FINDING 2023-021 SNAP Cluster, ALN 10.551 and 10.561, Special Tests and Provisions - EBT Reconciliations See Schedule of Findings and Questioned Costs for chart/table. Background MDHHS is responsible for determining eligibility for SNAP benefits. The State's EBT provider then provides the SNAP recipient with a debit card which can be used for food purchases at authorized retailer stores. The State's EBT contractor is responsible for paying retailers that have accepted EBT cards for qualified purchases. The EBT contractor then receives funds from the State, via wire transfer, as reimbursement for the retail purchases. MDHHS is responsible for reconciling the payments made to retailers by its EBT contractor with the amounts drawn from its EBT account with the U.S. Department of the Treasury. Condition MDHHS did not complete daily reconciliations of payments made to retailers by its EBT contractor with the client information recorded in its system and the reports used to make the federal draw. MDHHS developed the Benefit Issuer Food Stamp Report to summarize the total detailed daily client SNAP activity reported by its EBT contractor; however, because of inaccuracies, MDHHS did not use the report in its reconciliation process. Criteria Federal regulation 7 CFR 274.1(i)(1) requires state agencies to establish procedures to monitor SNAP benefit issuers to ensure their operations comply with SNAP requirements, including the identification and correction of deficiencies and to report any violations to the federal government. Also, federal regulation 7 CFR 274.4(a) requires state agencies to reconcile total EBT funds entering into, exiting from, and remaining in the EBT contractor's system each day and to verify retailer credit against the deposit information entered in the Automated Clearing House. Cause MDHHS informed us that EBT reconciliations between Bridges, Bridges data warehouse, and the vendor are conducted on a monthly basis using daily data because of the timing of benefit authorization, availability of vendor data, and usage of benefits. Effect Without proper reconciliation procedures in place, MDHHS could not ensure daily SNAP payment amounts recorded in its system were accurate. We consider this to be a material weakness and material noncompliance because of the amount of SNAP benefits issued through the EBT process and because this required daily reconciliation was not in place in fiscal year 2023. The federal grantor agency could issue sanctions or disallowances related to noncompliance. Known Questioned Costs None. Recommendation We recommend MDHHS complete daily reconciliations of payments made to retailers by its EBT contractor with client information recorded in its system and the reports used to make the federal draw. Management Views MDHHS disagrees that a material weakness and material noncompliance exist. MDHHS federal reporting conducts a daily reconciliation of federal draws and authorizations to retailers based on vendor EBT reports. In addition, MDHHS conducts a monthly reconciliation between Bridges, Bridges data warehouse, and vendor EBT reports using daily data to ensure the client information in Bridges and Bridges data warehouse is accurate. The monthly reconciliation process does not impact the federal draw because the daily reconciliation of the vendor EBT report is used for this purpose. MDHHS provided detailed and accurate descriptions of MDHHS daily and monthly EBT reconciliations to the designated federal awarding agency contacts at the United States Department of Agriculture Food and Nutrition Service Agency that are familiar with MDHHS processes and received confirmation that the current reconciliation processes in place are sufficient to comply with federal regulations. Auditor's Comments to Management Views MDHHS acknowledges it does not perform daily reconciliations of payments made to retailers by its EBT contractor to Bridges data although federal regulation 7 CFR 274.4(a) requires state agencies to reconcile total EBT funds entering into, exiting from, and remaining in the EBT contractor's system each day. Also, MDHHS did not sufficiently communicate its EBT process to its regional federal contact person. The daily EBT "reconciliation" noted above does not include Bridges data, but instead uses the EBT contractor report to confirm the accuracy of the federal account balance. Therefore, the regional federal contact person did not have all necessary information to assess if MDHHS's process complied with the federal regulation. In addition, MDHHS did not obtain an opinion from a federal person with the authority to issue an opinion on behalf of the United States Department of Agriculture ensuring consistent interpretation of federal regulations. Federal regulations 2 CFR 200.516(a)(1) and 2 CFR 200.516(a)(2) state it is the auditor's determination of whether a deficiency in internal control is a significant deficiency or a material weakness and whether a noncompliance with federal statutes, regulations, or the terms and conditions of a federal award is material for the purpose of reporting an audit finding. MDHHS incurred SNAP (ALN 10.551) expenditures of $3.7 billion during fiscal year 2023, with daily draws averaging over $20 million; therefore, the lack of a daily reconciliation increases the risk MDHHS may not detect differences between the State records and the EBT contractor's reports prior to drawing down federal funds. The finding stands as written.
FINDING 2023-008 MDHHS, PACAP - Inappropriate PACAP Allocation See Schedule of Findings and Questioned Costs for chart/table. Condition MDHHS did not ensure it used the appropriate Public Assistance Cost Allocation Plan (PACAP) data to allocate expenditures to its federal programs. We noted: a. 2 (1%) of 203 statistic groups for which MDHHS used incorrect data to calculate the PACAP percentages, which affected 6 (40%) of 15 sampled cost pools. b. 2 (13%) of 16 Random Moment Time Studies, which MDHHS used to calculate PACAP percentages, did not have a complete population of participants, which affected 6 (40%) of 15 sampled cost pools. Criteria Federal regulation 45 CFR 95.507 and Appendix VI of federal regulation 2 CFR 200 state costs are allocable to a particular cost objective if the services involved are chargeable or assignable to such cost objective in accordance with relative benefits received. Federal regulation 45 CFR 95.517 requires MDHHS to claim federal financial participation for costs associated with a program only in accordance with its approved or amended (at its discretion) PACAP. Federal regulation 2 CFR 200.306 requires that costs used for matching be allowable costs to the federal award. Cause MDHHS informed us its current quality control processes did not detect the errors. Effect MDHHS incorrectly allocated expenditures to various federal programs. The federal grantor agency could issue sanctions or disallowances related to noncompliance. Known Questioned Costs Undeterminable. Recommendation We recommend MDHHS ensure it uses the appropriate PACAP data to allocate expenditures to its federal programs. Management Views MDHHS disagrees the exceptions identified should rise to the level of a significant deficiency and noncompliance. The comprehensive set of quality control processes continue to operate as designed to identify any errors greater than 5.0% of the total difference of the given statistical group from the previous quarter and none of the errors identified in the finding fell outside of this range. For part a., the auditor's review included all related statistical records within each statistical group for the 15 sampled cost pools. This includes all statistics used in the cost allocation process for the entire fiscal year because the costs that originate in these cost pools are referenced in all other cost pools. After review of all fiscal year 2023 statistical data, 6 individual statistical records out of 6,548 were found to be in error. After recalculating the cost allocated amounts related to this error, we identified that approximately $15,346 was overclaimed to LIHEAP out of $1,732,426,561 (0.0009%) of costs allocated in fiscal year 2023 by MDHHS. The other program areas identified were underclaimed. For part b., MDHHS acknowledges the exclusion of a participant from two quarters (quarter three and quarter four) of the Family Independence Specialists/Eligibility Specialists (FIS/ES) Random Moment Time Study (RMTS) in the sample. Although the actual dollar value impact of excluding a participant is indeterminable, MDHHS concluded the impact would be immaterial because there are over 6,000 RMTS participants each quarter and RMTS results vary little from quarter to quarter from non-programmatic changes. Auditor's Comments to Management Views For part a., we calculated the cost allocated amounts related to the error and identified that approximately $17,317 was overclaimed to LIHEAP out of $141.0 million of second quarter expenditures. However, in combination with part b., we could not conclude overclaims for other federal programs were less than $25,000. For part b., MDHHS used incomplete data to allocate approximately $143.5 million of third quarter expenditures and $171.2 million of fourth quarter expenditures for a total of $314.6 million to various federal and State programs, which may have affected the percentages used to allocate these expenditures. MDHHS did not assess the impact of these incomplete records. Consequently, it has no basis for its "immaterial" statement. Given the errors noted in parts a. and b., we could not determine the combined known questioned costs; however, it is likely that the improper allocation related to the $455.7 million exceeds $25,000 for the federal programs identified. Federal regulation 2 CFR 200.516(a)(3) states that in evaluating the effect of questioned costs on the opinion on noncompliance, the auditor considers the best estimate of total questioned costs (likely questioned costs), not just the questioned costs specifically identified (known questioned costs). The auditor must also report audit findings for known questioned costs when likely questioned costs are greater than $25,000 for a type of compliance requirement for a major program. Therefore, the finding stands as written.
FINDING 2023-021 SNAP Cluster, ALN 10.551 and 10.561, Special Tests and Provisions - EBT Reconciliations See Schedule of Findings and Questioned Costs for chart/table. Background MDHHS is responsible for determining eligibility for SNAP benefits. The State's EBT provider then provides the SNAP recipient with a debit card which can be used for food purchases at authorized retailer stores. The State's EBT contractor is responsible for paying retailers that have accepted EBT cards for qualified purchases. The EBT contractor then receives funds from the State, via wire transfer, as reimbursement for the retail purchases. MDHHS is responsible for reconciling the payments made to retailers by its EBT contractor with the amounts drawn from its EBT account with the U.S. Department of the Treasury. Condition MDHHS did not complete daily reconciliations of payments made to retailers by its EBT contractor with the client information recorded in its system and the reports used to make the federal draw. MDHHS developed the Benefit Issuer Food Stamp Report to summarize the total detailed daily client SNAP activity reported by its EBT contractor; however, because of inaccuracies, MDHHS did not use the report in its reconciliation process. Criteria Federal regulation 7 CFR 274.1(i)(1) requires state agencies to establish procedures to monitor SNAP benefit issuers to ensure their operations comply with SNAP requirements, including the identification and correction of deficiencies and to report any violations to the federal government. Also, federal regulation 7 CFR 274.4(a) requires state agencies to reconcile total EBT funds entering into, exiting from, and remaining in the EBT contractor's system each day and to verify retailer credit against the deposit information entered in the Automated Clearing House. Cause MDHHS informed us that EBT reconciliations between Bridges, Bridges data warehouse, and the vendor are conducted on a monthly basis using daily data because of the timing of benefit authorization, availability of vendor data, and usage of benefits. Effect Without proper reconciliation procedures in place, MDHHS could not ensure daily SNAP payment amounts recorded in its system were accurate. We consider this to be a material weakness and material noncompliance because of the amount of SNAP benefits issued through the EBT process and because this required daily reconciliation was not in place in fiscal year 2023. The federal grantor agency could issue sanctions or disallowances related to noncompliance. Known Questioned Costs None. Recommendation We recommend MDHHS complete daily reconciliations of payments made to retailers by its EBT contractor with client information recorded in its system and the reports used to make the federal draw. Management Views MDHHS disagrees that a material weakness and material noncompliance exist. MDHHS federal reporting conducts a daily reconciliation of federal draws and authorizations to retailers based on vendor EBT reports. In addition, MDHHS conducts a monthly reconciliation between Bridges, Bridges data warehouse, and vendor EBT reports using daily data to ensure the client information in Bridges and Bridges data warehouse is accurate. The monthly reconciliation process does not impact the federal draw because the daily reconciliation of the vendor EBT report is used for this purpose. MDHHS provided detailed and accurate descriptions of MDHHS daily and monthly EBT reconciliations to the designated federal awarding agency contacts at the United States Department of Agriculture Food and Nutrition Service Agency that are familiar with MDHHS processes and received confirmation that the current reconciliation processes in place are sufficient to comply with federal regulations. Auditor's Comments to Management Views MDHHS acknowledges it does not perform daily reconciliations of payments made to retailers by its EBT contractor to Bridges data although federal regulation 7 CFR 274.4(a) requires state agencies to reconcile total EBT funds entering into, exiting from, and remaining in the EBT contractor's system each day. Also, MDHHS did not sufficiently communicate its EBT process to its regional federal contact person. The daily EBT "reconciliation" noted above does not include Bridges data, but instead uses the EBT contractor report to confirm the accuracy of the federal account balance. Therefore, the regional federal contact person did not have all necessary information to assess if MDHHS's process complied with the federal regulation. In addition, MDHHS did not obtain an opinion from a federal person with the authority to issue an opinion on behalf of the United States Department of Agriculture ensuring consistent interpretation of federal regulations. Federal regulations 2 CFR 200.516(a)(1) and 2 CFR 200.516(a)(2) state it is the auditor's determination of whether a deficiency in internal control is a significant deficiency or a material weakness and whether a noncompliance with federal statutes, regulations, or the terms and conditions of a federal award is material for the purpose of reporting an audit finding. MDHHS incurred SNAP (ALN 10.551) expenditures of $3.7 billion during fiscal year 2023, with daily draws averaging over $20 million; therefore, the lack of a daily reconciliation increases the risk MDHHS may not detect differences between the State records and the EBT contractor's reports prior to drawing down federal funds. The finding stands as written.
