2022-001 Eligibility Housing Voucher Cluster Continuum of Care Program AL No. 14.267 Other Matter required to be reported under 2 CFR 200.516(a) Condition: Out of an approximate population of 43,000 tenants in the Housing Voucher Cluster programs, 44 tenant files were tested and the following deficiencies were noted: ? 8 files did not receive an annual recertification within the required compliance timeframe. ? 4 of which were completed within 13 months ? 2 files did not include adequate income support. Out of an approximate population of 3,500 tenants in the Continuum of Care Program, 44 tenant files were tested and the following deficiencies were noted: ? 12 files did not receive an annual recertification within the required compliance timeframe. ? 6 of which were completed within 13 months ? 2 files did not include adequate income support. ? 2 files were missing 9886 forms effective for the fiscal year. Criteria: The Authority?s Administrative Plan, 24 CFR 982.516, 24 CFR 578 and the Authority?s Continuum of Care Policies require internal controls to be in place to ensure proper procedures are being followed in compliance with HUD requirements regarding timely, complete and accurate tenant files. Context: The auditor randomly selected 44 tenant files out of each program?s population, which we consider to be a statistically valid sample size. The auditor reviewed the tenant files and support to ensure that proper procedures are being followed and that the Authority is in compliance with HUD requirements regarding timely, complete, and accurate tenant files. Cause: The Authority experienced staffing and operational challenges during the onset of the COVID-19 pandemic. Those challenges have continued although the CARES Act Wavers expired on December 31, 2021. Additionally, a significant portion of the population being served are transient in nature and obtaining timely and accurate information is challenging. Effect: The Authority is not in compliance with HUD requirements regarding eligibility which could result in the incorrect amount of rental assistance provided. Questioned Costs: None. Auditor Recommendations: The Authority should consider reevaluating their established procedures and controls currently in place to ensure full compliance in regards to eligibility and the timeliness of recertifications. The Authority needs to correct the deficiencies noted in the tested files and consider the impact to the rest of the population of tenant files that were not selected as part of the auditor?s sample. Management Response: See Corrective Action Plan.
2022-001 Eligibility Housing Voucher Cluster Continuum of Care Program AL No. 14.267 Other Matter required to be reported under 2 CFR 200.516(a) Condition: Out of an approximate population of 43,000 tenants in the Housing Voucher Cluster programs, 44 tenant files were tested and the following deficiencies were noted: ? 8 files did not receive an annual recertification within the required compliance timeframe. ? 4 of which were completed within 13 months ? 2 files did not include adequate income support. Out of an approximate population of 3,500 tenants in the Continuum of Care Program, 44 tenant files were tested and the following deficiencies were noted: ? 12 files did not receive an annual recertification within the required compliance timeframe. ? 6 of which were completed within 13 months ? 2 files did not include adequate income support. ? 2 files were missing 9886 forms effective for the fiscal year. Criteria: The Authority?s Administrative Plan, 24 CFR 982.516, 24 CFR 578 and the Authority?s Continuum of Care Policies require internal controls to be in place to ensure proper procedures are being followed in compliance with HUD requirements regarding timely, complete and accurate tenant files. Context: The auditor randomly selected 44 tenant files out of each program?s population, which we consider to be a statistically valid sample size. The auditor reviewed the tenant files and support to ensure that proper procedures are being followed and that the Authority is in compliance with HUD requirements regarding timely, complete, and accurate tenant files. Cause: The Authority experienced staffing and operational challenges during the onset of the COVID-19 pandemic. Those challenges have continued although the CARES Act Wavers expired on December 31, 2021. Additionally, a significant portion of the population being served are transient in nature and obtaining timely and accurate information is challenging. Effect: The Authority is not in compliance with HUD requirements regarding eligibility which could result in the incorrect amount of rental assistance provided. Questioned Costs: None. Auditor Recommendations: The Authority should consider reevaluating their established procedures and controls currently in place to ensure full compliance in regards to eligibility and the timeliness of recertifications. The Authority needs to correct the deficiencies noted in the tested files and consider the impact to the rest of the population of tenant files that were not selected as part of the auditor?s sample. Management Response: See Corrective Action Plan.
2022-003 Financial Impropriety Information on Federal Program(s) U.S. Department of State Name of Program: Program to End Modern Slavery Assistance Listing Number: 19.019 Grant Award Number: S-SJTIP-17-CA-1018/S-SJTIP-18-CA-1014/ S-SJTIP-18-CA-3035 Grant Award Period: October 1, 2017 through June 30, 2022, October 1, 2018 through December 31, 2022, October 1, 2021 to September 30, 2024 Criteria - §200.516(a) Audit findings(6) requires known or suspected fraud be reported by the auditors. Condition - During the year ended December 31, 2022, the Fund received an e-mail from one of its subrecipients stating that they received a whistleblower complaint about an alleged financial impropriety that occurred within their country office. The subrecipient conducted an internal audit, which confirmed in December 2022 some of the allegations including receipt of per diem for trips not attended and use of an office vehicle and fuel for personal use. In February 2023, the subrecipient also contracted with a consultant to perform a forensic audit of the suspected inappropriate procurement and corruption activities at their Uganda Country office for the period from January 1, 2019 through December 31, 2022. The forensic report highlighted certain amounts that were misappropriated from the PEMS 2 grant for the year ended December 31, 2022. The Fund did not suffer any financial loss, since the Fund subtracted the misappropriated amount from the final disbursement to the subrecipient. In addition, in accordance with 2CFR 200.113, the Fund disclosed the financial impropriety incident to the Office of the Inspector General (OIG) for the Department of State and the cognizant Grants Officer was aware of substantiated misappropriation that impacted funding sub-awarded by the Fund to the subrecipient under the PEMS 2 grant. Cause - Individuals at the subrecipient organization committed inappropriate procurement and corruption activities. Effect - These conditions could result in unallowable expenses being charged to U.S. Government awards if the whistle blower complaint and subsequent investigation did not identify the financial impropriety. Questioned Costs - There are no questioned costs since the Fund subtracted the misappropriated amount from the final disbursement to the subrecipient. Context - This matter was identified through a whistleblower complaint at the subrecipient organization during the year ended December 31, 2022. Repeat Finding - This is not a repeat finding. Recommendation - The Fund should continue to monitor and assess the control environment in which its subrecipients operate. The Fund should also ensure a detailed risk assessment of all subrecipients is regularly performed and reviewed. It should also assess whether future funding be provided to the subrecipient. View of Responsible Officials - Management agrees with the Federal award finding identified in the audit. The Fund’s response to this finding is described in the accompanying management’s corrective action plan.
2022-003 Financial Impropriety Information on Federal Program(s) U.S. Department of State Name of Program: Program to End Modern Slavery Assistance Listing Number: 19.019 Grant Award Number: S-SJTIP-17-CA-1018/S-SJTIP-18-CA-1014/ S-SJTIP-18-CA-3035 Grant Award Period: October 1, 2017 through June 30, 2022, October 1, 2018 through December 31, 2022, October 1, 2021 to September 30, 2024 Criteria - §200.516(a) Audit findings(6) requires known or suspected fraud be reported by the auditors. Condition - During the year ended December 31, 2022, the Fund received an e-mail from one of its subrecipients stating that they received a whistleblower complaint about an alleged financial impropriety that occurred within their country office. The subrecipient conducted an internal audit, which confirmed in December 2022 some of the allegations including receipt of per diem for trips not attended and use of an office vehicle and fuel for personal use. In February 2023, the subrecipient also contracted with a consultant to perform a forensic audit of the suspected inappropriate procurement and corruption activities at their Uganda Country office for the period from January 1, 2019 through December 31, 2022. The forensic report highlighted certain amounts that were misappropriated from the PEMS 2 grant for the year ended December 31, 2022. The Fund did not suffer any financial loss, since the Fund subtracted the misappropriated amount from the final disbursement to the subrecipient. In addition, in accordance with 2CFR 200.113, the Fund disclosed the financial impropriety incident to the Office of the Inspector General (OIG) for the Department of State and the cognizant Grants Officer was aware of substantiated misappropriation that impacted funding sub-awarded by the Fund to the subrecipient under the PEMS 2 grant. Cause - Individuals at the subrecipient organization committed inappropriate procurement and corruption activities. Effect - These conditions could result in unallowable expenses being charged to U.S. Government awards if the whistle blower complaint and subsequent investigation did not identify the financial impropriety. Questioned Costs - There are no questioned costs since the Fund subtracted the misappropriated amount from the final disbursement to the subrecipient. Context - This matter was identified through a whistleblower complaint at the subrecipient organization during the year ended December 31, 2022. Repeat Finding - This is not a repeat finding. Recommendation - The Fund should continue to monitor and assess the control environment in which its subrecipients operate. The Fund should also ensure a detailed risk assessment of all subrecipients is regularly performed and reviewed. It should also assess whether future funding be provided to the subrecipient. View of Responsible Officials - Management agrees with the Federal award finding identified in the audit. The Fund’s response to this finding is described in the accompanying management’s corrective action plan.
2022-003 Financial Impropriety Information on Federal Program(s) U.S. Department of State Name of Program: Program to End Modern Slavery Assistance Listing Number: 19.019 Grant Award Number: S-SJTIP-17-CA-1018/S-SJTIP-18-CA-1014/ S-SJTIP-18-CA-3035 Grant Award Period: October 1, 2017 through June 30, 2022, October 1, 2018 through December 31, 2022, October 1, 2021 to September 30, 2024 Criteria - §200.516(a) Audit findings(6) requires known or suspected fraud be reported by the auditors. Condition - During the year ended December 31, 2022, the Fund received an e-mail from one of its subrecipients stating that they received a whistleblower complaint about an alleged financial impropriety that occurred within their country office. The subrecipient conducted an internal audit, which confirmed in December 2022 some of the allegations including receipt of per diem for trips not attended and use of an office vehicle and fuel for personal use. In February 2023, the subrecipient also contracted with a consultant to perform a forensic audit of the suspected inappropriate procurement and corruption activities at their Uganda Country office for the period from January 1, 2019 through December 31, 2022. The forensic report highlighted certain amounts that were misappropriated from the PEMS 2 grant for the year ended December 31, 2022. The Fund did not suffer any financial loss, since the Fund subtracted the misappropriated amount from the final disbursement to the subrecipient. In addition, in accordance with 2CFR 200.113, the Fund disclosed the financial impropriety incident to the Office of the Inspector General (OIG) for the Department of State and the cognizant Grants Officer was aware of substantiated misappropriation that impacted funding sub-awarded by the Fund to the subrecipient under the PEMS 2 grant. Cause - Individuals at the subrecipient organization committed inappropriate procurement and corruption activities. Effect - These conditions could result in unallowable expenses being charged to U.S. Government awards if the whistle blower complaint and subsequent investigation did not identify the financial impropriety. Questioned Costs - There are no questioned costs since the Fund subtracted the misappropriated amount from the final disbursement to the subrecipient. Context - This matter was identified through a whistleblower complaint at the subrecipient organization during the year ended December 31, 2022. Repeat Finding - This is not a repeat finding. Recommendation - The Fund should continue to monitor and assess the control environment in which its subrecipients operate. The Fund should also ensure a detailed risk assessment of all subrecipients is regularly performed and reviewed. It should also assess whether future funding be provided to the subrecipient. View of Responsible Officials - Management agrees with the Federal award finding identified in the audit. The Fund’s response to this finding is described in the accompanying management’s corrective action plan.
