Recurring Findings

Health Care: Recurring Most severe Noncompliance
Federal Program Issue First Year Reported
Department's Assertion Page Number
Medicaid Cluster State automated welfare systems (SAWS) were implemented to manage various county welfare processes, including Medicaid, Supplemental Nutrition Assistance Program (SNAP), and Temporary Assistance for Needy Families (TANF). In California, the state does not maintain the computer systems supporting the eligibility determination process, but the state does pay benefits on behalf of participants for Medicaid. All 58 counties aligned themselves into one of three consortia. Each county consortium is responsible for the design, development, implementation, maintenance, and operation of its SAWS. As a result of setting up these consortia, counties are thereby responsible for monitoring these systems to ensure they meet the federal requirements necessary to ensure compliance, including federal compliance related to eligibility determination and redetermination. Health Care Services communicates to counties information required by federal regulations through the State Plan, alert letters, and other agreements. However, as identified during our fiscal year 2011–12 audit, Health Care Services did not evaluate that the use of county-owned systems for eligibility determination rather than a state-owned system created the need for additional communication to counties as to how federal compliance requirements related to eligibility were to be addressed in county OMB Circular A-133 audits. Health Care Services also did not report subrecipient expenditures for fee-for-service amounts and managed care premiums to counties. In other words, the OMB A-133 Compliance Supplement guidance on split eligibility does not apply in California. Instead, the county auditor is responsible for meeting internal control and compliance objectives for eligibility. During fiscal year 2012–13, Health Care Services began to evaluate how to communicate to counties and auditors their responsibilities under OMB Circular A-133; however, no changes were made. As part of its evaluation, Health Care Services began to consider implication of the federal Patient Protection and Affordable Care Act (PPACA), which expanded Medicaid coverage and simplified eligibility requirements to be based on financial and nonfinancial criteria including income and citizenship/immigration status for a majority of beneficiaries. Health Care Services partnered with the California Health Benefit Exchange (Covered California) to implement the state’s health benefit exchange or marketplace, as required by the PPACA. Covered California is a related organization to the State of California and not considered a department or component unit. Through Covered California, the California Healthcare Eligibility, Enrollment and Retention System (CalHEERS) was deployed on October 1, 2013 to meet the requirements of the PPACA. CalHEERS was designed to determine eligibility based on modified adjusted gross income (MAGI) and citizenship, immigration status, incarceration status and other healthcare coverage among others. The county is also responsible for determining eligibility in certain circumstances, including those not determined based on modified adjusted gross income. In addition, counties continue to be responsible for redeterminations and case management for all beneficiaries. During fiscal year 2013–14, Health Care Services reassessed the need to ensure relevant eligibility control and compliance objectives were subject to audit at the county. Health Care Services estimates there are approximately 1 million Medi-Cal beneficiaries whose determinations were made by the counties using the SAWS. Health Care Services also concluded that given anticipated changes in federally mandated Medi-Cal eligibility quality control reviews to include non-MAGI determinations, ensuring eligibility was audited at the county was not necessary. Given that non-MAGI beneficiaries make up approximately 9 percent of the 10.9 million Medi-Cal beneficiaries and counties perform all parts of non-MAGI eligibility determinations, the county auditor is responsible for meeting internal control and compliance objectives for non-MAGI eligibility. N/A
Health Care Services agrees that the SAWS are owned, operated and maintained by the respective 58 counties throughout the state. However, Health Care Services contends that existing federally mandated Medi-Cal eligibility quality control reviews performed by Health Care Services, along with additional reviews that Health Care Services is planning to implement in fiscal year 2015-16, is more than sufficient to meet county internal control and compliance objectives for eligibility. The fact that Health Care Services is performing the reviews instead of county auditors should not preclude the objectives from being met. Health Care Services is currently working closely with the CMS to obtain approval to implement a series of four new Medicaid eligibility quality control pilots over the next three years that are designed to replace pre-ACA quality control requirements (Medi-Cal Eligibility Quality Control