Response to the Audit
Department of Health Care Services
Ms. Elaine M. Howle
California State Auditor
621 Capitol Mall, Suite 1200
Sacramento, CA 95814
RE: Response to California State Auditor's Draft Report: California Department of Housing
and Community Development: Its Oversight of Housing Bond Funds Remains
Inconsistent
Dear Ms. Howle:
The California Department of Health Care Services (DHCS) hereby provides responses to the draft findings of the California State Auditor's (CSA) report entitled, Department of Health Care Services: It Paid Billions in Questionable Medi-Cal Premiums and Claims Because It Failed to Follow Up on Eligibility Discrepancies. The CSA conducted this audit and issued four findings and five recommendations.
DHCS agrees with the findings and the recommendations and has prepared corrective action plans to implement them. DHCS appreciates the work performed by the CSA and the opportunity to respond to the findings. If you have any questions, please contact Ms. Nicole Jacot, External Audit Manager, at (916) 713-8812.
Department of Health Care Services’
Responses to the California State Auditor Report Entitled: Department of Health
Care Services: It Paid Billions in Questionable Medi-Cal Premiums and Claims
Because It Failed to Follow Up on Eligibility Discrepancies
Report Number: 2018-603 (18-08)
Finding #1: Health Care Services made questionable payments amounting to billions of dollars and may have prevented some beneficiaries from accessing services.
Recommendation #1: To recover inappropriately spent funds, prevent future erroneous payments, and ensure eligible individuals’ access to care, Health Care Services should resolve the discrepancies identified and recover erroneous payments where allowable by June 30, 2019.
DHCS Agreement: Fully Agrees with Finding
Response:The Department of Health Care Services (DHCS) agrees to review the discrepant records identified in the course of this audit. Due to the volume of records, DHCS cannot commit to resolving all discrepancies and recovering associated erroneous payments by June 2019, but does commit to demonstrating reasonable progress by this date.
Implementation Status:
[ ] Fully Implemented:
Implementation Date:
[X] Not Fully Implemented:
Estimated Implementation Date: October 2019
[ ] Will Not Implement
Substantiation:
[ ] Attached (Fully Implemented)
[X] Not Applicable (Not Fully Implemented or Will Not Implement)
Finding #2: Although Health Care Services has established a process for notifying counties of beneficiary records that require follow-up, gaps in this process allowed the problems identified to persist.
Recommendation #2: To prevent future erroneous payments, Health Care Services should do the following by December 31, 2018:
Implement procedures to ensure the timely resolution of system discrepancies. These procedures should include Health Care Services regularly following up on recurring, unresolved system discrepancies with the responsible county.
DHCS Agreement: Fully Agrees with Finding
Response: DHCS is in the process of implementing a quality control process that will identify system discrepancies. DHCS will work collaboratively with counties to ensure that these discrepancies are resolved in a timely manner.
Implementation Status:
[ ] Fully Implemented:
Implementation Date:
[X] Not Fully Implemented:
Estimated Implementation Date: Winter 2018.
[ ] Will Not Implement
Substantiation:
[ ] Attached (Fully Implemented)
[X] Not Applicable (Not Fully Implemented or Will Not Implement)
Recommendation #3: To prevent future erroneous payments, Health Care Services should do the following by December 31, 2018:
Establish procedures that define when it will use its authority as defined in state law to sanction unresponsive counties that do not remedy known discrepancies.
DHCS Agreement: Fully Agrees with Finding
Response: DHCS will establish procedures that include administrative remedies to address county performance in resolving known system discrepancies, including corrective action plans and potential sanctions, as allowed under state law, for counties that are not making reasonable progress. DHCS cannot commit to implement such procedures by December 31, 2018, but does commit to having procedures established by July 1, 2019. This delay is needed as the department continues our work with the counties regarding their overall performance and establishing metrics by which to hold them accountable. These efforts include conducting onsite visits to all of the county offices which requires extensive coordination, time and needed follow-up as well as vetting the required procedures with counties.
Implementation Status:
[ ] Fully Implemented:
Implementation Date:
[X] Not Fully Implemented:
Estimated Implementation Date: July 1, 2019.
