 CFR 200.516(a)(3) requires the auditor to report known questioned costs less than $25,000 if it is likely total questioned costs would exceed $25,000. • $910 - federal share made to a provider on behalf of an ineligible beneficiary. • $492 - State share of costs MDHHS inappropriately used as matching. Recommendation We recommend MDHHS obtain an updated medical needs form to support beneficiary eligibility for HHP payments. Management Views MDHHS agrees with the finding.
FINDING 2024-045 Temporary Assistance for Needy Families, ALN 93.558, Activities Allowed or Unallowed, Allowable Costs/Cost Principles, and Eligibility - Non-Financial Eligibility Documentation See Schedule of Findings and Questioned Costs for chart/table. Condition MDHHS did not obtain or maintain sufficient non-financial case record documentation to support client eligibility for 1 (5%) of 22 sampled TANF-funded assistance payments. In this 1 instance, we noted MDHHS did not ensure the family's case record contained documentation to indicate household individuals were not in violation of their probation or parole requirements related to any offense in order to demonstrate the family was in need of TANF assistance. Criteria Federal regulation 45 CFR 260.20 requires a family be needy in order to be eligible for TANF assistance and job preparation services. Federal regulation 45 CFR 205.60(a) requires MDHHS to maintain records to support eligibility, including facts to support the client's need for assistance. MDHHS's policies and procedures require documentation used to verify eligibility be maintained in the case file. In addition, Subpart E of federal regulation 45 CFR 75 requires costs charged to federal programs be adequately documented, be necessary and reasonable for the administration of the federal award, be in accordance with the relative benefits received by the program, and be consistent with policies and procedures applying to both the federal award and other activities of the state. Cause MDHHS informed us its controls were not sufficient to ensure all of the required verification documentation was appropriately maintained in the client's case record. Effect MDHHS may have made TANF-funded assistance payments to ineligible clients. The federal grantor agency could issue sanctions or disallowances related to noncompliance. Known Questioned Costs Federal regulation 2 CFR 200.516(a)(3) requires the auditor to report known questioned costs less than $25,000 if it is likely total questioned costs would exceed $25,000. • $13 - federally funded. Recommendation We recommend MDHHS obtain and maintain sufficient non-financial case record documentation to support client eligibility for TANF-funded assistance payments. Management Views MDHHS agrees with the finding.
FINDING 2024-046 Temporary Assistance for Needy Families, ALN 93.558, Activities Allowed or Unallowed, Allowable Costs/Cost Principles, and Eligibility - Inappropriate TANF-Funded Emergency Foster Care Assistance See Schedule of Findings and Questioned Costs for chart/table. Condition MDHHS did not appropriately consider a child's circumstances to ensure the child met eligibility requirements for 1 (17%) of 6 sampled TANF-funded emergency foster care case records. Our review disclosed because the child met Foster Care Title IV-E program requirements, the child did not meet TANF eligibility requirements. Criteria MDHHS's TANF State Plan allows MDHHS to use TANF funds for emergency foster care only if such care cannot be provided under Title IV-E. Administration for Children and Families' TANF Program Policy Questions and Answers indicate states may not use federal TANF or State maintenance of effort funds to take the place of any foster care maintenance payments provided under the federal foster care program. In addition, Subpart E of federal regulation 45 CFR 75 requires costs charged to federal programs be necessary and reasonable for the administration of the federal award, be in accordance with the relative benefits received by the program, and be consistent with policies and procedures applying to both the federal award and other activities of the state. Cause MDHHS informed us the child welfare funding specialist did not timely update the funding determination because they were not aware the case manager uploaded the child's birth certificate. Effect MDHHS may have made emergency foster care payments on behalf of a child who did not qualify for TANF federal reimbursement. The federal grantor agency could issue sanctions or disallowances related to noncompliance. Known Questioned Costs Federal regulation 2 CFR 200.516(a)(3) requires the auditor to report known questioned costs less than $25,000 if it is likely total questioned costs would exceed $25,000. • $6,430 - federally funded. Recommendation We recommend MDHHS appropriately consider a child's circumstances to ensure the child meets TANF eligibility requirements. Management Views MDHHS agrees with the finding.
FINDING 2024-050 Refugee and Entrant Assistance State/Replacement Designee Administered Programs, ALN 93.566, Activities Allowed or Unallowed, Allowable Costs/Cost Principles, and Eligibility - Assistance to Ineligible Refugees See Schedule of Findings and Questioned Costs for chart/table. Condition LEO and MDHHS did not ensure compliance with federal laws and regulations relating to client eligibility. Our review disclosed MDHHS did not maintain sufficient documentation of its efforts to evaluate clientsʹ eligibility; examples of documentation include support for the verification of nationality, identification, U.S. entry date, and mandatory work for 22 (55%) of 40 sampled refugee cash assistance payments. Criteria Federal regulations 45 CFR 400.53 and 45 CFR 400.75(a) require refugees to meet general eligibility requirements for refugee cash assistance, including requirements that eligible refugees meet immigration status and identification conditions; reside in the United States less than the eligibility period determined by HHS's Office of Refugee Resettlement; and cannot, without good cause, fail or refuse to meet the work registry requirements. Also, federal regulation 45 CFR 400.28 requires MDHHS provide for the maintenance of operational records as are necessary for federal monitoring of the State's REAP. Federal regulation 45 CFR 75.303 requires the auditee to establish and maintain effective internal control over federal awards that provides reasonable assurance the auditee is managing federal awards in compliance with federal statutes, regulations, and the terms and conditions of federal awards. Cause MDHHS's internal control and monitoring activities were not sufficient to ensure MDHHS maintained or appropriately considered the required verification documentation in clientsʹ case records to support eligibility. Effect We consider this to be a material weakness and material noncompliance because MDHHS may have provided assistance to ineligible clients and because of the overall high error rate. The federal grantor agency could issue sanctions or disallowances related to noncompliance. Known Questioned Costs Federal regulation 2 CFR 200.516(a)(3) requires the auditor to report known questioned costs less than $25,000 if it is likely total questioned costs would exceed $25,000. • $892 - federal share. Recommendation We recommend LEO and MDHHS maintain documentation to support client eligibility was determined in accordance with eligibility requirements. Management Views LEO and MDHHS agree with the finding.