and Payment Error Rate Measurement programs). The new pilot programs will consist of Health Care Services staff re-performing eligibility determinations from a random sample that will identify potential errors made by SAWS and/or county eligibility workers, including non-MAGI determinations starting in Round 3 (10/1/14 – 3/31/15) of the quality control pilots. In addition, pursuant to Senate Bill 28 (Hernandez, Chapter 4, Statutes of 2013), Health Care Services is required to implement a new budgeting methodology for county administrative costs that Health Care Services plans to implement no sooner than FY 2015/16. The new budgeting methodology is intended to address the changes in eligibility determination rules and processes resulting from implementation of ACA. A core element of the new budgeting methodology is to utilize a private contractor, to perform county reviews, including, time studies to assess how long it takes county eligibility workers to perform various tasks under new ACA rules. The data obtained by the contractor will be used as part of the new budgeting methodology. Health Care Services suggests the auditor of the State continue to audit Medi- Cal eligibility performed by the SAWS/counties for fiscal year 2014-15 and close out this audit finding based on implementation of the Health Care Services review processes described above. 64
Medical Assistance Program State automated welfare systems (SAWS) were implemented to manage various county welfare processes, including Medicaid, Supplemental Nutrition Assistance Program (SNAP), and Temporary Assistance for Needy Families (TANF). In California, the state does not maintain the computer systems supporting the eligibility determination process, but the state does pay benefits on behalf of participants for Medicaid. All 58 counties aligned themselves into one of three consortia. Each county consortium is responsible for the design, development, implementation, maintenance, and operation of its SAWS. As a result of setting up these consortia, counties are thereby responsible for monitoring these systems to ensure they meet the federal requirements necessary to ensure compliance, including federal compliance related to eligibility determination and redetermination. Health Care Services communicates to counties information required by federal regulations through the State Plan, alert letters, and other agreements. However, as identified during our fiscal year 2011–12 audit, Health Care Services did not evaluate that the use of county-owned systems for eligibility determination rather than a state-owned system created the need for additional communication to counties as to how federal compliance requirements related to eligibility were to be addressed in county OMB Circular A-133 audits. Health Care Services also did not report subrecipient expenditures for fee-for-service amounts and managed care premiums to counties. In other words, the OMB A-133 Compliance Supplement guidance on split eligibility does not apply in California. Instead, the county auditor is responsible for meeting internal control and compliance objectives for eligibility. During fiscal year 2012–13, Health Care Services began to evaluate how to communicate to counties and auditors their responsibilities under OMB Circular A-133; however, no changes were made. As part of its evaluation, Health Care Services began to consider implication of the federal Patient Protection and Affordable Care Act (PPACA), which expanded Medicaid coverage and simplified eligibility requirements to be based on financial and nonfinancial criteria including income and citizenship/immigration status for a majority of beneficiaries. Health Care Services partnered with the California Health Benefit Exchange (Covered California) to implement the state’s health benefit exchange or marketplace, as required by the PPACA. Covered California is a related organization to the State of California and not considered a department or component unit. Through Covered California, the California Healthcare Eligibility, Enrollment and Retention System (CalHEERS) was deployed on October 1, 2013 to meet the requirements of the PPACA. CalHEERS was designed to determine eligibility based on modified adjusted gross income (MAGI) and citizenship, immigration status, incarceration status and other healthcare coverage among others. The county is also responsible for determining eligibility in certain circumstances, including those not determined based on modified adjusted gross income. In addition, counties continue to be responsible for redeterminations and case management for all beneficiaries. During fiscal year 2013–14, Health Care Services reassessed the need to ensure relevant eligibility control and compliance objectives were subject to audit at the county. Health Care Services estimates there are approximately 1 million Medi-Cal beneficiaries whose determinations were made by the counties using the SAWS. Health Care Services also concluded that given anticipated changes in federally mandated Medi-Cal eligibility quality control reviews to include non-MAGI determinations, ensuring eligibility was audited at the county was not necessary. Given that non-MAGI beneficiaries make up approximately 9 percent of the 10.9 million Medi-Cal beneficiaries and counties perform all parts of non-MAGI eligibility determinations, the county auditor is responsible for meeting internal control and compliance objectives for non-MAGI eligibility. N/A
