REPORT DIGEST

DEPARTMENT OF HUMAN SERVICES

Financial Audit For the Year Ending June 30,
2013, and
Compliance Examination for the Two Years Ending
June 30, 2013


Release Date:   May 29, 2014

Summary of Findings:
Total this audit: 38
Total last audit:  43
Repeated from last audit: 27

State of Illinois, Office of the Auditor General
WILLIAM G. HOLLAND, 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

• Weaknesses were identified in the preparation
of year-end accounting reports submitted to the
Illinois Office of the Comptroller and
preparation of year-end Department financial
statements.

• The Department has weaknesses in the quarterly
reporting of accounts receivable.

• The Department lacked adequate close-out
procedures while closing Mental Health and
Developmental Centers.

• The Department failed to calculate and pay
prompt payment interest on medical assistance
payments.

• The Department did not ensure procedures were
followed for disposal of documents containing
confidential and sensitive information.

• The Department transmitted unsecured
confidential information over the internet.

• The Department had numerous internal control
weaknesses in the Home Services Program.

• The Department did not adequately monitor
provider agencies.

• The Department did not adequately administer
locally held funds (bank accounts).

• The Department failed to make annual
redeterminations of eligibility for ALL KIDS in
compliance with statutory requirements.

• Duplicate enrollees were found in eligibility
files for the medical assistance program under
Title XIX of the Social Security Act.

• Medical Assistance records for deceased
individuals were not updated timely.

INTRODUCTION

This report presents our Department-wide
financial statement audit for the year ended
June 30, 2013 and compliance attestation
examination for the two years ending June 30,
2013.  At June 30, 2013 the Department operated
6 Developmental Centers, 7 Mental Health
Centers, 1 combined Mental Health and
Developmental Center and 3 Rehabilitation
Services Facilities.  During the engagement
period, the Department closed 3 facilities:
Tinley Park Mental Health Center, H. Douglas
Singer Mental Health Center, and the
Jacksonville Developmental Center.  The findings
are presented in the report beginning at page
18.

FINDINGS, CONCLUSIONS, AND RECOMMENDATIONS

WEAKNESSES IN PREPARATION OF ACCOUNTING REPORTS
AND FINANCIAL STATEMENTS

During the audit of the June 30, 2013 Department
financial statements, several exceptions were
noted.  Some of the conditions identified
follow:

• Accounting reports (GAAP reporting packages
and Forms) prepared for the Office of the State
Comptroller (Comptroller) were incomplete,
contained numerous inaccuracies and required
corrections.  One was submitted 24 days late, 2
were submitted 14 days late, 10 were submitted 4
to 6 days late, and 8 were submitted 1 day late.
Significant adjustments were made after the
original submission.

• The Department overstated current year
expenditures for the Temporary Assistance for
Needy Families (TANF) by $68.8 million on the
original SCO-563 Form submitted to the
Comptroller, which required significant
adjustments to receivables and unavailable
revenue in the General Revenue Fund.

• The Department failed to calculate and record
a liability for prompt payment interest on
payments to vendors for developmental disability
services covering fiscal years 2010 through
2013.

• The Comptroller instructed the Department on
August 23, 2013 to record the unpaid fiscal year
2012 back wages of $28.02 million as a liability
in the General Revenue Fund GAAP reporting
package.  However, the Department failed to
include this liability when they submitted the
GAAP reporting package on September 30, 2013 and
the adjustment was ultimately recorded by the
Comptroller on October 23, 2013.

• Auditors noted another State agency
recalculated program expenditures for the Home
and Community-Based Waiver program.  As a
result, the Comptroller adjusted federal
operating grant revenue by $36.46 million for
the Community Development Disability Services
Medicaid Trust Fund and $11.29 million for the
Health and Human Services Medicaid Trust Fund
approximately one month after the Department
initially submitted the GAAP reporting packages
for those funds.

• The Department overstated operating transfers
out from the General Revenue Fund to the DHS
Public Assistance Recoveries Trust Fund by $11.7
million.

• The Department overstated current year
expenditures for the Child Care and Development
Block Grant program by $8.12 million in the DHS
Special Purposes Trust Fund.

