Until the Legislature implements our recommendation in Chapter 2, Health Care Services should immediately resolve weaknesses in its oversight of local educational consortia and local governmental agencies to ensure that these entities sufficiently meet their responsibilities under the administrative activities program and meet the terms of their contracts with Health Care Services. Health Care Services should update its site review and desk review procedures to include the following steps:
* A risk-based approach to selecting entities for review.
* Verification that local educational consortia and local governmental agencies are adequately meeting the oversight and administrative responsibilities described in their contracts with Health Care Services.
* Verification that contracts between local educational consortia or local governmental agencies and their claiming units do not include provisions that could result in disallowed costs, such as allowing Health Care Services' participation fee to be included in the claim calculations.
* Examination of local educational consortia and local governmental agencies' records to ensure that:
-- Costs they claim for federal reimbursement are necessary and reasonable.
-- The entities are not inappropriately earning a profit based on the fees they collect from claiming units.
-- The coding performed by local educational consortia that charge claiming units a percentage of their federal reimbursement is reasonably accurate.
DHCS anticipates beginning site visits in January 2018. The delay from previous updates is due to unanticipated workload for Fiscal Year (FY) 2017-18 Quarter (Q) 2, which includes processing FY 2015-16 Q2 invoice payments, FY 2009-10 and FY 2010-11 backcasting invoice payments. All of these claims must be processed before December 1, 2017; therefore, staffing resources are currently fully directed to processing these claims.
DHCS developed criteria that will identify high-risk entities and provided it to the CSA on June 29, 2016. New site visit protocols will be implemented once coding has been finalized and invoices begin to be submitted. It would not be practical for the Department to begin site visits until we are able to review invoices that have been submitted via the new RMTS methodology. DHCS issued PPL 16-007 on April 8, 2016, informing LECs and LGAs about the participation fee and added this step to the site visit protocols. DHCS anticipates beginning sites visits in October of 2017.
DHCS reviews LEC/LGA oversight responsibilities during regularly scheduled site visits. As site visits have recently resumed, a new site visit protocol is being developed to include: a risk-based approach for identifying high-risk claiming units; a thorough review of sub-recipient contracts to verify the lack of provisions for claiming participation fees; and a detailed review of all assigned codes for moment responses. DHCS will develop a set of criteria that can be used to identify high-risk claiming units and help facilitate a revised site visit protocol based on the new Random Moment Time Survey (RMTS) methodology.
DHCS will work with audit staff in Audits and Investigation to review current risk-based practices to develop an approach for selecting entities for review. DHCS has requested copies of all contracts with the LEC/LGAs and LEAs and will review to determine the oversight and administrative responsibilities and verify these activities are being accomplished.
Agency responses received are posted verbatim.