POLICY HIGHLIGHTER

Volume 14, Number 8
April 9, 2004

DSHS response to the 2003 Statewide Audit in its own words

When an agency refuses to even acknowledge its audit findings, it is very unlikely that corrective action will occur from within that organization. This fact is especially worrisome when considering the recent audit of the Department of Social and Health Services (DSHS). Perhaps more troubling than the nineteen violations the state auditor (SAO) recently uncovered regarding DSHS in his 2003 Statewide Accountability Report are the agency's consistently defiant responses.

Below are samples of SAO's comments and DSHS's responses:

1) DSHS provided unallowable federal Medicaid services to illegal aliens (3-02).

SAO: Social Security Numbers (SSN) are not consistently verified prior to admitting clients into the Medicaid program. [DSHS's] client eligibility database shows SSN for many undocumented aliens. Further [DSHS] does not heed the federal alerts notifying staff of invalid SSN.

DSHS: First, DSHS would like to state the [SAO] fails to recognize that there are legitimate reasons why State may be unable to obtain the correct SSN . . .

SAO: The federal statutes are clear that an individual must have a valid SSN in order to be eligible for Medicaid benefits. The reasons offered by [DSHS] as to why it has not ensured adequate controls do not reverse federally mandated requirements.

2) DSHS does not have adequate internal controls to ensure that Medicaid payments are only made to individuals with valid SSN and not to deceased individuals or those using deceased individuals SSN (3-04).

SAO: Alerts sent by the federal government informing [DSHS] of a client's death are not heeded in a timely fashion or are overridden by staff. Additionally, workers are able to clear alerts without management's knowledge and management does not monitor the status of alerts issued.

DSHS: There are valid reasons why States may be unable to obtain or verify the correct SSN . . .

SAO: The federal statutes are clear that an individual must have a valid SSN in order to be eligible for Medicaid benefits. The reasons offered by [DSHS] as to why it has not ensured adequate controls do not reverse federally mandated requirements . . . When staff suspects that a client is using an invalid SSN, we have found in the majority of cases that the Medicaid application is approved and benefits are immediately given. Our audit revealed that [DSHS] computer systems have received up to five SSN for some of its clients. In the cases that we have reviewed, [DSHS] has never attempted to obtain the correct SSN.

3) DSHS did not provide reliable records needed for audit to SAO in a timely manner (3-01).

SAO: [DSHS] provided [SAO] with data that contained errors and mismatches . . . [DSHS] did not take timely action to notify us of the faulty data.

DSHS: [DSHS] concurs with and accepts responsibility for the delivery of the erroneous data to the SAO. Since the data was manipulated by SAO . . . it was difficult for [DSHS] to immediately determine the reasons for the discrepancies and identify the source of the error.

SAO: [SAO does] not agree with [DSHS's] statement that the data was manipulated by [SAO], which caused [DSHS's] delay in notifying us of the faulty data set.

4) DSHS does not have adequate internal controls to ensure that only eligible families are enrolled in the Medicaid Basic Health Plus program (3-06).

DSHS: [DSHS] partially concurs with this finding. DSHS does not concur with the part of finding regarding internal controls and we reaffirm our prior years audit response with additional clarification to statements made in this audit finding regarding internal controls . . .

SAO: [DSHS] believes it is not required to verify income unless it is questionable. However, according to federal requirements listed above, verification of income is mandatory . . . A disregard for control weakness that threatens program integrity may jeopardize future federal funding or may result in increased federal scrutiny for Washington's Medicaid program.

5) DSHS Division of Child Care and Early learning does not perform adequate background checks (3-12).

SAO: [DSHS] does not require licensors to see the individuals in person . . . does not verify documentation to ensure the persons have accurately stated the length of their state residency . . . performs no nationwide background checks on persons who report they have lived in the state for more than three years.

DSHS: [DSHS] acknowledges this is true [licensors do not see individuals in person] but does not concur with this finding because in-person validation is not required. We acknowledge that in-person validation might be desirable, but the voluminous turnover in staff in child care facilities would make it impossible on an ongoing basis. [DSHS] does not concur that licensors are conducting inadequate background checks. State law does not require nationwide background checks to be performed on persons who report they have lived in the state for more than three years . . . Nationwide background checks on all child care license applicants would be very time consuming and costly.

SAO: We reaffirm our finding. It is important parents and custodians know there are significant weaknesses in [DSHS's] background check process.

Conclusion
Statements from DSHS officials make it clear they don't believe SAO's findings are problems in need of fixing. The legislature should hold public hearings and mandate remedies unless they, too, think SAO's findings are unimportant.

Prepared by: Jason Mercier | Budget Research Analyst | 360-956-3482

Evergreen Freedom Foundation P.O. Box 552, Olympia, WA 98507 Phone: (360) 956-3482, Fax: (360) 352-1874 Email: effwa@effwa.org