Department officials stated the errors contained
in the GAAP reporting packages were primarily
due to a lack of a sufficient number of
qualified staff and corresponding titles,
education, and experience to prepare GAAP
reporting packages and financial statements in
accordance with GAAP.  The lack of a complete
general ledger and grants management system also
contributed to the errors.

Because of the significance of the weaknesses in
preparation of GAAP reporting forms submitted to
the Illinois Office of the Comptroller and
preparation of year-end Department financial
statements, this is considered a material
weakness in the Department’s internal control.
A material weakness is a deficiency, or a
combination of deficiencies, in internal
control, such that there is a reasonable
possibility that a material misstatement of the
entity’s financial statements will not be
prevented, or detected and corrected on a timely
basis.  (Finding 1, pages 18-21)  This finding
was first reported in 2009.

We recommended the Department implement
procedures and cross-training measures to ensure
GAAP Reporting Packages are prepared in a
timely, accurate and complete manner.

Department officials agreed with the
recommendation and stated they will implement
procedures and cross-training measures to ensure
GAAP Reporting Packages are prepared in a
timely, accurate and complete manner.  (For the
previous Department response, see Digest
Footnote #1).

WEAKNESSES OVER QUARTERLY REPORTING OF ACCOUNTS
RECEIVABLE

During testing of the quarterly receivable
forms, the auditors noted the reports were
manually compiled from multiple accounts
receivable systems in order to issue a single
report.  The compilation is complex and
cumbersome and, as a result, there is a
potential for errors in reporting.  The current
process takes several hours to complete over a
period of several weeks.  The Department’s
current primary accounts receivable system is
the Accounts Receivable System with the
secondary systems in the Consolidated Accounting
and Reporting System (CARS) and the
Reimbursement System II (RE2).  The systems need
to be updated to handle the quantity of
transactions processed by the Department.

Auditors noted the quarterly Forms C-98
submitted to the Comptroller contained
differences that could not be reconciled with
the Department’s supporting documentation. For
example, for the Mental Health Fund, receivable
balances each quarter consist of balances from
CARS, RE2, plus entries for Medicare Part D.
The Department does not maintain a detail
accounts receivable subsidiary ledger to support
the detail of the ending Mental Health Fund
quarterly balances.  Rather, the Department
generally takes the beginning quarterly
receivable balance, adds new receivables and
deletes payments to derive an ending quarterly
balance.  Auditors reviewed the supporting
documentation for these receivables but were
unable to reconcile the amounts to the totals
reported for the quarter end.  For fiscal year
2013, differences ranged from $5 million to $16
million at the end of each quarter.

Auditors also noted there were Forms generated
for funds that do not report receivables.
Department personnel indicated that CARS will
populate receivable amounts for funds that
actually do not have receivables.  According to
Department personnel, these amounts are
populated in error and must be zeroed out
manually.

Because of the significance of the weaknesses in
the Department’s accounts receivable reporting
system, this is considered a material weakness
in the Department’s internal control.  A
material weakness is a deficiency, or a
combination of deficiencies, in internal
control, such that there is a reasonable
possibility that a material misstatement of the
entity’s financial statements will not be
prevented, or detected and corrected on a timely
basis.  (Finding 2, pages 22-23)  This finding
was first reported in 2007.

We recommended the Department implement a
Department-wide accounts receivable system,
working with the appropriate parties regarding
any possible state-wide consolidated accounting
system initiatives.

Department officials agreed with the
recommendation and stated they will continue to
review the Accounts Receivable agency wide.
Based on the results of the review, the
Department stated they will establish and
implement any changes as solutions occur.  (For
the previous Department response, see Digest
Footnote #2).

INADEQUATE ADMINISTRATION OF CLOSING MENTAL
HEALTH CENTERS AND DEVELOPMENTAL CENTERS

The Department did not exercise adequate
internal control while closing Mental Health
Centers and Developmental Centers during the
examination period.

During fiscal years 2013 and 2012, the
Department closed the following facilities:

• Tinley Park Mental Health Center (Tinley Park)
– June 30, 2012
• H. Douglas Singer Mental Health and
Developmental Center (Singer) – October 31, 2012
• Jacksonville Developmental Center
(Jacksonville) – November 27, 2012

During testing of the Department’s operations
and close-out procedures at the Singer, Tinley
Park and Jacksonville centers, auditors noted
numerous weaknesses regarding close-out process
at Singer and Tinley Park, some of which were as
follows:

• During a walkthrough of the facilities several
months after their closure dates, the auditors
noted a large inventory of mechanical stores
items was still on hand.