According to Section 200.303 of the Uniform Guidance, a nonfederal entity must 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. Point of Freedom receiving Federal Awards must follow 2 CFR Part 200 subpart E, which outlines cost principles in the Uniform Guidance. Adequate documentation is crucial for costs to be allowable under Federal Awards, ensuring compliance, transparency, and accountability in fund utilization. We noted the following matters during testing: 1) Nineteen (19) contractor expenditures have no internal control evidence of timesheet reviewed and approved for the hours charged to the federal program. 2) Seven (7) disbursements have inadequate documentation. There is no formal monitoring over the contractors’ charged hours to the federal program and established policies over maintaining an adequate documentation. This suggests control deficiency over compliance. Incomplete documentation creates a challenge in promptly verifying the accuracy, thereby posing a risk of improper disbursements of federal funds. Of the 693 disbursements, we examined 68 of which seven (7) were identified with incomplete documentation, nineteen (19) contractor invoices without supporting timesheets. In accordance with 2 CFR 200.516(a)(3), auditors are required to report known questioned costs when likely questioned costs are greater than $25,000. Although the sample uncovered 26 transactions with incomplete documentation, resulting in $11,307 in questioned costs, extending the tests to the entire population projects questioned costs exceeding $25,000, specifically $27,462. We recommend that management should develop internal control procedures to address the compliance requirements of federal programs, especially over retaining adequate documentation of transactions.
Criteria: Regulations require that the Organization must submit the single audit data collection form and reporting package within the earlier of 30 calendar days after receipt of the auditor’s report or 9 months after the end of the audit period, to comply with 2 CFR § 200.512(a)(1). Condition: The Organization submitted their 2021 Single Audit Data Collection form on September 7, 2023, which was 20 months after the end of the audit period. Effect: The Organization did not comply with 2 CFR § 200.512(a)(1). Per 2 CFR § 200.516(a)(2), this results in material noncompliance with the provisions of Federal statues, regulations, and terms and conditions of Federal awards related to major programs. Cause: The Organization failed to submit their 2021 Single Audit Data Collection form before the end of September 2022 – the 9 month post-audit period ending deadline. Recommendations: We recommend management finalize and submit their single audit data collection forms within the 9 month window moving forward. Views of Responsible Officials: The Organization agrees with the finding and will work to implement the recommendations.
2022-002 Special Tests and Provisions - SEMAP Housing Voucher Cluster Other matter required to be reported in accordance 2 CFR 200.516(a) Condition: During our audit of the Authority?s SEMAP submission and discussion with the Authority staff, we noted that the Authority did not have proper documentation to support the selections made for the Authority?s annual SEMAP submission. Context: We obtained the Authority?s SEMAP submission and available support documentation. As a part of the testing process we attempted to review the Authority?s sampling and testing methodology for the SEMAP indicators. We were unable to determine that the correct sampling was performed and that the correct testing conclusion were selected with the available documentation. Criteria: 24 CFR 985.2 and 985.3 outlines sampling and testing methodologies for each indicator to allow the Authority to select the correct sample size from the correct universe and to correctly test and report the sample. Cause: The Authority is building the annual SEMAP submission into its procedures again after years of waivers not requiring the SEMAP submission due to COVID. Effect: The Authority is unable to support any selection methodology or testing conclusion performed as part of the annual SEMAP submission. Auditor?s Recommendations: The Authority should prepare and keep documentation to clearly outline the testing performed as a part of the SEMAP submission and the conclusion of each testing items.
2022-002 Special Tests and Provisions - SEMAP Housing Voucher Cluster Other matter required to be reported in accordance 2 CFR 200.516(a) Condition: During our audit of the Authority?s SEMAP submission and discussion with the Authority staff, we noted that the Authority did not have proper documentation to support the selections made for the Authority?s annual SEMAP submission. Context: We obtained the Authority?s SEMAP submission and available support documentation. As a part of the testing process we attempted to review the Authority?s sampling and testing methodology for the SEMAP indicators. We were unable to determine that the correct sampling was performed and that the correct testing conclusion were selected with the available documentation. Criteria: 24 CFR 985.2 and 985.3 outlines sampling and testing methodologies for each indicator to allow the Authority to select the correct sample size from the correct universe and to correctly test and report the sample. Cause: The Authority is building the annual SEMAP submission into its procedures again after years of waivers not requiring the SEMAP submission due to COVID. Effect: The Authority is unable to support any selection methodology or testing conclusion performed as part of the annual SEMAP submission. Auditor?s Recommendations: The Authority should prepare and keep documentation to clearly outline the testing performed as a part of the SEMAP submission and the conclusion of each testing items.
2022-002 Special Tests and Provisions - SEMAP Housing Voucher Cluster Other matter required to be reported in accordance 2 CFR 200.516(a) Condition: During our audit of the Authority?s SEMAP submission and discussion with the Authority staff, we noted that the Authority did not have proper documentation to support the selections made for the Authority?s annual SEMAP submission. Context: We obtained the Authority?s SEMAP submission and available support documentation. As a part of the testing process we attempted to review the Authority?s sampling and testing methodology for the SEMAP indicators. We were unable to determine that the correct sampling was performed and that the correct testing conclusion were selected with the available documentation. Criteria: 24 CFR 985.2 and 985.3 outlines sampling and testing methodologies for each indicator to allow the Authority to select the correct sample size from the correct universe and to correctly test and report the sample. Cause: The Authority is building the annual SEMAP submission into its procedures again after years of waivers not requiring the SEMAP submission due to COVID. Effect: The Authority is unable to support any selection methodology or testing conclusion performed as part of the annual SEMAP submission. Auditor?s Recommendations: The Authority should prepare and keep documentation to clearly outline the testing performed as a part of the SEMAP submission and the conclusion of each testing items.
FINDING 2022-031 Pandemic EBT Food Benefits, ALN 10.542, Activities Allowed or Unallowed and Eligibility - Overpayment of Benefits See Schedule of Findings and Questioned Costs for chart/table. Condition MDHHS did not always ensure accurate P-EBT benefits were provided to eligible beneficiaries. We noted for 1 (4%) of the 26 sampled cases reviewed, MDHHS duplicated the summer benefits resulting in an overpayment of $782. Criteria The Families First Coronavirus Response Act of 2020 (Public Law 116-127), as amended, requires MDHHS to have an approved state plan to provide P-EBT food benefits to households with children who would otherwise receive free or reduced-price meals if not for their schools being closed because of the COVID-19 emergency. MDHHS's P-EBT State Plan states it will provide the standard benefit amount for the summer period and will identify the eligible children based on eligibility in the last month of the school year. Cause MDHHS informed us that because of the timing of the 2022-2023 school enrollment for these children, a system error duplicated the 2022 summer benefits. Effect MDHHS overpaid P-EBT benefits by $782 for the sampled cases. 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 that are less than $25,000 if it is likely total questioned costs would exceed $25,000. ? $782 ? federal share. Recommendation We recommend MDHHS ensure accurate P-EBT benefits are provided to eligible beneficiaries. Management Views MDHHS agrees with the finding.
FINDING 2022-041 Homeowner Assistance Fund, ALN 21.026, Activities Allowed or Unallowed, Allowable Costs/Cost Principles, and Eligibility - Eligibility Determinations See Schedule of Findings and Questioned Costs for chart/table. Condition MSHDA did not obtain and maintain sufficient documentation to support the Homeowner Assistance Fund (HAF) applicants' eligibility was properly determined for 3 (12%) of 25 HAF assistance payments reviewed. We noted: a. For 1 (4%) applicant, sufficient documentation did not exist to support the applicant's eligibility. Contradictory information was provided by the applicant as to the hardship encountered from the COVID-19 pandemic. MSHDA did not detect this at the time of its review and, therefore, did not follow up with the applicant. b. For 1 (4%) applicant, MSHDA did not document the required income calculation to support the homeowner met the income eligibility requirement. We performed this calculation and determined the client was eligible for HAF assistance. c. For 1 (4%) applicant, MSHDA did not ensure its system checklist was completed prior to approving for eligibility. We determined this did not affect the applicant's eligibility. Criteria Subpart E of federal regulation 2 CFR 200 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 that apply to both the federal award and other activities of the state. The HAF guidance requires homeowners to attest that they experienced financial hardship after January 21, 2020 associated with the coronavirus pandemic. A financial hardship is defined as a material reduction in income or a material increase in expenses. The attestation must describe the nature of the financial hardship. MSHDA's internal policy requires case managers to verify and calculate homeowner income during their determination of eligibility in the initial review of the application. Case managers must record their calculations within the activity log. Calculations are performed to determine annual income utilizing supporting documentation. In addition, case managers must use a system checklist to ensure all parts of the application have been reviewed prior to approving the homeowner's eligibility. Cause MSHDA informed us these errors resulted from employee oversight. Effect MSHDA may have provided assistance to ineligible applicants. 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 that are less than $25,000 if it is likely total questioned costs would exceed $25,000. ? $9,129 - federal share. Recommendation We recommend MSHDA obtain and maintain sufficient documentation to support the HAF applicants' eligibility is properly determined. Management Views MSHDA agrees with the finding.
FINDING 2022-044 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 MDE and MDHHS did not ensure compliance with federal laws and regulations relating to client eligibility for CCDF Cluster child care payments for 6 (15%) of the 40 cases we reviewed. Our review disclosed: a. MDHHS case record documentation was inconsistent with client eligibility information entered in Bridges for 3 (8%) of 40 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 2 (5%) of 40 cases reviewed. We determined this did not affect the client's eligibility for child care services or level of benefits. c. MDHHS did not maintain sufficient documentation to support the client's eligibility determination for 1 (3%) of 40 cases reviewed. We noted incomplete supporting documentation related to the client's categorical eligibility. Criteria Federal regulation 45 CFR 98.20 provides eligibility requirements for child care services and permits MDE 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 MDE identify additional eligibility requirements in its CCDF State Plan. MDE'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 federal medical assistance percentage 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 that is 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 the required verification documentation in the client's case record to support eligibility. Effect We consider this to be a material weakness and material noncompliance because MDE may have made payments on behalf of 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 that are less than $25,000 if it is likely total questioned costs would exceed $25,000. ? $1,688 - federal share. ? $707 - State share of costs that MDE inappropriately used as matching. Recommendation We recommend that MDE and MDHHS maintain sufficient documentation and ensure that Bridges appropriately reflects documentation to support client eligibility was determined in accordance with eligibility requirements. Management Views MDHHS and MDE agree with the finding.
