HomeMy WebLinkAboutMental Health - Contracted services and business practicesReport# 04/05 - 6 (Dated June 2, 2005)
MENTAL HEALTH DEPARTMENT-
Review of Business
and Contracting Practices
Presented to the
Deschutes County Audit Committee
by the
Internal Audit Program
David Givans, CPA – County Internal Auditor
Report# 04/05 - 6 Dated June 2, 2005
Deschutes County,
Oregon
Report# 04/05 - 6 (Dated June 2, 2005)
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Report# 04/05 - 6 (Dated June 2, 2005)
To: Audit Co mmittee
CC: Mike Daly, Tom DeWolf
From: David Givans, Count y Internal Auditor
Subject: Internal Audit Report on the Mental Health Department (Report #04/05-6)
Date: June 2, 2005
The enclosed audit report provides informat ion concerning the business pract ices of the Mental
Health Depart ment as it relates to contracting and operations. Informat ion contained in this reports
is fro m interviews, analyses and observat ions performed.
Many o f the necessary internal controls are in place and management and staff are to be
commended. Opportunit ies for improvement have been ident ified. A summary of the significant
findings and recommendat ions is provided in the Execut ive summary.
Audit results have been discussed with the Mental Health Director and staff. Management’s
response is included at the end of this report and addresses the findings and recommendations.
The staff and management of the Mental Healt h Department were cooperative and responsive
during our review. Ray Wingert with Informat ion Techno logy, who maintains their computerized
business systems, was integral to obtaining data from these systems for analysis.
Deschutes County,
Oregon
Internal Audit Program
David Givans, CPA
County Internal Auditor
Deschutes Services Center
1300 NW Wall St., Suite 200
Bend, OR 97701
Phone: 541-330-4674
Fax: 541-385-3202
davidg@co.deschutes.or.us
Report# 04/05 - 6 (Dated June 2, 2005)
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Report# 04/05 - 6 (Dated June 2, 2005)
MENTAL HEALTH DEPARTMENT -
Review of Business
and Contracting Practices
TABLE OF CONTENTS:
EXECUTIVE SUMMARY
1. INTRODUCTION
1.1. Background ……………………………………………………………………… 1-2
1.2. Object ives and Scope …………………………………………………………….... 2
1.3. Methodology …………………………………………………………………..… 2-3
2. FINDINGS – Follow-up on prior recommendation
2.1. Controls ………………………………………………………………………….. 3-5
3. FINDINGS – Business Practices
3.1. Controls …..…………………………………………………………………….. 5-10
3.2. Laws, Regulat ions, and Count y Policies ……………………………………… 10-12
3.3. Performance …………………………………………………………………... 12-21
3.4. Requires Addit io nal Information ………………………………………….….. 21-22
4. FINDINGS – Contracting Practices
4.1. Controls ………………………………………………………………………....... 22
4.2. Laws, Regulat ions, and Count y Policies …………………………………..….. 22-24
4.3. Performance ………………………………………………………………...… 24-25
5. RESPONSE FROM MANAGEMENT ………………………………………. 26-27
Report# 04/05 - 6 (Dated June 2, 2005)
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Report# 04/05 - 6 (Dated June 2, 2005) i
MENTAL HEALTH DEPARTMENT –
Review of Business and Contracting Practices
Report# 04/05 - 6 (Dated June 2, 2005)
EXECUTIVE SUMMARY
Purpose
As approved by Deschutes County’s Audit Committee, a review was conducted on business
practices regarding operations and contracts of the Mental Health Depart ment. Within
operations, revenue was given the most attention. Information contained in this reports is fro m
interviews, analyses, and observat ions performed. The purpose of the audit is to assist
management and staff in improving their business and contracting practices.
Results in brief
Audit findings result from incidents of non-co mpliance with stated procedures and/or
departures from prudent operation. The findings are, by nature, subject ive.
Many o f the necessary internal controls are in place. Opportunit ies for improvement have been
ident ified. The fo llowing highlights the significant findings presented to management for
consideration in a summarized format. The significant findings and a partial excerpt of the
associated recommendat ions include:
FOLLOW-UP ON PRIOR RECOMMENDATIONS
Receipts are not timely deposited or reconciled to Finance’s records
It is reco mmended that Mental Health staff deposit all mo nies received wit hin 24 hours. One
suggested solut ion is to account temporarily for deposited items by using a “clearing” account.
It is reco mmended that staff responsible for billing and writ ing-off o f billed balances should not
also be responsible for the collecting and receipting of mo nies. In order to properly segregate
duties and provide for a timelier deposit ing of monies, it is reco mmended
- For reception staff - log all payments received by mail, receipt all mo nies paid in
person, restrict ively endorse any checks, provide a copy of any checks and support to
the accounts receivable person, and deliver daily all mo nies and a copy of the payment
log to the person responsible for the night deposit.
- For the person responsible for the night deposit (not the A/R clerk) - compare the
mo nies received to the receipt log and receipts entered in the co mputerized business
system. Staff should reconcile the summary of deposits to the County’s financial
reports.
- For a supervisor– periodically, compare the deposit receipts to the payment log and the
underlying accounting.
Report# 04/05 - 5 (Dated June 2, 2005) ii
BUSINESS PRACTICES
Clinicians’ failure to use appointments in computerized business system
results in inefficiencies
It is reco mmended that appropriate mental healt h staff maintain their appoint ments on the
computerized business system. Recept ion staff should have the abilit y to add, move and delete
appoint ments in the system. A possible recommendation for capturing new appoint ments is for
clinicians to use an appoint ment tablet (in triplicate) where clients can be provided a ticket
indicat ing their next appoint ment, a copy provided to the reception staff for entry (if the
clinician has not already put the appoint ment in the system) and a copy to be retained by the
clinician.
Direct services by clinicians as measured by billed services seems low
It is reco mmended the Department consider increasing the productivit y standard it needs fro m
staff to configure operations. The Department should be more invo lved in establishing
performance standards for staff and what constitute creditable hours in the calculat ion of
performance standards.
No procedures to account for all service tickets
It is reco mmended for the Department to develop a process to track and obtain service t ickets
for all clients provided with services. The system should co mpare appoint ments to service
tickets received to make sure all services are entered. It is recommended for Department
management to establish performance standards for the turning in o f service tickets and
mo nitor for open tickets.