• During fieldwork at Singer, the auditors noted
the facility’s equipment items, generally
furniture, had been placed in hallways and
appeared to be abandoned.

The auditors also identified equipment items at
Tinley Park, including furniture, 4 farm
tractors, a forklift, and 10 inoperable State
vehicles that were still on-site within various
buildings across the Tinley Park campus and had,
presumably, been abandoned.

• The facilities did not conduct an inventory of
commodities, general stores, mechanical stores,
equipment and real property following the
announcement of the closure of the facility.

• Singer did not enter inventory requisitions
after October 3, 2012 or enter inventory
receiving reports after October 15, 2012 into
the Commodity Control System until after the
closure date of October 31, 2012.

• The Department was unable to provide
documentation supporting internal notification
of the Department’s Property Control Unit of the
impending closure of Singer or Tinley Park 6
months prior to closure.

• During walkthroughs of Spruce Hall at Tinley
Park, the auditors identified several boxes of
envelopes and several envelopes strewn
throughout the building where the envelopes had
been run through a postage meter.

• Singer completed its annual June 30, 2012,
equipment inventory on August 24, 2012, sixty-
eight days prior to closure on October 31, 2012.

Department officials stated the noted exceptions
were due to oversight.   Refer to Findings
2013-009, 2013-013, and 2013-016 for additional
recommendations pertaining to weaknesses noted
pertaining to the operations at Tinley Park and
Singer.  (Finding 5, pages 28-33)

We recommended the Department improve its
central oversight of the closure of remote
locations.  The oversight should include the
assignment of a liaison between the Central
Office and the remote location to monitor the
completion of the tasks needed to close out its
operations.

Department officials accepted the recommendation
and stated they have developed an Administrative
Directive for the process for shutting down or
decommissioning a DHS-operated facility, Center
or School.  In conjunction with this
Administrative Directive, the Department
indicated they developed a comprehensive
facility closure planning manual to provide
instructions for submitting a plan during
closures.

FAILURE TO CALCULATE AND PAY PROMPT PAYMENT
INTEREST ON MEDICAL ASSISTANCE PAYMENTS

During their testing, auditors determined the
Department does not have a methodology to
calculate prompt payment interest that resulted
from late medical payments to vendors processed
through Medicaid Management Information System
(MMIS) and therefore did not record a liability
while preparing its financial statements for the
year ended June 30, 2013.  In response to an
inquiry from the auditors, the Department
determined it had failed to pay prompt payment
interest to 270 vendors during fiscal years 2010
through 2013 totaling $20.5 million.  Of this
amount, unpaid interest for FY13 and FY12 was $6
million and $2.8 million, respectively.  In
addition, the Department was unable to provide
auditors with supporting documentation for the
medical assistance payments recorded against its
appropriations for the period July 1, 2009
through June 30, 2013.  (Finding 6, pages 34-36)

We recommended the Department develop a
methodology to calculate prompt payment interest
that results from late medical payments to
vendors processed through MMIS as well as
estimate a liability for such contingency when
preparing its financial statements.

Department officials accepted the recommendation
and stated they will work with the Department of
Healthcare and Family Services to develop an
interagency agreement regarding the calculation
of the MMIS Prompt Payment Interest on Medical
Assistance.

INADEQUATE COMPLIANCE WITH PROCEDURES FOR
DISPOSAL OF CONFIDENTIAL INFORMATION

During walkthroughs at the Department’s Central
Office, auditors found unlocked shred bins in
open areas that were clearly marked as shred.
We also found confidential information that was
disposed of in a recycle bin.

At three closed facilities, auditors noted the
following exceptions:

• At Tinley Park Mental Health Center, which
closed June 30, 2012, auditors conducted a
walkthrough 13 months following closure and
found the Department had left boxes of patient
records near the side entrance of a building.
In addition, files were noted in four buildings
that contained employee personnel records,
recipient files, forms containing names and
contact information for volunteers, clinical
record files, files containing medical tests,
pharmaceutical records, patient incident
records, patient surgical and psychiatric
records, and files containing information on
Hurricane Katrina refugees.