FINDING 2024-055 Low-Income Home Energy Assistance, ALN 93.568, Eligibility - Eligibility Determinations See Schedule of Findings and Questioned Costs for chart/table. Condition MDHHS did not maintain sufficient documentation of its efforts to evaluate client eligibility; examples of documentation include support for the verification of the client's income, client contribution payment, and proof of energy crisis for 11 (26%) of 42 sampled LIHEAP-funded State Emergency Relief (SER) energy payments. Criteria Federal law 42 USC 8624 requires the State to expend funds in accordance with the LIHEAP State Plan and allows MDHHS to use LIHEAP funds to intervene in energy-related crisis situations and assist eligible households to meet the costs of home energy. MDHHS policy requires county/district office caseworkers to verify and include certain income of SER group members during intake in order to determine eligibility for SER energy services. Also, policy, effective through November 30, 2023, states the payment amount must match the amount on the past due or shut-off notice. MDHHS revised its policy, effective November 13, 2023, to indicate the payment should be processed using the most advantageous amount to benefit the client up to the service cap. In addition, policy indicates the client contribution payment or payment by another agency must be verified before authorizing the department's portion of the remaining cost of services. Cause MDHHS's internal control and monitoring activities were not sufficient to ensure county/district office specialists adhered to established policies and procedures. Effect We consider this to be a material weakness and material noncompliance because MDHHS may have made payments on behalf of ineligible recipients and because of the high error rate. The federal grantor agency could issue sanctions or disallowances related to noncompliance. Known Questioned Costs Federal regulation 2 CFR 200.516(a)(3) requires the auditor to report known questioned costs less than $25,000 if it is likely total questioned costs would exceed $25,000. • $4,397- federal share. Recommendation We recommend MDHHS maintain sufficient documentation to support client eligibility for LIHEAP-funded SER energy payments. Management Views MDHHS agrees with the finding.
FINDING 2024-012 Medicaid Cluster, ALN 93.775, 93.777, and 93.778 and Children's Health Insurance Program, ALN 93.767 - Beneficiary Eligibility See Schedule of Findings and Questioned Costs for chart/table. Condition MDHHS did not ensure or demonstrate compliance with federal laws and regulations relating to beneficiary eligibility for 7 (12%) of 60 Medicaid and 33 (55%) of 60 CHIP cases. Our review disclosed: a. MDHHS did not determine beneficiary eligibility in accordance with eligibility requirements for 2 (3%) of 60 Medicaid and 10 (17%) of 60 CHIP cases reviewed. b. MDHHS did not maintain case file documentation supporting the beneficiary eligibility determination; examples of documentation include MAGI-based income verification results, other income support, and signed applications for 4 (7%) of 60 Medicaid and 23 (38%) of 60 CHIP cases reviewed. c. MDHHS did not determine beneficiary eligibility within the required time frame for 1 (2%) of 60 Medicaid cases reviewed. Criteria Federal regulations 42 CFR 435.1002(b) and 42 CFR 457.622(d) indicate federal funding is available only for services provided to eligible beneficiaries. Federal regulations 42 CFR 435.914 and 42 CFR 457.965 require case record documentation be maintained to support the eligibility decision. Federal regulations 42 CFR 435.10, 42 CFR 457.50, and 42 CFR 457.70 require MDHHS to specify in its State Plan the groups to whom Medicaid and CHIP are provided and the conditions of eligibility for individuals in those groups. Federal regulation 42 CFR 435.912(c) requires MDHHS to determine eligibility and provide notice of the decision within 90 days for applicants who apply for Medicaid on the basis of disability and 45 days for all other applicants. MDHHS Bridges Administrative Manual 300, The Case Record, indicates a case record includes documents and information related to a given case arranged in a series of packets and contained in a folder identified by a case name, grantee ID, or case number. A case record consists of both paper case records and electronic case files (ECF). The paper case record and ECF contain all forms, documents, and other evidence relevant to the group's current and past eligibility. Unless captured in Bridges the case record must document the facts essential to the eligibility determination and actions taken by the local office regarding the case. Cause MDHHS's internal control and monitoring activities were not sufficient to ensure MDHHS maintained or appropriately considered the required documentation in beneficiaries' case records to support eligibility determinations. Also, MDHHS's internal control did not ensure county/district office caseworkers timely reviewed beneficiaries' case records. Effect We consider this to be a material weakness and material noncompliance because MDHHS may have made payments on behalf of ineligible beneficiaries and because of the 12% Medicaid and 55% CHIP error rates. The federal grantor agency could issue sanctions or disallowances related to noncompliance. Known Questioned Costs Federal regulation 2 CFR 200.516(a)(3) requires the auditor to report known questioned costs less than $25,000 if it is likely total questioned costs would exceed $25,000. • $6,697 - federal share. • $2,299 - State share of costs MDHHS inappropriately used as matching. Recommendations We recommend MDHHS properly consider Medicaid and CHIP eligibility documentation in accordance with eligibility requirements. We also recommend MDHHS maintain documentation to support beneficiary eligibility was determined in accordance with eligibility requirements. We further recommend MDHHS ensure eligibility determinations are made timely. Management Views MDHHS agrees with the identified exceptions for parts a. and c. of the finding. However, MDHHS disagrees that 3 Medicaid cases and 20 Children's Health Insurance Program (CHIP) cases with MAGI determinations cited in part b. did not have case file documentation supporting the beneficiary eligibility determination. The Centers for Medicare and Medicaid Services (CMS) has determined that a reasonable compatibility indicator can be used for CMS audit purposes to determine if the attested income information was electronically verified for MAGI cases and MDHHS disagrees that documentation was not maintained to support the eligibility determination. The SOM MiIntegrate system communicates with various State and federal electronic trusted data sources and sends the information from these sources, along with the beneficiaries' attested income, to the SOM MAGI Rules Engine where the MAGI eligibility determination is made. As part of the MAGI eligibility determination, a reasonable compatibility test is completed to determine if beneficiary/applicant attested income is within a specified percentage of the electronic trusted data sources or if the attested and verified income are below the threshold for the applicable program. The results of the MAGI eligibility determination are sent back to MiIntegrate using an Account Transfer (AT) packet that contains the results. MiIntegrate then communicates the results to the SOM MAGI Viewer and Bridges using an AT packet and Bridges stores the AT packet number only that can be used to view the details of the AT packet within the SOM MAGI Viewer. The version of the AT packet within the MAGI Viewer also contains a reasonable compatibility indicator that documents the outcome of the reasonable compatibility test and supports the SOM MAGI Rules Engine eligibility decision. MDHHS stores the AT packet information, including facts essential to the eligibility determination, within MiIntegrate and the MAGI Viewer instead of Bridges to help protect and secure the federal income tax data and unemployment data used for the determination. The AT packet for each individual determination can be retrieved from the MAGI Viewer using the AT packet number stored in each beneficiary's case file within Bridges. MDHHS is not aware of any federal regulations that preclude MDHHS from storing this information in a separate system to help secure the data and restrict access as required by federal and state law. Auditor's Comments to Management Views Regarding the MAGI beneficiary eligibility documentation cited in part b., the CMS's Payment Error Rate Measurement (PERM) Manual indicates if states use electronic verification to verify eligibility elements there should be an indicator in the eligibility system, i.e., Bridges, showing the State verified the element, including the result of the verification. Also, federal regulations 42 CFR 935.914 and 42 CFR 457.965 require MDHHS to maintain facts in the case file to support the eligibility determination. The AT packet number does not include the reasonable compatibility indicator. Therefore, it does not provide sufficient detail within the case file, defined by MDHHS as records captured in Bridges, to demonstrate MDHHS verified the income or the caseworker confirmed the result of the verification. Therefore, the finding stands as written.
