REPORT DIGEST DEPARTMENT ON AGING COMPLIANCE EXAMINATION For the Two Years Ended: June 30, 2014 Release Date: May 14, 2015 FINDINGS THIS AUDIT: 9 CATEGORY: NEW -- REPEAT -- TOTAL Category 1: 0 -- 1 -- 1 Category 2: 6 -- 2 -- 8 Category 3: 0 -- 0 -- 0 TOTAL: 6 -- 3 -- 9 FINDINGS LAST AUDIT: 6 Category 1: Findings that are material weaknesses in internal control and/or a qualification on compliance with State laws and regulations (material noncompliance). Category 2: Findings that are significant deficiencies in internal control and noncompliance with State laws and regulations. Category 3: Findings that have no internal control issues but are in noncompliance with State laws and regulations. State of Illinois, Office of the Auditor General WILLIAM G. HOLLAND, AUDITOR GENERAL To obtain a copy of the Report contact: Office of the Auditor General, Iles Park Plaza, 740 E. Ash Street, Springfield, IL 62703 (217) 782-6046 or TTY (888) 261-2887 This Report Digest and Full Report are also available on the worldwide web at www.auditor.illinois.gov SYNOPSIS • (14-1) The Department lacked adequate controls and monitoring over eligibility determinations and payments made to service provider agencies that applied for and received a special hourly rate under the Community Care Program. • (14-9) The Department paid almost $360,000 for Community Care Program services charged for individuals who were deceased or incarcerated. FINDINGS, CONCLUSIONS, AND RECOMMENDATIONS INADEQUATE CONTROLS AND MONITORING OVER ENHANCED RATE PAYMENTS MADE TO COMMUNITY CARE PROGRAM SERVICE PROVIDERS The Department lacked adequate controls and monitoring over eligibility determinations and payments made to service provider agencies (providers) that applied for and received an enhanced hourly rate under the Community Care Program. Public Act 095-0713, effective July 1, 2008, authorized the Department to pay vendors providing homemaker, chore and housekeeping services an additional $1.33 per hour (enhanced rate) for the purpose of providing health insurance coverage to their employees and to those employees’ dependents. For the two fiscal years under examination, the Department has paid providers approximately $89 million for the enhanced rate payments. During testing, the following was noted: • Seven of seven (100%) Type 2 providers tested did not timely submit required annual eligibility documentation or financial reports to the Department during the examination period. • Three of the seven (43%) Type 2 providers did not submit verification from an independent certified public accounting firm of the actual, documented expense for health insurance during the provider’s fiscal year. • The Department did not maintain or receive adequate documentation from one of seven (14%) Type 1 providers tested in order to monitor their continued eligibility for receiving the enhanced rate during the examination period. (Finding 1, pages 8-10) This finding has been repeated since 2010. We recommended the Department strengthen controls to ensure that initial and ongoing reviews of eligibility and annual reporting for the enhanced reimbursement rate are conducted properly, in a timely manner, and in accordance with the Illinois Administrative Code. We also recommended the Department ensure required information is obtained from providers and maintained to support agency determinations. The Department agreed with the recommendation and stated they have strengthened efforts to ensure providers submit the necessary verification documents. The Department also responded they would continue efforts to obtain documentation even after contract termination to close-out final allowable expenditures payable to the provider. (For the previous Department response, see Digest Footnote #1.) IMPROPER COMMUNITY CARE PROGRAM PAYMENTS The Department paid almost $360,000 in Fiscal Year 2014 for Community Care Program (CCP) services charged for individuals who were deceased or incarcerated. The Department lacked sufficient controls to ensure timely identification of these changes in eligibility and to prevent expenditures for ineligible individuals. The auditors compared clients receiving CCP services to records of deaths and incarcerations and noted: • $321,668 was paid in Fiscal Year 2014 for services for individuals listed as deceased by the Social Security Administration. • The Department paid $38,309 to service providers for services charged for nine clients while they were incarcerated. (Finding 9, pages 23-25) We recommended the Department implement additional internal controls to ensure timely identification of changes in CCP eligibility, including client death and incarceration, to prevent expenditures for ineligible individuals. We also recommended the Department implement edit checks or other controls to prevent and detect provider billings charged to the wrong individual. Department officials agreed with the recommendation and stated they implemented changes whereby federal and state databases are used to verify the eligibility of client billings based on reported deaths and incarcerations. OTHER FINDINGS The remaining findings are reportedly being given attention by the Department. We will review the Department’s progress toward the implementation of our recommendations during our next examination. ACCOUNTANT’S OPINION The auditors conducted a State compliance examination of the Department on Aging for the two years ended June 30, 2014, as required by the Illinois State Auditing Act. The accountant’s report does not contain any scope limitations or disclaimers, but does contain a qualified opinion on compliance and a material weakness over internal control. WILLIAM G. HOLLAND Auditor General WGH:lkw SPECIAL ASSISTANT AUDITORS Our Special Assistant Auditors for this engagement were Winkel, Parker & Foster, CPA PC. DIGEST FOOTNOTES #1 - Inadequate Controls and Monitoring Over Enhanced Rate Payments Made to Community Care Program Service Providers - Previous Department Response 2012: Agree. The Agency has been involved in an 18 month long lawsuit with Service Employees International Union (SEIU) regarding enhanced rate payments to Type 2 Providers which has hampered our efforts to perform adequate monitoring. We expect that lawsuit to be resolved in the near future which will allow the Agency to move forward with full compliance of controls and monitoring.