Audit Release: Oregon Health Authority Should Improve Efforts to Detect and Prevent Improper Medicaid Payments

Report Highlights


Our audit found that Oregon Health Authority (OHA) recovery efforts are appropriate and reasonable, but the agency should strengthen efforts to detect and prevent improper payments in Oregon’s $9.3 billion per year Medicaid program. Prevention of improper payments is more cost-effective than attempting to recover improper payments. We also found that delays in processing eligibility for thousands of Oregon’s Medicaid recipients resulted in millions of dollars of avoidable Medicaid expenditures, a critical issue the agency failed to disclose until raised in a May 2017 Auditor Alert. Furthermore, OHA did not timely disclose relevant information, which impeded our audit work. OHA’s new management has been more proactive and transparent in addressing these issues.

Background

An improper payment is defined by the federal government as “any payment that should not have been made or was made in an incorrect amount (including overpayments and underpayments) under statutory, contractual, administrative, or other legally applicable requirements or where documentation is missing or not available.”

Purpose of Audit

The primary purpose of the audit was to determine if the Oregon Health Authority could improve processes to prevent, detect, and recover improper Medicaid payments. The secondary purpose was to follow-up on OHA’s progress to resolve issues we raised in our May 2017 Auditor Alert.

Key Findings

Within the context that Medicaid is a very complex and challenging program to administer, we found:

  1. OHA has gaps in procedures for preventing certain improper payments. Insufficient management of the agency’s processes for identifying and resolving payment and eligibility issues, prioritization of staffing resources, and efforts to address technology issues put taxpayer dollars at risk.
  2. OHA lacks well-defined, consistent, and agency-wide processes to detect certain improper payments, especially related to coordinated care. We identified approximately 31,300 questionable payments based on our review of 15 months of data. OHA needs to continue researching these claims to determine how many were improper; OHA reported that only a small percentage were improper based on preliminary research of 2,700 claims.
  3. OHA recovery efforts appear appropriate and reasonable, but may be underutilized due to OHA’s limited procedures for detecting improper payments.
  4. OHA reported completing the action plan to determine eligibility for the remaining backlog of 115,200 Medicaid recipients. Approximately 47,600 (41%) were deemed ineligible as a result, although this figure may decrease slightly through the end of November. Failure to address this issue in a timely fashion resulted in approximately $88 million in avoidable expenditures.

Recommendations

Drawing from national leading practices, our report includes eight recommendations to OHA focused on strengthening efforts to detect and prevent improper payments. Oregon Health Authority agrees with our recommendations. The agency’s response can be found at the end of the report.

Read full report here

 

Featured New Audit Release Performance Audit

DHS – Aging and People with Disabilities: Consumer-Employed Provider Program Needs Immediate Action to Ensure In-Home Care Consumers Receive Required Care and Services

Report Highlights


The Secretary of State’s Audits Division found that the Aging and People with Disabilities (APD) program should take immediate action to address gaps in program design and oversight in order to improve the safety and well-being of participants in the Consumer-Employed Provider (CEP) program.

Read full report here.

Background

Oregon is a leader in providing in-home long- term care options for older adults and people with disabilities. The most used in-home care program is the Consumer-Employed Provider program, which positions consumers as employers of their homecare worker.

Purpose

The purpose of this audit was to assess the policies and processes used by APD to ensure the needs of consumers in the CEP program are met.

Key Findings

The effectiveness of the Consumer-Employed Provider program is dependent on the consumer, the case manager, and the homecare worker. If each is capable, competent, and supported in their role, the current model can be successful. Our audit found:

1. Some consumers are not receiving the support necessary to ensure required employer duties are being performed, which adds to case managers’ and homecare workers’ responsibilities.
2. Case managers are not consistently contacting consumers, or monitoring services consumers receive due to excessive workloads.
3. Agency requirements do not ensure that homecare workers are prepared to provide the care and assistance consumers need.
4. Due to current data collection and utilization practices, it is difficult for APD to determine if consumers are safe and receiving the care and services they need.
5. Current deficiencies in the program may put consumers’ health and well-being at risk and keep the program from operating as intended.

To reach our findings, we conducted interviews and case file reviews, collected and analyzed CEP consumer data, and researched federal and state standards.

Recommendations

The report includes recommendations to improve Consumer-Employed Provider program implementation and support. Recommendations include consistently following existing monitoring policies, addressing case managers’ excessive workload and responsibilities, and providing more support to consumers and homecare workers.
The Department generally agreed with our findings and recommendations. Its response can be found at the end of the report.

Featured New Audit Release Performance Audit

Audit Release: Department of Administrative Services Should Enhance Succession Planning to Address Workforce Risks and Challenges

Report Highlights


The Secretary of State’s Audits Division found that the Department of Administrative Services (DAS) should play a stronger leadership role in addressing key workforce risks and challenges within the state executive branch, through enhanced workforce succession planning.

