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Review of Certain Aspects of the Implementation of Chapter 257 of the Acts of 2008 Objectives, Scope, and Methodology

An overview of the purpose and process of reviewing certain aspects of the implementation of Chapter 257 of the Acts of 2008.

Table of Contents

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 Executive Office of Health and Human Services (EOHHS) for the period July 1, 2015 through June 30, 2017.

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, if applicable, where each objective is discussed in the audit findings.

Objective

Conclusion

  1. Has EOHHS established an adequate rate-setting process in accordance with Chapter 257 of the Acts of 2008?

No; see Finding 1

  1. Did the Department of Developmental Services (DDS) adequately monitor providers of adult long-term residential services (ALTR)?

Yes

  1. Has the implementation of Chapter 257 improved the financial positions of providers and positively affected salaries for direct-care workers?

Partially; see
Initial Impacts

 

ALTR spending by DDS represented 41% of all expenses associated with contracts subject to rates set by EOHHS under Chapter 257 in fiscal year 2017. Based on its level of funding, we selected rates under DDS activity codes 3153 and 3753 promulgated under Section 420 of Title 101 of the Code of Massachusetts Regulations (CMR). Expenditures under these activity codes represented 97% of ALTR spending by DDS. The initial rate for this program was set in April 2014, making it one of the earliest rates set under Chapter 257.

To achieve our audit objectives, we gained an understanding of EOHHS’s internal control environment for the Chapter 257 rate-setting process by reviewing laws, regulations, policies, procedures, budgets, and other pertinent supporting documentation. We conducted interviews and observations with EOHHS management. In addition, we gained an understanding of DDS’s internal control environment related to monitoring service providers that were contracted to provide ALTR and had their contracts priced in accordance with Chapter 257. We also conducted interviews with DDS management.

Chapter 257 Rate-Setting

We obtained model budget worksheets supporting 55 out of 356 rates developed by EOHHS during the period July 1, 2015 through June 30, 2017 for the ALTR program. We reviewed the model budget rates for compliance with the Chapter 257 rate-setting process. We reviewed the rates for compliance with the public hearing and codification requirements of Section 13D of Chapter 118E of the General Laws. We also verified that the rates were approved by the Secretary of Administration and Finance, and we traced the approved rates to 101 CMR 420. We used nonstatistical methods in selecting our sample; therefore, we cannot project results to the population. 

DDS Provider Monitoring

We identified 89 ALTR providers that had received funding from DDS and had filed Uniform Financial Statements and Independent Auditor’s Reports (UFRs) from fiscal year 2010 through fiscal year 2017. From those 89 providers, we selected the 20 that received the most DDS revenue. We reviewed the ALTR program’s Request for Response, which was incorporated into the ALTR contracts, to determine the main performance monitoring objectives. We tested 20 DDS Provider Licensing Reports to determine whether DDS adequately monitored its contracted providers. We used nonstatistical sampling and therefore cannot project our results to the population.

Impact of Chapter 257 on Providers’ Finances and Direct-Care Wages

Using the UFR database maintained by the Operational Services Division (OSD), we obtained the net operating results of the providers and salaries for Direct Care I, II, and III6 employees for the 89 ALTR providers for fiscal years 2010 through 2017 to determine the effect of the implementation of Chapter 257 on providers’ finances and direct-care workers’ salaries. Using the UFR data for fiscal years 2010 through 2017, we calculated the average direct-care worker salaries for the three direct-care worker levels in the ALTR program.

In addition, we sent a questionnaire to all 89 providers to gain an understanding of their perspectives on the effect of the implementation of Chapter 257.

Data Reliability Assessment

For the rate-setting review, we obtained information from EOHHS, including ALTR UFR Excel worksheets containing service provider income, expense, and salary data. We determined the reliability of the data obtained by observing access and lockout controls at the EOHHS office in Quincy and by comparing EOHHS worksheet data to the OSD UFR database filings for agreement. We also assessed the validity, reasonableness, and completeness of the ALTR Excel worksheets using Audit Command Language software. We reviewed for duplicates, missing values, whether required values were populated correctly, and data outside the audit period. We obtained rate model budget Excel worksheets from EOHHS and completed a document inspection scan for hidden rows, columns, or worksheets. We determined that the data were sufficiently reliable for audit testing purposes.

For DDS provider monitoring, we obtained provider reports from the DDS website. To determine reliability, we verified that DDS had reports for all 89 ALTR providers on the website. We determined that the data were sufficiently reliable for audit testing purposes.

For the assessment of providers’ finances and direct care wages, we obtained UFR data from the OSD database on net operating income and direct care salaries from 2010 through 2017. We determined reliability by reviewing for blank fields and data outside the audit period. We determined that the data were sufficiently reliable for audit testing purposes.

6.    OSD’s UFR Audit & Preparation Manual defines Direct Care / Program Staff I employees as “Staff . . . who are responsible for the general daily care of program clients / service recipients.” Direct Care / Program Staff II and III employees have “experience or specific skills” and “significant experience, or specialized skills,” respectively.

Date published: May 8, 2019
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