FINDING 2022-046 CCDF Cluster, ALN 93.575 and 93.596, Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Eligibility; Matching, Level of Effort, and Earmarking; and Special Tests and Provisions - Provider Health and Safety Requirements See Schedule of Findings and Questioned Costs for chart/table. Background In accordance with the interagency agreement between MDE and the Department of Licensing and Regulatory Affairs (LARA) for fiscal year 2022, LARA was responsible for performing onsite inspections and licensing of child care providers. LARA completes on-site inspections to issue licenses, to renew licenses at the end of the license period, and to perform an interim inspection during the license period. Condition MDE and LARA did not perform timely inspections and maintain sufficient documentation to support child care providers met applicable health and safety requirements to be eligible for CCDF Cluster payments. Our review of 51 sampled licensed providers for the CCDF Cluster payments disclosed: a. LARA did not ensure timely annual on-site inspections for 7 (14%) licensed providers. We noted LARA performed the on-site inspections from 15 to 20 months after the last on-site inspection. b. LARA did not maintain documentation to support 1 renewal inspection. c. LARA did not maintain documentation to support it granted an extension when the license period had expired for 1 provider with a license renewed during fiscal year 2022. Criteria Federal regulation 45 CFR 98.41 states the lead agency (MDE) shall have in effect under State, local, or tribal law requirements designed, implemented, and enforced to protect the health and safety of children and provides the minimum health and safety topics that must include training on and be applicable to child care providers of services. The regulation also allows for MDE to include additional requirements determined to be necessary to promote child development and to protect children's health and safety as long as the additional requirements are not inconsistent with the parental choice safeguards. Federal regulation 45 CFR 98.44 requires MDE to identify in its CCDF State Plan established requirements for pre-service or orientation training in the established health and safety standards and for ongoing professional development that maintains and updates the health and safety standards described in federal regulation 45 CFR 98.41. Federal regulation 45 CFR 98.42(b)(2) states MDE shall certify in its CCDF State Plan it has monitoring policies and practices applicable to all child care providers eligible to deliver services for which assistance is provided under the CCDF Cluster. MDE must require inspections of licensed child care providers at licensure and not less than annually for compliance with all health and safety requirements described in federal regulation 45 CFR 98.41 and fire standards. Section 5 of MDE's CCDF State Plan for Federal Fiscal Years 2022-2024 provides the State's standards and monitoring processes to ensure providers meet health and safety requirements in the federal regulations. Cause LARA informed us limited resources impacted the timeliness of some inspections and the missing documentation was an oversight. Effect Child care providers may not have complied with all applicable health and safety requirements to receive CCDF Cluster funds resulting in potential improper payments to providers. 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 that are less than $25,000 if it is likely total questioned costs would exceed $25,000. ? $245 - federal share. ? $103 - State share of costs that MDE inappropriately used as matching. Recommendation We recommend MDE and LARA perform timely inspections and maintain sufficient documentation to support child care providers meet applicable health and safety requirements to be eligible for CCDF Cluster payments. Management Views MDE and LARA agree with the finding.
FINDING 2022-044 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 MDE and MDHHS did not ensure compliance with federal laws and regulations relating to client eligibility for CCDF Cluster child care payments for 6 (15%) of the 40 cases we reviewed. Our review disclosed: a. MDHHS case record documentation was inconsistent with client eligibility information entered in Bridges for 3 (8%) of 40 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 2 (5%) of 40 cases reviewed. We determined this did not affect the client's eligibility for child care services or level of benefits. c. MDHHS did not maintain sufficient documentation to support the client's eligibility determination for 1 (3%) of 40 cases reviewed. We noted incomplete supporting documentation related to the client's categorical eligibility. Criteria Federal regulation 45 CFR 98.20 provides eligibility requirements for child care services and permits MDE 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 MDE identify additional eligibility requirements in its CCDF State Plan. MDE'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 federal medical assistance percentage 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 that is 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 the required verification documentation in the client's case record to support eligibility. Effect We consider this to be a material weakness and material noncompliance because MDE may have made payments on behalf of 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 that are less than $25,000 if it is likely total questioned costs would exceed $25,000. ? $1,688 - federal share. ? $707 - State share of costs that MDE inappropriately used as matching. Recommendation We recommend that MDE and MDHHS maintain sufficient documentation and ensure that Bridges appropriately reflects documentation to support client eligibility was determined in accordance with eligibility requirements. Management Views MDHHS and MDE agree with the finding.
FINDING 2022-046 CCDF Cluster, ALN 93.575 and 93.596, Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Eligibility; Matching, Level of Effort, and Earmarking; and Special Tests and Provisions - Provider Health and Safety Requirements See Schedule of Findings and Questioned Costs for chart/table. Background In accordance with the interagency agreement between MDE and the Department of Licensing and Regulatory Affairs (LARA) for fiscal year 2022, LARA was responsible for performing onsite inspections and licensing of child care providers. LARA completes on-site inspections to issue licenses, to renew licenses at the end of the license period, and to perform an interim inspection during the license period. Condition MDE and LARA did not perform timely inspections and maintain sufficient documentation to support child care providers met applicable health and safety requirements to be eligible for CCDF Cluster payments. Our review of 51 sampled licensed providers for the CCDF Cluster payments disclosed: a. LARA did not ensure timely annual on-site inspections for 7 (14%) licensed providers. We noted LARA performed the on-site inspections from 15 to 20 months after the last on-site inspection. b. LARA did not maintain documentation to support 1 renewal inspection. c. LARA did not maintain documentation to support it granted an extension when the license period had expired for 1 provider with a license renewed during fiscal year 2022. Criteria Federal regulation 45 CFR 98.41 states the lead agency (MDE) shall have in effect under State, local, or tribal law requirements designed, implemented, and enforced to protect the health and safety of children and provides the minimum health and safety topics that must include training on and be applicable to child care providers of services. The regulation also allows for MDE to include additional requirements determined to be necessary to promote child development and to protect children's health and safety as long as the additional requirements are not inconsistent with the parental choice safeguards. Federal regulation 45 CFR 98.44 requires MDE to identify in its CCDF State Plan established requirements for pre-service or orientation training in the established health and safety standards and for ongoing professional development that maintains and updates the health and safety standards described in federal regulation 45 CFR 98.41. Federal regulation 45 CFR 98.42(b)(2) states MDE shall certify in its CCDF State Plan it has monitoring policies and practices applicable to all child care providers eligible to deliver services for which assistance is provided under the CCDF Cluster. MDE must require inspections of licensed child care providers at licensure and not less than annually for compliance with all health and safety requirements described in federal regulation 45 CFR 98.41 and fire standards. Section 5 of MDE's CCDF State Plan for Federal Fiscal Years 2022-2024 provides the State's standards and monitoring processes to ensure providers meet health and safety requirements in the federal regulations. Cause LARA informed us limited resources impacted the timeliness of some inspections and the missing documentation was an oversight. Effect Child care providers may not have complied with all applicable health and safety requirements to receive CCDF Cluster funds resulting in potential improper payments to providers. 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 that are less than $25,000 if it is likely total questioned costs would exceed $25,000. ? $245 - federal share. ? $103 - State share of costs that MDE inappropriately used as matching. Recommendation We recommend MDE and LARA perform timely inspections and maintain sufficient documentation to support child care providers meet applicable health and safety requirements to be eligible for CCDF Cluster payments. Management Views MDE and LARA agree with the finding.
FINDING 2022-044 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 MDE and MDHHS did not ensure compliance with federal laws and regulations relating to client eligibility for CCDF Cluster child care payments for 6 (15%) of the 40 cases we reviewed. Our review disclosed: a. MDHHS case record documentation was inconsistent with client eligibility information entered in Bridges for 3 (8%) of 40 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 2 (5%) of 40 cases reviewed. We determined this did not affect the client's eligibility for child care services or level of benefits. c. MDHHS did not maintain sufficient documentation to support the client's eligibility determination for 1 (3%) of 40 cases reviewed. We noted incomplete supporting documentation related to the client's categorical eligibility. Criteria Federal regulation 45 CFR 98.20 provides eligibility requirements for child care services and permits MDE 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 MDE identify additional eligibility requirements in its CCDF State Plan. MDE'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 federal medical assistance percentage 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 that is 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 the required verification documentation in the client's case record to support eligibility. Effect We consider this to be a material weakness and material noncompliance because MDE may have made payments on behalf of 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 that are less than $25,000 if it is likely total questioned costs would exceed $25,000. ? $1,688 - federal share. ? $707 - State share of costs that MDE inappropriately used as matching. Recommendation We recommend that MDE and MDHHS maintain sufficient documentation and ensure that Bridges appropriately reflects documentation to support client eligibility was determined in accordance with eligibility requirements. Management Views MDHHS and MDE agree with the finding.
FINDING 2022-046 CCDF Cluster, ALN 93.575 and 93.596, Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Eligibility; Matching, Level of Effort, and Earmarking; and Special Tests and Provisions - Provider Health and Safety Requirements See Schedule of Findings and Questioned Costs for chart/table. Background In accordance with the interagency agreement between MDE and the Department of Licensing and Regulatory Affairs (LARA) for fiscal year 2022, LARA was responsible for performing onsite inspections and licensing of child care providers. LARA completes on-site inspections to issue licenses, to renew licenses at the end of the license period, and to perform an interim inspection during the license period. Condition MDE and LARA did not perform timely inspections and maintain sufficient documentation to support child care providers met applicable health and safety requirements to be eligible for CCDF Cluster payments. Our review of 51 sampled licensed providers for the CCDF Cluster payments disclosed: a. LARA did not ensure timely annual on-site inspections for 7 (14%) licensed providers. We noted LARA performed the on-site inspections from 15 to 20 months after the last on-site inspection. b. LARA did not maintain documentation to support 1 renewal inspection. c. LARA did not maintain documentation to support it granted an extension when the license period had expired for 1 provider with a license renewed during fiscal year 2022. Criteria Federal regulation 45 CFR 98.41 states the lead agency (MDE) shall have in effect under State, local, or tribal law requirements designed, implemented, and enforced to protect the health and safety of children and provides the minimum health and safety topics that must include training on and be applicable to child care providers of services. The regulation also allows for MDE to include additional requirements determined to be necessary to promote child development and to protect children's health and safety as long as the additional requirements are not inconsistent with the parental choice safeguards. Federal regulation 45 CFR 98.44 requires MDE to identify in its CCDF State Plan established requirements for pre-service or orientation training in the established health and safety standards and for ongoing professional development that maintains and updates the health and safety standards described in federal regulation 45 CFR 98.41. Federal regulation 45 CFR 98.42(b)(2) states MDE shall certify in its CCDF State Plan it has monitoring policies and practices applicable to all child care providers eligible to deliver services for which assistance is provided under the CCDF Cluster. MDE must require inspections of licensed child care providers at licensure and not less than annually for compliance with all health and safety requirements described in federal regulation 45 CFR 98.41 and fire standards. Section 5 of MDE's CCDF State Plan for Federal Fiscal Years 2022-2024 provides the State's standards and monitoring processes to ensure providers meet health and safety requirements in the federal regulations. Cause LARA informed us limited resources impacted the timeliness of some inspections and the missing documentation was an oversight. Effect Child care providers may not have complied with all applicable health and safety requirements to receive CCDF Cluster funds resulting in potential improper payments to providers. 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 that are less than $25,000 if it is likely total questioned costs would exceed $25,000. ? $245 - federal share. ? $103 - State share of costs that MDE inappropriately used as matching. Recommendation We recommend MDE and LARA perform timely inspections and maintain sufficient documentation to support child care providers meet applicable health and safety requirements to be eligible for CCDF Cluster payments. Management Views MDE and LARA agree with the finding.
FINDING 2022-044 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 MDE and MDHHS did not ensure compliance with federal laws and regulations relating to client eligibility for CCDF Cluster child care payments for 6 (15%) of the 40 cases we reviewed. Our review disclosed: a. MDHHS case record documentation was inconsistent with client eligibility information entered in Bridges for 3 (8%) of 40 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 2 (5%) of 40 cases reviewed. We determined this did not affect the client's eligibility for child care services or level of benefits. c. MDHHS did not maintain sufficient documentation to support the client's eligibility determination for 1 (3%) of 40 cases reviewed. We noted incomplete supporting documentation related to the client's categorical eligibility. Criteria Federal regulation 45 CFR 98.20 provides eligibility requirements for child care services and permits MDE 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 MDE identify additional eligibility requirements in its CCDF State Plan. MDE'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 federal medical assistance percentage 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 that is 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 the required verification documentation in the client's case record to support eligibility. Effect We consider this to be a material weakness and material noncompliance because MDE may have made payments on behalf of 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 that are less than $25,000 if it is likely total questioned costs would exceed $25,000. ? $1,688 - federal share. ? $707 - State share of costs that MDE inappropriately used as matching. Recommendation We recommend that MDE and MDHHS maintain sufficient documentation and ensure that Bridges appropriately reflects documentation to support client eligibility was determined in accordance with eligibility requirements. Management Views MDHHS and MDE agree with the finding.
