REPORT DIGEST

DEPARTMENT OF HEALTHCARE AND FAMILY
SERVICES

FINANCIAL AUDIT
FOR THE YEAR ENDED JUNE 30, 2020

Release Date:  June 30, 2021

FINDINGS THIS AUDIT:  11

CATEGORY:  NEW -- REPEAT -- TOTAL
Category 1:  3 -- 8 -- 11
Category 2:  0 -- 0 -- 0
Category 3:  0 -- 0 -- 0
TOTAL:  3 -- 8 -- 11

FINDINGS LAST AUDIT: 11

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

SYNOPSIS

• (20-01) The Departments (HFS and DHS)
lacked controls over eligibility
determinations and redeterminations for
Federal programs where such determination
is documented using the Integrated
Eligibility System (IES).

• (20-02) The Departments (HFS and DHS)
did not maintain adequate internal
control to ensure change documentation
and applications for benefits and
redeterminations of eligibility for
benefits were reviewed and/or completed
timely.

• (20-08) The Department of Healthcare
and Family Services (HFS) failed to
execute interagency agreements (IA) with
the Department of Human Services (DHS)
and the Department of Children and Family
Services (DCFS) establishing adequate
internal controls over operation of the
State of Illinois’ Illinois Medicaid
Program Advanced Cloud Technology system
(IMPACT). In addition, HFS failed to
sufficiently review and document
eligibility requirements either prior to
the approval of eligibility, and/or
during the required monthly screenings
for enrolled providers.

• (20-11) The Department did not have a
reconciliation process to provide
assurance census data submitted to its
pension and other postemployment benefits
(OPEB) plans was complete and accurate
and lacked adequate internal control over
reporting its census data.

FINDINGS, CONCLUSIONS, AND
RECOMMENDATIONS

INADEQUATE CONTROLS OVER ELIGIBILITY
DETERMINATIONS AND REDETERMINATIONS

The Department of Healthcare and Family
Services (HFS) and the Department of
Human Services (DHS) (collectively, the
“Departments”) lacked controls over
eligibility determinations and
redeterminations for Federal programs
where such determination is documented
using the Integrated Eligibility System
(IES).

The Departments’ Integrated Eligibility
System (IES) is the automated system used
by the Departments which intakes,
processes (with the assistance of
caseworkers), and approves recipient
applications, redetermination, Midpoint
Reports and maintenance items, in order
to determine eligibility and make
payments for the State’s human service
programs.

In order to conclude if the determination
of eligibility was proper, we selected a
sample of 60 cases (30 new applications
and 30 redeterminations) and tested
whether the cases were properly certified
(approved or denied) based on non-
financial, financial and timeliness
criteria. Our testing considered all the
documentation contained within the case
file, including the scanned documentation
supporting caseworker overrides required
prior to certification. In 13 of the 60
cases tested (21.7%), we noted 15
exceptions where either the case was not
certified timely and/or the case file did
not contain documentation supporting
eligibility upon certification. (Finding
1, pages 55-57)

We recommended management of the
Departments work together to implement
additional controls to ensure appropriate
documentation of eligibility is obtained
at the time of certification and retained
in IES, complete certifications of
applications and redeterminations timely
and correct IES application errors.

HFS accepted the recommendation and
stated it will work with DHS to develop
policy guidance to remind eligibility
workers of verification requirements,
update and distribute training materials
to clearly communicate and reinforce
verification requirements and correct the
medical processing errors noted.

UNTIMELY PROCESSING OF APPLICATIONS FOR
BENEFITS, REDETERMINATIONS OF ELIGIBILITY
FOR BENEFITS, AND ELIGIBILITY CHANGE
DOCUMENATION

The Department of Healthcare and Family
Services (HFS) and the Department of
Human Services (DHS) (collectively, the
“Departments”) did not maintain adequate
internal control to ensure change
documentation and applications for
benefits and redeterminations of
eligibility for benefits were reviewed
and/or completed timely.

As part of our audit procedures, we
tested the Departments’ compliance with
the federal time requirements for
approving or denying applications,
conducting redeterminations, and working
any changes communicated by recipients
for the SNAP, TANF, and Medical programs.