FINDING 2023-008 MDHHS, PACAP - Inappropriate PACAP Allocation See Schedule of Findings and Questioned Costs for chart/table. Condition MDHHS did not ensure it used the appropriate Public Assistance Cost Allocation Plan (PACAP) data to allocate expenditures to its federal programs. We noted: a. 2 (1%) of 203 statistic groups for which MDHHS used incorrect data to calculate the PACAP percentages, which affected 6 (40%) of 15 sampled cost pools. b. 2 (13%) of 16 Random Moment Time Studies, which MDHHS used to calculate PACAP percentages, did not have a complete population of participants, which affected 6 (40%) of 15 sampled cost pools. Criteria Federal regulation 45 CFR 95.507 and Appendix VI of federal regulation 2 CFR 200 state costs are allocable to a particular cost objective if the services involved are chargeable or assignable to such cost objective in accordance with relative benefits received. Federal regulation 45 CFR 95.517 requires MDHHS to claim federal financial participation for costs associated with a program only in accordance with its approved or amended (at its discretion) PACAP. Federal regulation 2 CFR 200.306 requires that costs used for matching be allowable costs to the federal award. Cause MDHHS informed us its current quality control processes did not detect the errors. Effect MDHHS incorrectly allocated expenditures to various federal programs. The federal grantor agency could issue sanctions or disallowances related to noncompliance. Known Questioned Costs Undeterminable. Recommendation We recommend MDHHS ensure it uses the appropriate PACAP data to allocate expenditures to its federal programs. Management Views MDHHS disagrees the exceptions identified should rise to the level of a significant deficiency and noncompliance. The comprehensive set of quality control processes continue to operate as designed to identify any errors greater than 5.0% of the total difference of the given statistical group from the previous quarter and none of the errors identified in the finding fell outside of this range. For part a., the auditor's review included all related statistical records within each statistical group for the 15 sampled cost pools. This includes all statistics used in the cost allocation process for the entire fiscal year because the costs that originate in these cost pools are referenced in all other cost pools. After review of all fiscal year 2023 statistical data, 6 individual statistical records out of 6,548 were found to be in error. After recalculating the cost allocated amounts related to this error, we identified that approximately $15,346 was overclaimed to LIHEAP out of $1,732,426,561 (0.0009%) of costs allocated in fiscal year 2023 by MDHHS. The other program areas identified were underclaimed. For part b., MDHHS acknowledges the exclusion of a participant from two quarters (quarter three and quarter four) of the Family Independence Specialists/Eligibility Specialists (FIS/ES) Random Moment Time Study (RMTS) in the sample. Although the actual dollar value impact of excluding a participant is indeterminable, MDHHS concluded the impact would be immaterial because there are over 6,000 RMTS participants each quarter and RMTS results vary little from quarter to quarter from non-programmatic changes. Auditor's Comments to Management Views For part a., we calculated the cost allocated amounts related to the error and identified that approximately $17,317 was overclaimed to LIHEAP out of $141.0 million of second quarter expenditures. However, in combination with part b., we could not conclude overclaims for other federal programs were less than $25,000. For part b., MDHHS used incomplete data to allocate approximately $143.5 million of third quarter expenditures and $171.2 million of fourth quarter expenditures for a total of $314.6 million to various federal and State programs, which may have affected the percentages used to allocate these expenditures. MDHHS did not assess the impact of these incomplete records. Consequently, it has no basis for its "immaterial" statement. Given the errors noted in parts a. and b., we could not determine the combined known questioned costs; however, it is likely that the improper allocation related to the $455.7 million exceeds $25,000 for the federal programs identified. Federal regulation 2 CFR 200.516(a)(3) states that in evaluating the effect of questioned costs on the opinion on noncompliance, the auditor considers the best estimate of total questioned costs (likely questioned costs), not just the questioned costs specifically identified (known questioned costs). The auditor must also report audit findings for known questioned costs when likely questioned costs are greater than $25,000 for a type of compliance requirement for a major program. Therefore, the finding stands as written.
FINDING 2023-021 SNAP Cluster, ALN 10.551 and 10.561, Special Tests and Provisions - EBT Reconciliations See Schedule of Findings and Questioned Costs for chart/table. Background MDHHS is responsible for determining eligibility for SNAP benefits. The State's EBT provider then provides the SNAP recipient with a debit card which can be used for food purchases at authorized retailer stores. The State's EBT contractor is responsible for paying retailers that have accepted EBT cards for qualified purchases. The EBT contractor then receives funds from the State, via wire transfer, as reimbursement for the retail purchases. MDHHS is responsible for reconciling the payments made to retailers by its EBT contractor with the amounts drawn from its EBT account with the U.S. Department of the Treasury. Condition MDHHS did not complete daily reconciliations of payments made to retailers by its EBT contractor with the client information recorded in its system and the reports used to make the federal draw. MDHHS developed the Benefit Issuer Food Stamp Report to summarize the total detailed daily client SNAP activity reported by its EBT contractor; however, because of inaccuracies, MDHHS did not use the report in its reconciliation process. Criteria Federal regulation 7 CFR 274.1(i)(1) requires state agencies to establish procedures to monitor SNAP benefit issuers to ensure their operations comply with SNAP requirements, including the identification and correction of deficiencies and to report any violations to the federal government. Also, federal regulation 7 CFR 274.4(a) requires state agencies to reconcile total EBT funds entering into, exiting from, and remaining in the EBT contractor's system each day and to verify retailer credit against the deposit information entered in the Automated Clearing House. Cause MDHHS informed us that EBT reconciliations between Bridges, Bridges data warehouse, and the vendor are conducted on a monthly basis using daily data because of the timing of benefit authorization, availability of vendor data, and usage of benefits. Effect Without proper reconciliation procedures in place, MDHHS could not ensure daily SNAP payment amounts recorded in its system were accurate. We consider this to be a material weakness and material noncompliance because of the amount of SNAP benefits issued through the EBT process and because this required daily reconciliation was not in place in fiscal year 2023. The federal grantor agency could issue sanctions or disallowances related to noncompliance. Known Questioned Costs None. Recommendation We recommend MDHHS complete daily reconciliations of payments made to retailers by its EBT contractor with client information recorded in its system and the reports used to make the federal draw. Management Views MDHHS disagrees that a material weakness and material noncompliance exist. MDHHS federal reporting conducts a daily reconciliation of federal draws and authorizations to retailers based on vendor EBT reports. In addition, MDHHS conducts a monthly reconciliation between Bridges, Bridges data warehouse, and vendor EBT reports using daily data to ensure the client information in Bridges and Bridges data warehouse is accurate. The monthly reconciliation process does not impact the federal draw because the daily reconciliation of the vendor EBT report is used for this purpose. MDHHS provided detailed and accurate descriptions of MDHHS daily and monthly EBT reconciliations to the designated federal awarding agency contacts at the United States Department of Agriculture Food and Nutrition Service Agency that are familiar with MDHHS processes and received confirmation that the current reconciliation processes in place are sufficient to comply with federal regulations. Auditor's Comments to Management Views MDHHS acknowledges it does not perform daily reconciliations of payments made to retailers by its EBT contractor to Bridges data although federal regulation 7 CFR 274.4(a) requires state agencies to reconcile total EBT funds entering into, exiting from, and remaining in the EBT contractor's system each day. Also, MDHHS did not sufficiently communicate its EBT process to its regional federal contact person. The daily EBT "reconciliation" noted above does not include Bridges data, but instead uses the EBT contractor report to confirm the accuracy of the federal account balance. Therefore, the regional federal contact person did not have all necessary information to assess if MDHHS's process complied with the federal regulation. In addition, MDHHS did not obtain an opinion from a federal person with the authority to issue an opinion on behalf of the United States Department of Agriculture ensuring consistent interpretation of federal regulations. Federal regulations 2 CFR 200.516(a)(1) and 2 CFR 200.516(a)(2) state it is the auditor's determination of whether a deficiency in internal control is a significant deficiency or a material weakness and whether a noncompliance with federal statutes, regulations, or the terms and conditions of a federal award is material for the purpose of reporting an audit finding. MDHHS incurred SNAP (ALN 10.551) expenditures of $3.7 billion during fiscal year 2023, with daily draws averaging over $20 million; therefore, the lack of a daily reconciliation increases the risk MDHHS may not detect differences between the State records and the EBT contractor's reports prior to drawing down federal funds. The finding stands as written.
FINDING 2023-022 Pandemic EBT Food Benefits, ALN 10.542, Activities Allowed or Unallowed and Eligibility - Lack of Documentation for School Modality Data Reviews See Schedule of Findings and Questioned Costs for chart/table. Condition MDHHS did not maintain documentation of its efforts to review the accuracy of P-EBT school modality data used to calculate food benefit payments for all eligible students. 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 review monthly sample modality results for program accuracy, including an interview with school personnel and MDE. Cause MDHHS informed us it reviewed the school modality data, but it did not document its review in the log. Effect We consider this to be a material weakness and material noncompliance because MDHHS may have made payments to or on behalf of ineligible students. The federal grantor agency could issue sanctions or disallowances related to noncompliance. Known Questioned Costs None. Recommendation We recommend MDHHS maintain documentation to support that it appropriately reviews the accuracy of P-EBT school modality data. Management Views MDHHS disagrees that not formally documenting the review details on the log rises to the level of a material weakness and material noncompliance. MDHHS selects a sample of schools that submitted data and verifies the accuracy of P-EBT school modality data reported, documenting the schools reviewed within a log. Following the written business process, P-EBT staff first identify public information available to verify the school's modality data such as the school's calendar or news articles, and then reach out to school administration if public information is not available. If additional steps are required to reconcile the data, P-EBT staff document the support and results, sign off on the reconciliation, and forward to a supervisor for review. For this review period, no discrepancies were identified between what the school reported, and school websites. Since no discrepancies were noted, staff verbally communicated the review results to the manager and the log of sample items reviewed were kept within a shared drive. Auditor's Comments to Management Views MDHHS acknowledges it did not document the results of its modality reviews because it verbally communicated the results internally. Documentation of completed reviews is necessary to provide information to both MDHHS supervisors and auditors to validate MDHHS appropriately completed its modality reviews. MDHHS provided a spreadsheet to support its reviews; however, the spreadsheet did not substantiate the reviews were completed. Therefore, without documentation, the auditor cannot perform appropriate audit procedures, including sampling and testing of internal control, to verify MDHHS completed its modality reviews. Federal regulations 2 CFR 200.516(a)(1) and 2 CFR 516(a)(2) state it is the auditor's determination of whether a deficiency in internal control is a significant deficiency or a material weakness and whether a noncompliance with federal statutes, regulations, or the terms and conditions of a federal award is material for the purpose of reporting an audit finding. The lack of a documented modality review process increases the risk MDHHS may not detect inaccuracies in school reported modality and may authorize payments to ineligible students. Therefore, the finding stands as written.
FINDING 2023-008 MDHHS, PACAP - Inappropriate PACAP Allocation See Schedule of Findings and Questioned Costs for chart/table. Condition MDHHS did not ensure it used the appropriate Public Assistance Cost Allocation Plan (PACAP) data to allocate expenditures to its federal programs. We noted: a. 2 (1%) of 203 statistic groups for which MDHHS used incorrect data to calculate the PACAP percentages, which affected 6 (40%) of 15 sampled cost pools. b. 2 (13%) of 16 Random Moment Time Studies, which MDHHS used to calculate PACAP percentages, did not have a complete population of participants, which affected 6 (40%) of 15 sampled cost pools. Criteria Federal regulation 45 CFR 95.507 and Appendix VI of federal regulation 2 CFR 200 state costs are allocable to a particular cost objective if the services involved are chargeable or assignable to such cost objective in accordance with relative benefits received. Federal regulation 45 CFR 95.517 requires MDHHS to claim federal financial participation for costs associated with a program only in accordance with its approved or amended (at its discretion) PACAP. Federal regulation 2 CFR 200.306 requires that costs used for matching be allowable costs to the federal award. Cause MDHHS informed us its current quality control processes did not detect the errors. Effect MDHHS incorrectly allocated expenditures to various federal programs. The federal grantor agency could issue sanctions or disallowances related to noncompliance. Known Questioned Costs Undeterminable. Recommendation We recommend MDHHS ensure it uses the appropriate PACAP data to allocate expenditures to its federal programs. Management Views MDHHS disagrees the exceptions identified should rise to the level of a significant deficiency and noncompliance. The comprehensive set of quality control processes continue to operate as designed to identify any errors greater than 5.0% of the total difference of the given statistical group from the previous quarter and none of the errors identified in the finding fell outside of this range. For part a., the auditor's review included all related statistical records within each statistical group for the 15 sampled cost pools. This includes all statistics used in the cost allocation process for the entire fiscal year because the costs that originate in these cost pools are referenced in all other cost pools. After review of all fiscal year 2023 statistical data, 6 individual statistical records out of 6,548 were found to be in error. After recalculating the cost allocated amounts related to this error, we identified that approximately $15,346 was overclaimed to LIHEAP out of $1,732,426,561 (0.0009%) of costs allocated in fiscal year 2023 by MDHHS. The other program areas identified were underclaimed. For part b., MDHHS acknowledges the exclusion of a participant from two quarters (quarter three and quarter four) of the Family Independence Specialists/Eligibility Specialists (FIS/ES) Random Moment Time Study (RMTS) in the sample. Although the actual dollar value impact of excluding a participant is indeterminable, MDHHS concluded the impact would be immaterial because there are over 6,000 RMTS participants each quarter and RMTS results vary little from quarter to quarter from non-programmatic changes. Auditor's Comments to Management Views For part a., we calculated the cost allocated amounts related to the error and identified that approximately $17,317 was overclaimed to LIHEAP out of $141.0 million of second quarter expenditures. However, in combination with part b., we could not conclude overclaims for other federal programs were less than $25,000. For part b., MDHHS used incomplete data to allocate approximately $143.5 million of third quarter expenditures and $171.2 million of fourth quarter expenditures for a total of $314.6 million to various federal and State programs, which may have affected the percentages used to allocate these expenditures. MDHHS did not assess the impact of these incomplete records. Consequently, it has no basis for its "immaterial" statement. Given the errors noted in parts a. and b., we could not determine the combined known questioned costs; however, it is likely that the improper allocation related to the $455.7 million exceeds $25,000 for the federal programs identified. Federal regulation 2 CFR 200.516(a)(3) states that in evaluating the effect of questioned costs on the opinion on noncompliance, the auditor considers the best estimate of total questioned costs (likely questioned costs), not just the questioned costs specifically identified (known questioned costs). The auditor must also report audit findings for known questioned costs when likely questioned costs are greater than $25,000 for a type of compliance requirement for a major program. Therefore, the finding stands as written.
FINDING 2023-035 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 3 (8%) of the 40 cases we reviewed. Our review disclosed: a. MDHHS case record documentation was inconsistent with client eligibility information entered in Bridges for 2 (5%) 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 1 (3%) of 40 cases reviewed. We determined this did not affect the client's eligibility for child care services or level of benefits. Criteria Federal regulation 45 CFR 98.20 provides eligibility requirements for child care services and permits 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 all required verification documentation in the client's case record to support eligibility. Effect MDE may have made payments on behalf of ineligible clients. The federal grantor agency could issue sanctions or disallowances related to noncompliance. Known Questioned Costs Federal regulation 2 CFR 200.516(a)(3) requires the auditor to report known questioned costs less than $25,000 if it is likely total questioned costs would exceed $25,000. • $127 - federal share. • $52 - State share of costs MDE inappropriately used as matching. Recommendation We recommend MiLEAP 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 MiLEAP and MDHHS agree with the finding.