FINDING 2024-012 Medicaid Cluster, ALN 93.775, 93.777, and 93.778 and Children's Health Insurance Program, ALN 93.767 - Beneficiary Eligibility See Schedule of Findings and Questioned Costs for chart/table. Condition MDHHS did not ensure or demonstrate compliance with federal laws and regulations relating to beneficiary eligibility for 7 (12%) of 60 Medicaid and 33 (55%) of 60 CHIP cases. Our review disclosed: a. MDHHS did not determine beneficiary eligibility in accordance with eligibility requirements for 2 (3%) of 60 Medicaid and 10 (17%) of 60 CHIP cases reviewed. b. MDHHS did not maintain case file documentation supporting the beneficiary eligibility determination; examples of documentation include MAGI-based income verification results, other income support, and signed applications for 4 (7%) of 60 Medicaid and 23 (38%) of 60 CHIP cases reviewed. c. MDHHS did not determine beneficiary eligibility within the required time frame for 1 (2%) of 60 Medicaid cases reviewed. Criteria Federal regulations 42 CFR 435.1002(b) and 42 CFR 457.622(d) indicate federal funding is available only for services provided to eligible beneficiaries. Federal regulations 42 CFR 435.914 and 42 CFR 457.965 require case record documentation be maintained to support the eligibility decision. Federal regulations 42 CFR 435.10, 42 CFR 457.50, and 42 CFR 457.70 require MDHHS to specify in its State Plan the groups to whom Medicaid and CHIP are provided and the conditions of eligibility for individuals in those groups. Federal regulation 42 CFR 435.912(c) requires MDHHS to determine eligibility and provide notice of the decision within 90 days for applicants who apply for Medicaid on the basis of disability and 45 days for all other applicants. MDHHS Bridges Administrative Manual 300, The Case Record, indicates a case record includes documents and information related to a given case arranged in a series of packets and contained in a folder identified by a case name, grantee ID, or case number. A case record consists of both paper case records and electronic case files (ECF). The paper case record and ECF contain all forms, documents, and other evidence relevant to the group's current and past eligibility. Unless captured in Bridges the case record must document the facts essential to the eligibility determination and actions taken by the local office regarding the case. Cause MDHHS's internal control and monitoring activities were not sufficient to ensure MDHHS maintained or appropriately considered the required documentation in beneficiaries' case records to support eligibility determinations. Also, MDHHS's internal control did not ensure county/district office caseworkers timely reviewed beneficiaries' case records. Effect We consider this to be a material weakness and material noncompliance because MDHHS may have made payments on behalf of ineligible beneficiaries and because of the 12% Medicaid and 55% CHIP error rates. The federal grantor agency could issue sanctions or disallowances related to noncompliance. Known Questioned Costs Federal regulation 2 CFR 200.516(a)(3) requires the auditor to report known questioned costs less than $25,000 if it is likely total questioned costs would exceed $25,000. • $6,697 - federal share. • $2,299 - State share of costs MDHHS inappropriately used as matching. Recommendations We recommend MDHHS properly consider Medicaid and CHIP eligibility documentation in accordance with eligibility requirements. We also recommend MDHHS maintain documentation to support beneficiary eligibility was determined in accordance with eligibility requirements. We further recommend MDHHS ensure eligibility determinations are made timely. Management Views MDHHS agrees with the identified exceptions for parts a. and c. of the finding. However, MDHHS disagrees that 3 Medicaid cases and 20 Children's Health Insurance Program (CHIP) cases with MAGI determinations cited in part b. did not have case file documentation supporting the beneficiary eligibility determination. The Centers for Medicare and Medicaid Services (CMS) has determined that a reasonable compatibility indicator can be used for CMS audit purposes to determine if the attested income information was electronically verified for MAGI cases and MDHHS disagrees that documentation was not maintained to support the eligibility determination. The SOM MiIntegrate system communicates with various State and federal electronic trusted data sources and sends the information from these sources, along with the beneficiaries' attested income, to the SOM MAGI Rules Engine where the MAGI eligibility determination is made. As part of the MAGI eligibility determination, a reasonable compatibility test is completed to determine if beneficiary/applicant attested income is within a specified percentage of the electronic trusted data sources or if the attested and verified income are below the threshold for the applicable program. The results of the MAGI eligibility determination are sent back to MiIntegrate using an Account Transfer (AT) packet that contains the results. MiIntegrate then communicates the results to the SOM MAGI Viewer and Bridges using an AT packet and Bridges stores the AT packet number only that can be used to view the details of the AT packet within the SOM MAGI Viewer. The version of the AT packet within the MAGI Viewer also contains a reasonable compatibility indicator that documents the outcome of the reasonable compatibility test and supports the SOM MAGI Rules Engine eligibility decision. MDHHS stores the AT packet information, including facts essential to the eligibility determination, within MiIntegrate and the MAGI Viewer instead of Bridges to help protect and secure the federal income tax data and unemployment data used for the determination. The AT packet for each individual determination can be retrieved from the MAGI Viewer using the AT packet number stored in each beneficiary's case file within Bridges. MDHHS is not aware of any federal regulations that preclude MDHHS from storing this information in a separate system to help secure the data and restrict access as required by federal and state law. Auditor's Comments to Management Views Regarding the MAGI beneficiary eligibility documentation cited in part b., the CMS's Payment Error Rate Measurement (PERM) Manual indicates if states use electronic verification to verify eligibility elements there should be an indicator in the eligibility system, i.e., Bridges, showing the State verified the element, including the result of the verification. Also, federal regulations 42 CFR 935.914 and 42 CFR 457.965 require MDHHS to maintain facts in the case file to support the eligibility determination. The AT packet number does not include the reasonable compatibility indicator. Therefore, it does not provide sufficient detail within the case file, defined by MDHHS as records captured in Bridges, to demonstrate MDHHS verified the income or the caseworker confirmed the result of the verification. Therefore, the finding stands as written.
Criteria: Per Title 2 CFR § 200.516, the auditor must report known questioned costs greater than $25,000 for a Federal program that is not audited as a major program. In addition, Title 2 CFR § 200.303 requires the recipient of federal funds establish and maintain effective internal control over the federal award that provides reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Condition: As part of a review performed by METRO’s internal audit department (METRO IA) over the activities of the vanpool department in fiscal year 2024, METRO IA identified certain questioned costs incurred and reimbursed as part of the Highway Planning and Construction program administered by the Texas Department of Transportation (TXDOT). These questioned costs were communicated by METRO management to TXDOT and they are working with TXDOT on final resolution. The Highway Planning and Construction program was not a major program in fiscal year 2024 subject to a single audit. We did not identify any other similar costs in the major programs tested. Total questioned cost identified through the METRO IA procedures was $262,794. Total expenditures for the Highway Planning and Construction program were $744,358. Cause: The Vanpool department did not have adequate internal controls and processes in place to ensure that department personnel properly understood grant requirements and that program costs were properly calculated and allowable in accordance with the grant agreements. Effect: Certain of the costs incurred and submitted for reimbursement by METRO were unallowable. Auditor’s Recommendation: METRO should establish appropriate processes and controls to guide personnel in the determination of allowable costs in accordance with grant agreements. In particular, management should focus on the processes and controls associated with the vanpool department.