Coordinated effort needed to collect on service billings
It is reco mmended the Department should assess to what extent it can or will pursue collect ion
of charges and develop a collect ion policy and procedures in line wit h that assessment. Policies
and procedures should establish performance standards for effect ive billing and co llect ion of
services. It is reco mmended that staff Department staff developed so me commo n codes to
ident ify the main reasons why insurance and customers do not pay. Addit ional reports need to
be developed to monitor the reasons provided for non-payment by payor.
Clients not required to provide support for reduced fees
It is reco mmended the Department consider requiring support for informat ion used to establish
reduced client fees. This might include inco me tax returns or pay stubs. It is reco mmended for
Report# 04/05 - 5 (Dated June 2, 2005) iii
the Department to consider updating their fee schedule on an annual basis.
Recovery from Medicare may be improved
It is reco mmended the Department have clinicians providing services to Medicare clients and
with appropriate licensing, be required to obtain their Medicare provider number. It is
recommended the Department consider a practice of assigning Medicare clients to the
clinicians with Medicare provider numbers. It is recommended the Department consider
requiring contracted psychiatrists and nurse practitio ners obtain Medicare provider numbers if
they are working for the County.
Coordinated oversight needed over professional service providers
It is reco mmended for the Department to develop a performance standard (such as % direct ly
chargeable services) with providers so administrative time can be kept to a minimum. It is
recommended for the Department within their co mputerized business system to develop reports
by physician and nurse practit ioner covering those performance standards. The reports should
be date sensit ive so service hours could be co mpared to billings by those service providers.
Frequency of insurance billings could be improved
It is reco mmended for the Department to consider establishing guidelines for the frequency o f
billings. Staff indicated they wanted to bill twice a month.
Lack of security awareness over computers
It is reco mmended the Department reinforce policies aimed at computer securit y. Staff should
utilize passworded screen savers and or log out if not present at their computer. It may be
possible for workstations used by mult iple staff to be setup so the transit ion between users can
be done quickly.
Department does not have appropriate approvals for change and petty cash
funds
It is reco mmended for the Department to obtain a formal reso lut ion for the type, amount, and
locat ion of the cash it uses in its operations. These amounts should be assigned to a specific
custodian, secured when not in use, and periodically counted and accounted for by a supervisor.
Manual receipts do not conform to County Policy
It is reco mmended the Department obtain receipt books conforming to County po licy. Fro m
Report# 04/05 - 5 (Dated June 2, 2005) iv
discussio ns with staff, it appears the receipt book should be in triplicate so one can be provided
to the customer, one can be retained, and one can be provided to the business office wit h the
mo nies. The business office should track the receipt numbering to assure that they have
received mo nies for all o f the receipts issued.
Written accounting policies and procedures concerning duties of staff are
insufficient
It is reco mmended Department document its account ing policies and procedures. The
procedures should emphasize the areas of monitoring, supervision and segregat ion of dut ies.
The development of Mental Health’s computerized business software
requires more oversight
It is reco mmended the programmer establish adequate tests for their changes to make sure they
are operating as planned. It is recommended the Mental Health Depart ment periodically review
their software needs and consider whether the internal so ftware is the best cho ice for their
operations. Wit h advances in software design, it is possible there are pre-developed packages
that could be used. If the internally developed software continues to be used, it is
recommended the system be improved so it can be sufficient for staff to use without significant
invo lvement of the programmer. This would include operations manual and documentation so
staff can resolve issues and process needed reports.
Use of computerized business system reports needs improvement
It is reco mmended staff develop procedures to provide oversight of the Department's act ivit ies
as maintained in the co mputerized business system. Some of the procedures ident ified include:
· Analysis of time lag for receipt of service tickets;
· Summary o f total services provided, billed, and paid;
· Summary o f accounts receivable collections and adjust ments; and
· Except ion reports identifying problems wit h client balances and activit y.
Clinician submits invoices on behalf of vendors
It is reco mmended that County staff should not originate invoices or other documents for non-
County ent ities. It is also important that County staff do not authorize documents they prepare.
It is further recommended that County staff discard letterhead for these outside organizat ions
and not issue any documents on their behalf.
Report# 04/05 - 5 (Dated June 2, 2005) v
CONTRACTING PRACTICES
Contract files are incomplete and unorganized
It is reco mmended the organizat ion of contracts be improved. Suggestions include:
· making sure there is a master log of all contracts wit h the department
· maintaining all contracts in a central location (provide for a checkout system so the files
can be used by staff)
· organizing contracts by t ype (revenue or expenditure) and then alphabetically.
· removing expired contracts to a separate part of the fo lder, fo lder or area
· developing a “summary sheet” for each contract file
Oversight of service providers could be improved
It is reco mmended the Department visit with providers, especially under new contract
arrangements, near the beginning of the contract to make sure the work is being performed in
accordance with the contract. Potential areas of monitoring should be ident ified in advance.
The Department should detail how things are to be documented and supported before payment.
Lease deposits not utilized at end of lease term
It is reco mmended for the County’s Property and Facilit y Director to follow-up on the recovery
of these monies from the lessor of the property. It is reco mmended the Department in their
lease files ut ilize a cover sheet ident ifying significant items that need to be resolved before,
during or at the end of the lease such as deposits, prepaid rent and property tax exempt ions.
County insurance requirements not always fulfilled before contracts are in
place
It is reco mmended the Department fulfill all insurance requirements as required by legal and
fo llo w the procedures as outlined by Risk Management. The insurance cert ificates or other
documentation should be maintained in the vendors’ contract file and the associated renewal
dates, if the certificate expires before the end of the contract.
Services continue after expiration of contracts
It is reco mmended for the Department to monitor the expiration dates of their contracts. One
suggest ion is utilizing a contract log with pertinent informat ion for following up on contracts.
One suggest ion that came out of meet ings with the business managers was to put one-year
extensio n clauses into contracts to simplify the renewal process.