FINDING 2023-008 MDHHS, PACAP - Inappropriate PACAP Allocation See Schedule of Findings and Questioned Costs for chart/table. Condition MDHHS did not ensure it used the appropriate Public Assistance Cost Allocation Plan (PACAP) data to allocate expenditures to its federal programs. We noted: a. 2 (1%) of 203 statistic groups for which MDHHS used incorrect data to calculate the PACAP percentages, which affected 6 (40%) of 15 sampled cost pools. b. 2 (13%) of 16 Random Moment Time Studies, which MDHHS used to calculate PACAP percentages, did not have a complete population of participants, which affected 6 (40%) of 15 sampled cost pools. Criteria Federal regulation 45 CFR 95.507 and Appendix VI of federal regulation 2 CFR 200 state costs are allocable to a particular cost objective if the services involved are chargeable or assignable to such cost objective in accordance with relative benefits received. Federal regulation 45 CFR 95.517 requires MDHHS to claim federal financial participation for costs associated with a program only in accordance with its approved or amended (at its discretion) PACAP. Federal regulation 2 CFR 200.306 requires that costs used for matching be allowable costs to the federal award. Cause MDHHS informed us its current quality control processes did not detect the errors. Effect MDHHS incorrectly allocated expenditures to various federal programs. The federal grantor agency could issue sanctions or disallowances related to noncompliance. Known Questioned Costs Undeterminable. Recommendation We recommend MDHHS ensure it uses the appropriate PACAP data to allocate expenditures to its federal programs. Management Views MDHHS disagrees the exceptions identified should rise to the level of a significant deficiency and noncompliance. The comprehensive set of quality control processes continue to operate as designed to identify any errors greater than 5.0% of the total difference of the given statistical group from the previous quarter and none of the errors identified in the finding fell outside of this range. For part a., the auditor's review included all related statistical records within each statistical group for the 15 sampled cost pools. This includes all statistics used in the cost allocation process for the entire fiscal year because the costs that originate in these cost pools are referenced in all other cost pools. After review of all fiscal year 2023 statistical data, 6 individual statistical records out of 6,548 were found to be in error. After recalculating the cost allocated amounts related to this error, we identified that approximately $15,346 was overclaimed to LIHEAP out of $1,732,426,561 (0.0009%) of costs allocated in fiscal year 2023 by MDHHS. The other program areas identified were underclaimed. For part b., MDHHS acknowledges the exclusion of a participant from two quarters (quarter three and quarter four) of the Family Independence Specialists/Eligibility Specialists (FIS/ES) Random Moment Time Study (RMTS) in the sample. Although the actual dollar value impact of excluding a participant is indeterminable, MDHHS concluded the impact would be immaterial because there are over 6,000 RMTS participants each quarter and RMTS results vary little from quarter to quarter from non-programmatic changes. Auditor's Comments to Management Views For part a., we calculated the cost allocated amounts related to the error and identified that approximately $17,317 was overclaimed to LIHEAP out of $141.0 million of second quarter expenditures. However, in combination with part b., we could not conclude overclaims for other federal programs were less than $25,000. For part b., MDHHS used incomplete data to allocate approximately $143.5 million of third quarter expenditures and $171.2 million of fourth quarter expenditures for a total of $314.6 million to various federal and State programs, which may have affected the percentages used to allocate these expenditures. MDHHS did not assess the impact of these incomplete records. Consequently, it has no basis for its "immaterial" statement. Given the errors noted in parts a. and b., we could not determine the combined known questioned costs; however, it is likely that the improper allocation related to the $455.7 million exceeds $25,000 for the federal programs identified. Federal regulation 2 CFR 200.516(a)(3) states that in evaluating the effect of questioned costs on the opinion on noncompliance, the auditor considers the best estimate of total questioned costs (likely questioned costs), not just the questioned costs specifically identified (known questioned costs). The auditor must also report audit findings for known questioned costs when likely questioned costs are greater than $25,000 for a type of compliance requirement for a major program. Therefore, the finding stands as written.
FINDING 2023-035 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 3 (8%) of the 40 cases we reviewed. Our review disclosed: a. MDHHS case record documentation was inconsistent with client eligibility information entered in Bridges for 2 (5%) 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 1 (3%) of 40 cases reviewed. We determined this did not affect the client's eligibility for child care services or level of benefits. Criteria Federal regulation 45 CFR 98.20 provides eligibility requirements for child care services and permits 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 all required verification documentation in the client's case record to support eligibility. Effect MDE may have made payments on behalf of ineligible clients. The federal grantor agency could issue sanctions or disallowances related to noncompliance. Known Questioned Costs Federal regulation 2 CFR 200.516(a)(3) requires the auditor to report known questioned costs less than $25,000 if it is likely total questioned costs would exceed $25,000. • $127 - federal share. • $52 - State share of costs MDE inappropriately used as matching. Recommendation We recommend MiLEAP 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 MiLEAP and MDHHS agree with the finding.
FINDING 2023-008 MDHHS, PACAP - Inappropriate PACAP Allocation See Schedule of Findings and Questioned Costs for chart/table. Condition MDHHS did not ensure it used the appropriate Public Assistance Cost Allocation Plan (PACAP) data to allocate expenditures to its federal programs. We noted: a. 2 (1%) of 203 statistic groups for which MDHHS used incorrect data to calculate the PACAP percentages, which affected 6 (40%) of 15 sampled cost pools. b. 2 (13%) of 16 Random Moment Time Studies, which MDHHS used to calculate PACAP percentages, did not have a complete population of participants, which affected 6 (40%) of 15 sampled cost pools. Criteria Federal regulation 45 CFR 95.507 and Appendix VI of federal regulation 2 CFR 200 state costs are allocable to a particular cost objective if the services involved are chargeable or assignable to such cost objective in accordance with relative benefits received. Federal regulation 45 CFR 95.517 requires MDHHS to claim federal financial participation for costs associated with a program only in accordance with its approved or amended (at its discretion) PACAP. Federal regulation 2 CFR 200.306 requires that costs used for matching be allowable costs to the federal award. Cause MDHHS informed us its current quality control processes did not detect the errors. Effect MDHHS incorrectly allocated expenditures to various federal programs. The federal grantor agency could issue sanctions or disallowances related to noncompliance. Known Questioned Costs Undeterminable. Recommendation We recommend MDHHS ensure it uses the appropriate PACAP data to allocate expenditures to its federal programs. Management Views MDHHS disagrees the exceptions identified should rise to the level of a significant deficiency and noncompliance. The comprehensive set of quality control processes continue to operate as designed to identify any errors greater than 5.0% of the total difference of the given statistical group from the previous quarter and none of the errors identified in the finding fell outside of this range. For part a., the auditor's review included all related statistical records within each statistical group for the 15 sampled cost pools. This includes all statistics used in the cost allocation process for the entire fiscal year because the costs that originate in these cost pools are referenced in all other cost pools. After review of all fiscal year 2023 statistical data, 6 individual statistical records out of 6,548 were found to be in error. After recalculating the cost allocated amounts related to this error, we identified that approximately $15,346 was overclaimed to LIHEAP out of $1,732,426,561 (0.0009%) of costs allocated in fiscal year 2023 by MDHHS. The other program areas identified were underclaimed. For part b., MDHHS acknowledges the exclusion of a participant from two quarters (quarter three and quarter four) of the Family Independence Specialists/Eligibility Specialists (FIS/ES) Random Moment Time Study (RMTS) in the sample. Although the actual dollar value impact of excluding a participant is indeterminable, MDHHS concluded the impact would be immaterial because there are over 6,000 RMTS participants each quarter and RMTS results vary little from quarter to quarter from non-programmatic changes. Auditor's Comments to Management Views For part a., we calculated the cost allocated amounts related to the error and identified that approximately $17,317 was overclaimed to LIHEAP out of $141.0 million of second quarter expenditures. However, in combination with part b., we could not conclude overclaims for other federal programs were less than $25,000. For part b., MDHHS used incomplete data to allocate approximately $143.5 million of third quarter expenditures and $171.2 million of fourth quarter expenditures for a total of $314.6 million to various federal and State programs, which may have affected the percentages used to allocate these expenditures. MDHHS did not assess the impact of these incomplete records. Consequently, it has no basis for its "immaterial" statement. Given the errors noted in parts a. and b., we could not determine the combined known questioned costs; however, it is likely that the improper allocation related to the $455.7 million exceeds $25,000 for the federal programs identified. Federal regulation 2 CFR 200.516(a)(3) states that in evaluating the effect of questioned costs on the opinion on noncompliance, the auditor considers the best estimate of total questioned costs (likely questioned costs), not just the questioned costs specifically identified (known questioned costs). The auditor must also report audit findings for known questioned costs when likely questioned costs are greater than $25,000 for a type of compliance requirement for a major program. Therefore, the finding stands as written.
FINDING 2023-035 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 3 (8%) of the 40 cases we reviewed. Our review disclosed: a. MDHHS case record documentation was inconsistent with client eligibility information entered in Bridges for 2 (5%) 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 1 (3%) of 40 cases reviewed. We determined this did not affect the client's eligibility for child care services or level of benefits. Criteria Federal regulation 45 CFR 98.20 provides eligibility requirements for child care services and permits 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 all required verification documentation in the client's case record to support eligibility. Effect MDE may have made payments on behalf of ineligible clients. The federal grantor agency could issue sanctions or disallowances related to noncompliance. Known Questioned Costs Federal regulation 2 CFR 200.516(a)(3) requires the auditor to report known questioned costs less than $25,000 if it is likely total questioned costs would exceed $25,000. • $127 - federal share. • $52 - State share of costs MDE inappropriately used as matching. Recommendation We recommend MiLEAP 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 MiLEAP and MDHHS agree with the finding.
FINDING 2023-008 MDHHS, PACAP - Inappropriate PACAP Allocation See Schedule of Findings and Questioned Costs for chart/table. Condition MDHHS did not ensure it used the appropriate Public Assistance Cost Allocation Plan (PACAP) data to allocate expenditures to its federal programs. We noted: a. 2 (1%) of 203 statistic groups for which MDHHS used incorrect data to calculate the PACAP percentages, which affected 6 (40%) of 15 sampled cost pools. b. 2 (13%) of 16 Random Moment Time Studies, which MDHHS used to calculate PACAP percentages, did not have a complete population of participants, which affected 6 (40%) of 15 sampled cost pools. Criteria Federal regulation 45 CFR 95.507 and Appendix VI of federal regulation 2 CFR 200 state costs are allocable to a particular cost objective if the services involved are chargeable or assignable to such cost objective in accordance with relative benefits received. Federal regulation 45 CFR 95.517 requires MDHHS to claim federal financial participation for costs associated with a program only in accordance with its approved or amended (at its discretion) PACAP. Federal regulation 2 CFR 200.306 requires that costs used for matching be allowable costs to the federal award. Cause MDHHS informed us its current quality control processes did not detect the errors. Effect MDHHS incorrectly allocated expenditures to various federal programs. The federal grantor agency could issue sanctions or disallowances related to noncompliance. Known Questioned Costs Undeterminable. Recommendation We recommend MDHHS ensure it uses the appropriate PACAP data to allocate expenditures to its federal programs. Management Views MDHHS disagrees the exceptions identified should rise to the level of a significant deficiency and noncompliance. The comprehensive set of quality control processes continue to operate as designed to identify any errors greater than 5.0% of the total difference of the given statistical group from the previous quarter and none of the errors identified in the finding fell outside of this range. For part a., the auditor's review included all related statistical records within each statistical group for the 15 sampled cost pools. This includes all statistics used in the cost allocation process for the entire fiscal year because the costs that originate in these cost pools are referenced in all other cost pools. After review of all fiscal year 2023 statistical data, 6 individual statistical records out of 6,548 were found to be in error. After recalculating the cost allocated amounts related to this error, we identified that approximately $15,346 was overclaimed to LIHEAP out of $1,732,426,561 (0.0009%) of costs allocated in fiscal year 2023 by MDHHS. The other program areas identified were underclaimed. For part b., MDHHS acknowledges the exclusion of a participant from two quarters (quarter three and quarter four) of the Family Independence Specialists/Eligibility Specialists (FIS/ES) Random Moment Time Study (RMTS) in the sample. Although the actual dollar value impact of excluding a participant is indeterminable, MDHHS concluded the impact would be immaterial because there are over 6,000 RMTS participants each quarter and RMTS results vary little from quarter to quarter from non-programmatic changes. Auditor's Comments to Management Views For part a., we calculated the cost allocated amounts related to the error and identified that approximately $17,317 was overclaimed to LIHEAP out of $141.0 million of second quarter expenditures. However, in combination with part b., we could not conclude overclaims for other federal programs were less than $25,000. For part b., MDHHS used incomplete data to allocate approximately $143.5 million of third quarter expenditures and $171.2 million of fourth quarter expenditures for a total of $314.6 million to various federal and State programs, which may have affected the percentages used to allocate these expenditures. MDHHS did not assess the impact of these incomplete records. Consequently, it has no basis for its "immaterial" statement. Given the errors noted in parts a. and b., we could not determine the combined known questioned costs; however, it is likely that the improper allocation related to the $455.7 million exceeds $25,000 for the federal programs identified. Federal regulation 2 CFR 200.516(a)(3) states that in evaluating the effect of questioned costs on the opinion on noncompliance, the auditor considers the best estimate of total questioned costs (likely questioned costs), not just the questioned costs specifically identified (known questioned costs). The auditor must also report audit findings for known questioned costs when likely questioned costs are greater than $25,000 for a type of compliance requirement for a major program. Therefore, the finding stands as written.
FINDING 2023-035 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 3 (8%) of the 40 cases we reviewed. Our review disclosed: a. MDHHS case record documentation was inconsistent with client eligibility information entered in Bridges for 2 (5%) 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 1 (3%) of 40 cases reviewed. We determined this did not affect the client's eligibility for child care services or level of benefits. Criteria Federal regulation 45 CFR 98.20 provides eligibility requirements for child care services and permits 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 all required verification documentation in the client's case record to support eligibility. Effect MDE may have made payments on behalf of ineligible clients. The federal grantor agency could issue sanctions or disallowances related to noncompliance. Known Questioned Costs Federal regulation 2 CFR 200.516(a)(3) requires the auditor to report known questioned costs less than $25,000 if it is likely total questioned costs would exceed $25,000. • $127 - federal share. • $52 - State share of costs MDE inappropriately used as matching. Recommendation We recommend MiLEAP 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 MiLEAP and MDHHS agree with the finding.