Capital Fund Program Grants Draws Condition: During our audit procedures over revenue recognition for the Capital Fund Program (CFP), we identified drawdowns of federal funds for which the client was unable to provide adequate supporting documentation. Specifically, the expenditures associated with the draw requests lacked invoices, contracts, or other substantiating records to demonstrate that the costs were allowable, allocable, and incurred in accordance with applicable federal requirements. Criteria: Per 2 CFR §200.403 and §200.302, costs charged to federal awards must be adequately documented and supported by source documentation. Additionally, 2 CFR §200.516(a)(3) requires auditors to report known questioned costs exceeding $25,000 for any federal program, even if not selected as a major program. Cause: The deficiency appears to result from inadequate internal controls over documentation retention and grant compliance monitoring for the CFP. Effect: The lack of documentation impairs the auditor’s ability to verify the allowability of expenditures, resulting in known questioned costs exceeding $25,000. Questioned Cost: $90,149 Recommendations: We recommend that management implement procedures to ensure that all draw requests under the CFP are supported by complete and accurate documentation. This includes maintaining invoices, contracts, and payment records that clearly link expenditures to the approved scope of work under the grant. Management Response: Today’s Marlboro County Housing Authority management acknowledges the auditor’s finding that documentation to support certain CFP drawdowns was incomplete or missing and concurs that this represents a failure to comply with Uniform Guidance documentation requirements under 2 CFR §200.302 and §200.403. The Authority recognizes the importance of maintaining complete and accurate supporting records—such as invoices, contracts, and payment documentation—to substantiate costs charged to federal programs and ensure allowability and allocability under the Capital Fund Program. Effective October 1st, 2024, all draw requests under the Capital Fund Program ARE supported by: Approved contracts or purchase orders Invoices or other source documents Proof of payment (e.g., canceled checks, ACH confirmations) Documentation clearly linking each expense to an approved activity in the CFP Annual Statement
Criteria: As a condition of receiving federal awards, the awardee organization must comply with filing the required reports timely, specifically, submission of an audit report within nine months after the end of the audit period. Condition: The entity submitted their audit report eleven months after the end of their audit period September 30, 2023. Cause: The entity has not been able to close their books in a timely manner due to the late submission of vendor invoices. At times their closing has conflicted with the auditor’s availability and therefore, the audit was unable to be completed within the nine month period. Effect: The entity was not in compliance with the deadline for the audit report under 2 CFR 200.516 (a). Questioned costs: None Reported Context/Sampling: None Reported Repeat Finding from Prior Year: Yes 2023-001 Recommendation: We recommend that management communicate with their vendors to assure that timely invoices are submitted and that a strict timeline for completion of the audit is adhered to. Views of Responsible Officials: The entity has implemented wording in their vendor contracts that they will not honor invoices that are more than 90 days out.
Criteria: As a condition of receiving federal awards, the awardee organization must comply with filing the required reports timely, specifically, submission of an audit report within nine months after the end of the audit period. Condition: The entity submitted their audit report eleven months after the end of their audit period September 30, 2023. Cause: The entity has not been able to close their books in a timely manner due to the late submission of vendor invoices. At times their closing has conflicted with the auditor’s availability and therefore, the audit was unable to be completed within the nine month period. Effect: The entity was not in compliance with the deadline for the audit report under 2 CFR 200.516 (a). Questioned costs: None Reported Context/Sampling: None Reported Repeat Finding from Prior Year: Yes 2023-001 Recommendation: We recommend that management communicate with their vendors to assure that timely invoices are submitted and that a strict timeline for completion of the audit is adhered to. Views of Responsible Officials: The entity has implemented wording in their vendor contracts that they will not honor invoices that are more than 90 days out.
Criteria: As a condition of receiving federal awards, the awardee organization must comply with filing the required reports timely, specifically, submission of an audit report within nine months after the end of the audit period. Condition: The entity submitted their audit report eleven months after the end of their audit period September 30, 2023. Cause: The entity has not been able to close their books in a timely manner due to the late submission of vendor invoices. At times their closing has conflicted with the auditor’s availability and therefore, the audit was unable to be completed within the nine month period. Effect: The entity was not in compliance with the deadline for the audit report under 2 CFR 200.516 (a). Questioned costs: None Reported Context/Sampling: None Reported Repeat Finding from Prior Year: Yes 2023-001 Recommendation: We recommend that management communicate with their vendors to assure that timely invoices are submitted and that a strict timeline for completion of the audit is adhered to. Views of Responsible Officials: The entity has implemented wording in their vendor contracts that they will not honor invoices that are more than 90 days out.
Criteria: As a condition of receiving federal awards, the awardee organization must comply with filing the required reports timely, specifically, submission of an audit report within nine months after the end of the audit period. Condition: The entity submitted their audit report eleven months after the end of their audit period September 30, 2023. Cause: The entity has not been able to close their books in a timely manner due to the late submission of vendor invoices. At times their closing has conflicted with the auditor’s availability and therefore, the audit was unable to be completed within the nine month period. Effect: The entity was not in compliance with the deadline for the audit report under 2 CFR 200.516 (a). Questioned costs: None Reported Context/Sampling: None Reported Repeat Finding from Prior Year: Yes 2023-001 Recommendation: We recommend that management communicate with their vendors to assure that timely invoices are submitted and that a strict timeline for completion of the audit is adhered to. Views of Responsible Officials: The entity has implemented wording in their vendor contracts that they will not honor invoices that are more than 90 days out.
Criteria: As a condition of receiving federal awards, the awardee organization must comply with filing the required reports timely, specifically, submission of an audit report within nine months after the end of the audit period. Condition: The entity submitted their audit report eleven months after the end of their audit period September 30, 2023. Cause: The entity has not been able to close their books in a timely manner due to the late submission of vendor invoices. At times their closing has conflicted with the auditor’s availability and therefore, the audit was unable to be completed within the nine month period. Effect: The entity was not in compliance with the deadline for the audit report under 2 CFR 200.516 (a). Questioned costs: None Reported Context/Sampling: None Reported Repeat Finding from Prior Year: Yes 2023-001 Recommendation: We recommend that management communicate with their vendors to assure that timely invoices are submitted and that a strict timeline for completion of the audit is adhered to. Views of Responsible Officials: The entity has implemented wording in their vendor contracts that they will not honor invoices that are more than 90 days out.
Criteria: As a condition of receiving federal awards, the awardee organization must comply with filing the required reports timely, specifically, submission of an audit report within nine months after the end of the audit period. Condition: The entity submitted their audit report eleven months after the end of their audit period September 30, 2023. Cause: The entity has not been able to close their books in a timely manner due to the late submission of vendor invoices. At times their closing has conflicted with the auditor’s availability and therefore, the audit was unable to be completed within the nine month period. Effect: The entity was not in compliance with the deadline for the audit report under 2 CFR 200.516 (a). Questioned costs: None Reported Context/Sampling: None Reported Repeat Finding from Prior Year: Yes 2023-001 Recommendation: We recommend that management communicate with their vendors to assure that timely invoices are submitted and that a strict timeline for completion of the audit is adhered to. Views of Responsible Officials: The entity has implemented wording in their vendor contracts that they will not honor invoices that are more than 90 days out.