• At H. Douglas Singer Mental Health Center,
which closed October 31, 2012, auditors
conducted a walkthrough 9 months following
closure and found complete employee records,
recipient court records and other court records,
and Patient Daily Census and Movement reports
with recipient names.  In addition, auditors
noted filing cabinets full of investigations,
reports, and attorney correspondence related to
the Department’s Office of the Inspector
General.

• At the Jacksonville Developmental Center,
which closed on November 27, 2012, auditors
found confidential information in trash
receptacles, filing cabinets, binders, boxes,
and on desks.  We found resident names, health
information, and social security numbers, a
labeled medical specimen, photos of residents
labeled with residents’ names and incident
number, security reports which included resident
names; filing cabinets with folder separators
labeled with resident names; two computer
monitors and three computer towers; large stack
of binders which contained the last name and
first initial of residents on the spine of the
binders; and manila filing folders with patient
names written on the tabs.


We noted the confidential information at the
above facilities may have been exposed to
outside individuals, including employees of the
Department of Central Management Services and
vandals.  With regard to Tinley Park Mental
Health Center, additional exposure occurred as a
result of training conducted at the Center by
members of the U.S. Navy SEALs and area police
officers.

Additionally, documents containing confidential
information were found in trash or recycle bins
while performing visits at certain other
Department facilities.  Documentation included
information such as patient names, social
security numbers, guardian names, addresses,
telephone numbers, appointments, assessments,
specimen logs, and test orders.  (Finding 9,
pages 41-43)  This finding was first reported in
2005.

We recommended the Department ensure
confidential information is adequately protected
and review existing policies regarding the
security and control of confidential information
to ensure Department-wide procedures exist for
ensuring confidential and personal information
is adequately secured in both electronic and
hardcopy format.  We further recommended the
Department effectively communicate and enforce
its procedures for safeguarding, retention, and
subsequent disposal of all confidential
information to all Department personnel,
including facilities.

Department officials accepted the recommendation
and stated they are developing a new
Administrative Directive to ensure confidential
information is adequately protected and personal
information is adequately secured in both
electronic and hardcopy format. The Department
also stated they will communicate and enforce
its procedures for safeguarding, retention, and
subsequent disposal of all confidential
information to all Department personnel,
including facilities.  (For the previous
Department response, see Digest Footnote #3).

UNSECURED CONFIDENTIAL INFORMATION TRANSMITTED
OVER THE INTERNET

The Department did not adequately protect
confidential sensitive information.  From July
to October, Department staff sent numerous
unprotected emails to OAG staff that contained
information such as: protected health
information, names and social security numbers
and bank account information.  In each case, OAG
staff informed the sender of the infraction,
asked the sender to refrain from sending such
information in an email, and provided
information on the availability of State’s
encryption resources.  (Finding 26, pages 84-85)

We recommended the Department ensure
confidential information is adequately protected
by effectively communicating and enforcing
procedures for safeguarding, retaining, and
communicating confidential information to all
Department personnel, including facilities.

Department officials accepted the recommendation
and stated they will educate and inform DHS
users about how to utilize Entrust as well as
using the Illinois FTP Transfer Site when
sharing confidential or protected data with
those external to the State network.  The
Department indicated they will also inform users
about security awareness and handling of
confidential and protected data.

INTERNAL CONTROL WEAKNESSES IN THE HOME SERVICES
PROGRAM

During testing, numerous internal control
weaknesses were identified in the Department of
Human Services’ (Department) Home Services
Program managed by the Department’s Division of
Rehabilitation Services.  These weaknesses were
first noted in a review of the Home Services
Program that Department management had performed
in fiscal year 2005.

The auditors noted through testing and
discussions with Home Services Program and fraud
division personnel the following weaknesses were
still prevalent during the current examination
period:

• The Home Services Program relies on the
customer under an “honor system” to guard
against abuse and to ensure compliance.  The
customer is responsible for approving and
signing their Personal Assistant’s timesheets.
• There was insufficient monitoring of case
files to ensure program objectives were being
met.  There is only one supervisor at each of
the 43 field offices to monitor Home Services
Program activities.  On average, each supervisor
was responsible for approximately 803 case files
during fiscal years 2013 and 2012.