Report# 04/05 - 5 (Dated June 2, 2005) vi
Privacy Officer suggests use of business associate agreements
It is reco mmended the Department review with the Privacy Officer those potential service
providers could be classified as business associates for HIPAA purposes. The Department
should then fo llow the Privacy Officer’s guidance and Legal Counsel in obtaining appropriate
agreements to assure HIPAA compliance.
REQUIRES ADDITIONAL RESEARCH
Should “flex fund” monies be loaned?
It is reco mmended the Department determine the appropriateness of requesting repayment fro m
OHP clients of “flex funds” provided by ABHA. If it is not appropriate, they should notify
these clients so there will be no misunderstanding. If these truly are loans, they should be
accounted for and managed as loans.
Report# 04/05 - 6 (Dated June 2, 2005) Page 1
1. INTRODUCTION
1.1 BACKGROUND
Audit Authorit y:
As approved by Deschutes County’s Audit Committee, a review was conducted of the business
and contracting practices for the Mental Healt h Department. The Audit Committee authorized
the audit by its approval of the Count y’s internal audit workplan for fiscal year 2004/2005.
Purpose of Audit:
The audit object ives were identified through discussio ns wit h Mental Health Management. The
focus was on business practices regarding operations and contracts. Within operations, revenue
was given the most attention. This report includes managements’ response to these
recommendat ions.
Internal Controls:
County government is responsible for using public assets and public funds in a prudent and
responsible manner. County managers in turn are responsible for developing and maintaining
procedures to protect public assets and promote efficient and effect ive services. These
procedures and the environment promoted by management are called internal controls.
Management is ult imately responsible for implement ing appropriate internal control systems.
Effect ive internal control provides reasonable assurance of achieving the fo llowing object ives:
1. Effect iveness and efficiency of operations.
2. Reliabilit y of reporting information.
3. Compliance with applicable laws and regulat ions.
Effect ive internal controls minimize the potential for errors and/or irregularit ies to occur. If they
do occur, effect ive internal controls detect such errors and/or irregularit ies in a t imely manner
during the normal course of business.
Contracts
Most County business relat ionships are enumerated by contract. This results in a significant
level of administration. The Department is concerned wit h these issues and is looking to better
handle these arrangements.
Mental Health Depart ment Informat ion
The Mental Healt h Department is separated into three funct ional groups
- Adult treatment
- Children and family, and
- Developmental disabilit ies.
These areas are handled by specific program managers. Each group has their own resources,
challenges and utilizes the computerized business systems to varying extents. The business
office has a business manager and team to support the underlying needs o f the Department.
Report# 04/05 - 6 (Dated June 2, 2005) Page 2
The Mental Healt h Department operates on a 14 millio n dollar budget and emplo ys so me 87 Full
Time Equivalent (FTE) emplo yees. A significant amount of their funding co mes fro m state
sources.
1.2 OBJECTIVES and SCOPE
Audit objectives:
The object ives of the audit were:
1. To review the business practices emplo yed by the business o ffice primarily over
revenues.
2. To review contracting procedures and files.
3. To evaluate compliance wit h Federal, State or Count y regulat ions and requirements, as
ident ified.
Opportunities for increased efficiency and effect iveness were included in the recommendat ions
when applicable.
Scope:
Fieldwork and observat ions were made during the normal course of business (in November 2004
through April 2005). Analysis of revenue data focused on billed and co llected services for 2004.
The review of the systems of internal control system was limited to observations of procedures
observed or described by staff. The review procedures were not extensive enough to provide an
overall conclusio n as to the effect iveness o f the internal control system for the Mental Healt h
Department.
1.3 METHODOLOGY
The audit involved gaining an understanding o f the control environment as described by
management and staff during interviews. Relevant evidence was obtained through observat ion
and interviews. This review is, by nature, subject ive.
Audit procedures included:
· Researched and fo llowed up on prior audit recommendat ions made to Mental Health.
· Developing an understanding of Mental Healt h Department issues through review of
audit reports and associated recommendations issued by other local governments.
· Analyzed and reviewed budgetary and financial informat ion.
· Developed an understanding of the business systems (manual and co mputerized) through
interviews wit h front desk attendants, departmental management and other staff.
· Assessment of key internal controls.
· Observations of actual transact ions and procedures to see how the procedures were being
performed.
· Select ive testing of client files for services billed and fee assessment documentation.
· Analyses of underlying billed service data including (but not limit ed to) billed services,
comparison of receipts to deposits, and recovery by payor.
· Analysis of clinician schedules to services billed.
· Comparison o f BOCC contract documents and department files of contracts.
· Reviewed contracts for insurance certificates meet ing Count y requirements.
Report# 04/05 - 6 (Dated June 2, 2005) Page 3
The audit was conducted in accordance with Government Auditing Standards issued by the
Comptroller General of the United States.
2. FINDINGS – Follow-up on Prior Recommendations
During the course of this audit, three prior external audit recommendat ions were identified. Two
of the findings have been sufficiently addressed by management. The most recent of these
findings is noted as still being an issue for the Department.
2.1 Controls
Receipts are not timely deposited or reconciled to Finance’s records
In September 2000, the external auditors (Donanca, Battleson & Co LLP) identified in their letter
to management that the Mental Healt h Department was not making daily deposits with the
County Finance office. They observed deposits during 1999-00 fiscal year were being made
weekly, or once every two weeks. In addit ion, the Department was not preparing a monthly
summary report and reconciling it to the Finance mo nthly reports. They reco mmended deposits
be made daily, in accordance with Count y procedures and reconciled to Finance reports.
Management’s response to these recommendat ions indicated that the Department’s new business
manager would be working on so lutions to these issues. There was no indication of how this was
addressed in the subsequent external audit by Moss Adams.
Age from Receipt to Deposit by month - 2004
11
6
3
6
8
5
3 3
6
3
6
4
5
1
1
1
1
1
0
2
0
1
1
0 5
1
0
2
4
6
8
10
12
14 1 2 3 4 5 6 7 8 9 1 0 1 1 1 2 A V E R A G E
Month (2004)
D a y s t o d e p o s i t
Avg. Age to deposit
Avg. Age to post
An analysis o f 2004 data confirmed continuing delays in deposits as was noted in the prior
recommendat ion. On average, it is taking over 6 days to deposit receipts. The age to post is the
days from receipt of payment until the account ing is determined. The age to deposits is how long
Report# 04/05 - 6 (Dated June 2, 2005) Page 4
fro m the time of posting to the time Finance receives the monies.
