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The Executive Office of Health and Human Services Has Not Established Policies and Procedures Regarding the Rate-Setting Process for Programs Subject to Chapter 257 of the Acts of 2008.

In its response, EOHHS agreed with the audit findings and indicated it will develop written policies and procedures for rate-setting for human service programs.

Table of Contents

Overview

The Executive Office of Health and Human Services (EOHHS) has not established policies and procedures documenting how rates are developed for human-service providers’ contracts under Chapter 257 of the Acts of 2008. As a result, there is no assurance that a consistent method is used to develop the rates paid to human-service providers. In addition, the lack of policies and procedures could make it difficult for new EOHHS staff members assigned to the rate-setting task to understand the method they should use.

Authoritative Guidance

Section 13D of Chapter 118E of the Massachusetts General Laws requires EOHHS to have a documented process regarding the establishment of reimbursement rates for human-service providers, stating that it “shall promulgate rules and regulations for the administration of its duties and the determination of rates.”

Reasons for Issue

EOHHS asserts that it follows the statutory requirements for setting rates in accordance with Chapter 257; however, it did not have a policy in place during our audit period to establish a formal rate-setting process for programs subject to Chapter 257. Specifically, EOHHS’s legal counsel wrote, in an email to us dated January 18, 2019,

In establishing social service program rates pursuant to the provisions of Chapter 257 of the Acts of 2008, EOHHS adheres to statutory requirements for promulgating regulations and regulatory amendments, and relies on the rate regulations themselves as a basis to obtain information by which rates are established. Specifically, M.G.L. c. 118E, section 13D, requires that rates for social service programs be established after public hearing. M.G.L. c. 30A requires a process by which regulations must be promulgated; and M.G.L. c. 30A, Section 2, details the procedures for promulgation of regulations after public hearing. Additionally, the Secretary of the Commonwealth publishes a regulations manual that provides rules of process in line with M.G.L. c. 30A, which EOHHS follows when promulgating rate regulations. As part of this promulgation process, EOHHS publishes a notice of public hearing containing a description of how proposed rates were developed. Further, at public hearing, EOHHS provides information in staff testimony detailing how each proposed rate was developed or updated.

With regard to the development of proposed rates, EOHHS follows the statutory requirements at M.G.L. c. 118E, sections 13C and 13D, related to the elements required to be considered in developing social service program rates. Specifically, EOHHS takes into account costs of applicable governmental mandates, relevant cost adjustment factors as appropriate, and applicable geographical differences. Additionally, as noted above, the social service program rate regulations contain provisions related to cost reporting requirements. The regulation at 808 CMR 1.00, a regulation promulgated by the Operational Services Division (OSD), provides detailed cost reporting standards and requirements attributable to human and social service providers, and which is referenced in the cost reporting requirements within the EOHHS rate regulations. These cost reporting requirements apply equally to all social service program providers, and enable EOHHS to establish rates of payment adequate to compensate for costs incurred by efficient and economically operated providers in line with statutory obligations.

Recommendation

EOHHS should establish written policies and procedures for the rate-setting process.

Auditee’s Response

EOHHS agrees with the recommendation and will develop written policies and procedures on or before July 1, 2019, for its existing process for establishing rates for social-service programs.

Auditor’s Reply

Based on its response, EOHHS is taking measures to address our concerns in this area.

Date published: May 8, 2019
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