• During testing of 5 field offices, auditors
noted many cases that did not contain a timely
redetermination of need.  Of the 50 files
tested, auditors noted 22 (44%) did not contain
a timely redetermination.  (Finding 10, pages
44-45)  (This finding was first reported in
2005.

We recommended the Department implement controls
to monitor and ensure accuracy in the
timekeeping process for Personal Assistants,
perform customer redeterminations in accordance
with the Department’s Administrative Rules
governing the Home Services Program, and
continue to show improvement in its caseload per
counselor through the allocation of resources or
alternative controls.

Department officials accepted the recommendation
and are enhancing its procedures to strengthen
internal controls over the Home Services
Programs.  (For the previous Department
response, see Digest Footnote #4).

INADEQUATE MONITORING OF PROVIDER AGENCIES

Auditors tested the Department’s monitoring of
the Division of Rehabilitation Services’ awards
and grant agreements with its provider agencies
and noted the following exceptions:

• No on-site monitoring had occurred for
multiple fiscal years for 2 of 20 (10 %)
providers tested.  One provider of the
Independent Living program had not been visited
since August 2001 and another provider of the
Blind Services program had not been visited
since May 2009.

• Four of 20 (20%) providers tested did not
receive their monitoring report from the
Department in a timely manner.  These reports
were provided from 16 to 45 days late.  (Finding
12, page 48)

We recommended the Department implement improved
monitoring procedures to ensure compliance with
the Department’s Administrative Rules.  The
monitoring procedures should encompass timely
on-site visits and issuance of monitoring
reports.

Department officials accepted the
recommendation. The Division of Rehabilitation
Services stated they will work to fill vacancies
and implement improved monitoring procedures to
ensure compliance with the Department’s
Administrative Rules.

INADEQUATE ADMINISTRATION OF LOCALLY HELD FUNDS

The Department’s Central Office and mental
health and developmental disability facilities
inadequately administered locally held funds
(bank accounts) during the examination period.
Auditors noted exceptions regarding the
administration, accounting, reconciliation,
reporting, receipt and disbursement of these
funds.

Some of the weaknesses noted during the testing
of the Department’s quarterly reporting of
receipts and disbursements for the two years
ended June 30, 2013 follow:

• Eight of 17 (47%) facilities tested did not
properly perform monthly reconciliations of
their locally held funds.

• At the Chicago-Read Mental Health Center,
auditors noted various exceptions in 4 locally
held funds.  Some of the exceptions noted
consisted of: the same person prepared checks,
received receipts, and recorded receipts and
disbursements; the Center improperly comingled
monies between the DHS Other Special Trusts Fund
and the Patient Travel Trust Fund; and the cash
on hand did not reconcile back to the fully
authorized amounts for the Living Skills Fund,
Patient Travel Trust Fund, DHS Other Special
Trusts Fund, and DHS Resident’s Trust Fund
during a surprise cash count (the differences
between the reconciled amount and authorized
amounts ranged from $1 to $100).

• At Clyde L. Choate Mental Health and
Developmental Center, auditors noted the Center
did not maintain the Patient Travel Trust Fund
in a local FDIC insured bank account as
required.  The fund was maintained in a cash box
in a locked cabinet and safe.  In addition, the
Center’s transfer of the remaining cash balance
in the fund was not remitted timely to the State
Treasury.  The fund’s balance was remitted 56
days late.

• At Rushville Treatment and Detention Facility,
auditors noted 4 of 4 (100%)  Reports of
Receipts and Disbursement for Locally Held Funds
(Form C-17) were not accurate.  In addition, the
facility did not maintain adequate segregation
of duties for the DHS Resident’s Trust Fund.
The same employee maintained the DHS Resident’s
Trust Fund records in addition to preparing the
deposits and delivering the deposits to the
bank.  Further, interest earned in the DHS
Resident’s Trust Fund was not allocated to
individual resident accounts for 2 of 12 (17%)
months during fiscal year 2013.