Criteria: As a condition of receiving federal awards, the awardee organization must comply with filing the required reports timely, specifically, submission of an audit report within nine months after the end of the audit period. Condition: The entity submitted their audit report eleven months after the end of their audit period September 30, 2023. Cause: The entity has not been able to close their books in a timely manner due to the late submission of vendor invoices. At times their closing has conflicted with the auditor’s availability and therefore, the audit was unable to be completed within the nine month period. Effect: The entity was not in compliance with the deadline for the audit report under 2 CFR 200.516 (a). Questioned costs: None Reported Context/Sampling: None Reported Repeat Finding from Prior Year: Yes 2023-001 Recommendation: We recommend that management communicate with their vendors to assure that timely invoices are submitted and that a strict timeline for completion of the audit is adhered to. Views of Responsible Officials: The entity has implemented wording in their vendor contracts that they will not honor invoices that are more than 90 days out.
Criteria: As a condition of receiving federal awards, the awardee organization must comply with filing the required reports timely, specifically, submission of an audit report within nine months after the end of the audit period. Condition: The entity submitted their audit report eleven months after the end of their audit period September 30, 2023. Cause: The entity has not been able to close their books in a timely manner due to the late submission of vendor invoices. At times their closing has conflicted with the auditor’s availability and therefore, the audit was unable to be completed within the nine month period. Effect: The entity was not in compliance with the deadline for the audit report under 2 CFR 200.516 (a). Questioned costs: None Reported Context/Sampling: None Reported Repeat Finding from Prior Year: Yes 2023-001 Recommendation: We recommend that management communicate with their vendors to assure that timely invoices are submitted and that a strict timeline for completion of the audit is adhered to. Views of Responsible Officials: The entity has implemented wording in their vendor contracts that they will not honor invoices that are more than 90 days out.
Criteria: As a condition of receiving federal awards, the awardee organization must comply with filing the required reports timely, specifically, submission of an audit report within nine months after the end of the audit period. Condition: The entity submitted their audit report eleven months after the end of their audit period September 30, 2023. Cause: The entity has not been able to close their books in a timely manner due to the late submission of vendor invoices. At times their closing has conflicted with the auditor’s availability and therefore, the audit was unable to be completed within the nine month period. Effect: The entity was not in compliance with the deadline for the audit report under 2 CFR 200.516 (a). Questioned costs: None Reported Context/Sampling: None Reported Repeat Finding from Prior Year: Yes 2023-001 Recommendation: We recommend that management communicate with their vendors to assure that timely invoices are submitted and that a strict timeline for completion of the audit is adhered to. Views of Responsible Officials: The entity has implemented wording in their vendor contracts that they will not honor invoices that are more than 90 days out.
Finding 2024-002: Overdrawn Federal Funding Compliance Requirements: Cash Management; Reporting Type: Material Weakness in Internal Control over Compliance and Material Noncompliance Federal Agency: Corporation for National and Community Service AL Numbers and Titles: 94.006 – AmeriCorps National Federal Award Number: 22NDHGA003 Questioned Costs: $748,053 Repeat Finding: No Criteria: Under 2 CFR § 200.305(b), federal funds must be drawn only as needed to meet the immediate cash requirements of the program. Recipients must minimize the time between the transfer of funds and disbursement. Per 2 CFR § 200.516(c), the auditor must report known questioned costs greater than $25,000 for a federal program, even if the program is not audited as a major program. Condition: As of September 30, 2024, NACDD has overdrawn a total of $748,053 in excess of expenditures to date in federal funds under the AmeriCorps grant. The overdrawn amount remained outstanding at year-end and had not been repaid or offset by additional allowable expenditures as of the date of this report. Cause: The overdrawn funds were caused by a failure in internal processes for reconciling drawdowns to actual expenditures. The drawdown analysis file used to request funds was corrupted, and no compensating control was in place to detect or prevent overdraws. Furthermore, NACDD did not implement timely corrective action after identifying the issue, and their internal control processes did not ensure compliance with federal cash management regulations. Additionally, Federal Financial Reports (FFRs) submitted by the organization did not accurately reflect actual allowable expenditures, and overstated cumulative grant activity. There was no timely reconciliation between the organization’s accounting records and amounts reported to the granting agency, as required. Effect: NACDD is in violation of federal cash management requirements, having drawn down $748,053 more in federal funds than expended as of year-end. This represents questioned costs and could result in a requirement to return funds to the granting agency. This issue exposes the organization to noncompliance risk and potential findings by federal oversight agencies. Additionally, incorrect reporting on the FFRs may have misled the grantor regarding the organization’s use of federal funds and the timing of expenditures. This constitutes a noncompliance with the Reporting requirement under 2 CFR 200.327–328, and calls into question the accuracy and completeness of required grantor submissions. Recommendation: We recommend that NACDD take immediate steps to address the overdrawn federal funds of $748,053 related to AmeriCorps grant by either remitting the excess to the granting agency or applying eligible FY25 expenditures, if allowable. To prevent recurrence, NACDD should implement formal monthly reconciliation procedures to ensure that all federal drawdowns are fully supported by actual expenditures recorded in the general ledger. Additionally, internal controls over financial reporting should be strengthened to ensure that amounts reported on the Federal Financial Reports (FFRs) and AmeriCorps’ eGrants system are accurate and agree to supporting records. Staff responsible for grant compliance should receive training on Uniform Guidance requirements, particularly those related to allowable costs, cash management, and reporting. Finally, NACDD should conduct a retrospective review of prior reports submitted to AmeriCorps for this project to assess whether corrections or disclosures are necessary and notify the grantor as appropriate. Views of Responsible Officials Corrective Actions: Management agrees with this finding. Please refer to the Corrective Action Plan.