A number of observat ions came out of the analysis:
· Average age fro m receipt to posting o f accounting is 5.3 days (shown on chart)
· Average age fro m account ing to making of deposit is 1.2 days (shown on chart)
· Receipts were deposited in greater than 1 day 80% of the time.
· Wit hin two weeks, 90% of the receipts and value were deposited.
· The average time it took to make deposit was nearly five days longer for receipts received
on a Friday.
· Nearly 20% o f the receipts are not being deposited at the time a deposit is made.
Descript ion of current system of processing receipts
Front desk staff open the mail for the Department. Checks are not restrict ively endorsed or
logged for fo llow-up. Most receipts are routed through the mailroom to the accounts receivable
clerk for posting. The accounts receivable clerk then posts the checks against specific customer
services. Somet imes addit ional research is required to enter the receipt. Checks coming in fro m
large insurance providers often affect numerous client accounts. After posting, the Mental Healt h
computerized business system is then able to provide a detail account ing of the receipts by
associated revenue line item. The posted receipts are then provided to a staff person responsible
for preparing the deposit. The receipt and deposit of monies usually does not occur in the same
day. Deposits are normally taken to Finance.
The weakness in this approach is that monies are delayed fro m being deposited by the underlying
accounting. An addit ional weakness, discussed later, is having the accounts receivable person
receive mo nies.
County po licy (P-1999-075) requires all mo nies received to be deposited within 24 hours with
the Treasurer’s Office or the Bank.
Delaying deposits provides the opportunit y for monies to be misappropriated. During the audit,
some $27.75 in unposted receipts fro m June and December were ident ified as missing. These
receipts had been un-deposited for a relatively lo ng period and had not been addressed by
supervisory staff. Since these mo nies have been missing for such a long time it is not clear what
happened.
It is recommended that Mental Health staff deposit all monies received within 24 hours. The
monies can be deposited with one of the County’s Banks, if staff cannot make it to Finance.
One suggested solution is to account temporarily for deposited items by using a “clearing”
account. The use of a “clearing” account requires an accounting be provided that matches
with the deposits so the “clearing” account is zeroed (cleared) out. Initial discussions with
Finance have indicated this can be done if Mental Health will clear-out the clearing account
on an ongoing basis.
In order to properly segregate duties and provide for a timelier depositing of monies, it is
recommended
- For reception staff - log all payments received by mail, receipt all monies paid in
person, restrictively endorse any checks, provide a copy of any checks and support to
Report# 04/05 - 6 (Dated June 2, 2005) Page 5
the accounts receivable person, and deliver daily all monies and a copy of the payment
log to the person responsible for the night deposit.
- For the person responsible for the night deposit (not the A/R clerk) - compare the
monies received to the receipt log and receipts entered in the computerized business
system. Staff should reconcile the summary of deposits to the County’s financial
reports.
- For a supervisor– periodically, compare the deposit receipts to the payment log and the
underlying accounting.
It is recommended the Department consider improvements to the Departments computerized
business systems to track the handling of received monies before they can be posted to specific
clients.
3. FINDINGS – Business practices
3.1 Controls
No procedures to account for all service tickets
The Department’s co mputerized business system cannot track and fo llow-up on outstanding
service tickets with clinicians. Department procedures for handling client services do not include
any methods to track the receipt of service tickets from client appointments. An analysis of
appoint ments (which is limited since not all clinicians use the system) compared to entered
service tickets indicated potential missing service tickets in the range of 4%-7%.
Services should be tracked sufficient ly to assure the service t ickets are submitted.
If service t ickets are not turned in, encounter data is understated and billings are understated.
This will likely reduce mo nies co ming into the Department from insurance, clients and the State.
The potential impact could be significant to the Department. An audit performed by ABHA in
2003 identified a 6% error rate for encounters in chart but not in the County’s encounter data.
It is recommended for the Department to develop a process to track and obtain service tickets
for all clients provided with services. One possibility is to assign each client a service ticket on
arrival. Open service tickets should be tracked until they are entered. The system should
compare appointments to service tickets received to make sure all services are entered.
It is recommended for Department management to establish performance standards for the
turning in of service tickets and monitor for open tickets. For clinicians who provide services
outside of the clinic, there should be some quick method of identifying the client and the date
seen on a log so that these expected service tickets can be entered into the system and the
service tickets followed up on by separate staff.
Report# 04/05 - 6 (Dated June 2, 2005) Page 6
Clients not required to provide support for reduced fees
Staff setting reduced fees for clients are not required to obtain proof of monthly gross inco me or
number of dependents. Staff obtain written representations fro m clients on gross monthly
inco me and number of dependents. Most of the client files reviewed did not have any support
for the gross inco me or number of dependents indicated. The Department utilizes client
provided informat ion to assess charges based on abilit y to pay based upon the sliding fee
schedule. The fee schedule (based upon poverty guidelines) was last updated in 2003. There
was no indicat ion that longer-term clients have had their fees revisited for changes in their
situation.
Total fees co llected direct ly fro m clients in 2004 amounted to nearly $12 thousand
(approximately 32% of services billed). If the Department truly wants to assess and co llect
reasonable fees they should make sure they have a supportable basis for the monthly gross
inco me and number of dependents such as pay stubs or inco me tax returns.
It is recommended the Department consider requiring support for information used to
establish reduced client fees. This might include income tax returns or pay stubs. Patients
granted a reduced fee should be re-evaluated every year to determine if the patient’s situation
has changed or when a patient indicates a change in his or her income level. It is
recommended for the Department to consider updating their fee schedule on an annual basis.
Segregation of duties in collection system could be improved
It was noted the accounts receivable clerk who is responsible for billing and collect ions was also
responsible for establishing fees, collect ing monies, the init ial posting of receipts, and the write-
off of account balances. Other business office staff responsible for billing contracts receivable
also are responsible for receipting the money and handling the deposit of those monies.
Duties should be sufficient ly segregated so no one person is responsible for receiving,
reconciling, deposit ing mo ney and posting payments. The write-off o f account balances should
be reviewed by another authorized staff person. Adequate documentation should be retained to
support all adjust ments.