• At the Illinois School for the Deaf (School),
auditors noted exceptions for 2 different
locally held funds.  We found 4 of 12 (33%)
monthly fund bank reconciliations for the
DHS/DORS Agency Fund were not completed timely,
or within 30 days of month end.  Reconciliations
were performed between 12 and 103 days late.
Auditors also noted the same individual
responsible for authorizing locally held fund
disbursements was assigned to assume
recordkeeping duties of other accounting staff
in their absence.  This would allow the same
individual to authorize disbursements, write and
sign checks, post disbursements to the
accounting system, and prepare bank
reconciliations.  For the DHS/DORS Special
Revenue Fund, one of 24 (4%) bank
reconciliations tested were not performed on a
timely basis, or within 30 days of month end.
The bank reconciliation was performed 8 days
late.

Issues were also noted during our review of the
3 closed facilities as follows:

• Four of 32 (13%) and 18 of 24 (75%) Form C-17s
were not accurate at Jacksonville and Singer,
respectively.

• Eight of 32 (25%) Form C-17s did not utilize
proper cut-off reporting dates.  Cut-off dates
utilized were from 12 to 24 days after the end
of the quarter.  (Jacksonville)

• Eight of 32 (25%) interest income amounts
reported on the DHS Other Special Trusts Fund
Form C-17s did not appear reasonable or
consistent.  The interest income amounts accrued
between quarters ranged from $0 to $13,319.
(Jacksonville)

• Two of 32 (6%) Quarterly Activity Statements
were not accurate.  The third and fourth quarter
fiscal year 2013 Quarterly Activity Statements
each reported balances of $28,722 when both of
the amounts reported should have been $0.
(Jacksonville)

• The amount of cash on Singer’s bank
reconciliation did not agree with the amount on
the Form C-17.  Auditors noted unreconciled
differences ranging between $400 and $800
covering all four locally held funds.

• Twenty of 24 (83%) bank reconciliations
supporting Form C-17 were prepared between 17
and 39 days late.  (Singer)

• Twelve of 24 (50%) Form C-17s were completed
between 2 and 10 days late. (Singer)

• Auditors noted 7 unusual disbursements from
the DHS Other Special Trusts Fund.  The
disbursements included gas for a State vehicle,
fees for a resident’s eye exam, guardian mailing
fees, flashlights, late charges on an invoice,
and an IPASS transponder and tolls.  (Singer)

• Jacksonville did not preserve or was unable to
find records requested by the auditors: 45 of 67
(67%) bank statements, 67 of 67 (100%) bank
reconciliations, 64 of 67 (96%) months of
canceled checks, and a detailed listing of
disbursements from the DHS Rehabilitation Fund
from July 1, 2011 until the fund was closed.

• Singer did not preserve or was unable to find
records requested by the auditors:  supporting
documentation for outstanding checks and
deposits noted on Singer’s bank reconciliations
and 7 of 15 (47%) final disbursements to
residents from the DHS Resident’s Trust Fund,
totaling $4,763.

• Auditors noted Tinley Park was unable to
provide all requested locally held fund
documentation.  Therefore, the auditors were
unable to perform close-out procedures related
to locally held funds.  The Department provided
access to boxes of documentation pertaining to
the Center which were housed at Elisabeth
Ludeman Developmental Center.   The
documentation showed activity ceased at the
conclusion of fiscal year 2011 and restarted
during fiscal year 2013.  Department officials
indicated they were uncertain if the remainder
of the Tinley Park’s records had been sent
elsewhere within the Department.  (Finding 16,
pages 58-63)  This finding was first reported in
2009.

We recommended the Department develop,
implement, and monitor a training program for
all personnel involved in administering the
Department’s locally held funds to ensure
Central Office and facility staff are educated
of the requirements set forth in the statutes,
Statewide Accounting Management System  (SAMS),
and, as applicable, Department policies and
procedures related to these funds.

Department officials accepted the recommendation
and stated that facility staff will be trained
on specific requirements on the processing of
locally held funds per statutes, (SAMS) and
applicable Department policies and procedures
for all postings and fund reconciliations with
the bank statements.  (For the previous
Department response, see Digest Footnote #5).