Finding 2024-001: Known questioned costs related to eligibility Major Program: Housing Choice Voucher Program Federal Agency: U.S. Department of Housing and Urban Development Assistant Listing Number: 14.871 Criteria: The OMB Compliance Supplement for the Housing Choice Voucher Program (HCVP) states that the HCVP regulations are found in 24 CFR parts 5, 982, 983, and 985. 24 CFR 982.306(d) states that “The PHA must not approve a unit if the owner is the parent, child, grandparent, grandchild, sister, or brother of any member of the family, unless the PHA determines that approving the unit would provide reasonable accommodation for a family member who is a person with disabilities. This restriction against PHA approval of a unit only applies at the time a family initially receives tenant-based assistance for occupancy of a particular unit but does not apply to PHA approval of a new tenancy with continued tenant-based assistance in the same unit.” 2 CFR 200.516(a)(3) requires an audit finding to be reported for known questioned costs that are greater than $25,000 for a type of compliance requirement for a major program. Condition: As a result of our audit of the HCVP eligibility compliance requirement, it was noted that one (1) out of forty (40) participants reviewed did not meet the eligibility requirement because the tenant was a relative of the owner of the unit. Homeowner’s may apply for a reasonable accommodation for a family member who is a person with disabilities, however the owner did not request a reasonable accommodation. The owner and tenant were approved in May 2018, and payments began in June 2018. Cause: The City approved a housing choice voucher to a tenant that was ineligible due to being a relative of the owner because the City was unaware of the relationship between the owner and tenant upon approval of the housing choice voucher. The was unaware of the unallowed relationship because the owner and tenant certified that they were not related by signing the HUD-52517 form Request for Tenancy Approval that includes an owner’s certification that the owner is not the parent, child, grandparent, grandchild, sister or brother of any member of the family, unless the PHA has determined (and has notified the owner and the family of such determination) that approving leasing of the unit, notwithstanding such relationship, would provide reasonable accommodation for a family member who is a person with disabilities. Effect or Potential Effect: The City issued payments for a housing choice voucher to an ineligible owner and tenant since June 2018. Known Questioned Costs: $69,019 from June 2018 through September 2024. Current fiscal year known questioned costs were $11,712. The questioned costs are all payments made to the owner on behalf of the tenant mentioned above. Context: The auditor believes that the audit finding is an isolated instance and not a systemic problem. The City has appropriate internal controls, including inquiry of applicants as to whether they are related and obtains signed certifications that the owner and tenant are not related. In addition, the relationship was discovered through procedures that are not required by the Department of Housing and Urban Development. The finding was due to misrepresentations provided by the owner and tenant, and through other audit procedures there were no indications that this was a systematic issue. The sample selected was a valid sample and the City is still in overall compliance with the eligibility requirement for the HCVP major program. Repeat finding: No Recommendation: We recommend the City continue to clearly communicate to housing owners that they cannot rent to relatives, and to implement additional procedures over eligibility compliance on a sample basis going forward with regards to potential ineligible relationships between the owner and tenant. Examples of potential additional procedures include internet searches of the owner and tenant. View of Responsible Officials: See corrective action plan on page 9
Finding 2024-001: Significant Deficiency and known questioned costs related to activities allowed or unallowed and allowable costs/cost principles Major Program: HOME Investment Partnership Program Federal Agency: U.S. Department of Housing and Urban Development Assistant Listing Number: 14.239 Criteria: The City is responsible for ensuring compliance with all applicable provisions of the HOME Investment Partnerships Program (HOME) as prescribed by the U.S. Department of Housing and Urban Development. According to requirements included in the OMB Compliance Supplement, all HOME Funds may be used by participating jurisdictions to provide for: (a) incentives to develop and support affordable rental housing and homeownership affordability through the acquisition, new construction, reconstruction, or rehabilitation of non-luxury housing with suitable amenities, including real property acquisition, site improvements, conversion, demolition, and other expenses, including financing costs, relocation expenses of any displaced persons, families, businesses, or organizations; (b) tenant-based rental assistance, including security deposits; (c) the payment of reasonable administrative and planning costs; and (d) the payment of operating expenses of Community Housing Development Organizations (CHDOs). The housing must be permanent or transitional. The acquisition of vacant land or demolition can only be undertaken with respect to a particular housing project intended to provide affordable housing, and when construction is expected to begin within 12 months. Conversion of an existing structure to affordable housing is rehabilitation unless certain circumstances exist. Manufactured housing may be purchased or rehabilitated and the land upon which it is built may be purchased with HOME funds. HOME funds may be used to pay for development construction hard costs, refinancing costs, acquisition costs, related soft costs, CHDO costs, relocation costs, and costs related to the repayment of loans (24 CFR sections 92.205(a) and 92.206).” 2 CFR 200.516(a)(3) requires an audit finding to be reported for known questioned costs that are greater than $25,000 for a type of compliance requirement for a major program. Condition and Context: During testing of HOME activities allowed or unallowed and allowable costs/cost principles (AB) compliance requirements, it was noted that one (1) out of thirty-nine (39) disbursement transactions reviewed did not meet the AB compliance requirements. 2 CFR 200.305(b)(8) states that “a payment must not be made to a recipient or subrecipient for amounts that the recipient or subrecipient withholds from contractors to assure satisfactory completion of work. Payment must be made when the recipient or subrecipient disburses the withheld funds to the contractors or to escrow accounts established to ensure satisfactory completion of work.” The City requested reimbursement for retainage amounts that were not released as of September 30, 2024. Cause: The City had turnover in the project manager department related to HOME construction projects. The project manager turnover caused a miscommunication between the project managers and grant accounting employees which resulted in the request for reimbursement of retainage that had not yet been paid by the City. Effect or Potential Effect: The City received grant reimbursements related to expenditures that were not paid as of September 30, 2025. Known Questioned Costs: $112,539 from October 1st, 2023 through September 30th, 2024. These are for all projects that retainage was requested for reimbursement but the retainage was not released as of September 30, 2024. Repeat Finding: No Recommendation: We recommend the City continue to train its employees to on allowable activities and costs related to the HOME grant. View of Responsible Officials: See Corrective Action Plan on page 10
FINDING 2024-033 CCDF Cluster, ALN 93.575 and 93.596, Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Eligibility; and Matching, Level of Effort, and Earmarking - Client Eligibility See Schedule of Findings and Questioned Costs for chart/table. Condition MiLEAP and MDHHS did not ensure compliance with federal laws and regulations relating to client eligibility for CCDF Cluster child care payments for 5 (8%) of the 60 cases we reviewed. Our review disclosed: a. MDHHS case record documentation was inconsistent with client eligibility information entered in Bridges for 5 (8%) of 60 cases reviewed. For these cases, the authorized hours of care in Bridges exceeded the client's documented need for hours of child care services. b. MDHHS did not appropriately categorize the client's eligibility based on the supporting documentation in the case record for 1 (2%) of 60 cases reviewed, which is also reported in part a. We determined this did not affect the client's eligibility for child care services or level of benefits. Criteria Federal regulation 45 CFR 98.20 provides eligibility requirements for child care services and permits MiLEAP to establish eligibility requirements in addition to those outlined in the section as long as the additional requirements are not in violation of the regulation. Federal regulation 45 CFR 98.16(i)(5) requires MiLEAP identify additional eligibility requirements in its CCDF State Plan. MiLEAP's CCDF State Plan for Federal Fiscal Years 2022-2024 provides specific requirements for client, child, and provider eligibility. Also, CCDF program policy deems clients are either income eligible or categorically eligible if they participate in certain other programs such as Foster Care - Title IV. The client's income or categorical eligibility determines the client's level of benefits, and the child must be assigned to an eligible provider. Federal regulation 45 CFR 98.55 allows states to claim expenditures to be matched at the FMAP rate for allowable activities, as described in the approved state plan. In order to receive federal matching funds for a fiscal year, states must also expend an amount of nonfederal funds for child care activities in the state at least equal to the state's share of expenditures for the fiscal years 1994 or 1995 (whichever is greater) under Sections 402(g) and 402(i) of the federal Social Security Act as these sections were in effect before October 1, 1995, and the expenditures must be for allowable services or activities, as described in the approved state plan. Cause MDHHS informed us its internal control and monitoring activities were not sufficient to ensure MDHHS maintained or appropriately considered all required verification documentation in the client's case record to support eligibility. Effect MiLEAP may have made payments on behalf of ineligible clients. The federal grantor agency could issue sanctions or disallowances related to noncompliance. Known Questioned Costs Federal regulation 2 CFR 200.516(a)(3) requires the auditor to report known questioned costs less than $25,000 if it is likely total questioned costs would exceed $25,000. • $586 - federal share. • $257 - State share of costs MiLEAP inappropriately used as matching. Recommendation We recommend MiLEAP and MDHHS maintain sufficient documentation and ensure Bridges appropriately reflects documentation to support client eligibility was determined in accordance with eligibility requirements. Management Views MiLEAP and MDHHS agree with the finding.