Read full report here

Background

This audit reviewed succession planning within the Oregon executive branch. Succession planning is an ongoing management process used to ensure workforce continuity and effectiveness, particularly in key leadership and technical functions.

Purpose

The purpose of the audit was to determine if and how the State of Oregon could better plan for future key workforce needs, including preparing state employees to fill key roles.

Key Findings

Within the context that effective succession planning is difficult, complex and is frequently not a priority within the public sector, we found:

  1. DAS has not developed or implemented a state-level succession planning framework, despite recognizing the importance of succession planning.
  2. The lack of a succession planning framework increases workforce risks, such as not developing or retaining knowledgeable and skilled employees to perform critical functions.
  3. These risks are exacerbated by demographic and economic trends, including increasing retirement rates, and a lack of formal succession planning processes within state agencies.
  4. State agencies also report challenges, including inaccessible workforce information, that may hinder strategic human capital management practices and should be addressed at a state level.

To reach our findings we conducted interviews, reviewed documents and reported practices, researched leading practices and analyzed workforce data.

Recommendations

Drawing from national leading practices and benchmarking with other states, the report includes eight recommendations to the Department of Administrative Services focused on implementing a succession planning framework in the Oregon executive branch. Recommendations include providing guidance to agencies, monitoring workforce risks, and working with agencies to identify and address barriers at a state level.

Featured New Audit Release Performance Audit

Methods (to our Madness): Disaggregating Data to Improve Evaluation and Transparency of Economic Development Programs

 Periodically, we will highlight some of the methods used in a recently released audit. Every performance audit is unique and can require creative thinking and methodologies to answer our audit objective. Some of these methods could be replicated or present valuable lessons for future projects.

 

Disaggregating data can improve transparency and evaluation of programs. In a recent audit of Business Oregon, the audit team divided data about business finance and forgivable loans by different programs to estimate job growth and return on investment, as well as rural investments for each program.

Business Oregon reports jobs created for all of its programs combined, in one Key Performance Measure. The audit team saw their more detailed analysis as an approach that Business Oregon’s analysts could emulate and improve on, in order to foster greater transparency and improve understanding of the investments and outcomes of individual programs.

I recently sat down with Jon Bennett, a Performance Auditor, to learn about their analysis strategy and any lessons learned.

Business Oregon’s programs contribute to job growth

Jon’s team analyzed different business finance programs at Business Oregon and calculated net job growth for participating businesses over a four year period. They found that about two-thirds of businesses had net job growth. They also found that most of the awards went to businesses that paid wages below the county average, important since Business Oregon has a mission to create living wage jobs.

They also looked at investment by geography and found that most awards go to non-rural areas. This is important because rural areas contain 40% of Oregon’s population and were struggling to get out of the recession.

While it is valuable to look at the big picture, separating data into different programs and different measures can provide greater insights into the effectiveness of each program and how each program’s investments reflect the agency’s priorities.

Lessons Learned: Time management and planning ahead

Jon had a few different lessons learned, but the big take away is one I’ve experienced before – time management. Doing data analysis always seems to take longer than you expect it to. One of the time consuming aspects Jon faced was combining data from two different data sources. He thought it would be simple because he had a unique identifier, but it turns out that some of the businesses he was looking at had multiple locations and he had to look at the data more carefully.

Next time, Jon would also like to do a better job of planning how to document his work before he does it. As auditors, we always have our work checked for accuracy, which can be challenging if there is not a clear documentation trail. That is one of the benefits of using ACL, since it automatically creates a log. But sometimes other tools can be more useful. Jon interestingly switched between Excel, ACL, and STATA to use the tool that could do the task most efficiently in the way that he knew best.

 

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Caroline Zavitkovski, OAD Principal Performance Auditor, MPA

 

Auditing and Methodology Featured Performance Audit

Audit Release: Automated Medicaid eligibility is processed appropriately at OHA, yet manual input accuracy and eligibility override monitoring need improvement

AUDIT PURPOSE

In Oregon, over one million individuals have Medicaid coverage. Medicaid expenditures totaled $9.3 billion in fiscal year 2016, including $1.2 billion in state general funds. We conducted this audit to determine if two critical automated computer programs managed by the Oregon Health Authority accurately verify Medicaid client eligibility and accurately issue payments to healthcare providers. If these programs do not function properly, clients may inappropriately receive, or be denied, Medicaid benefits.

FINDINGS IMPACT

Manual input errors and lack of monitoring of overrides can cause inappropriate eligibility determinations and payments to providers. If agency leadership implements more effective monitoring of caseworker eligibility overrides and improves manual input accuracy, the state will better comply with eligibility requirements and increase accuracy of payments. Inaction will allow overrides and manual input errors to continue causing inappropriate payments to providers.