• For change documentation (a/k/a
maintenance) – when a recipient
encounters a change in their situation,
which may have an impact on eligibility,
the recipient is to notify the
Departments of such change.  As of June
30, 2020, the Departments had a backlog
of 70,466 cases in which information had
been received; however, not reviewed.
Because the information had not been
reviewed, the Departments did not know
the program(s) which might be impacted.
As such, we were unable to determine the
timeliness of processing the information.

• For initial applications – At June 30,
2020, the Departments had a backlog of
20,511 medical applications, 4,208 SNAP
applications, and 2,223 TANF
applications, for which the determination
of eligibility to receive benefits was
not completed timely. Additionally, there
were 8,989 applications in which the
applicant did not specify the program;
therefore, we were unable to determine
the timeliness of the application.

• For redeterminations - As of June 30,
2020, DHS had not timely redetermined the
eligibility of 881 SNAP and/or TANF
recipients to continue receiving benefits
upon receipt of redetermination
information from the recipient. In
addition, DHS had received
redetermination information from 1,145
SNAP and/or TANF recipients; however, due
to a defect within IES, the date the
information was received was not
documented.  Because the received date
was missing, we were unable to determine
the timeliness of these redeterminations.
(Finding 2, pages 58-59)

We recommended the Departments work
together to implement controls to comply
with the requirement that applications
are reviewed and approved or denied
within 45 or 30 days, as applicable, and
the Departments establish appropriate
controls to both monitor the progress of
eligibility redeterminations and ensure
those redeterminations occur timely along
with any change documentation received.

HFS accepted the recommendation and
stated it will work with DHS to maintain
eligibility staffing levels to assure
continued reductions in applications
pending over 45 days and to be prepared
to handle work associated with, once
again, sending redeterminations forms
after the public health emergency  ends.
If necessary, HFS stated it will develop
additional strategies based on Federal
CMS guidance to the State regarding
requirements for resuming full
redetermination processing at the end of
the public health emergency.

INSUFFICIENT REVIEW AND DOCUMENTATION OF
PROVIDER ENROLLMENT DETERMINATIONS AND
FAILURE TO EXECUTE INTERAGENCY AGREEMENT

The Department of Healthcare and Family
Services (HFS) failed to execute
interagency agreements (IA) with the
Department of Human Services (DHS) and
the Department of Children and Family
Services (DCFS) establishing adequate
internal controls over the operation of
the State of Illinois’ Illinois Medicaid
Program Advanced Cloud Technology system
(IMPACT). In addition, HFS failed to
sufficiently review and document
eligibility requirements either prior to
the approval of eligibility, and/or
during the required monthly screenings
for enrolled providers.

HFS’ and DHS’ Roles

As set by the State of Illinois’ State
Plan under Title XIX of the Social
Security Act (State Plan) (Section 1.1),
the State’s designated agency responsible
for administering and supervising the
administration of the Medicaid Program is
HFS. However, Section 1.1 of the State
Plan allows for HFS to delegate specific
functions to other State agencies to
assist with the administration of the
Medicaid Program, pursuant to a written
IA defining each agency’s roles and
responsibilities.  As such, DHS
administers several human service
programs under the Medicaid Program,
including developmental disabilities
support services, rehabilitation
services, and substance abuse (prevention
and recovery) services. DCFS administers
the State’s child welfare program which
includes cooperating in the establishment
of Medicaid eligibility for children who
are wards of the State.

Auditor Testing and Results

Interagency Agreements

The auditors noted HFS did not enter into
or have existing IAs with DHS defining
each agency’s roles and responsibilities
as they related to IMPACT during fiscal
year 2020.

Further, the auditors noted HFS did not
enter into or have existing IAs with DCFS
defining each agencies’ roles and
responsibilities as they related to
IMPACT during fiscal years 2019 and 2020.

Detail Sample Testing of IMPACT Providers
at HFS

During fiscal year 2020, 26,113 provider
enrollment applications were approved in
IMPACT.  In order to determine if the
providers’ applications were approved in
accordance with federal and State laws/
rules/regulations, a sample of 60
approved applications were selected for
testing. The testing results were as
follows:

Seventeen (28%) approved provider
applications did not contain
documentation to substantiate a review of
the provider’s required professional
license or board certification to confirm
the licenses/certifications were valid at
the time the application was approved.