Wit hout segregation of duties and sufficient oversight, monies could be missing and they would
not be ident ified in a timely manner, if at all.
It is recommended that staff responsible for billing and writing-off of billed balances should
not also be responsible for the collecting and receipting of monies. The recommendations set
forth in the response to the prior year recommendation (Section 2.1) should establish
sufficient segregation of duties to resolve this issue.
It is also recommended that a supervisor periodically review adjustments to billed accounts.
Report# 04/05 - 6 (Dated June 2, 2005) Page 7
Written accounting policies and procedures concerning duties of staff are
insufficient
There are few current written account ing policies and procedures in the Mental Healt h
Department.
Communicat ion is an essent ial co mponent of internal controls. Written policies and procedures
are effect ive for controls. Well-designed and maintained po licies and procedures enhance
accountabilit y and consistency. The result ing documentation is also useful for training and
cross-training personnel.
The lack o f comprehensive written accounting procedures can lead to inadequately planned
controls, inadequate supervisio n, poor and inadequate training, and lack of adherence to stated
control procedures.
Some areas within the Department have worked to developed dome written procedures.
It is recommended Department document its accounting policies and procedures. The
procedures should emphasize the areas of monitoring, supervision and segregation of duties.
These policies and procedures should be available to all employees and should include, in
detail, the responsibilities of each employee.
The development of Mental Health’s computerized business software requires
more oversight
The computerized business system for handling the Mental Healt h Departments operations was
developed internally. Staff rely heavily on one programmer to assess issues wit h the system on
an ongo ing basis. Software changes are often implemented direct ly to the operational system.
Informat ion Techno logy has no process for reviewing software changes by programmers and
documentation of so ftware is limited. There are no software operation manuals.
During the review of the County’s Strategic Informat ion Techno logy Plan in September 2000,
PTI recommended a strategy of transit io ning o ff the current mainframe operating environment
over the long term. The County’s Strategic Information Techno logy Plan called into question the
County’s abilit y to sustain the custom developed software. The Department should consider the
cost and impact of continuing improvements to internal so ftware.
A 2003 informat ion securit y review also ident ified a low-level risk wit h Count y software change
controls. The review indicated the County should improve the change management process to
make improvements to internally developed so ftware.
If internal so ftware development continues, changes should be tested to assure the changes do
not negat ively influence other processes. The Count y has co mputers available to test new
applicat ions.
Wit hout sufficient review of software changes, there can be problems. One programming
change resulted in duplicate and incorrect billings and required significant staff fo llow-up and
Report# 04/05 - 6 (Dated June 2, 2005) Page 8
research. In a separate incident, the software erased previous billing data when the payor type
was changed. Researching these and other issues drains resources from other activit ies in the
Department. Current staff do not have the abilit y to operate the software systems without
significant assistance fro m the programmer. The Department for the twelve months ending
March 2005 incurred costs for software development and support of about $73 thousand.
It is recommended the programmer establish adequate tests for their changes to make sure
they are operating as planned. Periodically other Information Technology staff should
perform reviews of code and changes to code to make sure that IT Department policies and
procedures are being met.
It is recommended the Mental Health Department periodically review their software needs and
consider whether the internal software is the best choice for their operations. With advances
in software design, it is possible there are pre-developed packages that could be used. The
Department should develop a cost/benefit approach when analyzing potential software
solutions.
If the internally developed software continues to be used, it is recommended the system be
improved so it can be sufficient for staff to use without significant involvement of the
programmer. This would include operations manual and documentation so staff can resolve
issues and process needed reports.
Service ticket data entry not sufficiently supervised
Business office staff inputs a significant number of service tickets. There are no batch or other
controls over service t ickets entry. There are no established procedures to ident ify if t ickets are
not entered. The duplicate copies of service tickets used for input are disposed of after three
mo nths.
Sufficient controls should be established to assure that all service t ickets received are input.
Wit h current procedures, there is the possibilit y for not inputting so me service t ickets and not
knowing it. This is part ly because the Department does not track service t ickets from client
appoint ments. This issue is significantly reduced with the entry of service provider claims since
the provider ult imately will be looking for payment.
It is recommended the Business office establish additional controls over the service ticket
processing to make sure all service tickets are processed. One suggestion is to utilize batch
totals to compare the number of service tickets received to those input.
Clinician submits invoices on behalf of vendors
A clinician has been preparing and submitt ing invoices for a number of service providers. The
invo ices amount to hundreds of thousands of dollars. The invo ices are prepared on the service
provider’s letterhead. Some o f the letterhead used for invo ices was signed in advance. The
service providers rely on the clinician to prepare their billings and have not developed
Report# 04/05 - 6 (Dated June 2, 2005) Page 9
procedures to do it themselves. From discussio n wit h the clinician, the Finance Department
changed the way they handled these invo ices and would only pay on client submitted invo ices.
Prior to this, the clinician had been submitt ing the invo ices direct ly for payment. The program’s
solut ion was to prepare the invo ices for the vendors on vendor letterhead and was done in order
to facilitate the vendors’ cashflow needs.
Outside service providers should create and submit their own invo ices. County staff should be in
the posit ion to make an independent assessment as to the validit y of the invo ice and underlying
services provided.
County staff act ing on behalf of outside groups could circumvent those organizat ion’s policies
and procedures and expose the County and those organizat ions to risk. Emplo yees with the
abilit y to create and authorize invo ices could circumvent expected controls and make
unauthorized payments to unauthorized vendors.
A number of these service providers are subject to significant oversight by the State who
reconciles contracted services to dollars paid. Any variances ident ified would be paid or
collected.
It is recommended that County staff should not originate invoices or other documents for non-
County entities. It is also important that County staff do not authorize documents they
prepare. It is further recommended that County staff discard letterhead for these outside
organizations and not issue any documents on their behalf.