Read full report here.

KEY FINDINGS

  • Two critical automated computer programs appropriately determined eligibility, enrolled Medicaid clients in coordinated care organizations, and made appropriate payments to those organizations based on eligibility information received.
  • Automated computer processes appropriately validated the Social Security number and citizenship status of applicants over 99.7% of the time in our review of over 425,000 records.
  • We reviewed 30 eligibility determinations and found seven (23%) had manual input errors. While only one error resulted in a client being determined eligible when they were not, each of the errors related to application information that could have resulted in inappropriate eligibility determinations.
  • Although their volume has significantly decreased over time, overrides of eligibility are not sufficiently monitored, meaning unauthorized overrides of Medicaid eligibility could occur.
  • Our review of 72 overridden eligibility segments showed caseworkers did not take proper action to clear 25 (35%). Overridden segments are not subject to automated processes that redetermine eligibility for certain clients.
  • Our 2011 audit recommendations to OHA and DHS concerning access to the Medicaid Management Information System have not been fully implemented, increasing security risk.

RECOMMENDATIONS SUMMARY

  • OHA should continue efforts to improve caseworker manual input accuracy through additional training, and implement a review process for input where errors negatively affect eligibility determination.
  • OHA managers should monitor eligibility overrides to prevent unauthorized validation and ensure state resources are spent appropriately.
  • OHA and DHS should fully implement our 2011 audit logical access recommendations.
Featured IT Audit New Audit Release Performance Audit

Speaking Truth to Power (Users): Why data visualization matters to researchers, auditors, and program evaluators

“I’m not a data visualization expert, but I am a data visualization enthusiast” Rebecca Brinkley joked as she started her presentation on including visual elements in reports to the State of Oregon Research Academy (SORA).  Several dozen researchers from around the state listened intently as she walked through the importance of including visual elements and gave examples from recent audit reports from the Oregon Audits Division.

Why Visuals Matter

“Our brains are visual processors not word processors” explained Rebecca Brinkley. Most people think visually rather than verbally.  Furthermore, visuals have been found to be processed at a much higher rate than text alone.  The visual elements help the reader process complex information and improve retention.

Many times visuals can help tell a story or make a connection that would be more difficult to do using text. For example, Rebecca highlighted this image of the water cycle in a recent report on water management in Oregon.

waikato

I don’t know about you, but I’d much rather see this image describing the water cycle than reading a long paragraph describing the water cycle.

We will be highlighting some more example of useful data visualization techniques in future blog posts.

Rebecca will also be presenting to the Pacific Northwest Intergovernmental Audit Forum in March.

Ian Green, CGAP and OAD Senior Auditor

Ian Green, CGAP and OAD Senior Auditor

Auditors at Work Featured Performance Audit

Talkin’ Shop With: Larry Stafford, Clark County Audit Services Manager

Join us as we talk shop with our neighbor to the North and former OAD performance auditor, Larry Stafford.

About Clark County’s Audit Services

clarkcountylogo

Per county code, internal audit is an independent appraisal activity for the review of operations within the county. The objective is to assist management in the effective discharge of their duties, and to promote efficiency and economy consistent with the public interest.

Clark County government is comprised of several separately elected officials, including the County Auditor.

The Audit Services Department conducts performance audits, internal control reviews, and provides other services to county management. Performance audits are objective and systematic reviews of program quality and the results achieved. Internal control reviews include analytical reviews, interviews, observations, and tests with the intent of evaluating the security of county assets and the accuracy/reliability of financial reports.

The Clark County Auditor

The Clark County Auditor is elected to a four-year term and our current Clark County Auditor is Greg Kimsey. In addition to being the county’s chief financial officer, the auditor also oversees several essential county services: Audits, Auto Licensing, Elections, Marriage Licensing, Financial Services, and Recording. Additionally, the Auditor works with other elected officials, various state agencies, and the state legislature regarding issues that affect these services.

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Fort Vancouver (image from Clark County Historical Museum)

Working with an elected auditor is interesting because they can bring a different perspective and things to consider. We do debriefs with the auditor throughout our audits, and at the end of the Scoping, Planning, and Fieldwork phases.

Can you describe your role as Audit Services Manager?

stafford

As the Audit Services Manager for Clark County, I serve as the principle auditor and am responsible for the quality of the Audit Services team (2016 Peer review). This includes reviewing audit work and administrative responsibilities such as developing and maintaining policies and procedures, hiring staff, performing the annual quality assessment, and coordinating peer reviews.  I also serve as a liaison between County departments and external auditors, like those from the Washington State Auditor’s office.