FINDING 2022-046 CCDF Cluster, ALN 93.575 and 93.596, Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Eligibility; Matching, Level of Effort, and Earmarking; and Special Tests and Provisions - Provider Health and Safety Requirements See Schedule of Findings and Questioned Costs for chart/table. Background In accordance with the interagency agreement between MDE and the Department of Licensing and Regulatory Affairs (LARA) for fiscal year 2022, LARA was responsible for performing onsite inspections and licensing of child care providers. LARA completes on-site inspections to issue licenses, to renew licenses at the end of the license period, and to perform an interim inspection during the license period. Condition MDE and LARA did not perform timely inspections and maintain sufficient documentation to support child care providers met applicable health and safety requirements to be eligible for CCDF Cluster payments. Our review of 51 sampled licensed providers for the CCDF Cluster payments disclosed: a. LARA did not ensure timely annual on-site inspections for 7 (14%) licensed providers. We noted LARA performed the on-site inspections from 15 to 20 months after the last on-site inspection. b. LARA did not maintain documentation to support 1 renewal inspection. c. LARA did not maintain documentation to support it granted an extension when the license period had expired for 1 provider with a license renewed during fiscal year 2022. Criteria Federal regulation 45 CFR 98.41 states the lead agency (MDE) shall have in effect under State, local, or tribal law requirements designed, implemented, and enforced to protect the health and safety of children and provides the minimum health and safety topics that must include training on and be applicable to child care providers of services. The regulation also allows for MDE to include additional requirements determined to be necessary to promote child development and to protect children's health and safety as long as the additional requirements are not inconsistent with the parental choice safeguards. Federal regulation 45 CFR 98.44 requires MDE to identify in its CCDF State Plan established requirements for pre-service or orientation training in the established health and safety standards and for ongoing professional development that maintains and updates the health and safety standards described in federal regulation 45 CFR 98.41. Federal regulation 45 CFR 98.42(b)(2) states MDE shall certify in its CCDF State Plan it has monitoring policies and practices applicable to all child care providers eligible to deliver services for which assistance is provided under the CCDF Cluster. MDE must require inspections of licensed child care providers at licensure and not less than annually for compliance with all health and safety requirements described in federal regulation 45 CFR 98.41 and fire standards. Section 5 of MDE's CCDF State Plan for Federal Fiscal Years 2022-2024 provides the State's standards and monitoring processes to ensure providers meet health and safety requirements in the federal regulations. Cause LARA informed us limited resources impacted the timeliness of some inspections and the missing documentation was an oversight. Effect Child care providers may not have complied with all applicable health and safety requirements to receive CCDF Cluster funds resulting in potential improper payments to providers. 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 that are less than $25,000 if it is likely total questioned costs would exceed $25,000. ? $245 - federal share. ? $103 - State share of costs that MDE inappropriately used as matching. Recommendation We recommend MDE and LARA perform timely inspections and maintain sufficient documentation to support child care providers meet applicable health and safety requirements to be eligible for CCDF Cluster payments. Management Views MDE and LARA agree with the finding.
FINDING 2022-044 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 MDE and MDHHS did not ensure compliance with federal laws and regulations relating to client eligibility for CCDF Cluster child care payments for 6 (15%) of the 40 cases we reviewed. Our review disclosed: a. MDHHS case record documentation was inconsistent with client eligibility information entered in Bridges for 3 (8%) of 40 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 2 (5%) of 40 cases reviewed. We determined this did not affect the client's eligibility for child care services or level of benefits. c. MDHHS did not maintain sufficient documentation to support the client's eligibility determination for 1 (3%) of 40 cases reviewed. We noted incomplete supporting documentation related to the client's categorical eligibility. Criteria Federal regulation 45 CFR 98.20 provides eligibility requirements for child care services and permits MDE 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 MDE identify additional eligibility requirements in its CCDF State Plan. MDE'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 federal medical assistance percentage 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 that is 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 the required verification documentation in the client's case record to support eligibility. Effect We consider this to be a material weakness and material noncompliance because MDE may have made payments on behalf of 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 that are less than $25,000 if it is likely total questioned costs would exceed $25,000. ? $1,688 - federal share. ? $707 - State share of costs that MDE inappropriately used as matching. Recommendation We recommend that MDE and MDHHS maintain sufficient documentation and ensure that Bridges appropriately reflects documentation to support client eligibility was determined in accordance with eligibility requirements. Management Views MDHHS and MDE agree with the finding.
FINDING 2022-046 CCDF Cluster, ALN 93.575 and 93.596, Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Eligibility; Matching, Level of Effort, and Earmarking; and Special Tests and Provisions - Provider Health and Safety Requirements See Schedule of Findings and Questioned Costs for chart/table. Background In accordance with the interagency agreement between MDE and the Department of Licensing and Regulatory Affairs (LARA) for fiscal year 2022, LARA was responsible for performing onsite inspections and licensing of child care providers. LARA completes on-site inspections to issue licenses, to renew licenses at the end of the license period, and to perform an interim inspection during the license period. Condition MDE and LARA did not perform timely inspections and maintain sufficient documentation to support child care providers met applicable health and safety requirements to be eligible for CCDF Cluster payments. Our review of 51 sampled licensed providers for the CCDF Cluster payments disclosed: a. LARA did not ensure timely annual on-site inspections for 7 (14%) licensed providers. We noted LARA performed the on-site inspections from 15 to 20 months after the last on-site inspection. b. LARA did not maintain documentation to support 1 renewal inspection. c. LARA did not maintain documentation to support it granted an extension when the license period had expired for 1 provider with a license renewed during fiscal year 2022. Criteria Federal regulation 45 CFR 98.41 states the lead agency (MDE) shall have in effect under State, local, or tribal law requirements designed, implemented, and enforced to protect the health and safety of children and provides the minimum health and safety topics that must include training on and be applicable to child care providers of services. The regulation also allows for MDE to include additional requirements determined to be necessary to promote child development and to protect children's health and safety as long as the additional requirements are not inconsistent with the parental choice safeguards. Federal regulation 45 CFR 98.44 requires MDE to identify in its CCDF State Plan established requirements for pre-service or orientation training in the established health and safety standards and for ongoing professional development that maintains and updates the health and safety standards described in federal regulation 45 CFR 98.41. Federal regulation 45 CFR 98.42(b)(2) states MDE shall certify in its CCDF State Plan it has monitoring policies and practices applicable to all child care providers eligible to deliver services for which assistance is provided under the CCDF Cluster. MDE must require inspections of licensed child care providers at licensure and not less than annually for compliance with all health and safety requirements described in federal regulation 45 CFR 98.41 and fire standards. Section 5 of MDE's CCDF State Plan for Federal Fiscal Years 2022-2024 provides the State's standards and monitoring processes to ensure providers meet health and safety requirements in the federal regulations. Cause LARA informed us limited resources impacted the timeliness of some inspections and the missing documentation was an oversight. Effect Child care providers may not have complied with all applicable health and safety requirements to receive CCDF Cluster funds resulting in potential improper payments to providers. 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 that are less than $25,000 if it is likely total questioned costs would exceed $25,000. ? $245 - federal share. ? $103 - State share of costs that MDE inappropriately used as matching. Recommendation We recommend MDE and LARA perform timely inspections and maintain sufficient documentation to support child care providers meet applicable health and safety requirements to be eligible for CCDF Cluster payments. Management Views MDE and LARA agree with the finding.
FINDING 2022-019 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. Background In 2014, federal regulations changed the methodology for determining eligibility for certain Medicaid Cluster and CHIP beneficiaries to a methodology using federal income tax data known as MAGI. Federal regulation 26 CFR 301.6103(a) prohibits an auditor from using federal income tax data unless in connection with an audit of the state agency responsible for the administration of the state tax law. For 2014 through 2018, auditors were not expected to review MAGI eligibility determinations. Beginning in 2019, the U.S. Office of Management and Budget* (OMB) Compliance Supplement was revised requiring auditors to review MAGI eligibility determinations for both the Medicaid Cluster and CHIP. Also, because of the public health emergency, MDHHS was not required to perform redeterminations and could not end healthcare coverage unless the individual voluntarily requested termination, moved out of state, or was deceased. As a result, we sampled beneficiaries for each program who either began receiving assistance or had a change in their type of assistance during fiscal year 2022. We summarized the results of our eligibility review in the following table: See Schedule of Findings and Questioned Costs for chart/table. For an estimated 74,086 Medicaid and 16,324 CHIP beneficiaries, we were unable to determine if MDHHS complied with federal laws and regulations related to MAGI-based eligibility because federal regulations prohibited our use of federal income tax data and the beneficiaries' case record did not contain other available income information. Other income information is not required to be included in the case record when a determination of eligibility is based on MAGI. However, if such information was available, we reviewed this information for eligibility purposes to accurately report the sample items that could not be tested. The results of the testing for the remaining 54 Medicaid and 48 CHIP beneficiaries we were able to review are summarized in the finding below. Condition MDHHS did not ensure or demonstrate compliance with federal laws and regulations relating to beneficiary eligibility. Our review disclosed: a. MDHHS did not determine beneficiary eligibility in accordance with eligibility requirements for 4 (7%) of 54 Medicaid and 11 (23%) of 48 CHIP cases reviewed. b. MDHHS did not maintain case file documentation that supports the beneficiary eligibility determination for 1 (2%) of 54 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 regulation 42 CFR 435.914 requires 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. Cause For part a., MDHHS indicated it did not properly consider all available beneficiary information when determining beneficiary eligibility because of system issues and staff actions. For part b., MDHHS indicated the missing documentation resulted from staff oversight. 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 9% Medicaid and 23% 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 that are less than $25,000 if it is likely total questioned costs would exceed $25,000. ? $1,969 - federal share. ? $656 - 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. Management Views MDHHS agrees with the finding.