The Program Manager has indicated there are some unique issues with some of the service
providers involved. The State provides monies before month-end to accommodate the
cashflow needs of these vendors. An invoice must be submitted to the County before the
accounting is available to have a check by month-end. In a year, the State will be taking over
payments to these vendors. Considering the above, it is recommended until the time the State
begins making payments, the vendor submit an estimated billing for the month with a variance
adjustment for the prior month (billed vs. actual). This should accommodate the cash flow
requirements while staying within close proximity of amounts provided by the State and
accounted for by the vendor. This suggested solution was discussed with the Finance
Department and it appears to address their concerns.
Combined insurance and client payments exceeded amount of service
In review of payments received for services, noted some instances where the insurance and client
payments exceeded the service amount. The Department indicates that in these situations, this is
treated as an overpayment and a refund is processed. For some of the instances noted, refunds
had not been processed.
Billings should be monitored so the result ing payments do not exceed the value for the services.
Monies co llected in excess of services are due to back to the client. Some of these monies were
ident ified as overpayments by clients. The refunds identified amounted to some $800.
Report# 04/05 - 6 (Dated June 2, 2005) Page 10
It is recommended there be improvements to the Department’s internally developed billing
software to include reports and logic checks to test for and identify any overpayment
situations. The instances noted were provided to business office staff to research and, if
appropriate, process refund checks.
Assignment of revenue receipt numbers should be controlled
The Departments computerized business system allows the reuse and skipping o f receipt
numbers. It was observed there were numerous gaps in the sequence of receipt numbers. The
system does have an audit trail that is retained and can be used to research what has happened.
Such audit trails are usually only accessed if a problem is encountered. The programmer's
review of the audit trail indicated the gaps were primarily fro m the software. The way the
software was developed allowed for inconsistent handling of receipt numbers and led to gaps in
the receipt numbers used. Two staff have the rights to delete receipts, one which is the accounts
receivable clerk who is current ly responsible for collect ing monies.
Receipt numbers should be controlled so the associated dollars attributed can be summarized and
tracked through to deposit. Control over receipt numbers is often essent ial to validate the
receipts received and the amounts expected to be deposited. Gaps in the numbering could
indicate unaccounted for receipts.
If receipts are not controlled and can be deleted or reassigned without supervisio n, monies could
be taken and there would be insufficient informat ion available to ident ify the missing monies in a
timely manner.
It is recommended that receipt numbers be sufficiently controlled, not be reissued and any
deletions monitored by supervisory personnel. The software processes that allowed these gaps
in receipts should be revisited. The accounts receivable clerk should not have authority to
delete receipts.
3.2 Laws, Regulations and County Policies
Lack of security awareness over computers
Front desk staff were observed leaving their co mputer terminals in a logged-in state when on
breaks. Two separate computer terminals are used for the front reception areas. Several staff
utilize the terminals when checking in clients. Once users login in the morning they are not
logging out or securing the terminal when they leave their terminals unattended. The
Department and County so ftware restricts and tracks access based upon who logged-in.
The County securit y awareness training and computer usage policies indicate each emplo yee has
the responsibilit y to ensure that County data is protected against unauthorized access. Emplo yees
must protect any access they have established to avo id unauthorized access. Similarly, County
procedures established to comply wit h HIPAA require users access systems using their
authorized user ident ificat ion and password.
Report# 04/05 - 6 (Dated June 2, 2005) Page 11
Unauthorized access is not acceptable in a HIPAA medical environment. Authorizat ion levels
and audit trails are ineffect ive if unsupervised use of the computers occurs by others.
This incidental usage between coworkers primarily occurs when staff are covering mult iple
reception desks on breaks and during lunch.
It is recommended the Department reinforce policies aimed at computer security. Staff should
utilize passworded screen savers and or log out if not present at their computer. It may be
possible for workstations used by multiple staff to be setup so the transition between users can
be done quickly.
Department does not have appropriate approvals for change and petty cash
funds
The Department has $300 used as petty cash in three locations. In addit ion, the Department has
$50 of change mo nies. The only Count y reso lutions located for petty cash funds were for $50
dollar increments in various locat ions totaling $250. No resolut ion could be located for change
funds.
Department cash posit ions should be approved by formal Count y reso lution. As mo ney locat ions
are changed, the resolut ion should be updated.
A lack of oversight over cash can result in its theft.
It is recommended for the Department to obtain a formal resolution for the type, amount, and
location of the cash it uses in its operations. These amounts should be assigned to a specific
custodian, secured when not in use, and periodically counted and accounted for by a
supervisor.
Manual receipts do not conform to County Policy
The Department in some circumstance utilizes manual receipts. The receipts are prenumbered
but do not have the Department’s name imprinted on them.
County po licy #1999-075 requires all invo icing for goods and services and subsequent collect ion
shall be recorded using pre-numbered forms imprinted with the County’s name and depart ment.
No departments will use “generic” receipts. Departments using such “generic” receipts should
retain the receipt books but effectively vo id any unused receipt stock.
The use of generic receipts books provides an ineffective control over monies receipted.
It is recommended the Department obtain receipt books conforming to County policy. From
discussions with staff, it appears the receipt book should be in triplicate so one can be provided
to the customer, one can be retained, and one can be provided to the business office with the
monies. The business office should track the receipt numbering to assure that they have
received monies for all of the receipts issued.
Report# 04/05 - 6 (Dated June 2, 2005) Page 12
New County policy requires written response
The Mental Healt h Department received ABHA audit results in April 2004. The results provided
data and recommendations. It does not appear the Department formulated a response to the
informat ion presented. Since then, the Department has been the subject of other audits by
ABHA and the State, for which the Department has not received the results.
In August 2004, County Policy 2004-107 was adopted regarding responding to
recommendat ions. Part of the policy states that Count y management (department heads and
supervisory personnel) whose operations are referenced in reco mmendat ions from internal or
external auditors or from consultants are expected to provide a written response to all
recommendat ions.
The reasoning for the policy is partly is fro m Government Audit ing Standards which state,
“Much of the benefit fro m audit work is not in the findings reported or the recommendat ions
made, but in their effect ive reso lution. Auditee management is responsible for resolving audit
findings and recommendat ions, and having a process to track their status can help it fulfill this
responsibilit y. If management does not have such a process, auditors may wish to establish their
own. Continued attention to significant findings and recommendations can help auditors assure
that the benefits of their work are realized.”