When I left OAD, Gary Blackmer, who was the director at the time, told me that I would have to “live with my audits” at the county. He was right. At the state, we would audit an agency and leave. But at the county we see the people we audit every day. We still report to a separately elected Auditor and so we are external to those that we audit, yet we are still internal to county government. We have to build relationships while always being aware of our independence.

What got you into performance auditing?

Luck! I spent ten years in the automation/ engineering field. That was mostly robotics-related work including electrical design, project management, and programming. I also spent some time in the financial services industry.

I wasn’t happy with my work-life balance, so I went to graduate school and earned my MBA as a path to a new career. I attended a job fair with a classmate who went to speak with the Oregon Audits Division about financial auditing. At the booth they also told me about this interesting and challenging field called performance auditing. I’ve always been driven to learn new things and this sounded like just the right fit. I was fortunate to get a position with OAD and to work with some very good auditors.

Larry’s take on performance auditing

One of the most important things I learned at OAD was that performance auditing is about understanding the issues and finding solutions – not placing blame. Also, reporting when you find things are happening the right way is just as important as identifying problems. It provides objectivity to your report and delivers the assurance expected from an audit.

For example, the first audit I worked on at OAD examined if state agencies hired former employees as contractors.  We found some instances, but all of the required procurement processes were followed and the award decisions were appropriate. Saying that in an audit report certainly didn’t get headlines but it did provide assurance.

Working at OAD was really interesting.  I was involved in a lot of issues at different levels, auditing different agencies and topics.

Coordinating with state auditors

clarkcountyThe Washington State Auditor’s office is doing some work around accountability. As part of this work, they are reviewing the financial affairs of municipal governments, state and local laws, and contracts to assess risk and evaluate compliance, mostly looking at internal controls. What I help with is making sure there is no duplication of work, and help facilitate communication and work with Clark County staff. I also help provide context and clear up any confusion, similar to an internal auditor.

Providing training

Internal control failures are common issues identified in our audits. So each fall, we host a half-day seminar on fraud and internal controls for County managers. I’ve found this kind of training is helpful for managers who are often experts in their field but have not been exposed to management tools like the COSO framework or the fraud triangle.

The training doesn’t take a lot of our time, but there is a big pay off. When these fundamental issues are addressed, then our performance audits can focus on higher level issues. The trainings also help to build relationships and credibility, and we get good feedback from managers who attend. They’re very interested in this information and how they can apply it to improve their departments.

How do you choose your audit topics?

We complete a biannual risk assessment and create a schedule of proposed audits. This includes input from elected officials, employees, citizens of Clark County, and our auditors. This proposed schedule is presented to our Audit Oversight Committee, of which the Clark County Auditor is the chair. The committee recommends audit priorities before we finalize our schedule. The County Auditor can approve audit work on issues that emerge between biannual risk assessments.

What are some interesting audits you’ve worked on at Clark County?

An audit I did on economic development was probably the most interesting audit I’ve worked on. Economics has a lot of intertwined theories, so it’s hard to nail down criteria. We wanted tangible criteria because it doesn’t matter what’s happening if you can’t agree on how to measure things. In the end, we also adjusted our conclusions based on the more questionable evidence. This audit received an ALGA Knighton Award as a result of this approach and how we treated the evidence.

Audit of Clark County’s Job Creation- Fee Waiver Program 

“The Clark County Auditor’s Office evaluated an economic development program designed to spur job creation through waiving government fees. The audit found that the fee waiver program cost Clark County approximately $8 million in its first year in forgone revenue and was not cost effective. Objective in its treatment of evidence and sensitive to its policy implications, the audit makes two strong recommendations: 1) either discontinue the program, or 2) implement significant changes to improve the program. The audit won the exemplary award for its scope and methodology, significant impact and for its clear and concise report writing.”

fee-waiver-audit

We’re also completing a series of inventory audits that look at high-risk assets, like ammunition and fuel. These material management audits are more interesting than you’d think! We’ve found opportunities to improve operations while decreasing costs, risk, and liability.

Sheriff’s Office High Risk Equipment and Supplies Management Audit 

“This was an impactful audit that focused on internal controls of high-risk materials utilized by the Sheriff’s Office, taking into account public safety as well as accountability. Findings and conclusions directly tied to objectives. Recommendations when implemented will not only have a cost savings but will increase efficiency and enhance accountability. The report was well organized with effective use of photos and charts.”

What is your favorite part about your job?

When I was a kid, I would research different topics and learn all about them. In doing this work, I have the opportunity to that for a living. It’s also all across a wide spectrum of services — it’s very hard to get bored! My favorite part about this job, though, is getting to work with other auditors. They’re so intelligent and passionate about their work.

Auditors at Work Featured Performance Audit Regional Roundup: Talkin' Shop