Audit of the Catastrophic Illness in Children Relief Fund Objectives, Scope, and Methodology

An overview of the purpose and process of auditing the Catastrophic Illness in Children Relief Fund

Overview

In accordance with Section 12 of Chapter 11 of the Massachusetts General Laws, the Office of the State Auditor has conducted a performance audit of certain activities of the Catastrophic Illness in Children Relief Fund (CICRF) for the period July 1, 2017 through June 30, 2019.

We conducted this performance audit in accordance with generally accepted government auditing standards. Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives. We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objectives.

Below is a list of our audit objectives, indicating each question we intended our audit to answer, the conclusion we reached regarding each objective, and where each objective is discussed in the audit findings.

Objective	Conclusion
Does CICRF financially meet the needs of eligible applicants who have applied for financial assistance for qualified medical expenses by using sliding fee scales, as required by Sections 5(d) and 5(b) of Chapter 111K of the General Laws, in a timely manner?	Partially; see Findings 1 and 2
Does CICRF pursue and receive federal matching funds for qualified medical expenses in accordance with Section 10 of Chapter 111K of the General Laws?	No; see Finding 3
Does CICRF disburse funds to eligible applicants for qualified medical expenses in accordance with its “Eligibility Policy” and “Expense Policy”?	Partially; see Finding 1

 

To achieve our objectives, we gained an understanding of the internal controls we determined to be relevant to the objectives by reviewing original source documents; conducting inquiries with CICRF officials; and reviewing CICRF’s internal controls and applicable laws, regulations, and agency policies and procedures.

We reviewed and tested the effectiveness of internal controls related to the processing of applications. Specifically, we performed control testing to verify that the CICRF director or secretary/treasurer signed each expenditure approval before reimbursement and that CICRF met to review specific cases to determine whether the medical expenses incurred by families were necessary and reasonable before approving them for reimbursement.

To obtain sufficient, appropriate evidence to address our audit objectives, we conducted further audit testing as described below.

Sliding Fee Scales

To determine whether CICRF calculated reimbursements using sliding fee scales, we reviewed applicable state laws and regulations and other authoritative guidance. These require reimbursement amounts for medical expenses to be based on a sliding fee scale, which in turn is based on a family’s income, size, assets, and medical expenses. We selected a random, nonstatistical sample of 60 of the 363 unique cases for which CICRF made reimbursements during the audit period. We first determined whether expenses in the sample were for vehicle purchases, vehicle modifications, home modifications, or whole house generators. We determined each family’s federal poverty level (FPL) percentage and expense amount, and used these determinations to verify the family was reimbursed the proper amount based on the appropriate sliding fee scale. For all other expense types, we determined whether the family’s FPL percentage was greater than, or less than or equal to, 800%. If it was above 800%, we determined whether or not the family had assets greater than or equal to $1 million. In such a case, the family should be reimbursed for only 90% of its qualified medical expenses. Using our determinations, we verified that the families were reimbursed the proper amount based on CICRF’s general sliding fee scale.

Timeliness of Application Processing

To determine whether CICRF processed applications in a timely manner, we selected a random, nonstatistical sample of 60 of the 363 unique cases for which CICRF made reimbursements during the audit period. For these cases, we analyzed the time from the date the application was received to the date the application review process began; from the date the application review process began to the date CICRF approved the reimbursement; and finally from the date the application was received to the date CICRF approved the reimbursement. Using these analyses, we calculated the average days between all parts of the application process for the cases in the sample.

Federal Financial Participation

To determine whether CICRF pursued federal matching funds for qualified medical expenses, we reviewed applicable state laws and regulations and other authoritative guidance that require CICRF to obtain federal matching funds for reimbursed medical expenses. We met with CICRF officials to determine whether CICRF pursued federal financial participation (FFP). We learned that CICRF did not pursue FFP, so we quantified the dollar amount that could have been recovered if it had done so. We identified all applicants who were insured by MassHealth. We reviewed the types of medical expenses CICRF reimbursed to those who were insured by MassHealth during the audit period. We analyzed the reimbursements to identify and quantify those that were eligible for FFP.

Eligibility

To determine whether CICRF verified age and residency eligibility, we selected a random, nonstatistical sample of 30 of the 363 unique cases that resulted in reimbursements during the audit period. For this sample, we reviewed the case files to verify each applicant’s eligibility in two ways. First, we reviewed documentation confirming the child’s date of birth to determine whether the child was 21 years old or younger on the dates of service. Second, we reviewed documentation confirming that the family and the child were Massachusetts residents.

To determine whether CICRF verified income eligibility, we selected a random, nonstatistical sample of 30 of the 363 unique cases that resulted in reimbursements during the audit period. For each sampled case, we reviewed Internal Revenue Service W-2 forms, tax returns, Social Security income, State Supplement Program³ payments, pay stubs, and other documentation to determine whether CICRF obtained sufficient, appropriate documents to determine family income. We reviewed expense documentation to determine whether medical expenses qualified for reimbursement and were more than 10% of each family’s gross annual income up to $100,000 and, when appropriate, more than 15% of each family’s gross annual income above $100,000.

Data Reliability Assessment

CICRF maintains a Microsoft Access database to track cases throughout the application review process. CICRF employees manually enter information in this database when they begin the review process. Once an application has been deemed eligible and the reimbursement has been approved, CICRF employees update the database to include the payment information.

To gain an understanding of the Microsoft Access database and its controls, we interviewed CICRF personnel. To assess the reliability of the data provided to us from the database, we performed the following procedures. We traced a random, nonstatistical sample of payment information for 30 cases to information in the Commonwealth Information Warehouse.⁴ We verified that the data did not contain blank records, duplicates, or dates outside the audit period. We also verified that it contained necessary data fields. We traced key information from a random, nonstatistical sample of 30 cases to hardcopy case files to verify the accuracy and completeness of the database. We determined that the data in CICRF’s database were sufficiently reliable for the purposes of our audit.

We used nonstatistical sampling methods for our audit objectives and did not project the sample results to any of the population.

3.    According to the website of the Massachusetts Department of Transitional Assistance, “the State Supplement Program (SSP) is a state cash benefit program for qualified Massachusetts Supplemental Security Income (SSI) applicants. SSI provides monthly payments to eligible, low-income individuals who are 65 or older, blind, or disabled. Massachusetts provides additional payments called the State Supplement Program (SSP).”

4.    The Commonwealth Information Warehouse contains budget, human resource, and payroll information as well as financial transaction data from the Massachusetts Management Accounting and Reporting System.

Date published:	April 20, 2022