WEAKNESSES IN CONDUCTING ANNUAL ELIGIBILITY
REDETERMINATIONS FOR KIDCARE (ALL KIDS)

During testing of 30 ALL KIDS case files,
auditors identified 17 (57%) case files where an
annual redetermination was not performed as
required.  Included in the 17 exceptions were 3
instances of passive redeterminations that
occurred during fiscal year 2012.  Department
personnel indicated the Department eliminated
the use of passive redeterminations in July
2012; however, the active redetermination
procedures did not become effective until
January 2013.  The passive redetermination
process included sending a form to the client
annually which is required to be completed only
upon changes to the client’s income.  In this
process, the Department assumed there were no
changes if a response was not received.  Passive
redeterminations were utilized for cases that
involved families where the only benefits
received by the children were medical benefits.
(Finding 36, pages 106-107)  This finding was
first reported in 2005.

We recommended the Department monitor the
transition of its eligibility redetermination
process to ensure all redeterminations are
performed on an active annual basis in
compliance with the Act.

Department officials accepted the recommendation
and stated they will continue to work with the
Department of Healthcare and Family Services to
review current processes for performing
eligibility redeterminations and consider
changes necessary to ensure all redeterminations
are performed within prescribed timeframes.
(For the previous Department response, see
Digest Footnote #6).

DUPLICATION OF MEDICAL ASSISTANCE ENROLLEES

We reviewed the Title XIX eligibility files for
fiscal year 2013, noting 29,684 Social Security
Numbers (SSN) had been assigned approximately
60,840 recipient identification numbers.
Recipient identification numbers are unique
identification numbers (Recipient IDs) that are
assigned to enrollees.  Specifically, we noted:

• 28,316 SSNs with two different Recipient IDs;
• 1,276 SSNs with three different Recipient IDs;
• 83 SSNs with four different Recipient IDs;
• 7 SSNs with five different Recipient IDs;
• 1 SSN with six different Recipient IDs; and
• 1 SSN with seven different Recipient IDs.

We identified overpayments for duplicative
capitation and coordinated care fee payments
made by the HFS totaling $192,432 in fiscal year
2013.  These payments were for individuals that
had more than one recipient identification
number in the eligibility data.  (Finding 37,
pages 108-109)

We recommended the Department implement controls
to ensure only one recipient identification
number is assigned to a social security
number/individual.

Department officials accepted the recommendation
and stated that they have a written policy that
includes instructions for assigning RINs that
aim to minimize duplication.  They also stated
they will continue to review and correct
duplicate IDs and to recover any improper
payments. Additionally, when the Integrated
Eligibility System is fully operational in 2015,
the Department expects improved controls that
will minimize the creation of duplicate IDs.

MEDICAL ASSISTANCE RECORDS NOT UPDATED TIMELY
FOR DECEASED INDIVIDUALS

The Department’s fiscal year 2013 records of
individuals eligible for participation in the
medical assistance program under Title XIX of
the Social Security Act included individuals
that were deceased according to the Illinois
Department of Public Health Vital Records data.

We identified 8,232 individuals for which the
Department of Public Health had a death record,
but were eligible for medical services.  Of the
8,232 deceased individuals with eligibility,
3,522 died prior to Fiscal Year 2013.  (We
recognized that the Department does not have
instantaneous access to death records, and for
the purposes of this finding, the 8,232 total
includes only those individuals still included
as eligible for medical services more than 60
days after their date of death.  The comparison
was based on an exact match of name, date of
birth, and Social Security Number.)

In our review of payment data, we noted the
following:

• $12.3 million was paid for capitation and fee-
for-service medical costs for 2,850 of the 8,232
deceased individuals.
• $11.4 million of the $12.3 million (93%) was
paid specifically for capitation arrangements.

• The $11.4 million was paid on behalf of 993
individuals whose date of death was more than 60
days prior to the payment date.

• 94 percent of the eligibility for the 993
individuals were aged, blind, or disabled.

The payments for capitation arrangements
occurring more than 60 days after death began to
increase on July 1, 2011, and have continued to
steadily increase through the last data we
received in connection with this testing, which
was October 2013.  As of October 1, 2013,
capitation payments were continuing to be paid
for 861 of the 993 individuals (87%) identified.
(Finding 38, pages 110-113)

We recommended the Department improve its system
of internal controls to ensure death dates for
current enrollees are entered timely.