FINDING 2023-008 MDHHS, PACAP - Inappropriate PACAP Allocation See Schedule of Findings and Questioned Costs for chart/table. Condition MDHHS did not ensure it used the appropriate Public Assistance Cost Allocation Plan (PACAP) data to allocate expenditures to its federal programs. We noted: a. 2 (1%) of 203 statistic groups for which MDHHS used incorrect data to calculate the PACAP percentages, which affected 6 (40%) of 15 sampled cost pools. b. 2 (13%) of 16 Random Moment Time Studies, which MDHHS used to calculate PACAP percentages, did not have a complete population of participants, which affected 6 (40%) of 15 sampled cost pools. Criteria Federal regulation 45 CFR 95.507 and Appendix VI of federal regulation 2 CFR 200 state costs are allocable to a particular cost objective if the services involved are chargeable or assignable to such cost objective in accordance with relative benefits received. Federal regulation 45 CFR 95.517 requires MDHHS to claim federal financial participation for costs associated with a program only in accordance with its approved or amended (at its discretion) PACAP. Federal regulation 2 CFR 200.306 requires that costs used for matching be allowable costs to the federal award. Cause MDHHS informed us its current quality control processes did not detect the errors. Effect MDHHS incorrectly allocated expenditures to various federal programs. The federal grantor agency could issue sanctions or disallowances related to noncompliance. Known Questioned Costs Undeterminable. Recommendation We recommend MDHHS ensure it uses the appropriate PACAP data to allocate expenditures to its federal programs. Management Views MDHHS disagrees the exceptions identified should rise to the level of a significant deficiency and noncompliance. The comprehensive set of quality control processes continue to operate as designed to identify any errors greater than 5.0% of the total difference of the given statistical group from the previous quarter and none of the errors identified in the finding fell outside of this range. For part a., the auditor's review included all related statistical records within each statistical group for the 15 sampled cost pools. This includes all statistics used in the cost allocation process for the entire fiscal year because the costs that originate in these cost pools are referenced in all other cost pools. After review of all fiscal year 2023 statistical data, 6 individual statistical records out of 6,548 were found to be in error. After recalculating the cost allocated amounts related to this error, we identified that approximately $15,346 was overclaimed to LIHEAP out of $1,732,426,561 (0.0009%) of costs allocated in fiscal year 2023 by MDHHS. The other program areas identified were underclaimed. For part b., MDHHS acknowledges the exclusion of a participant from two quarters (quarter three and quarter four) of the Family Independence Specialists/Eligibility Specialists (FIS/ES) Random Moment Time Study (RMTS) in the sample. Although the actual dollar value impact of excluding a participant is indeterminable, MDHHS concluded the impact would be immaterial because there are over 6,000 RMTS participants each quarter and RMTS results vary little from quarter to quarter from non-programmatic changes. Auditor's Comments to Management Views For part a., we calculated the cost allocated amounts related to the error and identified that approximately $17,317 was overclaimed to LIHEAP out of $141.0 million of second quarter expenditures. However, in combination with part b., we could not conclude overclaims for other federal programs were less than $25,000. For part b., MDHHS used incomplete data to allocate approximately $143.5 million of third quarter expenditures and $171.2 million of fourth quarter expenditures for a total of $314.6 million to various federal and State programs, which may have affected the percentages used to allocate these expenditures. MDHHS did not assess the impact of these incomplete records. Consequently, it has no basis for its "immaterial" statement. Given the errors noted in parts a. and b., we could not determine the combined known questioned costs; however, it is likely that the improper allocation related to the $455.7 million exceeds $25,000 for the federal programs identified. Federal regulation 2 CFR 200.516(a)(3) states that in evaluating the effect of questioned costs on the opinion on noncompliance, the auditor considers the best estimate of total questioned costs (likely questioned costs), not just the questioned costs specifically identified (known questioned costs). The auditor must also report audit findings for known questioned costs when likely questioned costs are greater than $25,000 for a type of compliance requirement for a major program. Therefore, the finding stands as written.
FINDING 2023-013 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. These continuous enrollment conditions ended March 31, 2023 with the passage of the Consolidated Appropriations Act of 2023, and states were required to initiate all redeterminations within a 12-month unwinding period. MDHHS began initiating redeterminations in June 2023. We sampled beneficiaries for each program who either had a benefit period which started during fiscal year 2023 or who had a benefit period which started prior to fiscal year 2023 and had a redetermination during the months of June through September 2023. 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 22,428 Medicaid and 8,520 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 59 Medicaid and 56 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 5 (8%) of 59 Medicaid and 12 (21%) of 56 CHIP cases reviewed. b. MDHHS did not maintain case file documentation that supports the beneficiary eligibility determination for 1 (2%) of 59 Medicaid and 1 (2%) of 56 CHIP cases reviewed. c. MDHHS did not determine beneficiary eligibility within the required time frame for 2 (3%) of 59 Medicaid and 4 (7%) of 56 CHIP 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. Federal regulations 42 CFR 435.912(c) and 42 CFR 457.340(d) require MDHHS to determine eligibility and provide notice of the decision within 90 days for applicants who apply for Medicaid on the basis of disability and 45 days for all other applicants. 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. For part c., MDHHS indicated limited staff resources and a significantly higher number of renewals due to the Public Health Emergency affected its ability to determine beneficiary eligibility within the required time frame. 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 10% Medicaid and 29% CHIP unduplicated error rates. The federal grantor agency could issue sanctions or disallowances related to noncompliance. Known Questioned Costs Federal regulation 2 CFR 200.516(a)(3) requires the auditor to report known questioned costs less than $25,000 if it is likely total questioned costs would exceed $25,000. • $2,211 - federal share. • $762 - State share of costs MDHHS inappropriately used as matching. Recommendations We recommend MDHHS properly consider Medicaid and CHIP eligibility documentation in accordance with eligibility requirements. We also recommend MDHHS maintain documentation to support beneficiary eligibility was determined in accordance with eligibility requirements. We further recommend MDHHS ensure eligibility determinations are made timely. Management Views MDHHS agrees with the finding.
FINDING 2023-014 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 that it incorrectly recorded $33.4 million of CHIP medical payments to the Medicaid Cluster throughout fiscal year 2023. However, we selected a sample of 3 beneficiaries that were transferred to CHIP and noted that 1 of 3 beneficiaries was not eligible for CHIP but was 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, one case was transferred in error. Effect MDHHS inappropriately transferred $133 Medicaid Cluster expenditures to CHIP. The federal grantor agency could issue sanctions or disallowances related to noncompliance. Also, of the $33.4 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 cash management compliance requirement noted, we consider this to be a material weakness and material noncompliance because the $33.4 million CHIP expenditures identified by MDHHS as inappropriately charged to and reimbursed by the Medicaid Cluster represented 11% of total CHIP expenditures. Known Questioned Costs Federal regulation 2 CFR 200.516(a)(3) requires the auditor to report known questioned costs less than $25,000 if it is likely total questioned costs would exceed $25,000. • $89 - federal share of CHIP payments made to providers for ineligible CHIP beneficiaries, of which $89 is questioned in Finding 2023-013. • $45 - 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 2023-038 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 $1,058 for 8 (27%) of 30 payments sampled from a $1,620,411 population of beneficiary payments with no corresponding Medicaid coverage. Criteria Federal regulation 42 CFR 435.1002(b) indicates federal funding is available only for services provided to eligible beneficiaries. Cause MDHHS informed us that because of system 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 less than $25,000 if it is likely that total questioned costs exceed $25,000. • $945 - federal share of payments made to providers on behalf of ineligible beneficiaries. • $113 - State share of payments made to providers on behalf of ineligible beneficiaries. Recommendation We recommend MDHHS ensure beneficiary eligibility is updated in CHAMPS. Management Views MDHHS agrees with the finding.
FINDING 2023-039 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 $183, for 3 (20%) of 15 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, effective through January 31, 2023, 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 140, effective February 1, 2023, prohibits payment for HHP services on days a client is unavailable due to hospitalization, except the caregiver may receive payment of HHP services on the day a client is admitted to a hospital if HHP services were completed before the time the client was admitted to the hospital. Also, ASM Sections 135 and 140 allow payment for HHP services on the day a client is discharged from the hospital. Cause MDHHS informed us the post-payment review process is complicated by the lag time (up to one year) associated with MDHHS receiving and processing hospital claims and delays in changes to clients' level of care. Also, MDHHS indicated staff oversight impacted the timeliness and accuracy of recoupments. Effect MDHHS paid a total of $183 from October 1, 2022 through September 30, 2023 for sampled clients who did not qualify for HHP services because they were hospitalized. The federal grantor agency could issue sanctions or disallowances related to noncompliance. Known Questioned Costs Federal regulation 2 CFR 200.516(a)(3) requires the auditor to report known questioned costs less than $25,000 if it is likely that total questioned costs would exceed $25,000. • $128 - federal share of amounts paid for HHP services while sampled clients were hospitalized. • $55 - 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 2023-008 MDHHS, PACAP - Inappropriate PACAP Allocation See Schedule of Findings and Questioned Costs for chart/table. Condition MDHHS did not ensure it used the appropriate Public Assistance Cost Allocation Plan (PACAP) data to allocate expenditures to its federal programs. We noted: a. 2 (1%) of 203 statistic groups for which MDHHS used incorrect data to calculate the PACAP percentages, which affected 6 (40%) of 15 sampled cost pools. b. 2 (13%) of 16 Random Moment Time Studies, which MDHHS used to calculate PACAP percentages, did not have a complete population of participants, which affected 6 (40%) of 15 sampled cost pools. Criteria Federal regulation 45 CFR 95.507 and Appendix VI of federal regulation 2 CFR 200 state costs are allocable to a particular cost objective if the services involved are chargeable or assignable to such cost objective in accordance with relative benefits received. Federal regulation 45 CFR 95.517 requires MDHHS to claim federal financial participation for costs associated with a program only in accordance with its approved or amended (at its discretion) PACAP. Federal regulation 2 CFR 200.306 requires that costs used for matching be allowable costs to the federal award. Cause MDHHS informed us its current quality control processes did not detect the errors. Effect MDHHS incorrectly allocated expenditures to various federal programs. The federal grantor agency could issue sanctions or disallowances related to noncompliance. Known Questioned Costs Undeterminable. Recommendation We recommend MDHHS ensure it uses the appropriate PACAP data to allocate expenditures to its federal programs. Management Views MDHHS disagrees the exceptions identified should rise to the level of a significant deficiency and noncompliance. The comprehensive set of quality control processes continue to operate as designed to identify any errors greater than 5.0% of the total difference of the given statistical group from the previous quarter and none of the errors identified in the finding fell outside of this range. For part a., the auditor's review included all related statistical records within each statistical group for the 15 sampled cost pools. This includes all statistics used in the cost allocation process for the entire fiscal year because the costs that originate in these cost pools are referenced in all other cost pools. After review of all fiscal year 2023 statistical data, 6 individual statistical records out of 6,548 were found to be in error. After recalculating the cost allocated amounts related to this error, we identified that approximately $15,346 was overclaimed to LIHEAP out of $1,732,426,561 (0.0009%) of costs allocated in fiscal year 2023 by MDHHS. The other program areas identified were underclaimed. For part b., MDHHS acknowledges the exclusion of a participant from two quarters (quarter three and quarter four) of the Family Independence Specialists/Eligibility Specialists (FIS/ES) Random Moment Time Study (RMTS) in the sample. Although the actual dollar value impact of excluding a participant is indeterminable, MDHHS concluded the impact would be immaterial because there are over 6,000 RMTS participants each quarter and RMTS results vary little from quarter to quarter from non-programmatic changes. Auditor's Comments to Management Views For part a., we calculated the cost allocated amounts related to the error and identified that approximately $17,317 was overclaimed to LIHEAP out of $141.0 million of second quarter expenditures. However, in combination with part b., we could not conclude overclaims for other federal programs were less than $25,000. For part b., MDHHS used incomplete data to allocate approximately $143.5 million of third quarter expenditures and $171.2 million of fourth quarter expenditures for a total of $314.6 million to various federal and State programs, which may have affected the percentages used to allocate these expenditures. MDHHS did not assess the impact of these incomplete records. Consequently, it has no basis for its "immaterial" statement. Given the errors noted in parts a. and b., we could not determine the combined known questioned costs; however, it is likely that the improper allocation related to the $455.7 million exceeds $25,000 for the federal programs identified. Federal regulation 2 CFR 200.516(a)(3) states that in evaluating the effect of questioned costs on the opinion on noncompliance, the auditor considers the best estimate of total questioned costs (likely questioned costs), not just the questioned costs specifically identified (known questioned costs). The auditor must also report audit findings for known questioned costs when likely questioned costs are greater than $25,000 for a type of compliance requirement for a major program. Therefore, the finding stands as written.
FINDING 2023-013 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. These continuous enrollment conditions ended March 31, 2023 with the passage of the Consolidated Appropriations Act of 2023, and states were required to initiate all redeterminations within a 12-month unwinding period. MDHHS began initiating redeterminations in June 2023. We sampled beneficiaries for each program who either had a benefit period which started during fiscal year 2023 or who had a benefit period which started prior to fiscal year 2023 and had a redetermination during the months of June through September 2023. 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 22,428 Medicaid and 8,520 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 59 Medicaid and 56 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 5 (8%) of 59 Medicaid and 12 (21%) of 56 CHIP cases reviewed. b. MDHHS did not maintain case file documentation that supports the beneficiary eligibility determination for 1 (2%) of 59 Medicaid and 1 (2%) of 56 CHIP cases reviewed. c. MDHHS did not determine beneficiary eligibility within the required time frame for 2 (3%) of 59 Medicaid and 4 (7%) of 56 CHIP 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. Federal regulations 42 CFR 435.912(c) and 42 CFR 457.340(d) require MDHHS to determine eligibility and provide notice of the decision within 90 days for applicants who apply for Medicaid on the basis of disability and 45 days for all other applicants. 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. For part c., MDHHS indicated limited staff resources and a significantly higher number of renewals due to the Public Health Emergency affected its ability to determine beneficiary eligibility within the required time frame. 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 10% Medicaid and 29% CHIP unduplicated error rates. The federal grantor agency could issue sanctions or disallowances related to noncompliance. Known Questioned Costs Federal regulation 2 CFR 200.516(a)(3) requires the auditor to report known questioned costs less than $25,000 if it is likely total questioned costs would exceed $25,000. • $2,211 - federal share. • $762 - State share of costs MDHHS inappropriately used as matching. Recommendations We recommend MDHHS properly consider Medicaid and CHIP eligibility documentation in accordance with eligibility requirements. We also recommend MDHHS maintain documentation to support beneficiary eligibility was determined in accordance with eligibility requirements. We further recommend MDHHS ensure eligibility determinations are made timely. Management Views MDHHS agrees with the finding.