Health Care Services agrees that the SAWS are owned, operated and maintained by the respective 58 counties throughout the state. However, Health Care Services contends that existing federally mandated Medi-Cal eligibility quality control reviews performed by Health Care Services, along with additional reviews that Health Care Services is planning to implement in fiscal year 2015-16, is more than sufficient to meet county internal control and compliance objectives for eligibility. The fact that Health Care Services is performing the reviews instead of county auditors should not preclude the objectives from being met. Health Care Services is currently working closely with the CMS to obtain approval to implement a series of four new Medicaid eligibility quality control pilots over the next three years that are designed to replace pre-ACA quality control requirements (Medi-Cal Eligibility Quality Control and Payment Error Rate Measurement programs). The new pilot programs will consist of Health Care Services staff re-performing eligibility determinations from a random sample that will identify potential errors made by SAWS and/or county eligibility workers, including non-MAGI determinations starting in Round 3 (10/1/14 – 3/31/15) of the quality control pilots. In addition, pursuant to Senate Bill 28 (Hernandez, Chapter 4, Statutes of 2013), Health Care Services is required to implement a new budgeting methodology for county administrative costs that Health Care Services plans to implement no sooner than FY 2015/16. The new budgeting methodology is intended to address the changes in eligibility determination rules and processes resulting from implementation of ACA. A core element of the new budgeting methodology is to utilize a private contractor, to perform county reviews, including, time studies to assess how long it takes county eligibility workers to perform various tasks under new ACA rules. The data obtained by the contractor will be used as part of the new budgeting methodology. Health Care Services suggests the auditor of the State continue to audit Medi- Cal eligibility performed by the SAWS/counties for fiscal year 2014-15 and close out this audit finding based on implementation of the Health Care Services review processes described above. 64
SCHIP (State Children's Insurance Program) State automated welfare systems (SAWS) were implemented to manage various county welfare processes, including Medicaid, Supplemental Nutrition Assistance Program (SNAP), and Temporary Assistance for Needy Families (TANF). In California, the state does not maintain the computer systems supporting the eligibility determination process, but the state does pay benefits on behalf of participants for Medicaid. All 58 counties aligned themselves into one of three consortia. Each county consortium is responsible for the design, development, implementation, maintenance, and operation of its SAWS. As a result of setting up these consortia, counties are thereby responsible for monitoring these systems to ensure they meet the federal requirements necessary to ensure compliance, including federal compliance related to eligibility determination and redetermination. Health Care Services communicates to counties information required by federal regulations through the State Plan, alert letters, and other agreements. However, as identified during our fiscal year 2011–12 audit, Health Care Services did not evaluate that the use of county-owned systems for eligibility determination rather than a state-owned system created the need for additional communication to counties as to how federal compliance requirements related to eligibility were to be addressed in county OMB Circular A-133 audits. Health Care Services also did not report subrecipient expenditures for fee-for-service amounts and managed care premiums to counties. In other words, the OMB A-133 Compliance Supplement guidance on split eligibility does not apply in California. Instead, the county auditor is responsible for meeting internal control and compliance objectives for eligibility. During fiscal year 2012–13, Health Care Services began to evaluate how to communicate to counties and auditors their responsibilities under OMB Circular A-133; however, no changes were made. As part of its evaluation, Health Care Services began to consider implication of the federal Patient Protection and Affordable Care Act (PPACA), which expanded Medicaid coverage and simplified eligibility requirements to be based on financial and nonfinancial criteria including income and citizenship/immigration status for a majority of beneficiaries. Health Care Services partnered with the California Health Benefit Exchange (Covered California) to implement the state’s health benefit exchange or marketplace, as required by the PPACA. Covered California is a related organization to the