REPORT DIGEST

DEPARTMENT OF HEALTHCARE AND FAMILY SERVICES

COMPLIANCE EXAMINATION
FOR THE TWO YEARS ENDED JUNE 30, 2023

Release Date:  December 19, 2024

FINDINGS THIS AUDIT: 24

CATEGORY:  NEW -- REPEAT – TOTAL
Category 1:  3 -- 5 -- 8
Category 2:  6 -- 10 -- 16
Category 3:  0 -- 0 -- 0
TOTAL:  9 -- 15 -- 24

FINDINGS LAST AUDIT: 27

State of Illinois, Office of the Auditor
General
FRANK J. MAUTINO, AUDITOR GENERAL

To obtain a copy of the Report contact:
Office of the Auditor General, 400 West
Monroe, Suite 306, Springfield, IL
62704-9849
(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

INTRODUCTION

The digest covers our Compliance Examination
of the Department for the two years ended
June 30, 2023. A Financial Audit as of and
for the year ended June 30, 2023, was
separately released. In total, this report
contains 24 findings, 7 of which were
reported in the Financial Audit.

SYNOPSIS

• (23-08)  The Department of Healthcare and
Family Services did not have adequate
internal controls over employee performance
evaluations and training.

• (23-09)  The Department of Healthcare and
Family Services did not have adequate
controls over accounts receivable.

• (23-12) The Department of Healthcare and
Family Services did not have adequate
controls over required Managed Care
Organization (MCO) reporting.

FINDINGS, CONCLUSIONS, AND RECOMMENDATIONS

INADEQUATE CONTROLS OVER PERSONAL SERVICES

The Department did not have adequate
internal controls over employee performance
evaluations and training.

During our testing, we noted the following:

• Two of 60 (3%) employees tested did not
have a performance evaluation on file for
FY23.

• One of 60 (2%) employees tested did not
have an evaluation of their performance
conducted within four months after the end
of their annual evaluation period in FY22.
We noted this evaluation was conducted 38
business days after the end of the four-
month period to conduct the employee’s
evaluation.

• One of 60 (2%) employees tested with
access to social security numbers in the
course of their employment did not complete
the annual identity protection training.

• Three of 60 (5%) employees tested did not
have a signed statement acknowledging their
responsibilities under the Abused and
Neglected Child Reporting Act (ANCRA) to
immediately report to the Department for
Children and Family Services (DCFS) a child
known to them in their professional or
official capacities may be an abused or
neglected child before commencing their
employment.

• The Department does not track the required
mandated reporter training under ANCRA. As
such, the Department was unable to provide
documentation demonstrating the employees in
our sample completed the initial mandated
report training and/or the training required
at least every three years.  (Finding 8,
pages 32-34)  This finding has been reported
since 2005.

This finding was first noted during the
Department’s fiscal year 2005 State
compliance examination, eighteen years ago.
As such, Department management has been
unsuccessful in implementing a corrective
action plan to remedy this deficiency.

We recommended the Department implement
controls to ensure staff members receive
timely performance evaluations in accordance
with the Illinois Administrative Code and
training courses are completed in accordance
with the State Officials and Employees
Ethics Act and Identity Protection Act.
Further, we recommended the Department
implement internal controls to ensure staff
complete the required acknowledge forms
documenting their understanding of their
mandated reporting responsibilities under
ANCRA prior to commencing employment and to
ensure staff complete the required training
under ANCRA.

The Department accepted the recommendation
and stated that they will continue to
communicate the requirements regarding
evaluations and training and improve
compliance with those requirements. The
Department also stated that they will ensure
staff complete the required acknowledge
forms documenting their understanding of
their mandated reporting responsibilities
under ANCRA prior to commencing employment
and ensure staff complete the required
training under ANCRA.

INADEQUATE CONTROLS OVER ACCOUNTS RECEIVABLE

The Department did not have adequate
controls over accounts receivable.

During testing of the quarterly accounts
receivable forms (Form C-97), auditors noted
the Form C-97s were manually completed by
various program areas and compiled by the
Department’s fiscal office in order to issue
a single Form C-97 per fund. We selected a
sample of 14 Form C-97s submitted to the
Office of Comptroller (Comptroller) during
the examination period. Seven of 14 Form
C-97s submitted to the Comptroller either
did not have supporting documentation for
the balances or had calculation errors.
Specifically, we noted:

• One (7%) Form C-97s submitted contained
one instance in which the Department could
not provide adequate documentation to
support the amounts. The unsupported
balanced amount to $5.3 million at the end
of the quarter reported. The Department’s
financial statements did not require
adjustments for the noted difference.