One (2%) approved provider application
included a request for the State to
backdate their enrollment beginning date.
However, the provider’s file did not
contain documentation of HFS’ or the
program’s applicable State agency’s
reason for allowing an exception and
thereby backdating the provider’s
enrollment.  As a result, the auditors
could not determine if the backdating of
enrollment, and the subsequent payments
were proper.

Detail Sample Testing of IMPACT Providers
at DHS and DCFS

In addition to the detailed testing of
IMPACT provider files conducted at HFS
noted above, the Office of the Auditor
General’s Special Assistant Auditors for
the DHS and DCFS fiscal year 2020
engagements also performed procedures to
determine if the providers’ applications
were approved in accordance with the
applicable State agency’s program
specific requirements. For findings
resulting from those procedures, please
refer to DHS’ Financial Statement Audit
Report for the year ended June 30, 2020
(Finding 2020-011), and DCFS’ Financial
Statement Audit Report for the year ended
June 30, 2020 (Finding 2020-005).
(Finding 8, pages 72-74)

We recommended HFS management work with
DHS and DCFS to ensure all provider
applications are properly reviewed,
approved, and documented within IMPACT.
In addition, we recommended HFS work with
DHS and DCFS to execute detailed
interagency agreements which document
specific roles and responsibilities as
they relate to IMPACT.

HFS accepted the recommendation and
stated it will work with DHS to ensure
provider applications and documentation
are thoroughly reviewed at the initial
enrollment and at revalidations.  HFS
also stated an interagency agreement was
drafted on April 1, 2020 and is in the
process of being finalized and that DHS
management stated dedicated inboxes will
also be implemented to ensure that
provider issues received from HFS are
expeditiously addressed.  Lastly, HFS
stated the IGA with DCFS is complete and
awaiting signature.


INADEQUATE INTERNAL CONTROLS OVER CENSUS
DATA

The Department of Healthcare and Family
Services’ (Department) did not have a
reconciliation process to provide
assurance census data submitted to its
pension and other postemployment benefits
(OPEB) plans was complete and accurate,
and lacked adequate internal control over
reporting its census data.

During testing, we noted the Department
had not performed an initial complete
reconciliation of its census data
recorded by the State Employees’
Retirement System of Illinois (SERS) and
the Department of Central Management
Services (CMS) to its internal records to
establish a base year of complete and
accurate census data.

Additionally, we noted two of 120 (2%)
employees tested had type code change
events within their records at CMS, such
as changes from leave of absence codes,
coverage opt outs, and changes in life
insurance coverage, which lacked support
within the Department’s records.  We
considered the impact of these
discrepancies and determined they did not
materially impact the Department’s
financial statements. (Finding 11, pages
79-80)

We recommended the Department implement
controls to ensure reportable events are
timely and accurately transmitted to CMS.
Further, we recommended the Department
work with SERS and CMS to develop an
annual reconciliation process of its
active members’ census data from its
underlying records to a report from each
plan of census data submitted to the
plan’s actuary.

The Department accepted the
recommendation and stated it is confident
the risk of reportable events not being
timely and accurately reported to CMS is
minimal and that it will be collaborating
with CMS and SERS to develop an annual
reconciliation process for active
members' census data.

OTHER FINDINGS

The remaining findings pertain to
insufficient internal controls over
changes to IES and recipient data,
inadequate access review procedures for
IES, inadequate disaster recovery
controls over the IES, insufficient
detailed agreement with the Department of
Innovation & Technology, inadequate
general information technology controls
over IMPACT, inadequate controls over
review of service providers, and
miscalculations of C-97 reporting. We
will review the Department’s progress
towards the implementation of our
recommendations in our next financial
audit.

AUDITOR’S OPINION

The auditors stated the financial
statements of the Department of
Healthcare and Family Services as of and
for the year ended June 30, 2020 are
fairly stated in all material respects.

This financial audit 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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