State of California and not considered a department or component unit. Through Covered California, the California Healthcare Eligibility, Enrollment and Retention System (CalHEERS) was deployed on October 1, 2013 to meet the requirements of the PPACA. CalHEERS was designed to determine eligibility based on modified adjusted gross income (MAGI) and citizenship, immigration status, incarceration status and other healthcare coverage among others. The county is also responsible for determining eligibility in certain circumstances, including those not determined based on modified adjusted gross income. In addition, counties continue to be responsible for redeterminations and case management for all beneficiaries. During fiscal year 2013–14, Health Care Services reassessed the need to ensure relevant eligibility control and compliance objectives were subject to audit at the county. Health Care Services estimates there are approximately 1 million Medi-Cal beneficiaries whose determinations were made by the counties using the SAWS. Health Care Services also concluded that given anticipated changes in federally mandated Medi-Cal eligibility quality control reviews to include non-MAGI determinations, ensuring eligibility was audited at the county was not necessary. Given that non-MAGI beneficiaries make up approximately 9 percent of the 10.9 million Medi-Cal beneficiaries and counties perform all parts of non-MAGI eligibility determinations, the county auditor is responsible for meeting internal control and compliance objectives for non-MAGI eligibility. N/A
Health Care Services agrees that the SAWS are owned, operated and maintained by the respective 58 counties throughout the state. However, Health Care Services contends that existing federally mandated Medi-Cal eligibility quality control reviews performed by Health Care Services, along with additional reviews that Health Care Services is planning to implement in fiscal year 2015-16, is more than sufficient to meet county internal control and compliance objectives for eligibility. The fact that Health Care Services is performing the reviews instead of county auditors should not preclude the objectives from being met. Health Care Services is currently working closely with the CMS to obtain approval to implement a series of four new Medicaid eligibility quality control pilots over the next three years that are designed to replace pre-ACA quality control requirements (Medi-Cal Eligibility Quality Control and Payment Error Rate Measurement programs). The new pilot programs will consist of Health Care Services staff re-performing eligibility determinations from a random sample that will identify potential errors made by SAWS and/or county eligibility workers, including non-MAGI determinations starting in Round 3 (10/1/14 – 3/31/15) of the quality control pilots. In addition, pursuant to Senate Bill 28 (Hernandez, Chapter 4, Statutes of 2013), Health Care Services is required to implement a new budgeting methodology for county administrative costs that Health Care Services plans to implement no sooner than FY 2015/16. The new budgeting methodology is intended to address the changes in eligibility determination rules and processes resulting from implementation of ACA. A core element of the new budgeting methodology is to utilize a private contractor, to perform county reviews, including, time studies to assess how long it takes county eligibility workers to perform various tasks under new ACA rules. The data obtained by the contractor will be used as part of the new budgeting methodology. Health Care Services suggests the auditor of the State continue to audit Medi- Cal eligibility performed by the SAWS/counties for fiscal year 2014-15 and close out this audit finding based on implementation of the Health Care Services review processes described above. 64
State Survey and Certification of Health Care Providers and Suppliers State automated welfare systems (SAWS) were implemented to manage various county welfare processes, including Medicaid, Supplemental Nutrition Assistance Program (SNAP), and Temporary Assistance for Needy Families (TANF). In California, the state does not maintain the computer systems supporting the eligibility determination process, but the state does pay benefits on behalf of participants for Medicaid. All 58 counties aligned themselves into one of three consortia. Each county consortium is responsible for the design, development, implementation, maintenance, and operation of its SAWS. As a result of setting up these consortia, counties are thereby responsible for monitoring these systems to ensure they meet the federal requirements necessary to ensure compliance, including federal compliance related to eligibility determination and redetermination. Health Care Services communicates to counties information required by federal regulations through the State Plan, alert letters, and other agreements. However, as identified during our fiscal year 2011–12 audit, Health Care Services did not evaluate that the use of county-owned systems for eligibility determination rather than a state-owned system created the need for additional communication to