REPORT DIGEST

DEPARTMENT OF HEALTHCARE AND FAMILY
SERVICES

COMPLIANCE EXAMINATION
FOR THE TWO YEARS ENDED JUNE 30, 2017

Release Date:  July 10, 2018

FINDINGS THIS AUDIT:  26

CATEGORY:  NEW -- REPEAT -- TOTAL
Category 1:  13 -- 3 -- 16
Category 2:  6 -- 4 -- 10
Category 3:  0 -- 0 -- 0
TOTAL:  19 -- 7 -- 26

FINDINGS LAST AUDIT: 12

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, 2017. A separate
Financial Audit as of and for the year
ended June 30, 2017, was previously
released on March 20, 2018. In total, this
report contains 26 findings, 13 of which
were reported in the Financial Audit.

SYNOPSIS

• (17-14) The Department of Healthcare and
Family Services entered into an interagency
agreement which circumvented the agency
reorganization provisions of the State of
Illinois’ Constitution.
• (17-15) The Department of Healthcare and
Family Services and the Department of Human
Services did not have adequate controls to
ensure the social security information of
applicants for human services programs was
sufficiently supported.

FINDINGS, CONCLUSIONS, AND RECOMMENDATIONS

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:

• The 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 14, pages 47-48)

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

APPLICANT SOCIAL SECURITY INFORMATION IN
IES NOT SUFFICIENTLY SUPPORTED

The Department of Healthcare and Family
Services and the Department of Human
Services (Departments) did not have
adequate controls to ensure the social
security information of applicants for
human services programs was sufficiently
supported.

The Departments have shared responsibility
for various human service programs in the
State, including the intake, processing,
and approval of applications for benefits.
The Departments have shared responsibility
for internal control over manual and
automated processes relating to eligibility
for these programs.

As part of our testing of the Integrated
Eligibility System (IES), we compared the
applications approved utilizing IES to the
Social Security Administration (SSA) Master
Death Records. We noted 164 approved
applicants had applied for services after
the date of death associated with the
Social Security Number (SSN) the applicant
had provided.  In addition, we noted 39
approved applicants had death dates
associated with the SSN the applicants had
provided that were prior to their birth
dates within IES.

As part of the IES clearance process, the
applicant’s SSN is matched to the SSA in
order to determine if the SSN is valid.  We
reviewed case information within IES for a
sample of five cases, noting the case
information documented the applicant’s SSN
as not being valid.  However, it appeared
each case had been overridden by the
caseworker, thus allowing services. As a
result, the Departments incurred
expenditures of $983,656 for applicants
that may not have been eligible for the
benefits received. (Finding 15, page 49)

We recommended the Department of Healthcare
and Family Services work with the
Department of Human Services to improve
controls over caseworker involvement by
refining supervisory oversight to confirm
all applications are properly approved and
caseworkers are properly obtaining and
retaining documentation in IES to support
eligibility. In addition, we recommended
the Departments seek reimbursement for
improper payments.

The Departments accepted the recommendation
and stated over 1 million applications were
approved using the IES system during FY16
and FY17.  The 203 cases (0.019%)
identified as having a social security
number in question were entered into the
system manually and appear to have been
entered incorrectly and these cases will be
corrected and any improper payments
identified will be recouped.  The
Departments also stated HFS will discuss
with IDHS whether more stringent edits or
approvals should be implemented to
eliminate the approval of cases with
incorrect social security numbers.

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, 2017, 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, 2017, as required by
the Illinois State Auditing Act.  The
accountants qualified their report on State
Compliance for Findings 2017-001 through
Finding 2017-016. 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

FJM:JV