FINDING 2022-020 Medicaid Cluster, ALN 93.775, 93.777, and 93.778 and Children's Health Insurance Program, ALN 93.767 - Expenditure Processing for Medical Payments See Schedule of Findings and Questioned Costs for chart/table. Condition MDHHS did not ensure Bridges and CHAMPS contained the correct Medicaid Cluster and CHIP eligibility information to record expenditures to the appropriate program at the time of payment and to ensure the related federal draw was accurate and timely. On a quarterly basis, MDHHS transferred expenditure amounts from the Medicaid Cluster to CHIP by completing a summary-level adjustment determined by analyzing CHAMPS payment data and Bridges eligibility data. As a result, MDHHS identified it incorrectly recorded $39.1 million of CHIP medical payments to the Medicaid Cluster throughout fiscal year 2022. However, we selected a sample of 2 beneficiaries that were transferred to CHIP and noted both beneficiaries were not eligible for CHIP but were in fact Medicaid eligible and, therefore, should not have been transferred. Criteria Federal regulation 45 CFR 75.303 requires the auditee to establish and maintain effective internal control over federal programs that provides reasonable assurance the auditee is managing federal awards in compliance with federal statutes, regulations, and the terms and conditions of federal awards. Federal regulation 31 CFR 205 requires state recipients to enter into agreements with the U.S. Department of the Treasury that prescribe specific methods of drawing down federal funds for selected large programs. Cause MDHHS implemented a system change to correct eligibility classifications in Bridges in April 2021. All new cases are being correctly routed. MDHHS expects all existing cases will be updated during the 14-month period following the May 11, 2023 end of the public health emergency, as allowed by the Centers for Medicare and Medicaid Services (CMS). The Medicaid Cluster to CHIP transfer was completed correctly; however, because of an incorrect eligibility determination reflected in Bridges, some cases were transferred in error. Effect MDHHS inappropriately transferred $294 Medicaid Cluster expenditures to CHIP. The federal grantor agency could issue sanctions or disallowances related to noncompliance. Also, of the $39.1 million in quarterly transfers, MDHHS may have improperly received either federal Medicaid Cluster funds or federal CHIP funds depending on the accuracy of the transferred amount. After MDHHS recorded the quarterly summary-level adjustments in the accounting system, it returned the Medicaid Cluster funds to the federal government and appropriately received reimbursement from CHIP. The quarterly CHIP draws were not compliant with the State's Cash Management Improvement Act (CMIA) agreement, which required weekly actual costs draws. For the CHIP compliance requirements noted, we consider this to be a material weakness and material noncompliance because the $39.1 million CHIP expenditures identified by MDHHS as inappropriately charged to and reimbursed by the Medicaid Cluster represented 14% of total CHIP expenditures and both sample items were inappropriately transferred to CHIP. Known Questioned Costs Federal regulation 2 CFR 200.516(a)(3) requires the auditor to report known questioned costs that are less than $25,000 if it is likely total questioned costs would exceed $25,000. ? $235 - federal share of CHIP payments made to providers for ineligible CHIP beneficiaries, of which $235 is questioned in Finding 2022-019. ? $58 - State share of costs MDHHS inappropriately used as matching. Recommendation We recommend MDHHS ensure Bridges and CHAMPS contain the correct Medicaid Cluster and CHIP eligibility information to allow MDHHS to record expenditures to the appropriate program at the time of payment and to ensure the related federal draw is accurate and timely. Management Views MDHHS agrees with the finding.
FINDING 2022-047 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 $5,774 for 15 (50%) of 30 payments sampled from a $1,390,653 population of beneficiary payments with no corresponding Medicaid coverage. Criteria Federal regulation 42 CFR 435.1002(b) indicates that federal funding is available only for services provided to eligible beneficiaries. Cause MDHHS informed us because of system and interface issues in both Bridges and CHAMPS, eligibility information was not always properly updated in 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 that are less than $25,000 if it is likely total questioned costs exceed $25,000. ? $5,103 - federal share of payments made to providers on behalf of ineligible beneficiaries. ? $671 - State share of payments made to providers on behalf of ineligible beneficiaries. Recommendation We recommend that MDHHS ensure that beneficiary eligibility is updated in CHAMPS. Management Views MDHHS agrees with the finding.
FINDING 2022-048 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 $324, for 2 (25%) of 8 sampled clients who were hospitalized while receiving Home Help Program (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 135 prohibits payment for HHP services on days a client is admitted to a hospital and for all subsequent days they remain in that facility. ASM Section 135 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, the monthly hospitalization reports are not capturing all facility stays for home help clients. Effect MDHHS paid a total of $324 from October 1, 2021 through September 30, 2022 for sampled clients who did not qualify for the 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 that are less than $25,000 if it is likely total questioned costs would exceed $25,000. ? $232 - federal share of amounts paid for HHP services while sampled clients were hospitalized. ? $92 - 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 2022-049 Medicaid Cluster, ALN 93.775, 93.777, and 93.778, Activities Allowed or Unallowed; Allowable Costs/Cost Principles; and Matching, Level of Effort, and Earmarking - Home Help Payment Oversight See Schedule of Findings and Questioned Costs for chart/table. Condition MDHHS did not review home help provider invoices for 4 (27%) of 15 sampled payments to individual providers, totaling $485, to help ensure home help payments were reflective of the services provided. 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 ASM to further define specific policies and procedures for delivery of Medicaid HHP services. ASM Section 135 requires individual providers to submit monthly invoices for reimbursement. Cause Although the Electronic Service Verifications (ESV) and Paper Service Verifications (PSV) collect information on completed services, prior to April 1, 2022 there was no automated review of the ESV information and there continues to be no automated review of the PSV information to determine if all services were provided before payment was issued. Effect MDHHS paid a total of $485 for services from October 1, 2021 through September 30, 2022 that were not supported by home help provider invoices for the sampled payments. 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 that are less than $25,000 if it is likely total questioned costs would exceed $25,000. ? $348 - federal share. ? $137 - State share of costs MDHHS inappropriately used as matching. Recommendation We recommend MDHHS review home help provider invoices to help ensure home help payments are reflective of the services provided. Management Views MDHHS agrees with the finding.
FINDING 2022-019 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. Background In 2014, federal regulations changed the methodology for determining eligibility for certain Medicaid Cluster and CHIP beneficiaries to a methodology using federal income tax data known as MAGI. Federal regulation 26 CFR 301.6103(a) prohibits an auditor from using federal income tax data unless in connection with an audit of the state agency responsible for the administration of the state tax law. For 2014 through 2018, auditors were not expected to review MAGI eligibility determinations. Beginning in 2019, the U.S. Office of Management and Budget* (OMB) Compliance Supplement was revised requiring auditors to review MAGI eligibility determinations for both the Medicaid Cluster and CHIP. Also, because of the public health emergency, MDHHS was not required to perform redeterminations and could not end healthcare coverage unless the individual voluntarily requested termination, moved out of state, or was deceased. As a result, we sampled beneficiaries for each program who either began receiving assistance or had a change in their type of assistance during fiscal year 2022. We summarized the results of our eligibility review in the following table: See Schedule of Findings and Questioned Costs for chart/table. For an estimated 74,086 Medicaid and 16,324 CHIP beneficiaries, we were unable to determine if MDHHS complied with federal laws and regulations related to MAGI-based eligibility because federal regulations prohibited our use of federal income tax data and the beneficiaries' case record did not contain other available income information. Other income information is not required to be included in the case record when a determination of eligibility is based on MAGI. However, if such information was available, we reviewed this information for eligibility purposes to accurately report the sample items that could not be tested. The results of the testing for the remaining 54 Medicaid and 48 CHIP beneficiaries we were able to review are summarized in the finding below. Condition MDHHS did not ensure or demonstrate compliance with federal laws and regulations relating to beneficiary eligibility. Our review disclosed: a. MDHHS did not determine beneficiary eligibility in accordance with eligibility requirements for 4 (7%) of 54 Medicaid and 11 (23%) of 48 CHIP cases reviewed. b. MDHHS did not maintain case file documentation that supports the beneficiary eligibility determination for 1 (2%) of 54 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 regulation 42 CFR 435.914 requires 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. Cause For part a., MDHHS indicated it did not properly consider all available beneficiary information when determining beneficiary eligibility because of system issues and staff actions. For part b., MDHHS indicated the missing documentation resulted from staff oversight. 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 9% Medicaid and 23% 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 that are less than $25,000 if it is likely total questioned costs would exceed $25,000. ? $1,969 - federal share. ? $656 - 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. Management Views MDHHS agrees with the finding.
FINDING 2022-020 Medicaid Cluster, ALN 93.775, 93.777, and 93.778 and Children's Health Insurance Program, ALN 93.767 - Expenditure Processing for Medical Payments See Schedule of Findings and Questioned Costs for chart/table. Condition MDHHS did not ensure Bridges and CHAMPS contained the correct Medicaid Cluster and CHIP eligibility information to record expenditures to the appropriate program at the time of payment and to ensure the related federal draw was accurate and timely. On a quarterly basis, MDHHS transferred expenditure amounts from the Medicaid Cluster to CHIP by completing a summary-level adjustment determined by analyzing CHAMPS payment data and Bridges eligibility data. As a result, MDHHS identified it incorrectly recorded $39.1 million of CHIP medical payments to the Medicaid Cluster throughout fiscal year 2022. However, we selected a sample of 2 beneficiaries that were transferred to CHIP and noted both beneficiaries were not eligible for CHIP but were in fact Medicaid eligible and, therefore, should not have been transferred. Criteria Federal regulation 45 CFR 75.303 requires the auditee to establish and maintain effective internal control over federal programs that provides reasonable assurance the auditee is managing federal awards in compliance with federal statutes, regulations, and the terms and conditions of federal awards. Federal regulation 31 CFR 205 requires state recipients to enter into agreements with the U.S. Department of the Treasury that prescribe specific methods of drawing down federal funds for selected large programs. Cause MDHHS implemented a system change to correct eligibility classifications in Bridges in April 2021. All new cases are being correctly routed. MDHHS expects all existing cases will be updated during the 14-month period following the May 11, 2023 end of the public health emergency, as allowed by the Centers for Medicare and Medicaid Services (CMS). The Medicaid Cluster to CHIP transfer was completed correctly; however, because of an incorrect eligibility determination reflected in Bridges, some cases were transferred in error. Effect MDHHS inappropriately transferred $294 Medicaid Cluster expenditures to CHIP. The federal grantor agency could issue sanctions or disallowances related to noncompliance. Also, of the $39.1 million in quarterly transfers, MDHHS may have improperly received either federal Medicaid Cluster funds or federal CHIP funds depending on the accuracy of the transferred amount. After MDHHS recorded the quarterly summary-level adjustments in the accounting system, it returned the Medicaid Cluster funds to the federal government and appropriately received reimbursement from CHIP. The quarterly CHIP draws were not compliant with the State's Cash Management Improvement Act (CMIA) agreement, which required weekly actual costs draws. For the CHIP compliance requirements noted, we consider this to be a material weakness and material noncompliance because the $39.1 million CHIP expenditures identified by MDHHS as inappropriately charged to and reimbursed by the Medicaid Cluster represented 14% of total CHIP expenditures and both sample items were inappropriately transferred to CHIP. Known Questioned Costs Federal regulation 2 CFR 200.516(a)(3) requires the auditor to report known questioned costs that are less than $25,000 if it is likely total questioned costs would exceed $25,000. ? $235 - federal share of CHIP payments made to providers for ineligible CHIP beneficiaries, of which $235 is questioned in Finding 2022-019. ? $58 - State share of costs MDHHS inappropriately used as matching. Recommendation We recommend MDHHS ensure Bridges and CHAMPS contain the correct Medicaid Cluster and CHIP eligibility information to allow MDHHS to record expenditures to the appropriate program at the time of payment and to ensure the related federal draw is accurate and timely. Management Views MDHHS agrees with the finding.
FINDING 2022-047 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 $5,774 for 15 (50%) of 30 payments sampled from a $1,390,653 population of beneficiary payments with no corresponding Medicaid coverage. Criteria Federal regulation 42 CFR 435.1002(b) indicates that federal funding is available only for services provided to eligible beneficiaries. Cause MDHHS informed us because of system and interface issues in both Bridges and CHAMPS, eligibility information was not always properly updated in 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 that are less than $25,000 if it is likely total questioned costs exceed $25,000. ? $5,103 - federal share of payments made to providers on behalf of ineligible beneficiaries. ? $671 - State share of payments made to providers on behalf of ineligible beneficiaries. Recommendation We recommend that MDHHS ensure that beneficiary eligibility is updated in CHAMPS. Management Views MDHHS agrees with the finding.