FINDING 2023-014 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 that it incorrectly recorded $33.4 million of CHIP medical payments to the Medicaid Cluster throughout fiscal year 2023. However, we selected a sample of 3 beneficiaries that were transferred to CHIP and noted that 1 of 3 beneficiaries was not eligible for CHIP but was 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, one case was transferred in error. Effect MDHHS inappropriately transferred $133 Medicaid Cluster expenditures to CHIP. The federal grantor agency could issue sanctions or disallowances related to noncompliance. Also, of the $33.4 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 cash management compliance requirement noted, we consider this to be a material weakness and material noncompliance because the $33.4 million CHIP expenditures identified by MDHHS as inappropriately charged to and reimbursed by the Medicaid Cluster represented 11% of total CHIP expenditures. Known Questioned Costs Federal regulation 2 CFR 200.516(a)(3) requires the auditor to report known questioned costs less than $25,000 if it is likely total questioned costs would exceed $25,000. • $89 - federal share of CHIP payments made to providers for ineligible CHIP beneficiaries, of which $89 is questioned in Finding 2023-013. • $45 - 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 2023-038 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 $1,058 for 8 (27%) of 30 payments sampled from a $1,620,411 population of beneficiary payments with no corresponding Medicaid coverage. Criteria Federal regulation 42 CFR 435.1002(b) indicates federal funding is available only for services provided to eligible beneficiaries. Cause MDHHS informed us that because of system 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 less than $25,000 if it is likely that total questioned costs exceed $25,000. • $945 - federal share of payments made to providers on behalf of ineligible beneficiaries. • $113 - State share of payments made to providers on behalf of ineligible beneficiaries. Recommendation We recommend MDHHS ensure beneficiary eligibility is updated in CHAMPS. Management Views MDHHS agrees with the finding.
FINDING 2023-039 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 $183, for 3 (20%) of 15 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, effective through January 31, 2023, 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 140, effective February 1, 2023, prohibits payment for HHP services on days a client is unavailable due to hospitalization, except the caregiver may receive payment of HHP services on the day a client is admitted to a hospital if HHP services were completed before the time the client was admitted to the hospital. Also, ASM Sections 135 and 140 allow payment for HHP services on the day a client is discharged from the hospital. Cause MDHHS informed us the post-payment review process is complicated by the lag time (up to one year) associated with MDHHS receiving and processing hospital claims and delays in changes to clients' level of care. Also, MDHHS indicated staff oversight impacted the timeliness and accuracy of recoupments. Effect MDHHS paid a total of $183 from October 1, 2022 through September 30, 2023 for sampled clients who did not qualify for HHP services because they were hospitalized. The federal grantor agency could issue sanctions or disallowances related to noncompliance. Known Questioned Costs Federal regulation 2 CFR 200.516(a)(3) requires the auditor to report known questioned costs less than $25,000 if it is likely that total questioned costs would exceed $25,000. • $128 - federal share of amounts paid for HHP services while sampled clients were hospitalized. • $55 - 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 2023-008 MDHHS, PACAP - Inappropriate PACAP Allocation See Schedule of Findings and Questioned Costs for chart/table. Condition MDHHS did not ensure it used the appropriate Public Assistance Cost Allocation Plan (PACAP) data to allocate expenditures to its federal programs. We noted: a. 2 (1%) of 203 statistic groups for which MDHHS used incorrect data to calculate the PACAP percentages, which affected 6 (40%) of 15 sampled cost pools. b. 2 (13%) of 16 Random Moment Time Studies, which MDHHS used to calculate PACAP percentages, did not have a complete population of participants, which affected 6 (40%) of 15 sampled cost pools. Criteria Federal regulation 45 CFR 95.507 and Appendix VI of federal regulation 2 CFR 200 state costs are allocable to a particular cost objective if the services involved are chargeable or assignable to such cost objective in accordance with relative benefits received. Federal regulation 45 CFR 95.517 requires MDHHS to claim federal financial participation for costs associated with a program only in accordance with its approved or amended (at its discretion) PACAP. Federal regulation 2 CFR 200.306 requires that costs used for matching be allowable costs to the federal award. Cause MDHHS informed us its current quality control processes did not detect the errors. Effect MDHHS incorrectly allocated expenditures to various federal programs. The federal grantor agency could issue sanctions or disallowances related to noncompliance. Known Questioned Costs Undeterminable. Recommendation We recommend MDHHS ensure it uses the appropriate PACAP data to allocate expenditures to its federal programs. Management Views MDHHS disagrees the exceptions identified should rise to the level of a significant deficiency and noncompliance. The comprehensive set of quality control processes continue to operate as designed to identify any errors greater than 5.0% of the total difference of the given statistical group from the previous quarter and none of the errors identified in the finding fell outside of this range. For part a., the auditor's review included all related statistical records within each statistical group for the 15 sampled cost pools. This includes all statistics used in the cost allocation process for the entire fiscal year because the costs that originate in these cost pools are referenced in all other cost pools. After review of all fiscal year 2023 statistical data, 6 individual statistical records out of 6,548 were found to be in error. After recalculating the cost allocated amounts related to this error, we identified that approximately $15,346 was overclaimed to LIHEAP out of $1,732,426,561 (0.0009%) of costs allocated in fiscal year 2023 by MDHHS. The other program areas identified were underclaimed. For part b., MDHHS acknowledges the exclusion of a participant from two quarters (quarter three and quarter four) of the Family Independence Specialists/Eligibility Specialists (FIS/ES) Random Moment Time Study (RMTS) in the sample. Although the actual dollar value impact of excluding a participant is indeterminable, MDHHS concluded the impact would be immaterial because there are over 6,000 RMTS participants each quarter and RMTS results vary little from quarter to quarter from non-programmatic changes. Auditor's Comments to Management Views For part a., we calculated the cost allocated amounts related to the error and identified that approximately $17,317 was overclaimed to LIHEAP out of $141.0 million of second quarter expenditures. However, in combination with part b., we could not conclude overclaims for other federal programs were less than $25,000. For part b., MDHHS used incomplete data to allocate approximately $143.5 million of third quarter expenditures and $171.2 million of fourth quarter expenditures for a total of $314.6 million to various federal and State programs, which may have affected the percentages used to allocate these expenditures. MDHHS did not assess the impact of these incomplete records. Consequently, it has no basis for its "immaterial" statement. Given the errors noted in parts a. and b., we could not determine the combined known questioned costs; however, it is likely that the improper allocation related to the $455.7 million exceeds $25,000 for the federal programs identified. Federal regulation 2 CFR 200.516(a)(3) states that in evaluating the effect of questioned costs on the opinion on noncompliance, the auditor considers the best estimate of total questioned costs (likely questioned costs), not just the questioned costs specifically identified (known questioned costs). The auditor must also report audit findings for known questioned costs when likely questioned costs are greater than $25,000 for a type of compliance requirement for a major program. Therefore, the finding stands as written.
FINDING 2023-013 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. These continuous enrollment conditions ended March 31, 2023 with the passage of the Consolidated Appropriations Act of 2023, and states were required to initiate all redeterminations within a 12-month unwinding period. MDHHS began initiating redeterminations in June 2023. We sampled beneficiaries for each program who either had a benefit period which started during fiscal year 2023 or who had a benefit period which started prior to fiscal year 2023 and had a redetermination during the months of June through September 2023. 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 22,428 Medicaid and 8,520 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 59 Medicaid and 56 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 5 (8%) of 59 Medicaid and 12 (21%) of 56 CHIP cases reviewed. b. MDHHS did not maintain case file documentation that supports the beneficiary eligibility determination for 1 (2%) of 59 Medicaid and 1 (2%) of 56 CHIP cases reviewed. c. MDHHS did not determine beneficiary eligibility within the required time frame for 2 (3%) of 59 Medicaid and 4 (7%) of 56 CHIP 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. Federal regulations 42 CFR 435.912(c) and 42 CFR 457.340(d) require MDHHS to determine eligibility and provide notice of the decision within 90 days for applicants who apply for Medicaid on the basis of disability and 45 days for all other applicants. 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. For part c., MDHHS indicated limited staff resources and a significantly higher number of renewals due to the Public Health Emergency affected its ability to determine beneficiary eligibility within the required time frame. 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 10% Medicaid and 29% CHIP unduplicated error rates. The federal grantor agency could issue sanctions or disallowances related to noncompliance. Known Questioned Costs Federal regulation 2 CFR 200.516(a)(3) requires the auditor to report known questioned costs less than $25,000 if it is likely total questioned costs would exceed $25,000. • $2,211 - federal share. • $762 - State share of costs MDHHS inappropriately used as matching. Recommendations We recommend MDHHS properly consider Medicaid and CHIP eligibility documentation in accordance with eligibility requirements. We also recommend MDHHS maintain documentation to support beneficiary eligibility was determined in accordance with eligibility requirements. We further recommend MDHHS ensure eligibility determinations are made timely. Management Views MDHHS agrees with the finding.
FINDING 2023-014 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 that it incorrectly recorded $33.4 million of CHIP medical payments to the Medicaid Cluster throughout fiscal year 2023. However, we selected a sample of 3 beneficiaries that were transferred to CHIP and noted that 1 of 3 beneficiaries was not eligible for CHIP but was 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, one case was transferred in error. Effect MDHHS inappropriately transferred $133 Medicaid Cluster expenditures to CHIP. The federal grantor agency could issue sanctions or disallowances related to noncompliance. Also, of the $33.4 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 cash management compliance requirement noted, we consider this to be a material weakness and material noncompliance because the $33.4 million CHIP expenditures identified by MDHHS as inappropriately charged to and reimbursed by the Medicaid Cluster represented 11% of total CHIP expenditures. Known Questioned Costs Federal regulation 2 CFR 200.516(a)(3) requires the auditor to report known questioned costs less than $25,000 if it is likely total questioned costs would exceed $25,000. • $89 - federal share of CHIP payments made to providers for ineligible CHIP beneficiaries, of which $89 is questioned in Finding 2023-013. • $45 - 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 2023-038 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 $1,058 for 8 (27%) of 30 payments sampled from a $1,620,411 population of beneficiary payments with no corresponding Medicaid coverage. Criteria Federal regulation 42 CFR 435.1002(b) indicates federal funding is available only for services provided to eligible beneficiaries. Cause MDHHS informed us that because of system 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 less than $25,000 if it is likely that total questioned costs exceed $25,000. • $945 - federal share of payments made to providers on behalf of ineligible beneficiaries. • $113 - State share of payments made to providers on behalf of ineligible beneficiaries. Recommendation We recommend MDHHS ensure beneficiary eligibility is updated in CHAMPS. Management Views MDHHS agrees with the finding.
FINDING 2023-039 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 $183, for 3 (20%) of 15 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, effective through January 31, 2023, 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 140, effective February 1, 2023, prohibits payment for HHP services on days a client is unavailable due to hospitalization, except the caregiver may receive payment of HHP services on the day a client is admitted to a hospital if HHP services were completed before the time the client was admitted to the hospital. Also, ASM Sections 135 and 140 allow payment for HHP services on the day a client is discharged from the hospital. Cause MDHHS informed us the post-payment review process is complicated by the lag time (up to one year) associated with MDHHS receiving and processing hospital claims and delays in changes to clients' level of care. Also, MDHHS indicated staff oversight impacted the timeliness and accuracy of recoupments. Effect MDHHS paid a total of $183 from October 1, 2022 through September 30, 2023 for sampled clients who did not qualify for HHP services because they were hospitalized. The federal grantor agency could issue sanctions or disallowances related to noncompliance. Known Questioned Costs Federal regulation 2 CFR 200.516(a)(3) requires the auditor to report known questioned costs less than $25,000 if it is likely that total questioned costs would exceed $25,000. • $128 - federal share of amounts paid for HHP services while sampled clients were hospitalized. • $55 - 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 2023-008 MDHHS, PACAP - Inappropriate PACAP Allocation See Schedule of Findings and Questioned Costs for chart/table. Condition MDHHS did not ensure it used the appropriate Public Assistance Cost Allocation Plan (PACAP) data to allocate expenditures to its federal programs. We noted: a. 2 (1%) of 203 statistic groups for which MDHHS used incorrect data to calculate the PACAP percentages, which affected 6 (40%) of 15 sampled cost pools. b. 2 (13%) of 16 Random Moment Time Studies, which MDHHS used to calculate PACAP percentages, did not have a complete population of participants, which affected 6 (40%) of 15 sampled cost pools. Criteria Federal regulation 45 CFR 95.507 and Appendix VI of federal regulation 2 CFR 200 state costs are allocable to a particular cost objective if the services involved are chargeable or assignable to such cost objective in accordance with relative benefits received. Federal regulation 45 CFR 95.517 requires MDHHS to claim federal financial participation for costs associated with a program only in accordance with its approved or amended (at its discretion) PACAP. Federal regulation 2 CFR 200.306 requires that costs used for matching be allowable costs to the federal award. Cause MDHHS informed us its current quality control processes did not detect the errors. Effect MDHHS incorrectly allocated expenditures to various federal programs. The federal grantor agency could issue sanctions or disallowances related to noncompliance. Known Questioned Costs Undeterminable. Recommendation We recommend MDHHS ensure it uses the appropriate PACAP data to allocate expenditures to its federal programs. Management Views MDHHS disagrees the exceptions identified should rise to the level of a significant deficiency and noncompliance. The comprehensive set of quality control processes continue to operate as designed to identify any errors greater than 5.0% of the total difference of the given statistical group from the previous quarter and none of the errors identified in the finding fell outside of this range. For part a., the auditor's review included all related statistical records within each statistical group for the 15 sampled cost pools. This includes all statistics used in the cost allocation process for the entire fiscal year because the costs that originate in these cost pools are referenced in all other cost pools. After review of all fiscal year 2023 statistical data, 6 individual statistical records out of 6,548 were found to be in error. After recalculating the cost allocated amounts related to this error, we identified that approximately $15,346 was overclaimed to LIHEAP out of $1,732,426,561 (0.0009%) of costs allocated in fiscal year 2023 by MDHHS. The other program areas identified were underclaimed. For part b., MDHHS acknowledges the exclusion of a participant from two quarters (quarter three and quarter four) of the Family Independence Specialists/Eligibility Specialists (FIS/ES) Random Moment Time Study (RMTS) in the sample. Although the actual dollar value impact of excluding a participant is indeterminable, MDHHS concluded the impact would be immaterial because there are over 6,000 RMTS participants each quarter and RMTS results vary little from quarter to quarter from non-programmatic changes. Auditor's Comments to Management Views For part a., we calculated the cost allocated amounts related to the error and identified that approximately $17,317 was overclaimed to LIHEAP out of $141.0 million of second quarter expenditures. However, in combination with part b., we could not conclude overclaims for other federal programs were less than $25,000. For part b., MDHHS used incomplete data to allocate approximately $143.5 million of third quarter expenditures and $171.2 million of fourth quarter expenditures for a total of $314.6 million to various federal and State programs, which may have affected the percentages used to allocate these expenditures. MDHHS did not assess the impact of these incomplete records. Consequently, it has no basis for its "immaterial" statement. Given the errors noted in parts a. and b., we could not determine the combined known questioned costs; however, it is likely that the improper allocation related to the $455.7 million exceeds $25,000 for the federal programs identified. Federal regulation 2 CFR 200.516(a)(3) states that in evaluating the effect of questioned costs on the opinion on noncompliance, the auditor considers the best estimate of total questioned costs (likely questioned costs), not just the questioned costs specifically identified (known questioned costs). The auditor must also report audit findings for known questioned costs when likely questioned costs are greater than $25,000 for a type of compliance requirement for a major program. Therefore, the finding stands as written.