Wit hout sufficient thought in responding to these audits and consult ing efforts, appropriate
corrections or improvements may not be made.
This policy is new; however, it is recommended the Department apply it to the past ABHA
report and to future reports, so appropriate measures are developed and taken in response to
findings and recommendations provided by consultants and auditors.
3.3 Performance
Clinicians’ failure to use appointments in computerized business system
results in inefficiencies
Most clinicians do not schedule their appo int ments in the co mputerized business system. The
client appointment data for 2004 indicated about 1 in 4 appo int ments are kept on the
computerized business system. When clinicians do not use the appointments system, reception
staff are required to call clinicians when there are questions on their schedules. There have also
been problems notifying clients when clinicians do not show for work and their schedule is not in
the system. Clinicians do not allow front desk staff to make appoint ments for the clinicians in
the system, which results in clinicians being responsible for placing their appo intments in the
system, which they are not all do ing.
Service appoint ments should be in the co mputerized business system. Utilizat ion of the
appoint ment system provides better efficiency in managing the work performed. For clinicians
who schedule their appoint ments:
· reception staff can prepare in advance a service ticket with the clients informat ion on it;
Report# 04/05 - 6 (Dated June 2, 2005) Page 13
· input of service ticket requires less manual input;
· appoint ments in the system can be flagged by staff, which alerts the clinician that the client is
there; and
· records staff can locate and pull client files for the appoint ment.
Clinicians who avo id placing their appoint ments on the system increase the workload of the front
desk staff, records staff, business office staff, and themselves, and increase the likelihood that
service tickets will not be completed.
It is recommended that appropriate mental health staff maintain their appointments on the
computerized business system. Reception staff should have the ability to add, move and delete
appointments in the system. A possible recommendation for capturing new appointments is
for clinicians to use an appointment tablet (in triplicate) where clients can be provided a ticket
indicating their next appointment, a copy provided to the reception staff for entry (if the
clinician has not already put the appointment in the system) and a copy to be retained by the
clinician.
Coordinated effort needed to collect on service billings
The Department does not have a collect ion policy. The accounts receivable clerk is primarily
responsible for collect ion and billing efforts. However, the accounts receivable clerk does not
have routine contact with clients as they co me in. Staff indicates that insurance is not always
properly coordinated. The fo llowing selected informat ion is from 2004 service data:
· Average days fro m service to input of service ticket is approximately is 11 days
· Average days to make init ial billing is 35 days (cumulat ive days = 46)
· Average days for collect ion fro m insurance is 36 days
· Average days unt il secondary insurance billing is 62 days
· Average days for collect ion fro m clients is 82 days
· Average rate for primary insurance co llect ion is 18%. Combined with secondary
insurance, the average recovery rate is 40%
· Self pay co llect ion rate is 31%
The Department should have appropriate policies regarding the collect ion of client service
billings. If the County would like to be able to recover more monies fro m insurance they need to
ascertain what the insurance coverage is and how best to meet its requirements. It takes all those
with client contact to maintain and fo llow-up on client billings.
Collect ions are a relat ively low percentage of billings. It is not clear what percentage is being
obtained by other local governments, but from discussio ns wit h staff there are minimal co llect ion
efforts being made current ly.
It is recommended the Department should assess to what extent it can or will pursue collection
of charges and develop a collection policy and procedures in line with that assessment.
Policies and procedures should establish performance standards for effective billing and
collection of services.
Report# 04/05 - 6 (Dated June 2, 2005) Page 14
In order to improve collections the Department should consider the following:
· Providing front desk staff with information on the amount owing so clients can be asked if
they can make a payment
· Having front desk staff and clinicians confirm current addresses
· Having the billing statements improved so that it shows the age of the unpaid balance.
· Considering whether a collection service should be used for some client unpaid balances.
The service used by the Solid Waste Department is very efficient and does not cost
anything to the department.
· Providing more effort on identifying why insurance has not paid to improve collection
efforts.
· Obtaining pre-authorization from some insurance providers.
· Reviewing insurance requirements before additional services are performed.
· Assigning appropriate clinicians to provide care based on their licensing and credentials to
maximize collection when possible.
· Establish procedures for handling insufficient fund checks.
Recovery from Medicare may be improved
In review of the top eight payors of services billed in 2004 it was clear that Medicare is the
lowest performer with so me 3% of billings being paid. This contrasts significant ly with recovery
fro m other payors in the top eight averaging payments of about 53%.
2004 Top Eight Insurance Payors (Billed, Paid and %Paid)
Based on $ Paid
68%
46%
100%
30%
12%
26%
22%
3%
$0
$100,000
$200,000
$300,000
$400,000
$500,000
$600,000
$700,000
$800,000
T19 CLEAR MEDICARE PASARR REGENCE
BC
BC/BS LIFEWISE PACIFIC
Insurance Payor
$ B i l l e d /P a i d
0%
20%
40%
60%
80%
100%
% P a i d
Billings
Payments
% Paid
Report# 04/05 - 6 (Dated June 2, 2005) Page 15
A number of potential issues have been investigated as reasons for this:
a. Medicare provider numbers are necessary to recover any payment (from clinicians and
psychiatrists). Analyses indicated clinicians without Medicare provider numbers collect
significantly lower amounts, if any at all.
· Not all of the contracted Psychiatrists (MD and nurse practitioners) have
Medicare provider numbers. Only one of the four contracted providers has a
Medicare provider number.
b. Medicare has poor coverage of mental illness. Many o f the Department’s clients have
Medicare standard – which only recent ly has provided some form of mental healt h
benefits.
· The best recovery percentage on specific procedure codes utilizing Medicare
providers was still only 23%.
Many clinicians have suitable education and licensing to apply for a Medicare provider number
and should. Of 22 clinicians with appropriate licensing and educat ion, only 8 have obtained a
Medicare provider number. Maximizing recovery from Medicare on an ongoing basis requires
managing client assignments, error codes, and collectibilit y.
Clinicians and psychiatrists with Medicare provider numbers appear to be recovering on average
14% on billings. Just getting licensed clinicians and psychiatrists Medicare provider numbers
would possibly increase recovery (based on 2004 numbers) of $13 thousand. If non-licensed
clinician work was performed by Medicare providers (i.e. licensed and wit h Medicare provider
number), it could increase recovery by as much as $73 thousand.