FINDING 2024-033 CCDF Cluster, ALN 93.575 and 93.596, Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Eligibility; and Matching, Level of Effort, and Earmarking - Client Eligibility See Schedule of Findings and Questioned Costs for chart/table. Condition MiLEAP and MDHHS did not ensure compliance with federal laws and regulations relating to client eligibility for CCDF Cluster child care payments for 5 (8%) of the 60 cases we reviewed. Our review disclosed: a. MDHHS case record documentation was inconsistent with client eligibility information entered in Bridges for 5 (8%) of 60 cases reviewed. For these cases, the authorized hours of care in Bridges exceeded the client's documented need for hours of child care services. b. MDHHS did not appropriately categorize the client's eligibility based on the supporting documentation in the case record for 1 (2%) of 60 cases reviewed, which is also reported in part a. We determined this did not affect the client's eligibility for child care services or level of benefits. Criteria Federal regulation 45 CFR 98.20 provides eligibility requirements for child care services and permits MiLEAP to establish eligibility requirements in addition to those outlined in the section as long as the additional requirements are not in violation of the regulation. Federal regulation 45 CFR 98.16(i)(5) requires MiLEAP identify additional eligibility requirements in its CCDF State Plan. MiLEAP's CCDF State Plan for Federal Fiscal Years 2022-2024 provides specific requirements for client, child, and provider eligibility. Also, CCDF program policy deems clients are either income eligible or categorically eligible if they participate in certain other programs such as Foster Care - Title IV. The client's income or categorical eligibility determines the client's level of benefits, and the child must be assigned to an eligible provider. Federal regulation 45 CFR 98.55 allows states to claim expenditures to be matched at the FMAP rate for allowable activities, as described in the approved state plan. In order to receive federal matching funds for a fiscal year, states must also expend an amount of nonfederal funds for child care activities in the state at least equal to the state's share of expenditures for the fiscal years 1994 or 1995 (whichever is greater) under Sections 402(g) and 402(i) of the federal Social Security Act as these sections were in effect before October 1, 1995, and the expenditures must be for allowable services or activities, as described in the approved state plan. Cause MDHHS informed us its internal control and monitoring activities were not sufficient to ensure MDHHS maintained or appropriately considered all required verification documentation in the client's case record to support eligibility. Effect MiLEAP may have made payments on behalf of ineligible clients. The federal grantor agency could issue sanctions or disallowances related to noncompliance. Known Questioned Costs Federal regulation 2 CFR 200.516(a)(3) requires the auditor to report known questioned costs less than $25,000 if it is likely total questioned costs would exceed $25,000. • $586 - federal share. • $257 - State share of costs MiLEAP inappropriately used as matching. Recommendation We recommend MiLEAP and MDHHS maintain sufficient documentation and ensure Bridges appropriately reflects documentation to support client eligibility was determined in accordance with eligibility requirements. Management Views MiLEAP and MDHHS agree with the finding.
FINDING 2024-033 CCDF Cluster, ALN 93.575 and 93.596, Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Eligibility; and Matching, Level of Effort, and Earmarking - Client Eligibility See Schedule of Findings and Questioned Costs for chart/table. Condition MiLEAP and MDHHS did not ensure compliance with federal laws and regulations relating to client eligibility for CCDF Cluster child care payments for 5 (8%) of the 60 cases we reviewed. Our review disclosed: a. MDHHS case record documentation was inconsistent with client eligibility information entered in Bridges for 5 (8%) of 60 cases reviewed. For these cases, the authorized hours of care in Bridges exceeded the client's documented need for hours of child care services. b. MDHHS did not appropriately categorize the client's eligibility based on the supporting documentation in the case record for 1 (2%) of 60 cases reviewed, which is also reported in part a. We determined this did not affect the client's eligibility for child care services or level of benefits. Criteria Federal regulation 45 CFR 98.20 provides eligibility requirements for child care services and permits MiLEAP to establish eligibility requirements in addition to those outlined in the section as long as the additional requirements are not in violation of the regulation. Federal regulation 45 CFR 98.16(i)(5) requires MiLEAP identify additional eligibility requirements in its CCDF State Plan. MiLEAP's CCDF State Plan for Federal Fiscal Years 2022-2024 provides specific requirements for client, child, and provider eligibility. Also, CCDF program policy deems clients are either income eligible or categorically eligible if they participate in certain other programs such as Foster Care - Title IV. The client's income or categorical eligibility determines the client's level of benefits, and the child must be assigned to an eligible provider. Federal regulation 45 CFR 98.55 allows states to claim expenditures to be matched at the FMAP rate for allowable activities, as described in the approved state plan. In order to receive federal matching funds for a fiscal year, states must also expend an amount of nonfederal funds for child care activities in the state at least equal to the state's share of expenditures for the fiscal years 1994 or 1995 (whichever is greater) under Sections 402(g) and 402(i) of the federal Social Security Act as these sections were in effect before October 1, 1995, and the expenditures must be for allowable services or activities, as described in the approved state plan. Cause MDHHS informed us its internal control and monitoring activities were not sufficient to ensure MDHHS maintained or appropriately considered all required verification documentation in the client's case record to support eligibility. Effect MiLEAP may have made payments on behalf of ineligible clients. The federal grantor agency could issue sanctions or disallowances related to noncompliance. Known Questioned Costs Federal regulation 2 CFR 200.516(a)(3) requires the auditor to report known questioned costs less than $25,000 if it is likely total questioned costs would exceed $25,000. • $586 - federal share. • $257 - State share of costs MiLEAP inappropriately used as matching. Recommendation We recommend MiLEAP and MDHHS maintain sufficient documentation and ensure Bridges appropriately reflects documentation to support client eligibility was determined in accordance with eligibility requirements. Management Views MiLEAP and MDHHS agree with the finding.