FINDING 2023-013 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. These continuous enrollment conditions ended March 31, 2023 with the passage of the Consolidated Appropriations Act of 2023, and states were required to initiate all redeterminations within a 12-month unwinding period. MDHHS began initiating redeterminations in June 2023. We sampled beneficiaries for each program who either had a benefit period which started during fiscal year 2023 or who had a benefit period which started prior to fiscal year 2023 and had a redetermination during the months of June through September 2023. 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 22,428 Medicaid and 8,520 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 59 Medicaid and 56 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 5 (8%) of 59 Medicaid and 12 (21%) of 56 CHIP cases reviewed. b. MDHHS did not maintain case file documentation that supports the beneficiary eligibility determination for 1 (2%) of 59 Medicaid and 1 (2%) of 56 CHIP cases reviewed. c. MDHHS did not determine beneficiary eligibility within the required time frame for 2 (3%) of 59 Medicaid and 4 (7%) of 56 CHIP 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. Federal regulations 42 CFR 435.912(c) and 42 CFR 457.340(d) require MDHHS to determine eligibility and provide notice of the decision within 90 days for applicants who apply for Medicaid on the basis of disability and 45 days for all other applicants. 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. For part c., MDHHS indicated limited staff resources and a significantly higher number of renewals due to the Public Health Emergency affected its ability to determine beneficiary eligibility within the required time frame. 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 10% Medicaid and 29% CHIP unduplicated error rates. The federal grantor agency could issue sanctions or disallowances related to noncompliance. Known Questioned Costs Federal regulation 2 CFR 200.516(a)(3) requires the auditor to report known questioned costs less than $25,000 if it is likely total questioned costs would exceed $25,000. • $2,211 - federal share. • $762 - State share of costs MDHHS inappropriately used as matching. Recommendations We recommend MDHHS properly consider Medicaid and CHIP eligibility documentation in accordance with eligibility requirements. We also recommend MDHHS maintain documentation to support beneficiary eligibility was determined in accordance with eligibility requirements. We further recommend MDHHS ensure eligibility determinations are made timely. Management Views MDHHS agrees with the finding.
FINDING 2023-014 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 that it incorrectly recorded $33.4 million of CHIP medical payments to the Medicaid Cluster throughout fiscal year 2023. However, we selected a sample of 3 beneficiaries that were transferred to CHIP and noted that 1 of 3 beneficiaries was not eligible for CHIP but was 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, one case was transferred in error. Effect MDHHS inappropriately transferred $133 Medicaid Cluster expenditures to CHIP. The federal grantor agency could issue sanctions or disallowances related to noncompliance. Also, of the $33.4 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 cash management compliance requirement noted, we consider this to be a material weakness and material noncompliance because the $33.4 million CHIP expenditures identified by MDHHS as inappropriately charged to and reimbursed by the Medicaid Cluster represented 11% of total CHIP expenditures. Known Questioned Costs Federal regulation 2 CFR 200.516(a)(3) requires the auditor to report known questioned costs less than $25,000 if it is likely total questioned costs would exceed $25,000. • $89 - federal share of CHIP payments made to providers for ineligible CHIP beneficiaries, of which $89 is questioned in Finding 2023-013. • $45 - 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 2023-038 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 $1,058 for 8 (27%) of 30 payments sampled from a $1,620,411 population of beneficiary payments with no corresponding Medicaid coverage. Criteria Federal regulation 42 CFR 435.1002(b) indicates federal funding is available only for services provided to eligible beneficiaries. Cause MDHHS informed us that because of system 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 less than $25,000 if it is likely that total questioned costs exceed $25,000. • $945 - federal share of payments made to providers on behalf of ineligible beneficiaries. • $113 - State share of payments made to providers on behalf of ineligible beneficiaries. Recommendation We recommend MDHHS ensure beneficiary eligibility is updated in CHAMPS. Management Views MDHHS agrees with the finding.
FINDING 2023-039 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 $183, for 3 (20%) of 15 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, effective through January 31, 2023, 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 140, effective February 1, 2023, prohibits payment for HHP services on days a client is unavailable due to hospitalization, except the caregiver may receive payment of HHP services on the day a client is admitted to a hospital if HHP services were completed before the time the client was admitted to the hospital. Also, ASM Sections 135 and 140 allow payment for HHP services on the day a client is discharged from the hospital. Cause MDHHS informed us the post-payment review process is complicated by the lag time (up to one year) associated with MDHHS receiving and processing hospital claims and delays in changes to clients' level of care. Also, MDHHS indicated staff oversight impacted the timeliness and accuracy of recoupments. Effect MDHHS paid a total of $183 from October 1, 2022 through September 30, 2023 for sampled clients who did not qualify for HHP services because they were hospitalized. The federal grantor agency could issue sanctions or disallowances related to noncompliance. Known Questioned Costs Federal regulation 2 CFR 200.516(a)(3) requires the auditor to report known questioned costs less than $25,000 if it is likely that total questioned costs would exceed $25,000. • $128 - federal share of amounts paid for HHP services while sampled clients were hospitalized. • $55 - 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 2023-008 MDHHS, PACAP - Inappropriate PACAP Allocation See Schedule of Findings and Questioned Costs for chart/table. Condition MDHHS did not ensure it used the appropriate Public Assistance Cost Allocation Plan (PACAP) data to allocate expenditures to its federal programs. We noted: a. 2 (1%) of 203 statistic groups for which MDHHS used incorrect data to calculate the PACAP percentages, which affected 6 (40%) of 15 sampled cost pools. b. 2 (13%) of 16 Random Moment Time Studies, which MDHHS used to calculate PACAP percentages, did not have a complete population of participants, which affected 6 (40%) of 15 sampled cost pools. Criteria Federal regulation 45 CFR 95.507 and Appendix VI of federal regulation 2 CFR 200 state costs are allocable to a particular cost objective if the services involved are chargeable or assignable to such cost objective in accordance with relative benefits received. Federal regulation 45 CFR 95.517 requires MDHHS to claim federal financial participation for costs associated with a program only in accordance with its approved or amended (at its discretion) PACAP. Federal regulation 2 CFR 200.306 requires that costs used for matching be allowable costs to the federal award. Cause MDHHS informed us its current quality control processes did not detect the errors. Effect MDHHS incorrectly allocated expenditures to various federal programs. The federal grantor agency could issue sanctions or disallowances related to noncompliance. Known Questioned Costs Undeterminable. Recommendation We recommend MDHHS ensure it uses the appropriate PACAP data to allocate expenditures to its federal programs. Management Views MDHHS disagrees the exceptions identified should rise to the level of a significant deficiency and noncompliance. The comprehensive set of quality control processes continue to operate as designed to identify any errors greater than 5.0% of the total difference of the given statistical group from the previous quarter and none of the errors identified in the finding fell outside of this range. For part a., the auditor's review included all related statistical records within each statistical group for the 15 sampled cost pools. This includes all statistics used in the cost allocation process for the entire fiscal year because the costs that originate in these cost pools are referenced in all other cost pools. After review of all fiscal year 2023 statistical data, 6 individual statistical records out of 6,548 were found to be in error. After recalculating the cost allocated amounts related to this error, we identified that approximately $15,346 was overclaimed to LIHEAP out of $1,732,426,561 (0.0009%) of costs allocated in fiscal year 2023 by MDHHS. The other program areas identified were underclaimed. For part b., MDHHS acknowledges the exclusion of a participant from two quarters (quarter three and quarter four) of the Family Independence Specialists/Eligibility Specialists (FIS/ES) Random Moment Time Study (RMTS) in the sample. Although the actual dollar value impact of excluding a participant is indeterminable, MDHHS concluded the impact would be immaterial because there are over 6,000 RMTS participants each quarter and RMTS results vary little from quarter to quarter from non-programmatic changes. Auditor's Comments to Management Views For part a., we calculated the cost allocated amounts related to the error and identified that approximately $17,317 was overclaimed to LIHEAP out of $141.0 million of second quarter expenditures. However, in combination with part b., we could not conclude overclaims for other federal programs were less than $25,000. For part b., MDHHS used incomplete data to allocate approximately $143.5 million of third quarter expenditures and $171.2 million of fourth quarter expenditures for a total of $314.6 million to various federal and State programs, which may have affected the percentages used to allocate these expenditures. MDHHS did not assess the impact of these incomplete records. Consequently, it has no basis for its "immaterial" statement. Given the errors noted in parts a. and b., we could not determine the combined known questioned costs; however, it is likely that the improper allocation related to the $455.7 million exceeds $25,000 for the federal programs identified. Federal regulation 2 CFR 200.516(a)(3) states that in evaluating the effect of questioned costs on the opinion on noncompliance, the auditor considers the best estimate of total questioned costs (likely questioned costs), not just the questioned costs specifically identified (known questioned costs). The auditor must also report audit findings for known questioned costs when likely questioned costs are greater than $25,000 for a type of compliance requirement for a major program. Therefore, the finding stands as written.
FINDING 2023-013 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. These continuous enrollment conditions ended March 31, 2023 with the passage of the Consolidated Appropriations Act of 2023, and states were required to initiate all redeterminations within a 12-month unwinding period. MDHHS began initiating redeterminations in June 2023. We sampled beneficiaries for each program who either had a benefit period which started during fiscal year 2023 or who had a benefit period which started prior to fiscal year 2023 and had a redetermination during the months of June through September 2023. 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 22,428 Medicaid and 8,520 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 59 Medicaid and 56 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 5 (8%) of 59 Medicaid and 12 (21%) of 56 CHIP cases reviewed. b. MDHHS did not maintain case file documentation that supports the beneficiary eligibility determination for 1 (2%) of 59 Medicaid and 1 (2%) of 56 CHIP cases reviewed. c. MDHHS did not determine beneficiary eligibility within the required time frame for 2 (3%) of 59 Medicaid and 4 (7%) of 56 CHIP 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. Federal regulations 42 CFR 435.912(c) and 42 CFR 457.340(d) require MDHHS to determine eligibility and provide notice of the decision within 90 days for applicants who apply for Medicaid on the basis of disability and 45 days for all other applicants. 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. For part c., MDHHS indicated limited staff resources and a significantly higher number of renewals due to the Public Health Emergency affected its ability to determine beneficiary eligibility within the required time frame. 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 10% Medicaid and 29% CHIP unduplicated error rates. The federal grantor agency could issue sanctions or disallowances related to noncompliance. Known Questioned Costs Federal regulation 2 CFR 200.516(a)(3) requires the auditor to report known questioned costs less than $25,000 if it is likely total questioned costs would exceed $25,000. • $2,211 - federal share. • $762 - State share of costs MDHHS inappropriately used as matching. Recommendations We recommend MDHHS properly consider Medicaid and CHIP eligibility documentation in accordance with eligibility requirements. We also recommend MDHHS maintain documentation to support beneficiary eligibility was determined in accordance with eligibility requirements. We further recommend MDHHS ensure eligibility determinations are made timely. Management Views MDHHS agrees with the finding.
FINDING 2023-014 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 that it incorrectly recorded $33.4 million of CHIP medical payments to the Medicaid Cluster throughout fiscal year 2023. However, we selected a sample of 3 beneficiaries that were transferred to CHIP and noted that 1 of 3 beneficiaries was not eligible for CHIP but was 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, one case was transferred in error. Effect MDHHS inappropriately transferred $133 Medicaid Cluster expenditures to CHIP. The federal grantor agency could issue sanctions or disallowances related to noncompliance. Also, of the $33.4 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 cash management compliance requirement noted, we consider this to be a material weakness and material noncompliance because the $33.4 million CHIP expenditures identified by MDHHS as inappropriately charged to and reimbursed by the Medicaid Cluster represented 11% of total CHIP expenditures. Known Questioned Costs Federal regulation 2 CFR 200.516(a)(3) requires the auditor to report known questioned costs less than $25,000 if it is likely total questioned costs would exceed $25,000. • $89 - federal share of CHIP payments made to providers for ineligible CHIP beneficiaries, of which $89 is questioned in Finding 2023-013. • $45 - 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 2023-038 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 $1,058 for 8 (27%) of 30 payments sampled from a $1,620,411 population of beneficiary payments with no corresponding Medicaid coverage. Criteria Federal regulation 42 CFR 435.1002(b) indicates federal funding is available only for services provided to eligible beneficiaries. Cause MDHHS informed us that because of system 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 less than $25,000 if it is likely that total questioned costs exceed $25,000. • $945 - federal share of payments made to providers on behalf of ineligible beneficiaries. • $113 - State share of payments made to providers on behalf of ineligible beneficiaries. Recommendation We recommend MDHHS ensure beneficiary eligibility is updated in CHAMPS. Management Views MDHHS agrees with the finding.