[ ] Will Not Implement
Substantiation:
[ ] Attached (Fully Implemented)
[X] Not Applicable (Not Fully Implemented or Will Not Implement)
Finding #3: Health Care Services provides reports to some counties in a format that limits their usefulness and does not ensure that all counties received or used the reports.
Recommendation #4: To assist counties in addressing discrepancies, Health Care Services should do the following by December 31, 2018:
Find a cost-effective method to provide its exception reports in an electronic format readable by common database and spreadsheet software products that would allow users to sort and filter the data readily.
DHCS Agreement: Fully Agrees with Finding
Response: DHCS will pursue a multi-pronged approach to address this finding. DHCS will stop sending printed exception eligible reports to the counties and will work with our partners to ensure that the data is provided in an electronic format consumable and workable at the county level with a target phased completion by end of current fiscal year 18-19.Implementation Status:
[ ] Fully Implemented:
Implementation Date:
[X] Not Fully Implemented:
Estimated Implementation Date: June 2019
[ ] Will Not Implement
Substantiation:
[ ] Attached (Fully Implemented)
[X] Not Applicable (Not Fully Implemented or Will Not Implement)
Finding #4: Health Care Services has provided the counties guidance on how to prioritize alerts. However, this guidance has deemphasized the need to correct some eligibility errors and instead focus on ensuring beneficiaries’ access to care, as its highest priority.
Recommendation #5: To assist counties in addressing discrepancies, Health Care Services should do the following by December 31, 2018:
Reevaluate and update its guidance to the counties related to prioritizing Medi-Cal Eligibility Data System (MEDS) alerts.
DHCS Agreement: Fully Agrees with Finding
Response: DHCS cannot commit to issuing counties new MEDS alerts guidance by December 31, 2018. DHCS commits to issuing updated guidance to counties on how to prioritize MEDS alerts by April 30, 2019. The April 30, 2019 target implementation date provides DHCS with the time needed to work with external partners to identify all critical alerts that impact eligibility processing and to provide counties with updated policy and procedural guidance as a result of these efforts.
Implementation Status:
[ ] Fully Implemented:
Implementation Date:
[X] Not Fully Implemented:
Estimated Implementation Date: April 30, 2019.
[ ] Will Not Implement
Substantiation:
[ ] Attached (Fully Implemented)
[X] Not Applicable (Not Fully Implemented or Will Not Implement)
Comments
CALIFORNIA STATE AUDITOR’S COMMENTS ON THE RESPONSE FROM THE DEPARTMENT OF HEALTH CARE SERVICES
To provide clarity and perspective, we are commenting on Health Care Services’ response to the audit. The numbers below correspond to the numbers we have placed in the margin of its response.
We acknowledge that Health Care Services needs to review a large number of discrepancies we identified during the audit. However, because it will continue to make questionable payments and may prevent some individuals from accessing services until it resolves these discrepancies, we encourage Health Care Services to complete this work as close to our recommended date as possible. We look forward to Health Care Services’ 60-day and six‑month responses to the audit, which should detail its progress in resolving these discrepancies.
Health Care Services should not need to delay implementing this recommendation until it conducts on‑site visits at all county offices and while it works with counties regarding their overall performance. Instead of waiting to complete these activities, Health Care Services should incentivize counties to correct known discrepancies and prevent future erroneous payments by establishing procedures by December 31, 2018, that define when it will sanction unresponsive counties.
By setting a target completion date of June 30, 2019, Health Care Services is not prioritizing this recommendation. As we explain here, exception reports are a critical tool to help counties resolve system discrepancies and prevent questionable payments. In addition, Health Care Services asserted that it already transmits exception reports to many counties electronically, thus it should be able to convert existing reports into a more useful electronic format and provide them to the counties by December 31, 2018.
As we state here, Health Care Services’ current guidance deemphasizes the need for counties to correct some eligibility errors. In addition, Health Care Services previously stated that it anticipated updating its guidance regarding MEDS alerts priorities by October 2018. Therefore, Health Care Services should be able to update its guidance to the counties by December 31, 2018.