counties as to how federal compliance requirements related to eligibility were to be addressed in county OMB Circular A-133 audits. Health Care Services also did not report subrecipient expenditures for fee-for-service amounts and managed care premiums to counties. In other words, the OMB A-133 Compliance Supplement guidance on split eligibility does not apply in California. Instead, the county auditor is responsible for meeting internal control and compliance objectives for eligibility. During fiscal year 2012–13, Health Care Services began to evaluate how to communicate to counties and auditors their responsibilities under OMB Circular A-133; however, no changes were made. As part of its evaluation, Health Care Services began to consider implication of the federal Patient Protection and Affordable Care Act (PPACA), which expanded Medicaid coverage and simplified eligibility requirements to be based on financial and nonfinancial criteria including income and citizenship/immigration status for a majority of beneficiaries. Health Care Services partnered with the California Health Benefit Exchange (Covered California) to implement the state’s health benefit exchange or marketplace, as required by the PPACA. Covered California is a related organization to the State of California and not considered a department or component unit. Through Covered California, the California Healthcare Eligibility, Enrollment and Retention System (CalHEERS) was deployed on October 1, 2013 to meet the requirements of the PPACA. CalHEERS was designed to determine eligibility based on modified adjusted gross income (MAGI) and citizenship, immigration status, incarceration status and other healthcare coverage among others. The county is also responsible for determining eligibility in certain circumstances, including those not determined based on modified adjusted gross income. In addition, counties continue to be responsible for redeterminations and case management for all beneficiaries. During fiscal year 2013–14, Health Care Services reassessed the need to ensure relevant eligibility control and compliance objectives were subject to audit at the county. Health Care Services estimates there are approximately 1 million Medi-Cal beneficiaries whose determinations were made by the counties using the SAWS. Health Care Services also concluded that given anticipated changes in federally mandated Medi-Cal eligibility quality control reviews to include non-MAGI determinations, ensuring eligibility was audited at the county was not necessary. Given that non-MAGI beneficiaries make up approximately 9 percent of the 10.9 million Medi-Cal beneficiaries and counties perform all parts of non-MAGI eligibility determinations, the county auditor is responsible for meeting internal control and compliance objectives for non-MAGI eligibility. N/A
Health Care Services agrees that the SAWS are owned, operated and maintained by the respective 58 counties throughout the state. However, Health Care Services contends that existing federally mandated Medi-Cal eligibility quality control reviews performed by Health Care Services, along with additional reviews that Health Care Services is planning to implement in fiscal year 2015-16, is more than sufficient to meet county internal control and compliance objectives for eligibility. The fact that Health Care Services is performing the reviews instead of county auditors should not preclude the objectives from being met. Health Care Services is currently working closely with the CMS to obtain approval to implement a series of four new Medicaid eligibility quality control pilots over the next three years that are designed to replace pre-ACA quality control requirements (Medi-Cal Eligibility Quality Control and Payment Error Rate Measurement programs). The new pilot programs will consist of Health Care Services staff re-performing eligibility determinations from a random sample that will identify potential errors made by SAWS and/or county eligibility workers, including non-MAGI determinations starting in Round 3 (10/1/14 – 3/31/15) of the quality control pilots. In addition, pursuant to Senate Bill 28 (Hernandez, Chapter 4, Statutes of 2013), Health Care Services is required to implement a new budgeting methodology for county administrative costs that Health Care Services plans to implement no sooner than FY 2015/16. The new budgeting methodology is intended to address the changes in eligibility determination rules and processes resulting from implementation of ACA. A core element of the new budgeting methodology is to utilize a private contractor, to perform county reviews, including, time studies to assess how long it takes county eligibility workers to perform various tasks under new ACA rules. The data obtained by the contractor will be used as part of the new budgeting methodology. Health Care Services suggests the auditor of the State continue to audit Medi- Cal eligibility performed by the SAWS/counties for fiscal year 2014-15 and close out this audit finding based on implementation of the Health Care Services review processes described above. 64
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