FINDING 2022-048 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 $324, for 2 (25%) of 8 sampled clients who were hospitalized while receiving Home Help Program (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 135 prohibits payment for HHP services on days a client is admitted to a hospital and for all subsequent days they remain in that facility. ASM Section 135 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, the monthly hospitalization reports are not capturing all facility stays for home help clients. Effect MDHHS paid a total of $324 from October 1, 2021 through September 30, 2022 for sampled clients who did not qualify for the 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 that are less than $25,000 if it is likely total questioned costs would exceed $25,000. ? $232 - federal share of amounts paid for HHP services while sampled clients were hospitalized. ? $92 - 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 2022-049 Medicaid Cluster, ALN 93.775, 93.777, and 93.778, Activities Allowed or Unallowed; Allowable Costs/Cost Principles; and Matching, Level of Effort, and Earmarking - Home Help Payment Oversight See Schedule of Findings and Questioned Costs for chart/table. Condition MDHHS did not review home help provider invoices for 4 (27%) of 15 sampled payments to individual providers, totaling $485, to help ensure home help payments were reflective of the services provided. 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 ASM to further define specific policies and procedures for delivery of Medicaid HHP services. ASM Section 135 requires individual providers to submit monthly invoices for reimbursement. Cause Although the Electronic Service Verifications (ESV) and Paper Service Verifications (PSV) collect information on completed services, prior to April 1, 2022 there was no automated review of the ESV information and there continues to be no automated review of the PSV information to determine if all services were provided before payment was issued. Effect MDHHS paid a total of $485 for services from October 1, 2021 through September 30, 2022 that were not supported by home help provider invoices for the sampled payments. 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 that are less than $25,000 if it is likely total questioned costs would exceed $25,000. ? $348 - federal share. ? $137 - State share of costs MDHHS inappropriately used as matching. Recommendation We recommend MDHHS review home help provider invoices to help ensure home help payments are reflective of the services provided. Management Views MDHHS agrees with the finding.
FINDING 2022-019 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. Background In 2014, federal regulations changed the methodology for determining eligibility for certain Medicaid Cluster and CHIP beneficiaries to a methodology using federal income tax data known as MAGI. Federal regulation 26 CFR 301.6103(a) prohibits an auditor from using federal income tax data unless in connection with an audit of the state agency responsible for the administration of the state tax law. For 2014 through 2018, auditors were not expected to review MAGI eligibility determinations. Beginning in 2019, the U.S. Office of Management and Budget* (OMB) Compliance Supplement was revised requiring auditors to review MAGI eligibility determinations for both the Medicaid Cluster and CHIP. Also, because of the public health emergency, MDHHS was not required to perform redeterminations and could not end healthcare coverage unless the individual voluntarily requested termination, moved out of state, or was deceased. As a result, we sampled beneficiaries for each program who either began receiving assistance or had a change in their type of assistance during fiscal year 2022. We summarized the results of our eligibility review in the following table: See Schedule of Findings and Questioned Costs for chart/table. For an estimated 74,086 Medicaid and 16,324 CHIP beneficiaries, we were unable to determine if MDHHS complied with federal laws and regulations related to MAGI-based eligibility because federal regulations prohibited our use of federal income tax data and the beneficiaries' case record did not contain other available income information. Other income information is not required to be included in the case record when a determination of eligibility is based on MAGI. However, if such information was available, we reviewed this information for eligibility purposes to accurately report the sample items that could not be tested. The results of the testing for the remaining 54 Medicaid and 48 CHIP beneficiaries we were able to review are summarized in the finding below. Condition MDHHS did not ensure or demonstrate compliance with federal laws and regulations relating to beneficiary eligibility. Our review disclosed: a. MDHHS did not determine beneficiary eligibility in accordance with eligibility requirements for 4 (7%) of 54 Medicaid and 11 (23%) of 48 CHIP cases reviewed. b. MDHHS did not maintain case file documentation that supports the beneficiary eligibility determination for 1 (2%) of 54 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 regulation 42 CFR 435.914 requires 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. Cause For part a., MDHHS indicated it did not properly consider all available beneficiary information when determining beneficiary eligibility because of system issues and staff actions. For part b., MDHHS indicated the missing documentation resulted from staff oversight. 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 9% Medicaid and 23% 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 that are less than $25,000 if it is likely total questioned costs would exceed $25,000. ? $1,969 - federal share. ? $656 - 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. Management Views MDHHS agrees with the finding.
FINDING 2022-020 Medicaid Cluster, ALN 93.775, 93.777, and 93.778 and Children's Health Insurance Program, ALN 93.767 - Expenditure Processing for Medical Payments See Schedule of Findings and Questioned Costs for chart/table. Condition MDHHS did not ensure Bridges and CHAMPS contained the correct Medicaid Cluster and CHIP eligibility information to record expenditures to the appropriate program at the time of payment and to ensure the related federal draw was accurate and timely. On a quarterly basis, MDHHS transferred expenditure amounts from the Medicaid Cluster to CHIP by completing a summary-level adjustment determined by analyzing CHAMPS payment data and Bridges eligibility data. As a result, MDHHS identified it incorrectly recorded $39.1 million of CHIP medical payments to the Medicaid Cluster throughout fiscal year 2022. However, we selected a sample of 2 beneficiaries that were transferred to CHIP and noted both beneficiaries were not eligible for CHIP but were in fact Medicaid eligible and, therefore, should not have been transferred. Criteria Federal regulation 45 CFR 75.303 requires the auditee to establish and maintain effective internal control over federal programs that provides reasonable assurance the auditee is managing federal awards in compliance with federal statutes, regulations, and the terms and conditions of federal awards. Federal regulation 31 CFR 205 requires state recipients to enter into agreements with the U.S. Department of the Treasury that prescribe specific methods of drawing down federal funds for selected large programs. Cause MDHHS implemented a system change to correct eligibility classifications in Bridges in April 2021. All new cases are being correctly routed. MDHHS expects all existing cases will be updated during the 14-month period following the May 11, 2023 end of the public health emergency, as allowed by the Centers for Medicare and Medicaid Services (CMS). The Medicaid Cluster to CHIP transfer was completed correctly; however, because of an incorrect eligibility determination reflected in Bridges, some cases were transferred in error. Effect MDHHS inappropriately transferred $294 Medicaid Cluster expenditures to CHIP. The federal grantor agency could issue sanctions or disallowances related to noncompliance. Also, of the $39.1 million in quarterly transfers, MDHHS may have improperly received either federal Medicaid Cluster funds or federal CHIP funds depending on the accuracy of the transferred amount. After MDHHS recorded the quarterly summary-level adjustments in the accounting system, it returned the Medicaid Cluster funds to the federal government and appropriately received reimbursement from CHIP. The quarterly CHIP draws were not compliant with the State's Cash Management Improvement Act (CMIA) agreement, which required weekly actual costs draws. For the CHIP compliance requirements noted, we consider this to be a material weakness and material noncompliance because the $39.1 million CHIP expenditures identified by MDHHS as inappropriately charged to and reimbursed by the Medicaid Cluster represented 14% of total CHIP expenditures and both sample items were inappropriately transferred to CHIP. Known Questioned Costs Federal regulation 2 CFR 200.516(a)(3) requires the auditor to report known questioned costs that are less than $25,000 if it is likely total questioned costs would exceed $25,000. ? $235 - federal share of CHIP payments made to providers for ineligible CHIP beneficiaries, of which $235 is questioned in Finding 2022-019. ? $58 - State share of costs MDHHS inappropriately used as matching. Recommendation We recommend MDHHS ensure Bridges and CHAMPS contain the correct Medicaid Cluster and CHIP eligibility information to allow MDHHS to record expenditures to the appropriate program at the time of payment and to ensure the related federal draw is accurate and timely. Management Views MDHHS agrees with the finding.
FINDING 2022-047 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 $5,774 for 15 (50%) of 30 payments sampled from a $1,390,653 population of beneficiary payments with no corresponding Medicaid coverage. Criteria Federal regulation 42 CFR 435.1002(b) indicates that federal funding is available only for services provided to eligible beneficiaries. Cause MDHHS informed us because of system and interface issues in both Bridges and CHAMPS, eligibility information was not always properly updated in 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 that are less than $25,000 if it is likely total questioned costs exceed $25,000. ? $5,103 - federal share of payments made to providers on behalf of ineligible beneficiaries. ? $671 - State share of payments made to providers on behalf of ineligible beneficiaries. Recommendation We recommend that MDHHS ensure that beneficiary eligibility is updated in CHAMPS. Management Views MDHHS agrees with the finding.
FINDING 2022-048 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 $324, for 2 (25%) of 8 sampled clients who were hospitalized while receiving Home Help Program (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 135 prohibits payment for HHP services on days a client is admitted to a hospital and for all subsequent days they remain in that facility. ASM Section 135 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, the monthly hospitalization reports are not capturing all facility stays for home help clients. Effect MDHHS paid a total of $324 from October 1, 2021 through September 30, 2022 for sampled clients who did not qualify for the 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 that are less than $25,000 if it is likely total questioned costs would exceed $25,000. ? $232 - federal share of amounts paid for HHP services while sampled clients were hospitalized. ? $92 - 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 2022-049 Medicaid Cluster, ALN 93.775, 93.777, and 93.778, Activities Allowed or Unallowed; Allowable Costs/Cost Principles; and Matching, Level of Effort, and Earmarking - Home Help Payment Oversight See Schedule of Findings and Questioned Costs for chart/table. Condition MDHHS did not review home help provider invoices for 4 (27%) of 15 sampled payments to individual providers, totaling $485, to help ensure home help payments were reflective of the services provided. 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 ASM to further define specific policies and procedures for delivery of Medicaid HHP services. ASM Section 135 requires individual providers to submit monthly invoices for reimbursement. Cause Although the Electronic Service Verifications (ESV) and Paper Service Verifications (PSV) collect information on completed services, prior to April 1, 2022 there was no automated review of the ESV information and there continues to be no automated review of the PSV information to determine if all services were provided before payment was issued. Effect MDHHS paid a total of $485 for services from October 1, 2021 through September 30, 2022 that were not supported by home help provider invoices for the sampled payments. 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 that are less than $25,000 if it is likely total questioned costs would exceed $25,000. ? $348 - federal share. ? $137 - State share of costs MDHHS inappropriately used as matching. Recommendation We recommend MDHHS review home help provider invoices to help ensure home help payments are reflective of the services provided. Management Views MDHHS agrees with the finding.
FINDING 2022-019 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. Background In 2014, federal regulations changed the methodology for determining eligibility for certain Medicaid Cluster and CHIP beneficiaries to a methodology using federal income tax data known as MAGI. Federal regulation 26 CFR 301.6103(a) prohibits an auditor from using federal income tax data unless in connection with an audit of the state agency responsible for the administration of the state tax law. For 2014 through 2018, auditors were not expected to review MAGI eligibility determinations. Beginning in 2019, the U.S. Office of Management and Budget* (OMB) Compliance Supplement was revised requiring auditors to review MAGI eligibility determinations for both the Medicaid Cluster and CHIP. Also, because of the public health emergency, MDHHS was not required to perform redeterminations and could not end healthcare coverage unless the individual voluntarily requested termination, moved out of state, or was deceased. As a result, we sampled beneficiaries for each program who either began receiving assistance or had a change in their type of assistance during fiscal year 2022. We summarized the results of our eligibility review in the following table: See Schedule of Findings and Questioned Costs for chart/table. For an estimated 74,086 Medicaid and 16,324 CHIP beneficiaries, we were unable to determine if MDHHS complied with federal laws and regulations related to MAGI-based eligibility because federal regulations prohibited our use of federal income tax data and the beneficiaries' case record did not contain other available income information. Other income information is not required to be included in the case record when a determination of eligibility is based on MAGI. However, if such information was available, we reviewed this information for eligibility purposes to accurately report the sample items that could not be tested. The results of the testing for the remaining 54 Medicaid and 48 CHIP beneficiaries we were able to review are summarized in the finding below. Condition MDHHS did not ensure or demonstrate compliance with federal laws and regulations relating to beneficiary eligibility. Our review disclosed: a. MDHHS did not determine beneficiary eligibility in accordance with eligibility requirements for 4 (7%) of 54 Medicaid and 11 (23%) of 48 CHIP cases reviewed. b. MDHHS did not maintain case file documentation that supports the beneficiary eligibility determination for 1 (2%) of 54 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 regulation 42 CFR 435.914 requires 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. Cause For part a., MDHHS indicated it did not properly consider all available beneficiary information when determining beneficiary eligibility because of system issues and staff actions. For part b., MDHHS indicated the missing documentation resulted from staff oversight. 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 9% Medicaid and 23% 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 that are less than $25,000 if it is likely total questioned costs would exceed $25,000. ? $1,969 - federal share. ? $656 - 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. Management Views MDHHS agrees with the finding.