FINDING 2023-039 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 $183, for 3 (20%) of 15 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, effective through January 31, 2023, 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 140, effective February 1, 2023, prohibits payment for HHP services on days a client is unavailable due to hospitalization, except the caregiver may receive payment of HHP services on the day a client is admitted to a hospital if HHP services were completed before the time the client was admitted to the hospital. Also, ASM Sections 135 and 140 allow payment for HHP services on the day a client is discharged from the hospital. Cause MDHHS informed us the post-payment review process is complicated by the lag time (up to one year) associated with MDHHS receiving and processing hospital claims and delays in changes to clients' level of care. Also, MDHHS indicated staff oversight impacted the timeliness and accuracy of recoupments. Effect MDHHS paid a total of $183 from October 1, 2022 through September 30, 2023 for sampled clients who did not qualify for HHP services because they were hospitalized. The federal grantor agency could issue sanctions or disallowances related to noncompliance. Known Questioned Costs Federal regulation 2 CFR 200.516(a)(3) requires the auditor to report known questioned costs less than $25,000 if it is likely that total questioned costs would exceed $25,000. • $128 - federal share of amounts paid for HHP services while sampled clients were hospitalized. • $55 - 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 2023-008 MDHHS, PACAP - Inappropriate PACAP Allocation See Schedule of Findings and Questioned Costs for chart/table. Condition MDHHS did not ensure it used the appropriate Public Assistance Cost Allocation Plan (PACAP) data to allocate expenditures to its federal programs. We noted: a. 2 (1%) of 203 statistic groups for which MDHHS used incorrect data to calculate the PACAP percentages, which affected 6 (40%) of 15 sampled cost pools. b. 2 (13%) of 16 Random Moment Time Studies, which MDHHS used to calculate PACAP percentages, did not have a complete population of participants, which affected 6 (40%) of 15 sampled cost pools. Criteria Federal regulation 45 CFR 95.507 and Appendix VI of federal regulation 2 CFR 200 state costs are allocable to a particular cost objective if the services involved are chargeable or assignable to such cost objective in accordance with relative benefits received. Federal regulation 45 CFR 95.517 requires MDHHS to claim federal financial participation for costs associated with a program only in accordance with its approved or amended (at its discretion) PACAP. Federal regulation 2 CFR 200.306 requires that costs used for matching be allowable costs to the federal award. Cause MDHHS informed us its current quality control processes did not detect the errors. Effect MDHHS incorrectly allocated expenditures to various federal programs. The federal grantor agency could issue sanctions or disallowances related to noncompliance. Known Questioned Costs Undeterminable. Recommendation We recommend MDHHS ensure it uses the appropriate PACAP data to allocate expenditures to its federal programs. Management Views MDHHS disagrees the exceptions identified should rise to the level of a significant deficiency and noncompliance. The comprehensive set of quality control processes continue to operate as designed to identify any errors greater than 5.0% of the total difference of the given statistical group from the previous quarter and none of the errors identified in the finding fell outside of this range. For part a., the auditor's review included all related statistical records within each statistical group for the 15 sampled cost pools. This includes all statistics used in the cost allocation process for the entire fiscal year because the costs that originate in these cost pools are referenced in all other cost pools. After review of all fiscal year 2023 statistical data, 6 individual statistical records out of 6,548 were found to be in error. After recalculating the cost allocated amounts related to this error, we identified that approximately $15,346 was overclaimed to LIHEAP out of $1,732,426,561 (0.0009%) of costs allocated in fiscal year 2023 by MDHHS. The other program areas identified were underclaimed. For part b., MDHHS acknowledges the exclusion of a participant from two quarters (quarter three and quarter four) of the Family Independence Specialists/Eligibility Specialists (FIS/ES) Random Moment Time Study (RMTS) in the sample. Although the actual dollar value impact of excluding a participant is indeterminable, MDHHS concluded the impact would be immaterial because there are over 6,000 RMTS participants each quarter and RMTS results vary little from quarter to quarter from non-programmatic changes. Auditor's Comments to Management Views For part a., we calculated the cost allocated amounts related to the error and identified that approximately $17,317 was overclaimed to LIHEAP out of $141.0 million of second quarter expenditures. However, in combination with part b., we could not conclude overclaims for other federal programs were less than $25,000. For part b., MDHHS used incomplete data to allocate approximately $143.5 million of third quarter expenditures and $171.2 million of fourth quarter expenditures for a total of $314.6 million to various federal and State programs, which may have affected the percentages used to allocate these expenditures. MDHHS did not assess the impact of these incomplete records. Consequently, it has no basis for its "immaterial" statement. Given the errors noted in parts a. and b., we could not determine the combined known questioned costs; however, it is likely that the improper allocation related to the $455.7 million exceeds $25,000 for the federal programs identified. Federal regulation 2 CFR 200.516(a)(3) states that in evaluating the effect of questioned costs on the opinion on noncompliance, the auditor considers the best estimate of total questioned costs (likely questioned costs), not just the questioned costs specifically identified (known questioned costs). The auditor must also report audit findings for known questioned costs when likely questioned costs are greater than $25,000 for a type of compliance requirement for a major program. Therefore, the finding stands as written.
FINDING 2023-047 Temporary Assistance for Needy Families, ALN 93.558, Activities Allowed or Unallowed, Allowable Costs/Cost Principles, and Eligibility - Non-Financial Eligibility Documentation See Schedule of Findings and Questioned Costs for chart/table. Condition MDHHS did not obtain or maintain sufficient non-financial case record documentation to support client eligibility for 3 (14%) of 21 sampled TANF-funded assistance payments. MDHHS did not obtain or maintain documentation such as support for timely completion of the Family Automated Screening Tool, Family Self-Sufficiency Plan, and records to support children older than 6 were attending school full time in order to demonstrate the 3 families were in need of TANF assistance. Criteria Federal regulation 45 CFR 260.20 requires a family be needy in order to be eligible for TANF assistance and job preparation services. Federal regulation 45 CFR 205.60(a) requires MDHHS to maintain records to support eligibility, including facts to support the client's need for assistance. MDHHS's TANF State Plan requires MDHHS and the client complete the Family Self-Sufficiency Plan prior to the end of the first three months of assistance. MDHHS's policies and procedures require documentation used to verify eligibility be maintained in the case file. In addition, Subpart E of federal regulation 45 CFR 75 requires costs charged to federal programs be adequately documented, be necessary and reasonable for the administration of the federal award, be in accordance with the relative benefits received by the program, and be consistent with policies and procedures that apply to both the federal award and other activities of the state. Cause 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. Effect MDHHS may have made TANF-funded assistance payments to ineligible clients. The federal grantor agency could issue sanctions or disallowances related to noncompliance. Known Questioned Costs Federal regulation 2 CFR 200.516(a)(3) requires the auditor to report known questioned costs less than $25,000 if it is likely total questioned costs would exceed $25,000. • $97 - federal share. 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 2023-008 MDHHS, PACAP - Inappropriate PACAP Allocation See Schedule of Findings and Questioned Costs for chart/table. Condition MDHHS did not ensure it used the appropriate Public Assistance Cost Allocation Plan (PACAP) data to allocate expenditures to its federal programs. We noted: a. 2 (1%) of 203 statistic groups for which MDHHS used incorrect data to calculate the PACAP percentages, which affected 6 (40%) of 15 sampled cost pools. b. 2 (13%) of 16 Random Moment Time Studies, which MDHHS used to calculate PACAP percentages, did not have a complete population of participants, which affected 6 (40%) of 15 sampled cost pools. Criteria Federal regulation 45 CFR 95.507 and Appendix VI of federal regulation 2 CFR 200 state costs are allocable to a particular cost objective if the services involved are chargeable or assignable to such cost objective in accordance with relative benefits received. Federal regulation 45 CFR 95.517 requires MDHHS to claim federal financial participation for costs associated with a program only in accordance with its approved or amended (at its discretion) PACAP. Federal regulation 2 CFR 200.306 requires that costs used for matching be allowable costs to the federal award. Cause MDHHS informed us its current quality control processes did not detect the errors. Effect MDHHS incorrectly allocated expenditures to various federal programs. The federal grantor agency could issue sanctions or disallowances related to noncompliance. Known Questioned Costs Undeterminable. Recommendation We recommend MDHHS ensure it uses the appropriate PACAP data to allocate expenditures to its federal programs. Management Views MDHHS disagrees the exceptions identified should rise to the level of a significant deficiency and noncompliance. The comprehensive set of quality control processes continue to operate as designed to identify any errors greater than 5.0% of the total difference of the given statistical group from the previous quarter and none of the errors identified in the finding fell outside of this range. For part a., the auditor's review included all related statistical records within each statistical group for the 15 sampled cost pools. This includes all statistics used in the cost allocation process for the entire fiscal year because the costs that originate in these cost pools are referenced in all other cost pools. After review of all fiscal year 2023 statistical data, 6 individual statistical records out of 6,548 were found to be in error. After recalculating the cost allocated amounts related to this error, we identified that approximately $15,346 was overclaimed to LIHEAP out of $1,732,426,561 (0.0009%) of costs allocated in fiscal year 2023 by MDHHS. The other program areas identified were underclaimed. For part b., MDHHS acknowledges the exclusion of a participant from two quarters (quarter three and quarter four) of the Family Independence Specialists/Eligibility Specialists (FIS/ES) Random Moment Time Study (RMTS) in the sample. Although the actual dollar value impact of excluding a participant is indeterminable, MDHHS concluded the impact would be immaterial because there are over 6,000 RMTS participants each quarter and RMTS results vary little from quarter to quarter from non-programmatic changes. Auditor's Comments to Management Views For part a., we calculated the cost allocated amounts related to the error and identified that approximately $17,317 was overclaimed to LIHEAP out of $141.0 million of second quarter expenditures. However, in combination with part b., we could not conclude overclaims for other federal programs were less than $25,000. For part b., MDHHS used incomplete data to allocate approximately $143.5 million of third quarter expenditures and $171.2 million of fourth quarter expenditures for a total of $314.6 million to various federal and State programs, which may have affected the percentages used to allocate these expenditures. MDHHS did not assess the impact of these incomplete records. Consequently, it has no basis for its "immaterial" statement. Given the errors noted in parts a. and b., we could not determine the combined known questioned costs; however, it is likely that the improper allocation related to the $455.7 million exceeds $25,000 for the federal programs identified. Federal regulation 2 CFR 200.516(a)(3) states that in evaluating the effect of questioned costs on the opinion on noncompliance, the auditor considers the best estimate of total questioned costs (likely questioned costs), not just the questioned costs specifically identified (known questioned costs). The auditor must also report audit findings for known questioned costs when likely questioned costs are greater than $25,000 for a type of compliance requirement for a major program. Therefore, the finding stands as written.
FINDING 2023-008 MDHHS, PACAP - Inappropriate PACAP Allocation See Schedule of Findings and Questioned Costs for chart/table. Condition MDHHS did not ensure it used the appropriate Public Assistance Cost Allocation Plan (PACAP) data to allocate expenditures to its federal programs. We noted: a. 2 (1%) of 203 statistic groups for which MDHHS used incorrect data to calculate the PACAP percentages, which affected 6 (40%) of 15 sampled cost pools. b. 2 (13%) of 16 Random Moment Time Studies, which MDHHS used to calculate PACAP percentages, did not have a complete population of participants, which affected 6 (40%) of 15 sampled cost pools. Criteria Federal regulation 45 CFR 95.507 and Appendix VI of federal regulation 2 CFR 200 state costs are allocable to a particular cost objective if the services involved are chargeable or assignable to such cost objective in accordance with relative benefits received. Federal regulation 45 CFR 95.517 requires MDHHS to claim federal financial participation for costs associated with a program only in accordance with its approved or amended (at its discretion) PACAP. Federal regulation 2 CFR 200.306 requires that costs used for matching be allowable costs to the federal award. Cause MDHHS informed us its current quality control processes did not detect the errors. Effect MDHHS incorrectly allocated expenditures to various federal programs. The federal grantor agency could issue sanctions or disallowances related to noncompliance. Known Questioned Costs Undeterminable. Recommendation We recommend MDHHS ensure it uses the appropriate PACAP data to allocate expenditures to its federal programs. Management Views MDHHS disagrees the exceptions identified should rise to the level of a significant deficiency and noncompliance. The comprehensive set of quality control processes continue to operate as designed to identify any errors greater than 5.0% of the total difference of the given statistical group from the previous quarter and none of the errors identified in the finding fell outside of this range. For part a., the auditor's review included all related statistical records within each statistical group for the 15 sampled cost pools. This includes all statistics used in the cost allocation process for the entire fiscal year because the costs that originate in these cost pools are referenced in all other cost pools. After review of all fiscal year 2023 statistical data, 6 individual statistical records out of 6,548 were found to be in error. After recalculating the cost allocated amounts related to this error, we identified that approximately $15,346 was overclaimed to LIHEAP out of $1,732,426,561 (0.0009%) of costs allocated in fiscal year 2023 by MDHHS. The other program areas identified were underclaimed. For part b., MDHHS acknowledges the exclusion of a participant from two quarters (quarter three and quarter four) of the Family Independence Specialists/Eligibility Specialists (FIS/ES) Random Moment Time Study (RMTS) in the sample. Although the actual dollar value impact of excluding a participant is indeterminable, MDHHS concluded the impact would be immaterial because there are over 6,000 RMTS participants each quarter and RMTS results vary little from quarter to quarter from non-programmatic changes. Auditor's Comments to Management Views For part a., we calculated the cost allocated amounts related to the error and identified that approximately $17,317 was overclaimed to LIHEAP out of $141.0 million of second quarter expenditures. However, in combination with part b., we could not conclude overclaims for other federal programs were less than $25,000. For part b., MDHHS used incomplete data to allocate approximately $143.5 million of third quarter expenditures and $171.2 million of fourth quarter expenditures for a total of $314.6 million to various federal and State programs, which may have affected the percentages used to allocate these expenditures. MDHHS did not assess the impact of these incomplete records. Consequently, it has no basis for its "immaterial" statement. Given the errors noted in parts a. and b., we could not determine the combined known questioned costs; however, it is likely that the improper allocation related to the $455.7 million exceeds $25,000 for the federal programs identified. Federal regulation 2 CFR 200.516(a)(3) states that in evaluating the effect of questioned costs on the opinion on noncompliance, the auditor considers the best estimate of total questioned costs (likely questioned costs), not just the questioned costs specifically identified (known questioned costs). The auditor must also report audit findings for known questioned costs when likely questioned costs are greater than $25,000 for a type of compliance requirement for a major program. Therefore, the finding stands as written.
