Finding 1236155 (2025-013)

Federal Agency: Department of Health and Human Services (DHHS) Federal Program: 93.777 State Survey and Certification of Health Care Providers and Suppliers (Title XVIII) Medicare 2024 and 2025 - TITLEXVIII 2024 and 2025 - TITLEXIXSS 2024 and 2025 - CLIA 2024 and 2025 - XVIIIIMPAC State Agency: Department of Health and Senior Services (DHSS) - Section for Long-Term Care Regulation (SLCR) Type of Finding: Nonmaterial Noncompliance Compliance Requirement: Special Tests and Provisions As similarly noted in our 4 prior audit reports, the SLCR did not perform facility survey procedures within required timeframes. In our test of compliance with facility survey requirements for 60 surveys performed during the year ended June 30, 2025, we noted 14 Statements of Deficiencies and Plan of Corrections were sent 11 to 22 days after the survey exit instead of within 10 days, and 3 facility revisits were completed in 69-89 days instead of within 60 days of the initial survey date. The DHSS is the state survey agency charged with inspecting providers of the Medicaid program, including hospitals, nursing facilities, and other long-term care (LTC) facilities. Under 42 CFR Section 431.108, as a basis for participation in Medicaid, providers are subject to survey and certification by the DHHS - Centers for Medicare and Medicaid Services (DHHS-CMS) or the DHSS to ensure providers and suppliers are in compliance with regulatory health and safety standards and conditions of participation. During the year ended June 30, 2025, the DHSS through the SLCR surveyed 518 providers, including 482 LTC nursing facilities, 6 intermediate care facilities for individuals with intellectual disabilities, and 30 non-deemed hospitals. The DHHS-CMS provides the State Operations Manual (SOM) to state agencies as guidelines for the survey and certification of providers. SOM Chapter 2, Section 2728, requires the state agency to mail to the provider a copy of Form CMS-2567 (Statement of Deficiencies and Plan of Correction) within 10 working days after the survey exit. In addition, SOM Chapter 7, Section 7317.2, requires onsite revisits for LTC nursing facilities to occur any time between the last correction date on the plan of correction and the 60th day from the survey date to confirm the facility is in substantial compliance, and in certain cases, has the ability to remain in substantial compliance. To test compliance with survey and certification requirements, we randomly selected surveys performed during the year ended June 30, 2025, or the most recent survey if a survey had not been performed during this period, for 60 facilities including 45 LTC nursing facilities, 5 intermediate care facilities for individuals with intellectual disabilities, and 10 non-deemed hospitals. Due to survey delays and backlogs, 4 of the surveys sampled were performed in state fiscal year 2026, 44 in state fiscal year 2025, and 12 in state fiscal year 2024. Of the 58 facility surveys that required a Statement of Deficiencies and Plan of Correction, 14 statements (24%)were sent to facilities between 11 and 22 working days after the survey exit instead of within 10 working days as required. In addition, of the 26 LTC nursing facilities that required a revisit, the revisit to 3 facilities (12%) was completed 69 to 89 days after the initial survey date instead of within 60 days as required. DHSS officials indicated there were multiple contributing factors for these delays including DHSS staffing shortages, industry labor shortages, insufficient state and federal funding, increased workloads due to increased volume and severity of complaints received and violations identified, transitions to a new federal monitoring software system, and the backlog of surveys due. DHSS officials stated they hired part-time retired surveyors and contracted with outside survey companies to help with the increased workload and backlog. DHSS officials further indicated they are working with the DHHS-CMS to minimize the delays. Conducting survey procedures within required timeframes helps to ensure providers are timely notified of deficiencies requiring correction so that timely follow up on those deficiencies can occur to provide assurance facilities are providing services to their clients that are in compliance with health and safety standards and conditions of participation. Recommendation The DHSS through the SLCR ensure survey procedures are conducted within required timeframes. Auditee's Response We partially agree with the auditor's finding. Our Corrective Action Plan includes an explanation and specific reasons for our disagreement and any planned actions to address the finding. Auditor's Comment The DHSS Corrective Action Plan states the DHSS disagrees a finding and corrective action is needed because (1) the State Auditor's Office (SAO) has determined the errors to be nonmaterial noncompliance, (2) the DHHS-CMS evaluation of DHSS compliance with revisit requirements has deemed the requirements to be "met" (compliance at a level at or exceeding a DHHS-CMS-determined threshold of 70%), and (3) the 3 revisit errors were not truly noncompliance because 1 revisit was not required and 2 revisits could not occur until additional actions were taken to address complaints. In conducting a single audit in accordance with 2 CFR Part 200 (Uniform Guidance), auditors are required by 2 CFR Section 200.514(d)(1)(2), to determine whether the auditee has complied with federal statutes, regulations, and the terms and conditions of federal awards that may have a direct and material effect on each of its major programs, as outlined in the OMB Compliance Supplement. The OMB Compliance Supplement, Part 4, for the Special Tests and Provisions Compliance Requirement directs auditors to "[d]etermine whether the state ensures that hospitals, nursing facilities, and [intermediate care facilities for individuals with intellectual disabilities] that serve Medicaid patients meet the prescribed health and safety standards." As stated in the finding, in making this determination, we review DHSS compliance with the DHHS-CMS SOM requirements. DHSS arguments that the revisit and SOD errors noted in the finding are not noncompliance and/or significant are not valid arguments, as explained below. (1) The SAO has not determined the 24% SOD or 12% revisit error rates to be insignificant. The finding was classified as nonmaterial noncompliance in our evaluation of the state's compliance with all 10 requirements within the Special Tests and Provisions Compliance Requirement for the Medicaid Cluster as a whole. All instances of noncompliance identified in the audit were cumulatively reviewed for purposes of forming our opinion on compliance with the direct and material compliance requirements. (2) The SAO has not misunderstood or disregarded the DHHS-CMS State Performance Standards System. While the DHHS-CMS also evaluates DHSS compliance through this system, the performance system is intended to measure the DHSS's level of compliance and identify when corrective action is needed to address deficiencies, but does not remove or waive the DHSS's responsibility to comply with the timeframes required by the SOM. (3) The audit exception listing provided to, and discussed with, the DHSS correctly lists the 3 revisit errors identified in the finding. Although the DHSS claims a revisit was not required for 1 of the errors, a revisit was clearly required per the SOM. The applicable survey letter documents the facility received a grid placement of "F". The SOM Matrix for Scope and Severity (Section 7400.3.1) classified a grid placement of "F" as "substandard quality of care," and SOM Section 7317.2 required revisits when surveys find "deficiencies that constitute substandard quality of care, harm, or immediate jeopardy." The DHSS provided no documentation or CMS policy that waived the revisit requirement for this facility. Regarding the other 2 errors, for which the DHSS argued the revisits could not occur until complaints regarding the facilities were resolved, the DHSS provided no CMS policy or directive indicating the DHSS could pause and delay revisits for facilities when complaints are received; and such revisit delays may allow deficiencies to continue and/or worsen over the course of the delay. In addition, the DHHS-CMS requirement to prioritize required actions does not remove or waive the DHSS's responsibility to perform revisits within required timeframes.