FINDING 2022-020 Medicaid Cluster, ALN 93.775, 93.777, and 93.778 and Children's Health Insurance Program, ALN 93.767 - Expenditure Processing for Medical Payments See Schedule of Findings and Questioned Costs for chart/table. Condition MDHHS did not ensure Bridges and CHAMPS contained the correct Medicaid Cluster and CHIP eligibility information to record expenditures to the appropriate program at the time of payment and to ensure the related federal draw was accurate and timely. On a quarterly basis, MDHHS transferred expenditure amounts from the Medicaid Cluster to CHIP by completing a summary-level adjustment determined by analyzing CHAMPS payment data and Bridges eligibility data. As a result, MDHHS identified it incorrectly recorded $39.1 million of CHIP medical payments to the Medicaid Cluster throughout fiscal year 2022. However, we selected a sample of 2 beneficiaries that were transferred to CHIP and noted both beneficiaries were not eligible for CHIP but were in fact Medicaid eligible and, therefore, should not have been transferred. Criteria Federal regulation 45 CFR 75.303 requires the auditee to establish and maintain effective internal control over federal programs that provides reasonable assurance the auditee is managing federal awards in compliance with federal statutes, regulations, and the terms and conditions of federal awards. Federal regulation 31 CFR 205 requires state recipients to enter into agreements with the U.S. Department of the Treasury that prescribe specific methods of drawing down federal funds for selected large programs. Cause MDHHS implemented a system change to correct eligibility classifications in Bridges in April 2021. All new cases are being correctly routed. MDHHS expects all existing cases will be updated during the 14-month period following the May 11, 2023 end of the public health emergency, as allowed by the Centers for Medicare and Medicaid Services (CMS). The Medicaid Cluster to CHIP transfer was completed correctly; however, because of an incorrect eligibility determination reflected in Bridges, some cases were transferred in error. Effect MDHHS inappropriately transferred $294 Medicaid Cluster expenditures to CHIP. The federal grantor agency could issue sanctions or disallowances related to noncompliance. Also, of the $39.1 million in quarterly transfers, MDHHS may have improperly received either federal Medicaid Cluster funds or federal CHIP funds depending on the accuracy of the transferred amount. After MDHHS recorded the quarterly summary-level adjustments in the accounting system, it returned the Medicaid Cluster funds to the federal government and appropriately received reimbursement from CHIP. The quarterly CHIP draws were not compliant with the State's Cash Management Improvement Act (CMIA) agreement, which required weekly actual costs draws. For the CHIP compliance requirements noted, we consider this to be a material weakness and material noncompliance because the $39.1 million CHIP expenditures identified by MDHHS as inappropriately charged to and reimbursed by the Medicaid Cluster represented 14% of total CHIP expenditures and both sample items were inappropriately transferred to CHIP. Known Questioned Costs Federal regulation 2 CFR 200.516(a)(3) requires the auditor to report known questioned costs that are less than $25,000 if it is likely total questioned costs would exceed $25,000. ? $235 - federal share of CHIP payments made to providers for ineligible CHIP beneficiaries, of which $235 is questioned in Finding 2022-019. ? $58 - State share of costs MDHHS inappropriately used as matching. Recommendation We recommend MDHHS ensure Bridges and CHAMPS contain the correct Medicaid Cluster and CHIP eligibility information to allow MDHHS to record expenditures to the appropriate program at the time of payment and to ensure the related federal draw is accurate and timely. Management Views MDHHS agrees with the finding.
FINDING 2022-047 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 $5,774 for 15 (50%) of 30 payments sampled from a $1,390,653 population of beneficiary payments with no corresponding Medicaid coverage. Criteria Federal regulation 42 CFR 435.1002(b) indicates that federal funding is available only for services provided to eligible beneficiaries. Cause MDHHS informed us because of system and interface issues in both Bridges and CHAMPS, eligibility information was not always properly updated in 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 that are less than $25,000 if it is likely total questioned costs exceed $25,000. ? $5,103 - federal share of payments made to providers on behalf of ineligible beneficiaries. ? $671 - State share of payments made to providers on behalf of ineligible beneficiaries. Recommendation We recommend that MDHHS ensure that beneficiary eligibility is updated in CHAMPS. Management Views MDHHS agrees with the finding.
FINDING 2022-048 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 $324, for 2 (25%) of 8 sampled clients who were hospitalized while receiving Home Help Program (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 135 prohibits payment for HHP services on days a client is admitted to a hospital and for all subsequent days they remain in that facility. ASM Section 135 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, the monthly hospitalization reports are not capturing all facility stays for home help clients. Effect MDHHS paid a total of $324 from October 1, 2021 through September 30, 2022 for sampled clients who did not qualify for the 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 that are less than $25,000 if it is likely total questioned costs would exceed $25,000. ? $232 - federal share of amounts paid for HHP services while sampled clients were hospitalized. ? $92 - 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 2022-049 Medicaid Cluster, ALN 93.775, 93.777, and 93.778, Activities Allowed or Unallowed; Allowable Costs/Cost Principles; and Matching, Level of Effort, and Earmarking - Home Help Payment Oversight See Schedule of Findings and Questioned Costs for chart/table. Condition MDHHS did not review home help provider invoices for 4 (27%) of 15 sampled payments to individual providers, totaling $485, to help ensure home help payments were reflective of the services provided. 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 ASM to further define specific policies and procedures for delivery of Medicaid HHP services. ASM Section 135 requires individual providers to submit monthly invoices for reimbursement. Cause Although the Electronic Service Verifications (ESV) and Paper Service Verifications (PSV) collect information on completed services, prior to April 1, 2022 there was no automated review of the ESV information and there continues to be no automated review of the PSV information to determine if all services were provided before payment was issued. Effect MDHHS paid a total of $485 for services from October 1, 2021 through September 30, 2022 that were not supported by home help provider invoices for the sampled payments. 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 that are less than $25,000 if it is likely total questioned costs would exceed $25,000. ? $348 - federal share. ? $137 - State share of costs MDHHS inappropriately used as matching. Recommendation We recommend MDHHS review home help provider invoices to help ensure home help payments are reflective of the services provided. Management Views MDHHS agrees with the finding.
FINDING 2022-054 Temporary Assistance for Needy Families, ALN 93.558, Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Eligibility; and Matching, Level of Effort, and Earmarking - 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 TANF-funded assistance payments. We noted the client's case records did not include the following: a. Documentation to support completion of the Family Self-Sufficiency Plan, verifications to support the relationship of the child to the adult on the case record, records to support children older than 6 were attending school full time, and inquiry regarding parole violations for 6 (30%) of 20 sampled TANF-funded Family Independence Program (FIP) payments. b. Completed applications, support for timely completion of the Family Automated Screening Tool, verifications to support the relationship of the child to the adult on the case record, and records to support children older than 6 were attending school full time for 2 (29%) of 7 sampled TANF-COVID-19 funded clothing allowance payments for eligible children receiving FIP or ineligible for FIP due to receiving Supplemental Security Income during September 2022. 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. Also, federal law 42 USC 608(a)(9)(A) states that a state may not provide assistance to any individual who is violating a condition of probation or parole imposed under federal or State law. Further, Public Act 166 of 2022 required MDHHS to allocate an annual clothing allowance to all eligible children in a FIP group. 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 that apply to both the federal award and other activities of the state. Cause For part a., MDHHS informed us its controls were not sufficient to ensure that all of the required verification documentation was appropriately maintained in the client's case record. For part b., MDHHS informed us that because these families received FIP benefits during September 2022, they were eligible for the COVID-19 clothing allowance. However, our review disclosed the two case records did not support FIP eligibility for September 2022. Effect We consider this to be a material weakness and material noncompliance because MDHHS may have made payments to ineligible recipients and because of the high error rates noted. 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 that are less than $25,000 if it is likely total questioned costs would exceed $25,000. ? $8,368 - federal share. ? $56 - State share of costs MDHHS inappropriately used as State maintenance of effort. 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 2022-054 Temporary Assistance for Needy Families, ALN 93.558, Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Eligibility; and Matching, Level of Effort, and Earmarking - 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 TANF-funded assistance payments. We noted the client's case records did not include the following: a. Documentation to support completion of the Family Self-Sufficiency Plan, verifications to support the relationship of the child to the adult on the case record, records to support children older than 6 were attending school full time, and inquiry regarding parole violations for 6 (30%) of 20 sampled TANF-funded Family Independence Program (FIP) payments. b. Completed applications, support for timely completion of the Family Automated Screening Tool, verifications to support the relationship of the child to the adult on the case record, and records to support children older than 6 were attending school full time for 2 (29%) of 7 sampled TANF-COVID-19 funded clothing allowance payments for eligible children receiving FIP or ineligible for FIP due to receiving Supplemental Security Income during September 2022. 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. Also, federal law 42 USC 608(a)(9)(A) states that a state may not provide assistance to any individual who is violating a condition of probation or parole imposed under federal or State law. Further, Public Act 166 of 2022 required MDHHS to allocate an annual clothing allowance to all eligible children in a FIP group. 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 that apply to both the federal award and other activities of the state. Cause For part a., MDHHS informed us its controls were not sufficient to ensure that all of the required verification documentation was appropriately maintained in the client's case record. For part b., MDHHS informed us that because these families received FIP benefits during September 2022, they were eligible for the COVID-19 clothing allowance. However, our review disclosed the two case records did not support FIP eligibility for September 2022. Effect We consider this to be a material weakness and material noncompliance because MDHHS may have made payments to ineligible recipients and because of the high error rates noted. 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 that are less than $25,000 if it is likely total questioned costs would exceed $25,000. ? $8,368 - federal share. ? $56 - State share of costs MDHHS inappropriately used as State maintenance of effort. 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 2022-057 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, assets, and proof of energy crisis for 13 (32%) of 41 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 assets or income of SER group members during intake in order to determine eligibility for SER energy services. Also, policy states the payment amount must match the amount on the past due or shut-off notice. Cause MDHHS's internal control and monitoring activities were not sufficient to ensure that county/district office caseworkers 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 that are less than $25,000 if it is likely total questioned costs would exceed $25,000. ? $3,772 ? 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 2022-057 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, assets, and proof of energy crisis for 13 (32%) of 41 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 assets or income of SER group members during intake in order to determine eligibility for SER energy services. Also, policy states the payment amount must match the amount on the past due or shut-off notice. Cause MDHHS's internal control and monitoring activities were not sufficient to ensure that county/district office caseworkers 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 that are less than $25,000 if it is likely total questioned costs would exceed $25,000. ? $3,772 ? 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 2022-019 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. Background In 2014, federal regulations changed the methodology for determining eligibility for certain Medicaid Cluster and CHIP beneficiaries to a methodology using federal income tax data known as MAGI. Federal regulation 26 CFR 301.6103(a) prohibits an auditor from using federal income tax data unless in connection with an audit of the state agency responsible for the administration of the state tax law. For 2014 through 2018, auditors were not expected to review MAGI eligibility determinations. Beginning in 2019, the U.S. Office of Management and Budget* (OMB) Compliance Supplement was revised requiring auditors to review MAGI eligibility determinations for both the Medicaid Cluster and CHIP. Also, because of the public health emergency, MDHHS was not required to perform redeterminations and could not end healthcare coverage unless the individual voluntarily requested termination, moved out of state, or was deceased. As a result, we sampled beneficiaries for each program who either began receiving assistance or had a change in their type of assistance during fiscal year 2022. We summarized the results of our eligibility review in the following table: See Schedule of Findings and Questioned Costs for chart/table. For an estimated 74,086 Medicaid and 16,324 CHIP beneficiaries, we were unable to determine if MDHHS complied with federal laws and regulations related to MAGI-based eligibility because federal regulations prohibited our use of federal income tax data and the beneficiaries' case record did not contain other available income information. Other income information is not required to be included in the case record when a determination of eligibility is based on MAGI. However, if such information was available, we reviewed this information for eligibility purposes to accurately report the sample items that could not be tested. The results of the testing for the remaining 54 Medicaid and 48 CHIP beneficiaries we were able to review are summarized in the finding below. Condition MDHHS did not ensure or demonstrate compliance with federal laws and regulations relating to beneficiary eligibility. Our review disclosed: a. MDHHS did not determine beneficiary eligibility in accordance with eligibility requirements for 4 (7%) of 54 Medicaid and 11 (23%) of 48 CHIP cases reviewed. b. MDHHS did not maintain case file documentation that supports the beneficiary eligibility determination for 1 (2%) of 54 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 regulation 42 CFR 435.914 requires 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. Cause For part a., MDHHS indicated it did not properly consider all available beneficiary information when determining beneficiary eligibility because of system issues and staff actions. For part b., MDHHS indicated the missing documentation resulted from staff oversight. 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 9% Medicaid and 23% 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 that are less than $25,000 if it is likely total questioned costs would exceed $25,000. ? $1,969 - federal share. ? $656 - 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. Management Views MDHHS agrees with the finding.