Department officials accepted the
recommendation.  DHS and HFS stated they
prioritize program integrity and cancelling
ineligible cases, and have cancelled
approximately 57,000 cases in the past 2 years
due to the death of a recipient.  DHS indicated
they have several procedures in place in order
to delete and/or cancel deceased clients as soon
as possible.  Additionally, the Department
stated they have recently created an
Administrative Control Unit and are
investigating the sources of electronic
information available to ensure they have the
most accurate and current information available.

AUDITORS’ OPINION

The auditors stated the Department’s financial
statements as of June 30, 2013 and for the year
then ended were presented fairly in all material
respects.

A compliance examination of the Department was
also conducted as required by the Illinois State
Auditing Act.  The Accountant’s Report noted the
Department did not comply in all material
respects with requirements regarding applicable
laws and regulations, including the State
uniform accounting system, in its financial and
fiscal operations as well as requirements
regarding obligating, expending, receiving and
using public funds of the State.

WILLIAM G. HOLLAND
Auditor General

WGH:etl

SPECIAL ASSISTANT AUDITORS

Sikich LLP were our Special Assistant Auditors
for this engagement.

DIGEST FOOTNOTES

#1  -  WEAKNESSES IN PREPARATION OF GAAP
REPORTING FORMS AND FINANCIAL STATEMENTS –
           Previous Department Response

2012:  The Department agrees with the
recommendation. The Department will implement
procedures and cross-training measures to ensure
GAAP Reporting Packages are prepared in a
timely, accurate and complete manner. This will
include seeking or allocating sufficient staff
resources and the implementation of formal
procedures to ensure GAAP financial information
is prepared and submitted to the Office of the
Comptroller in a timely and accurate manner, and
that all supporting documentation is maintained
in a contemporaneous manner.

# 2 - WEAKNESSES OVER QUARTERLY REPORTING OF
ACCOUNTS RECEIVABLE - Previous Department
Response

2012:  The Department agrees with the
recommendation. The Department continues to
review the Accounts Receivable agency wide.
Based on the results of the review, we will
establish and implement any changes as solutions
occur.  DHS is in the process of consolidating
the financial reporting from the three Accounts
Receivable Systems. The Department will continue
to work with the appropriate parties regarding
any possible state-wide consolidated accounting
system initiatives.

#3  -  INADEQUATE COMPLIANCE WITH PROCEDURES FOR
DISPOSAL OF  CONFIDENTIAL INFORMATION  -
Previous Department Response

2011: Agree. The Department will ensure
confidential information is adequately protected
and that procedures for safeguarding, retention
and subsequent disposal of all confidential
information should be effectively communicated
to all Department personnel, including
facilities.

#4 - INTERNAL CONTROL WEAKNESSES IN THE HOME
SERVICES PROGRAM -
          Previous Department Response

2011: Agree. The Department will implement
additional controls regarding timekeeping
accuracy and reducing the caseload per
counselor.

#5 - INADEQUATE ADMINISTRATION OF LOCALLY HELD
FUNDS -
          Previous Department Response

2011: Agree. The Department will ensure that
facility personnel are reminded of the
requirements set forth within the statutes, the
Comptroller's SAMS Manual and Department
policies and procedures related to the operation
and maintenance of the locally held funds.

#6  -   WEAKNESSES IN CONDUCTING ANNUAL
ELIGIBILITY REDETERMINATIONS FOR KIDCARE (ALL
KIDS)-
Previous Department Response
2011:  Agree. The Department is currently
working with HFS (the state Medicaid Agency
responsible for revising the medical
redetermination process) to implement an active
eligibility redetermination process and require
eligibility redeterminations be completed on an
annual basis in compliance with the Act;
involving electronically verifying eligibility
through automated sources, effective July 2012.

The MIS request that eliminates the passive
redetermination process, and implements the
newly developed electronic renewal process has
been submitted. In addition, HFS is imposing new
integrity measures to aggressively review
client's continued eligibility as a result of
the SMART Act passed and signed into law in June
2012. This includes utilizing private vendors
with access to national databases to perform
enhanced eligibility checks of income and
residency as part of the redetermination
process. HFS is working on securing the vendor
and the development of detailed procedures for
vendors as part of the redetermination process.