Publisher's Note: This post appears here courtesy of the Carolina Journal. The author of this post is Theresa Opeka.
The NC Department of Health and Human Services was found to be non-compliant with Federal requirements for several programs, including problems with the Medicaid eligibility determination process and paying Temporary Assistance for Needy Families (TANF) to ineligible families, according to an audit by the NC Office of the State Auditor.
The audit from State Auditor Beth Wood's office was for the Fiscal Year ending June 30, 2022, and part of the Statewide Single Audit.
Among the findings:
NCDHHS paid subrecipients of the Emergency Solutions Grant Program (ESGP) more than 30 days after receiving the payment request. During the audit period, the Department paid $24.2 million to ESGP subrecipients.
Auditors tested a sample of 40 subrecipient payments totaling $365,000 and found that 25 (63%) payments were not paid until 31 to 153 days after receiving the payment requests.
Subrecipients rely on ESGP funding to improve the number and quality of emergency shelters, provide essential services to shelter residents, re-house homeless individuals and families, and prevent families and individuals from becoming homeless.
NCDHHS management told auditors that staffing shortages and increased workload were to blame for the late payments.
Federal regulations require NCDHHS to pay each subrecipient within 30 days of receiving the subrecipient's payment request.
Auditors recommended that management should establish a contingency plan to ensure the continuity of operations when workloads increase and staffing shortages occur.
Another finding was the use of immunization funds for unallowable activities. During the audit period, NCDHHS spent $101.2 million in immunization funds to establish and maintain health services programs for vaccine-preventable diseases.
NCDHHS entered into contracts with vendors and subrecipients (collectively called agreements) to administer the immunization program. Auditors tested 26 of the 145 agreements with expenditures totaling $13.3 million and found one (4%) agreement that used $127,626 in funds on activities not allowed by the immunization program.
Auditors say NCDHHS may be required to pay the funds, which could have been used on activities that help control the spread of infectious diseases through immunization, back to the federal government.
NCDHHS management said the error was made because a purchase order was mistakenly issued using the incorrect funding source, and it was not detected during the review and approval process.
Auditors recommended that department management should ensure that staff responsible for reviewing and approving program spending clearly understand where funding sources can be used.
NCDHHS was also found to have paid Temporary Assistance for Needy Families (TANF) to ineligible families based on inaccurate and inadequately documented eligibility determinations. During the audit period, approximately 56,600 families received $129.3 million in TANF benefits.
Auditors redetermined eligibility for a sample of 93 families with benefits totaling $212,647 paid to or on their behalf during the audit period. They found two (2.2%) families to be ineligible for cash assistance during the coverage period. Payments totaling $4,935 were paid to these ineligible families.
In addition to the eligibility errors, auditors also identified ten families whose income calculations were inaccurate or whose case files were missing some of the required eligibility documentation.
Auditors said that even though the findings were less than $5,000, if testing was extended to the entire population, questioned costs could be greater than $25,000.
NCDHHS management blamed the errors on the inaccurate application of established eligibility policies by the county departments of social services (DSS) staff.
Auditors recommended that management should analyze each error to specifically identify why the errors occurred and develop additional training for county DSS staff or establish other procedures as necessary to prevent future errors from occurring.
It was also found that NCDHHS submitted inaccurate TANF data to the U.S. Department of Health and Human Services' Administration for Children and Families (ACF).
Approximately 10,600 families received approximately $26.3 million in cash assistance from the TANF program during the reporting period.
Auditors tested a sample of case files for 60 families from the quarterly performance reports that were submitted for the reporting period and found 10 (17%) cases where the number of months the participant received assistance was misreported.
NCDHHS also over-reported the total number of families receiving assistance by approximately 2,900 (27%) families, which auditors say could lead to penalties.
A penalty of 4% of the adjusted State Family Assistance Grant (SFAG) can be imposed for each quarter NCDHHS fails to submit an accurate, complete, and timely report. Based on the federal fiscal Year 2021 SFAG, the penalty could be up to $10.2 million.
Also, inaccurate data could impact the Department's Work Participation Rate (WPR) calculation, which could incur additional penalties.
NCDHHS said the errors were due to a programming code error and programming code changes that were needed after the transition to NC FAST, which occurred in the state fiscal year 2015. NCDHHS said other departments have been working on correcting the needed code changes but could not resolve all issues before submitting the federal fiscal Year 2021 reports.
Auditors recommended that NCDHHS management should continue working on fixing the issue, and until the programming code issues are resolved, they should design and implement alternative procedures to ensure accurate data is reported.
NCDHHS also made Medical Assistance Program (Medicaid) payments to providers based on inaccurate and inadequately documented eligibility determinations.
Even though county departments of social services (DSS) are first tasked with determination of recipients' eligibility for the Medicaid program, NCDHHS was responsible for ensuring compliance with the eligibility requirements.
Auditors found two errors totaling $938 in payments to those ineligible. They say that although $938 resulted from the errors identified, the amount of Medicaid funds paid on behalf of ineligible beneficiaries is likely greater. Auditors noted that the same finding was reported in the 2021 Statewide Single Audit.
NCDHHS said the errors occurred because of the inaccurate application of established eligibility policies by the county DSS staff.
Auditors recommended that NCDHHS analyze each error and develop additional training or establish other procedures as necessary to prevent future errors.
During the same timeframe, auditors found that $13,302 in overpayments were made to Medicaid providers, and those funds may have to be paid back to the federal government. Auditors noted that the same finding was reported in the 2021 Statewide Single Audit.
Other findings show that NCDHHS did not allocate and use $84,279 of Substance Abuse Block Grant (SABG) funds for primary prevention programs as required and may have to pay them back.
NCDHHS agreed with all findings and told auditors they are working on steps to take corrective action.