FINDING 2022-020 Medicaid Cluster, ALN 93.775, 93.777, and 93.778 and Children's Health Insurance Program, ALN 93.767 - Expenditure Processing for Medical Payments See Schedule of Findings and Questioned Costs for chart/table. Condition MDHHS did not ensure Bridges and CHAMPS contained the correct Medicaid Cluster and CHIP eligibility information to record expenditures to the appropriate program at the time of payment and to ensure the related federal draw was accurate and timely. On a quarterly basis, MDHHS transferred expenditure amounts from the Medicaid Cluster to CHIP by completing a summary-level adjustment determined by analyzing CHAMPS payment data and Bridges eligibility data. As a result, MDHHS identified it incorrectly recorded $39.1 million of CHIP medical payments to the Medicaid Cluster throughout fiscal year 2022. However, we selected a sample of 2 beneficiaries that were transferred to CHIP and noted both beneficiaries were not eligible for CHIP but were in fact Medicaid eligible and, therefore, should not have been transferred. Criteria Federal regulation 45 CFR 75.303 requires the auditee to establish and maintain effective internal control over federal programs that provides reasonable assurance the auditee is managing federal awards in compliance with federal statutes, regulations, and the terms and conditions of federal awards. Federal regulation 31 CFR 205 requires state recipients to enter into agreements with the U.S. Department of the Treasury that prescribe specific methods of drawing down federal funds for selected large programs. Cause MDHHS implemented a system change to correct eligibility classifications in Bridges in April 2021. All new cases are being correctly routed. MDHHS expects all existing cases will be updated during the 14-month period following the May 11, 2023 end of the public health emergency, as allowed by the Centers for Medicare and Medicaid Services (CMS). The Medicaid Cluster to CHIP transfer was completed correctly; however, because of an incorrect eligibility determination reflected in Bridges, some cases were transferred in error. Effect MDHHS inappropriately transferred $294 Medicaid Cluster expenditures to CHIP. The federal grantor agency could issue sanctions or disallowances related to noncompliance. Also, of the $39.1 million in quarterly transfers, MDHHS may have improperly received either federal Medicaid Cluster funds or federal CHIP funds depending on the accuracy of the transferred amount. After MDHHS recorded the quarterly summary-level adjustments in the accounting system, it returned the Medicaid Cluster funds to the federal government and appropriately received reimbursement from CHIP. The quarterly CHIP draws were not compliant with the State's Cash Management Improvement Act (CMIA) agreement, which required weekly actual costs draws. For the CHIP compliance requirements noted, we consider this to be a material weakness and material noncompliance because the $39.1 million CHIP expenditures identified by MDHHS as inappropriately charged to and reimbursed by the Medicaid Cluster represented 14% of total CHIP expenditures and both sample items were inappropriately transferred to CHIP. Known Questioned Costs Federal regulation 2 CFR 200.516(a)(3) requires the auditor to report known questioned costs that are less than $25,000 if it is likely total questioned costs would exceed $25,000. ? $235 - federal share of CHIP payments made to providers for ineligible CHIP beneficiaries, of which $235 is questioned in Finding 2022-019. ? $58 - State share of costs MDHHS inappropriately used as matching. Recommendation We recommend MDHHS ensure Bridges and CHAMPS contain the correct Medicaid Cluster and CHIP eligibility information to allow MDHHS to record expenditures to the appropriate program at the time of payment and to ensure the related federal draw is accurate and timely. Management Views MDHHS agrees with the finding.
FINDING 2022-019 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. Background In 2014, federal regulations changed the methodology for determining eligibility for certain Medicaid Cluster and CHIP beneficiaries to a methodology using federal income tax data known as MAGI. Federal regulation 26 CFR 301.6103(a) prohibits an auditor from using federal income tax data unless in connection with an audit of the state agency responsible for the administration of the state tax law. For 2014 through 2018, auditors were not expected to review MAGI eligibility determinations. Beginning in 2019, the U.S. Office of Management and Budget* (OMB) Compliance Supplement was revised requiring auditors to review MAGI eligibility determinations for both the Medicaid Cluster and CHIP. Also, because of the public health emergency, MDHHS was not required to perform redeterminations and could not end healthcare coverage unless the individual voluntarily requested termination, moved out of state, or was deceased. As a result, we sampled beneficiaries for each program who either began receiving assistance or had a change in their type of assistance during fiscal year 2022. We summarized the results of our eligibility review in the following table: See Schedule of Findings and Questioned Costs for chart/table. For an estimated 74,086 Medicaid and 16,324 CHIP beneficiaries, we were unable to determine if MDHHS complied with federal laws and regulations related to MAGI-based eligibility because federal regulations prohibited our use of federal income tax data and the beneficiaries' case record did not contain other available income information. Other income information is not required to be included in the case record when a determination of eligibility is based on MAGI. However, if such information was available, we reviewed this information for eligibility purposes to accurately report the sample items that could not be tested. The results of the testing for the remaining 54 Medicaid and 48 CHIP beneficiaries we were able to review are summarized in the finding below. Condition MDHHS did not ensure or demonstrate compliance with federal laws and regulations relating to beneficiary eligibility. Our review disclosed: a. MDHHS did not determine beneficiary eligibility in accordance with eligibility requirements for 4 (7%) of 54 Medicaid and 11 (23%) of 48 CHIP cases reviewed. b. MDHHS did not maintain case file documentation that supports the beneficiary eligibility determination for 1 (2%) of 54 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 regulation 42 CFR 435.914 requires 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. Cause For part a., MDHHS indicated it did not properly consider all available beneficiary information when determining beneficiary eligibility because of system issues and staff actions. For part b., MDHHS indicated the missing documentation resulted from staff oversight. 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 9% Medicaid and 23% 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 that are less than $25,000 if it is likely total questioned costs would exceed $25,000. ? $1,969 - federal share. ? $656 - 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. Management Views MDHHS agrees with the finding.
FINDING 2022-020 Medicaid Cluster, ALN 93.775, 93.777, and 93.778 and Children's Health Insurance Program, ALN 93.767 - Expenditure Processing for Medical Payments See Schedule of Findings and Questioned Costs for chart/table. Condition MDHHS did not ensure Bridges and CHAMPS contained the correct Medicaid Cluster and CHIP eligibility information to record expenditures to the appropriate program at the time of payment and to ensure the related federal draw was accurate and timely. On a quarterly basis, MDHHS transferred expenditure amounts from the Medicaid Cluster to CHIP by completing a summary-level adjustment determined by analyzing CHAMPS payment data and Bridges eligibility data. As a result, MDHHS identified it incorrectly recorded $39.1 million of CHIP medical payments to the Medicaid Cluster throughout fiscal year 2022. However, we selected a sample of 2 beneficiaries that were transferred to CHIP and noted both beneficiaries were not eligible for CHIP but were in fact Medicaid eligible and, therefore, should not have been transferred. Criteria Federal regulation 45 CFR 75.303 requires the auditee to establish and maintain effective internal control over federal programs that provides reasonable assurance the auditee is managing federal awards in compliance with federal statutes, regulations, and the terms and conditions of federal awards. Federal regulation 31 CFR 205 requires state recipients to enter into agreements with the U.S. Department of the Treasury that prescribe specific methods of drawing down federal funds for selected large programs. Cause MDHHS implemented a system change to correct eligibility classifications in Bridges in April 2021. All new cases are being correctly routed. MDHHS expects all existing cases will be updated during the 14-month period following the May 11, 2023 end of the public health emergency, as allowed by the Centers for Medicare and Medicaid Services (CMS). The Medicaid Cluster to CHIP transfer was completed correctly; however, because of an incorrect eligibility determination reflected in Bridges, some cases were transferred in error. Effect MDHHS inappropriately transferred $294 Medicaid Cluster expenditures to CHIP. The federal grantor agency could issue sanctions or disallowances related to noncompliance. Also, of the $39.1 million in quarterly transfers, MDHHS may have improperly received either federal Medicaid Cluster funds or federal CHIP funds depending on the accuracy of the transferred amount. After MDHHS recorded the quarterly summary-level adjustments in the accounting system, it returned the Medicaid Cluster funds to the federal government and appropriately received reimbursement from CHIP. The quarterly CHIP draws were not compliant with the State's Cash Management Improvement Act (CMIA) agreement, which required weekly actual costs draws. For the CHIP compliance requirements noted, we consider this to be a material weakness and material noncompliance because the $39.1 million CHIP expenditures identified by MDHHS as inappropriately charged to and reimbursed by the Medicaid Cluster represented 14% of total CHIP expenditures and both sample items were inappropriately transferred to CHIP. Known Questioned Costs Federal regulation 2 CFR 200.516(a)(3) requires the auditor to report known questioned costs that are less than $25,000 if it is likely total questioned costs would exceed $25,000. ? $235 - federal share of CHIP payments made to providers for ineligible CHIP beneficiaries, of which $235 is questioned in Finding 2022-019. ? $58 - State share of costs MDHHS inappropriately used as matching. Recommendation We recommend MDHHS ensure Bridges and CHAMPS contain the correct Medicaid Cluster and CHIP eligibility information to allow MDHHS to record expenditures to the appropriate program at the time of payment and to ensure the related federal draw is accurate and timely. Management Views MDHHS agrees with the finding.