• Seven (50%) Form C-97s contained 12
instances in which the Department did not
properly report the total combined accounts
receivable information. This was due to
calculation errors when combining individual
program area data for the Form C-97
submissions. Incorrectly reported balances
ranged from $2 thousand to $33.8 million at
the end of the quarter reported. The
Departments’ financial statements did not
require adjustments for the noted
differences.

We selected a sample of all accounts
receivables, over 90 days, from the
Department’s Aging of Total Gross
Receivables reports (Form C-98). As of June
30 2023, we noted 12 of 48 (25%) accounts
tested, totaling $20,634,220, were not
submitted to either the Comptroller’s Offset
System or sent to the Attorney General to be
certified as uncollectible. For each of the
12 accounts, the Department did not provide
documentation it had entered into a deferred
payment plan or demonstrated to the
Comptroller’s satisfaction that referral for
offset was not cost effective. The
Department’s financial statements did not
require adjustments due to the accounts
being considered uncollectible.  (Finding 9,
pages 35-37)

We recommended the Department implement
review processes to ensure the accuracy of
the C-97 reports submitted to the
Comptroller. We also recommended the
Department submit past due accounts
receivables to the Comptroller for placement
in the Comptroller’s Offset System in
accordance with the Illinois State
Collection Act of 1986, the Uncollected
State Claims Act, and SAMS. Further, where
applicable, we recommended the Department
request the Attorney General to certify as
uncollectible the account receivables the
Department has been unable to collect.

The Department accepted the recommendation
and stated that Department fiscal staff will
require program staff to submit
documentation and enhance their review of
the documentation to support quarterly
receivable forms and remind program areas to
review reports of debt $250 or more and more
than 90 days past due for placement in the
Comptroller’s Offset System or potential
write-off.

INADEQUATE CONTROLS OVER MANAGED CARE
ORGANIZATION REPORTING

The Department did not have adequate
controls over required Managed Care
Organization (MCO) reporting.

During our review of the Department’s MCO
reporting, we noted the following:

• The Department did not timely post two of
four (50%) reports to its website during the
engagement period. These reports were posted
seven and 25 days late.

• The Department did not timely publish on
its website the MCO medical loss ratio (MLR)
report on the calculation of each MCO’s MLR.
As of June 30, 2023, the Department had
finalized the MLRs through calendar year
2020. However, as of June 30, 2023, no
annual reports had been published on the
Department’s website. The Department
published the 2018, 2019, and 2020 MLR
reports on October 18, 2023, 75 business
days after the end of fiscal year 2023.
Furthermore, the Department included the MLR
reports on its list of reports to be filed
with the General Assembly, however, the
Department was unable to provide support the
report was submitted.

• The Department failed to timely publish
four of eight (50%) quarterly MCO
performance metrics reports on its website.
Furthermore, the Department’s MCO
performance metrics report did not contain
provider credentialing as statutorily
required.  (Finding 12, pages 42-44)  This
finding has been reported since 2019.

We recommended the Department strengthen
internal controls to ensure the MCO reports
are timely published and include the
statutorily required components.

The Department accepted the recommendation
and stated that it has adjusted its
reporting timeframes, for MCO hospital
claims to begin requesting data from the
MCO’s approximately 4.5 months prior to the
report posting due date, to allow enough
time to analyze and report on the data and
findings. The Department also stated that
MCOs do not complete a separate
credentialing process pursuant to contract
requirements. Lastly, the Department stated
that it will include a statement within
future MCO performance reporting materials
to capture this information beginning with
the July 2024 MCO performance report that is
anticipated to be issued in August 2024.

OTHER FINDINGS

The remaining findings are reportedly being
given attention by Department personnel. We
will review the Department’s progress
towards the implementation of our
recommendations in our next State compliance
examination.

AUDITOR’S OPINION

The financial audit report was separately
released. The auditors stated the financial
statements of the Department as of and for
the year ended June 30, 2023, are fairly
stated in all material respects.

ACCOUNTANT’S OPINION

The accountants conducted a State compliance
examination of the Department for the two
years ended June 30, 2023, as required by
the Illinois State Auditing Act.  The
accountants qualified their report on State
compliance for Finding 2023-001 through
2023-006, 2023-008, and 2023-009.  Except
for the noncompliance described in these
findings, the accountants stated the
Department complied, in all material
respects, with the requirements described in
the report.

The financial audit and this compliance
examination were performed by Sikich CPA
LLC.

JANE CLARK
Division Director

This report is transmitted in accordance
with Section 3-14 of the Illinois State
Auditing Act.

FRANK J. MAUTINO
Auditor General

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