FINDING 2024-012 Medicaid Cluster, ALN 93.775, 93.777, and 93.778 and Children's Health Insurance Program, ALN 93.767 - Beneficiary Eligibility See Schedule of Findings and Questioned Costs for chart/table. Condition MDHHS did not ensure or demonstrate compliance with federal laws and regulations relating to beneficiary eligibility for 7 (12%) of 60 Medicaid and 33 (55%) of 60 CHIP cases. Our review disclosed: a. MDHHS did not determine beneficiary eligibility in accordance with eligibility requirements for 2 (3%) of 60 Medicaid and 10 (17%) of 60 CHIP cases reviewed. b. MDHHS did not maintain case file documentation supporting the beneficiary eligibility determination; examples of documentation include MAGI-based income verification results, other income support, and signed applications for 4 (7%) of 60 Medicaid and 23 (38%) of 60 CHIP cases reviewed. c. MDHHS did not determine beneficiary eligibility within the required time frame for 1 (2%) of 60 Medicaid cases reviewed. Criteria Federal regulations 42 CFR 435.1002(b) and 42 CFR 457.622(d) indicate federal funding is available only for services provided to eligible beneficiaries. Federal regulations 42 CFR 435.914 and 42 CFR 457.965 require case record documentation be maintained to support the eligibility decision. Federal regulations 42 CFR 435.10, 42 CFR 457.50, and 42 CFR 457.70 require MDHHS to specify in its State Plan the groups to whom Medicaid and CHIP are provided and the conditions of eligibility for individuals in those groups. Federal regulation 42 CFR 435.912(c) requires MDHHS to determine eligibility and provide notice of the decision within 90 days for applicants who apply for Medicaid on the basis of disability and 45 days for all other applicants. MDHHS Bridges Administrative Manual 300, The Case Record, indicates a case record includes documents and information related to a given case arranged in a series of packets and contained in a folder identified by a case name, grantee ID, or case number. A case record consists of both paper case records and electronic case files (ECF). The paper case record and ECF contain all forms, documents, and other evidence relevant to the group's current and past eligibility. Unless captured in Bridges the case record must document the facts essential to the eligibility determination and actions taken by the local office regarding the case. Cause MDHHS's internal control and monitoring activities were not sufficient to ensure MDHHS maintained or appropriately considered the required documentation in beneficiaries' case records to support eligibility determinations. Also, MDHHS's internal control did not ensure county/district office caseworkers timely reviewed beneficiaries' case records. Effect We consider this to be a material weakness and material noncompliance because MDHHS may have made payments on behalf of ineligible beneficiaries and because of the 12% Medicaid and 55% CHIP error rates. The federal grantor agency could issue sanctions or disallowances related to noncompliance. Known Questioned Costs Federal regulation 2 CFR 200.516(a)(3) requires the auditor to report known questioned costs less than $25,000 if it is likely total questioned costs would exceed $25,000. • $6,697 - federal share. • $2,299 - State share of costs MDHHS inappropriately used as matching. Recommendations We recommend MDHHS properly consider Medicaid and CHIP eligibility documentation in accordance with eligibility requirements. We also recommend MDHHS maintain documentation to support beneficiary eligibility was determined in accordance with eligibility requirements. We further recommend MDHHS ensure eligibility determinations are made timely. Management Views MDHHS agrees with the identified exceptions for parts a. and c. of the finding. However, MDHHS disagrees that 3 Medicaid cases and 20 Children's Health Insurance Program (CHIP) cases with MAGI determinations cited in part b. did not have case file documentation supporting the beneficiary eligibility determination. The Centers for Medicare and Medicaid Services (CMS) has determined that a reasonable compatibility indicator can be used for CMS audit purposes to determine if the attested income information was electronically verified for MAGI cases and MDHHS disagrees that documentation was not maintained to support the eligibility determination. The SOM MiIntegrate system communicates with various State and federal electronic trusted data sources and sends the information from these sources, along with the beneficiaries' attested income, to the SOM MAGI Rules Engine where the MAGI eligibility determination is made. As part of the MAGI eligibility determination, a reasonable compatibility test is completed to determine if beneficiary/applicant attested income is within a specified percentage of the electronic trusted data sources or if the attested and verified income are below the threshold for the applicable program. The results of the MAGI eligibility determination are sent back to MiIntegrate using an Account Transfer (AT) packet that contains the results. MiIntegrate then communicates the results to the SOM MAGI Viewer and Bridges using an AT packet and Bridges stores the AT packet number only that can be used to view the details of the AT packet within the SOM MAGI Viewer. The version of the AT packet within the MAGI Viewer also contains a reasonable compatibility indicator that documents the outcome of the reasonable compatibility test and supports the SOM MAGI Rules Engine eligibility decision. MDHHS stores the AT packet information, including facts essential to the eligibility determination, within MiIntegrate and the MAGI Viewer instead of Bridges to help protect and secure the federal income tax data and unemployment data used for the determination. The AT packet for each individual determination can be retrieved from the MAGI Viewer using the AT packet number stored in each beneficiary's case file within Bridges. MDHHS is not aware of any federal regulations that preclude MDHHS from storing this information in a separate system to help secure the data and restrict access as required by federal and state law. Auditor's Comments to Management Views Regarding the MAGI beneficiary eligibility documentation cited in part b., the CMS's Payment Error Rate Measurement (PERM) Manual indicates if states use electronic verification to verify eligibility elements there should be an indicator in the eligibility system, i.e., Bridges, showing the State verified the element, including the result of the verification. Also, federal regulations 42 CFR 935.914 and 42 CFR 457.965 require MDHHS to maintain facts in the case file to support the eligibility determination. The AT packet number does not include the reasonable compatibility indicator. Therefore, it does not provide sufficient detail within the case file, defined by MDHHS as records captured in Bridges, to demonstrate MDHHS verified the income or the caseworker confirmed the result of the verification. Therefore, the finding stands as written.
FINDING 2024-040 Medicaid Cluster, ALN 93.775, 93.777, and 93.778, Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Eligibility; and Matching, Level of Effort, and Earmarking - Payments on Behalf of Ineligible Beneficiaries See Schedule of Findings and Questioned Costs for chart/table. Condition MDHHS did not ensure beneficiary eligibility was updated in CHAMPS. As a result, MDHHS issued $3,373 for 11 (37%) of 30 payments sampled from a $2,001,375 population of beneficiary payments with no corresponding Medicaid coverage. Criteria Federal regulation 42 CFR 435.1002(b) indicates federal funding is available only for services provided to eligible beneficiaries. Cause MDHHS informed us that because of system issues in Bridges, inaccurate eligibility information from Bridges was interfaced into CHAMPS, resulting in beneficiaries appearing eligible in CHAMPS in error and payments being processed based on that eligibility. Effect MDHHS made payments on behalf of ineligible beneficiaries. The federal grantor agency could issue sanctions or disallowances related to noncompliance. Known Questioned Costs Federal regulation 2 CFR 200.516(a)(3) requires the auditor to report known questioned costs less than $25,000 if it is likely total questioned costs exceed $25,000. • $2,256 - federal share of payments made to providers on behalf of ineligible beneficiaries. • $1,117 - State share of payments made to providers on behalf of ineligible beneficiaries. Recommendation We recommend MDHHS ensure beneficiary eligibility is updated in CHAMPS. Management Views MDHHS agrees with the finding.