FINDING 2023-008 MDHHS, PACAP - Inappropriate PACAP Allocation See Schedule of Findings and Questioned Costs for chart/table. Condition MDHHS did not ensure it used the appropriate Public Assistance Cost Allocation Plan (PACAP) data to allocate expenditures to its federal programs. We noted: a. 2 (1%) of 203 statistic groups for which MDHHS used incorrect data to calculate the PACAP percentages, which affected 6 (40%) of 15 sampled cost pools. b. 2 (13%) of 16 Random Moment Time Studies, which MDHHS used to calculate PACAP percentages, did not have a complete population of participants, which affected 6 (40%) of 15 sampled cost pools. Criteria Federal regulation 45 CFR 95.507 and Appendix VI of federal regulation 2 CFR 200 state costs are allocable to a particular cost objective if the services involved are chargeable or assignable to such cost objective in accordance with relative benefits received. Federal regulation 45 CFR 95.517 requires MDHHS to claim federal financial participation for costs associated with a program only in accordance with its approved or amended (at its discretion) PACAP. Federal regulation 2 CFR 200.306 requires that costs used for matching be allowable costs to the federal award. Cause MDHHS informed us its current quality control processes did not detect the errors. Effect MDHHS incorrectly allocated expenditures to various federal programs. The federal grantor agency could issue sanctions or disallowances related to noncompliance. Known Questioned Costs Undeterminable. Recommendation We recommend MDHHS ensure it uses the appropriate PACAP data to allocate expenditures to its federal programs. Management Views MDHHS disagrees the exceptions identified should rise to the level of a significant deficiency and noncompliance. The comprehensive set of quality control processes continue to operate as designed to identify any errors greater than 5.0% of the total difference of the given statistical group from the previous quarter and none of the errors identified in the finding fell outside of this range. For part a., the auditor's review included all related statistical records within each statistical group for the 15 sampled cost pools. This includes all statistics used in the cost allocation process for the entire fiscal year because the costs that originate in these cost pools are referenced in all other cost pools. After review of all fiscal year 2023 statistical data, 6 individual statistical records out of 6,548 were found to be in error. After recalculating the cost allocated amounts related to this error, we identified that approximately $15,346 was overclaimed to LIHEAP out of $1,732,426,561 (0.0009%) of costs allocated in fiscal year 2023 by MDHHS. The other program areas identified were underclaimed. For part b., MDHHS acknowledges the exclusion of a participant from two quarters (quarter three and quarter four) of the Family Independence Specialists/Eligibility Specialists (FIS/ES) Random Moment Time Study (RMTS) in the sample. Although the actual dollar value impact of excluding a participant is indeterminable, MDHHS concluded the impact would be immaterial because there are over 6,000 RMTS participants each quarter and RMTS results vary little from quarter to quarter from non-programmatic changes. Auditor's Comments to Management Views For part a., we calculated the cost allocated amounts related to the error and identified that approximately $17,317 was overclaimed to LIHEAP out of $141.0 million of second quarter expenditures. However, in combination with part b., we could not conclude overclaims for other federal programs were less than $25,000. For part b., MDHHS used incomplete data to allocate approximately $143.5 million of third quarter expenditures and $171.2 million of fourth quarter expenditures for a total of $314.6 million to various federal and State programs, which may have affected the percentages used to allocate these expenditures. MDHHS did not assess the impact of these incomplete records. Consequently, it has no basis for its "immaterial" statement. Given the errors noted in parts a. and b., we could not determine the combined known questioned costs; however, it is likely that the improper allocation related to the $455.7 million exceeds $25,000 for the federal programs identified. Federal regulation 2 CFR 200.516(a)(3) states that in evaluating the effect of questioned costs on the opinion on noncompliance, the auditor considers the best estimate of total questioned costs (likely questioned costs), not just the questioned costs specifically identified (known questioned costs). The auditor must also report audit findings for known questioned costs when likely questioned costs are greater than $25,000 for a type of compliance requirement for a major program. Therefore, the finding stands as written.
FINDING 2023-056 Low-Income Home Energy Assistance, ALN 93.568, Eligibility - Client Benefits in Excess of Fiscal Year Cap See Schedule of Findings and Questioned Costs for chart/table. Condition MDHHS did not ensure the total client benefits were limited to the fiscal year cap for 1 (3%) of 39 sampled clients. Criteria Federal law 42 USC 8624 requires the State expend funds in accordance with the LIHEAP State Plan. The LIHEAP State Plan indicates that when a payment was necessary to resolve an energy related emergency, the payment would be the minimum amount necessary to prevent shutoff or restore activities for natural gas and electric services and the payment for any other fuel types and deliverable fuels may be made up to the fiscal year cap. Also, MDHHS policy establishes payment limits for these emergency energy fiscal year caps. Cause MDHHS informed us the miscalculation of the total client benefits paid during the fiscal year was caused by a manual data entry error. Effect MDHHS made an energy payment in excess of the client's fiscal year cap. The federal grantor agency could issue sanctions or disallowances related to noncompliance. Known Questioned Costs Federal regulation 2 CFR 200.516(a)(3) requires the auditor to report known questioned costs less than $25,000 if it is likely that total questioned costs would exceed $25,000. • $190 - federal share. Recommendation We recommend MDHHS ensure the total client benefits do not exceed the fiscal year cap. Management Views MDHHS agrees with the finding.
FINDING 2023-057 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, household size, and proof of energy crisis for 9 (23%) of 39 sampled LIHEAP-funded State Emergency Relief (SER) energy payments. Criteria Federal law 42 USC 8624 requires the State to expend funds in accordance with the LIHEAP State Plan and allows MDHHS to use LIHEAP funds to intervene in energy-related crisis situations and assist eligible households to meet the costs of home energy. MDHHS policy requires county/district office caseworkers to verify and include certain income of SER group members during intake in order to determine eligibility for SER energy services. Also, policy states the payment amount must match the amount on the past due or shut-off notice. In addition, policy indicates the income limitation to be eligible is based on family size or SER group size. 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 less than $25,000 if it is likely that total questioned costs would exceed $25,000. • $6,469 - 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 2023-008 MDHHS, PACAP - Inappropriate PACAP Allocation See Schedule of Findings and Questioned Costs for chart/table. Condition MDHHS did not ensure it used the appropriate Public Assistance Cost Allocation Plan (PACAP) data to allocate expenditures to its federal programs. We noted: a. 2 (1%) of 203 statistic groups for which MDHHS used incorrect data to calculate the PACAP percentages, which affected 6 (40%) of 15 sampled cost pools. b. 2 (13%) of 16 Random Moment Time Studies, which MDHHS used to calculate PACAP percentages, did not have a complete population of participants, which affected 6 (40%) of 15 sampled cost pools. Criteria Federal regulation 45 CFR 95.507 and Appendix VI of federal regulation 2 CFR 200 state costs are allocable to a particular cost objective if the services involved are chargeable or assignable to such cost objective in accordance with relative benefits received. Federal regulation 45 CFR 95.517 requires MDHHS to claim federal financial participation for costs associated with a program only in accordance with its approved or amended (at its discretion) PACAP. Federal regulation 2 CFR 200.306 requires that costs used for matching be allowable costs to the federal award. Cause MDHHS informed us its current quality control processes did not detect the errors. Effect MDHHS incorrectly allocated expenditures to various federal programs. The federal grantor agency could issue sanctions or disallowances related to noncompliance. Known Questioned Costs Undeterminable. Recommendation We recommend MDHHS ensure it uses the appropriate PACAP data to allocate expenditures to its federal programs. Management Views MDHHS disagrees the exceptions identified should rise to the level of a significant deficiency and noncompliance. The comprehensive set of quality control processes continue to operate as designed to identify any errors greater than 5.0% of the total difference of the given statistical group from the previous quarter and none of the errors identified in the finding fell outside of this range. For part a., the auditor's review included all related statistical records within each statistical group for the 15 sampled cost pools. This includes all statistics used in the cost allocation process for the entire fiscal year because the costs that originate in these cost pools are referenced in all other cost pools. After review of all fiscal year 2023 statistical data, 6 individual statistical records out of 6,548 were found to be in error. After recalculating the cost allocated amounts related to this error, we identified that approximately $15,346 was overclaimed to LIHEAP out of $1,732,426,561 (0.0009%) of costs allocated in fiscal year 2023 by MDHHS. The other program areas identified were underclaimed. For part b., MDHHS acknowledges the exclusion of a participant from two quarters (quarter three and quarter four) of the Family Independence Specialists/Eligibility Specialists (FIS/ES) Random Moment Time Study (RMTS) in the sample. Although the actual dollar value impact of excluding a participant is indeterminable, MDHHS concluded the impact would be immaterial because there are over 6,000 RMTS participants each quarter and RMTS results vary little from quarter to quarter from non-programmatic changes. Auditor's Comments to Management Views For part a., we calculated the cost allocated amounts related to the error and identified that approximately $17,317 was overclaimed to LIHEAP out of $141.0 million of second quarter expenditures. However, in combination with part b., we could not conclude overclaims for other federal programs were less than $25,000. For part b., MDHHS used incomplete data to allocate approximately $143.5 million of third quarter expenditures and $171.2 million of fourth quarter expenditures for a total of $314.6 million to various federal and State programs, which may have affected the percentages used to allocate these expenditures. MDHHS did not assess the impact of these incomplete records. Consequently, it has no basis for its "immaterial" statement. Given the errors noted in parts a. and b., we could not determine the combined known questioned costs; however, it is likely that the improper allocation related to the $455.7 million exceeds $25,000 for the federal programs identified. Federal regulation 2 CFR 200.516(a)(3) states that in evaluating the effect of questioned costs on the opinion on noncompliance, the auditor considers the best estimate of total questioned costs (likely questioned costs), not just the questioned costs specifically identified (known questioned costs). The auditor must also report audit findings for known questioned costs when likely questioned costs are greater than $25,000 for a type of compliance requirement for a major program. Therefore, the finding stands as written.
FINDING 2023-056 Low-Income Home Energy Assistance, ALN 93.568, Eligibility - Client Benefits in Excess of Fiscal Year Cap See Schedule of Findings and Questioned Costs for chart/table. Condition MDHHS did not ensure the total client benefits were limited to the fiscal year cap for 1 (3%) of 39 sampled clients. Criteria Federal law 42 USC 8624 requires the State expend funds in accordance with the LIHEAP State Plan. The LIHEAP State Plan indicates that when a payment was necessary to resolve an energy related emergency, the payment would be the minimum amount necessary to prevent shutoff or restore activities for natural gas and electric services and the payment for any other fuel types and deliverable fuels may be made up to the fiscal year cap. Also, MDHHS policy establishes payment limits for these emergency energy fiscal year caps. Cause MDHHS informed us the miscalculation of the total client benefits paid during the fiscal year was caused by a manual data entry error. Effect MDHHS made an energy payment in excess of the client's fiscal year cap. The federal grantor agency could issue sanctions or disallowances related to noncompliance. Known Questioned Costs Federal regulation 2 CFR 200.516(a)(3) requires the auditor to report known questioned costs less than $25,000 if it is likely that total questioned costs would exceed $25,000. • $190 - federal share. Recommendation We recommend MDHHS ensure the total client benefits do not exceed the fiscal year cap. Management Views MDHHS agrees with the finding.
FINDING 2023-057 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, household size, and proof of energy crisis for 9 (23%) of 39 sampled LIHEAP-funded State Emergency Relief (SER) energy payments. Criteria Federal law 42 USC 8624 requires the State to expend funds in accordance with the LIHEAP State Plan and allows MDHHS to use LIHEAP funds to intervene in energy-related crisis situations and assist eligible households to meet the costs of home energy. MDHHS policy requires county/district office caseworkers to verify and include certain income of SER group members during intake in order to determine eligibility for SER energy services. Also, policy states the payment amount must match the amount on the past due or shut-off notice. In addition, policy indicates the income limitation to be eligible is based on family size or SER group size. 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 less than $25,000 if it is likely that total questioned costs would exceed $25,000. • $6,469 - 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 2023-013 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. These continuous enrollment conditions ended March 31, 2023 with the passage of the Consolidated Appropriations Act of 2023, and states were required to initiate all redeterminations within a 12-month unwinding period. MDHHS began initiating redeterminations in June 2023. We sampled beneficiaries for each program who either had a benefit period which started during fiscal year 2023 or who had a benefit period which started prior to fiscal year 2023 and had a redetermination during the months of June through September 2023. 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 22,428 Medicaid and 8,520 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 59 Medicaid and 56 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 5 (8%) of 59 Medicaid and 12 (21%) of 56 CHIP cases reviewed. b. MDHHS did not maintain case file documentation that supports the beneficiary eligibility determination for 1 (2%) of 59 Medicaid and 1 (2%) of 56 CHIP cases reviewed. c. MDHHS did not determine beneficiary eligibility within the required time frame for 2 (3%) of 59 Medicaid and 4 (7%) of 56 CHIP 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. Federal regulations 42 CFR 435.912(c) and 42 CFR 457.340(d) require MDHHS to determine eligibility and provide notice of the decision within 90 days for applicants who apply for Medicaid on the basis of disability and 45 days for all other applicants. 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. For part c., MDHHS indicated limited staff resources and a significantly higher number of renewals due to the Public Health Emergency affected its ability to determine beneficiary eligibility within the required time frame. 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 10% Medicaid and 29% CHIP unduplicated error rates. The federal grantor agency could issue sanctions or disallowances related to noncompliance. Known Questioned Costs Federal regulation 2 CFR 200.516(a)(3) requires the auditor to report known questioned costs less than $25,000 if it is likely total questioned costs would exceed $25,000. • $2,211 - federal share. • $762 - State share of costs MDHHS inappropriately used as matching. Recommendations We recommend MDHHS properly consider Medicaid and CHIP eligibility documentation in accordance with eligibility requirements. We also recommend MDHHS maintain documentation to support beneficiary eligibility was determined in accordance with eligibility requirements. We further recommend MDHHS ensure eligibility determinations are made timely. Management Views MDHHS agrees with the finding.