REPORT DIGEST

DEPARTMENT OF HEALTHCARE AND FAMILY
SERVICES

COMPLIANCE EXAMINATION
FOR THE TWO YEARS ENDED JUNE 30, 2019

Release Date:  July 7, 2020

FINDINGS THIS AUDIT:  26

CATEGORY:  NEW -- REPEAT -- TOTAL
Category 1:  2 -- 9 -- 11
Category 2:  7 -- 8 -- 15
Category 3:  0 -- 0 -- 0
TOTAL:  9 -- 17 -- 26

FINDINGS LAST AUDIT: 26

Category 1: Findings that are material
weaknesses in internal control and/or a
qualification on compliance with State
laws and regulations (material
noncompliance).
Category 2: Findings that are significant
deficiencies in internal control and
noncompliance with State laws and
regulations.
Category 3: Findings that have no
internal control issues but are in
noncompliance with State laws and
regulations.

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, Iles Park
Plaza, 740 E. Ash Street, Springfield, IL
62703
(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, 2019. A separate
Financial Audit as of and for the year
ended June 30, 2019, was previously
released on April 28, 2020. In total,
this report contains 26 findings, 11 of
which were reported in the Financial
Audit.

SYNOPSIS

• (19-12) The Department of Healthcare
and Family Services did not maintain
complete information needed to adequately
monitor Managed Care Organization (MCO)
contracts to ensure compliance with all
contractual provisions.
• (19-13) The Department of Healthcare
and Family Services entered into an
interagency agreement which circumvented
the agency reorganization provisions of
the State of Illinois’ Constitution.

FINDINGS, CONCLUSIONS, AND
RECOMMENDATIONS

INSUFFICIENT CONTROLS OVER MANAGED CARE
ORGANIZATION CONTRACTS

The Department of Healthcare and Family
Services (Department) did not maintain
complete information needed to adequately
monitor Managed Care Organization (MCO)
contracts to ensure compliance with all
contractual provisions.

The Department awarded seven new
HealthChoice of Illinois (HCI) MCO
contracts, effective January 1, 2018, to
provide managed care Statewide. During
our testing of the HCI MCO contracts, we
reviewed Attachment XIII: Required
Deliverables, Submissions, and Reporting
to identify the required deliverables for
each of the seven MCOs. We noted one
provider whose contract terminated with
the State on December 31, 2019; however,
the Department did not obtain all
required deliverables from this provider
for the months the provider had been
providing managed care services to its
members. The following reports were not
available for this provider:

• Annual recipient verification
procedures;
• Annual recipient verification results;
• Annual compliance certification; and
• Annual fraud and abuse compliance plan.
(Finding 12, page 50)

We recommended the Department obtain and
maintain a copy of all required
deliverables from each of the State’s HCI
MCOs as outlined in the contracts to
ensure it is adequately monitoring the
HCI MCOs in a timely and effective
manner.

The Department accepted the
recommendation and stated it is working
to correct future oversight through the
development and implementation of a
SharePoint Tracking and Monitoring Policy
and Procedure, improvements to the
SharePoint deliverables tracking
spreadsheet and implementation of
SharePoint training for the Bureau of
Managed Care Account Management staff.

NONCOMPLIANCE WITH THE STATE OF ILLINOIS’
CONSTITUTION

The Department of Healthcare and Family
Services (Department) entered into an
interagency agreement which circumvented
the agency reorganization provisions of
the State of Illinois’ Constitution.

During testing, we noted the Department,
Office of the Governor, and the Illinois
Health Information Exchange Authority
(Authority) entered into an interagency
agreement on September 23, 2016, for the
“transitioning of management of duties
from the Authority to [the Department].”
This interagency agreement included the
following terms:

• Section 2.03 noted all of the
Authority's remaining staff "shall
ultimately report to, and be under the
management control of, the [Department's]
Chief Operating Officer/Chief of Staff."
• Section 3.02 required the Authority to
designate the Department as its fiscal
agent for the purposes of distributing
moneys from the Health Information
Exchange Fund and may, at the
Department’s discretion, deposit future
moneys received into the Health
Information Exchange Fund.
• Section 3.03 required the Authority to
designate the signature authority of its
Executive Director “in its entirety” to
the Department’s Director.

In practicality, this interagency
agreement ended the Authority’s existence
as an independent, standalone entity and
reorganized the functions of the
Authority into the Department.  We noted
this change would contravene the
provisions of the Illinois Health
Information Exchange and Technology Act
(20 ILCS 3860/10), which created the
Authority as “an instrumentality and an
administrative agency of the State.”

The Constitution (Article V, Section 11)
allows the Governor, by Executive Order,
to reassign functions among or reorganize
executive agencies directly responsible
to the Governor.  If the reassignment or
reorganization contravenes a statute, the
Executive Order must be delivered to the
General Assembly.  After the Governor
complies with the delivery provisions of
the Constitution, the General Assembly
has 60 calendar days after the delivery
of the Executive Order to have one house,
by a record vote, disapprove of the
reassignment or reorganization to
prohibit the reassignment or
reorganization from occurring. (Finding
13, pages 51-52)

We recommended the Department continue to
work with the Governor and the General
Assembly to provide certainty as to the
legal status of the Authority.

The Department accepted the
recommendation and stated the General
Assembly passed legislation (SB 1864,
House Amendment #6) transferring the
duties to the Department under an Office
of Health Information Exchange within the
Department.  The change will become
effective upon the Governor’s signature.

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 audit/examination.

AUDITOR’S OPINION

The financial audit report was previously
released. The auditors stated the
financial statements of the Department as
of and for the year ended June 30, 2019,
are fairly stated in all material
respects.

ACCOUNTANT’S OPINION

The accountants conducted a compliance
examination of the Department for the two
years ended June 30, 2019, as required by
the Illinois State Auditing Act.  The
accountants qualified their report on
State Compliance for Findings 2019-001
through 2019-004, 2019-006, 2019-007, and
2019-009 through 2019-013. Except for the
noncompliance described in these
findings, the accountants state the
Department complied, in all material
respects, with the requirements described
in the report.

The financial audit and this compliance
examination was performed by Sikich LLP.

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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