One clinician was identified wit h an outside practice and no Medicare provider number. This
one clinician has so me $13 thousand in 2004 Medicare billings and only $21 was paid.
Assuming this emplo yee had a Medicare provider numbers and recovered 14%, the Department
could have recovered approximately $2 thousand. Staff have indicated that clinicians do not
want Medicare provider numbers since they must take Medicare patients in their outside
practices. The County has a policy (#91-5-1) that “private emplo yment shall not interfere with
County emplo yment”.
Part of the reason given for this problem is the Department has not mandated licensed clinicians
to obtain Medicare provider numbers.
It is recommended the Department have clinicians providing services to Medicare clients and
with appropriate licensing, be required to obtain their Medicare provider number.
It is recommended the Department support and encourage unlicensed clinicians to obtain
licensing and get their Medicare provider number. This might be a potential performance
standard within certain clinician job descriptions. The Department might want to consider
how it assigns clinicians to certain programs since many of the licensed clinicians are not in
areas serving Medicare clients.
It is recommended the Department consider a practice of assigning Medicare clients to the
clinicians with Medicare provider numbers.
Report# 04/05 - 6 (Dated June 2, 2005) Page 16
It is recommended the Department consider requiring contracted psychiatrists and nurse
practitioners obtain Medicare provider numbers if they are working for the County.
Direct services by clinicians as measured by billed services seems low
An analysis for selected clinicians (primarily adult treatment clinicians) of 2004 service hours
billed compared to hours paid indicated an average (non-supervisory) direct service rate of about
44%. Rates varied from a low of 17% to a high of about 86%. The Department’s internal
calculat ion for these same clinicians averages around 53%. The higher rate is due partly to
clinicians receiving credit for non-client work and the accounting for group sessio ns. It is also
conceivable, fro m the other findings in this report, that some of the services provided may not be
making it to billings, which likely reduces these calculated direct service rates. It is possible
some types of services are not be getting entered into the system. In addition clinicians receive
generous ho liday and vacation that eliminates so me 15% from possible direct service. The direct
service rate of contracted nurse practit ioners and psychiatrists is on average 58%.
Program managers expect direct service charges in the realm o f 55%. Program managers have
discretion in allowing other non-client time to be used in the measurement.
It is unclear whether the Department’s expected chargeabilit y level is sufficient given the
increasing budget pressures. A benchmark from other county mental healt h departments could
not be located. The Department is also monitoring no show and cancellat ions, which will
contribute to lower chargeabilit y rates if not properly managed. Overall, no show rates for those
clinicians using the appo intment system appear to average 14% for 2004.
It is recommended the Department consider increasing the productivity standard it needs from
staff to configure operations. The Department should be more involved in establishing
performance standards for staff and what constitute creditable hours in the calculation of
performance standards.
Frequency of insurance billings could be improved
The Mental Healt h Department is billing insurance and clients approximately once a month.
Staff indicated they were having trouble keeping up with re-billing and secondary billings.
Current ly when the explanat ion of benefit s statements are received from insurance providers,
staff must post any payments before they can adjust or re-bill the insurance provider or seek
payment form a secondary insurance. Secondary insurance bills appear to be going out some
two months after outcomes under primary insurance are known.
Best practice benchmarks for private medical pat ient accounting indicate billing should occur
within 3-5 days of service. Benchmarks for government clinics were not available. Staff should
be able to establish the secondary billing or re-bill at the time the explanation of benefits
statements are reviewed.
Delays in billing make it more difficult to collect. Most insurers will not pay if claim is over a
Report# 04/05 - 6 (Dated June 2, 2005) Page 17
year old. Wit hout sufficient time to perform re-bill and secondary bill funct ions addit io nal
recoveries will not be made. This also reduces the abilit y o f the Department to assess what the
collect ibilit y problems could be and if there are possible so lutions that could improve future
recovery.
It is recommended for the Department to consider establishing guidelines for the frequency of
billings. Staff indicated they wanted to bill twice a month. If payments can be posted at the
time the explanation of benefits is reviewed, it might speed up processing of rebills and
secondary billings. This might occur if payments are deposited in a separate process (as
recommended in a prior recommendation).
Use of computerized business system reports needs improvement
The current internally developed computerized business system has a limited number of reports
and business office staff do not appear to use them on a regular basis to monitor operations.
Many o f the reports are not designed to provide monitoring of the system and its funct ions. The
business team does not appear to use the reports consistent ly. IT staff develops reports as
requested. However, more reports are still needed to evaluate the performance of the system.
The Department is not using the computerized business systems to calculate and report on
performance standards developed on an ongoing basis. Some standards are gathered manually
since the data is not input into the system.
Account ing staff should routinely use reports fro m the system to monitor receipts, services input
and billed and outstanding receivables. Addit io nal reports should be developed to assist in
ident ifying problems with input, billings and co llecting service tickets. Reports should be
available to diagnose and ident ify issues with the operation of the system.
Wit hout effect ive reports, Staff may be inefficient in mo nitoring and supervising the funct ioning
of the computerized business system. Wit hout visible performance standards, staff will not have
goals in which to operate.
It is recommended staff develop procedures to provide oversight of the Department's activities
as maintained in the computerized business system. Some of the procedures identified include:
· Analysis of time lag for receipt of service tickets;
· Summary of total services provided, billed, and paid;
· Summary of accounts receivable collections and adjustments; and
· Exception reports identifying problems with client balances and activity.
Procedures identified will likely result in reports and a process for monitoring these by staff
independent of those functions. Supervisory level reports should be developed to provide
general oversight as well as measure performance against benchmarks established.
It is recommended that computerized reports be available by selectable date ranges. Staff
particularly wanted the ability to look at specific date ranges for psychiatrist services by
program code.
It is recommended the Department strive to have data in the system to report on internal
Report# 04/05 - 6 (Dated June 2, 2005) Page 18
benchmarks/standards for its operations. The Department might consider adding to the
system manual data gathered for certain performance reports. Management should receive
monthly data of key operating data and benchmark performance to evaluate operations. This
“scorecard” approach can be useful in evaluating key data for internal operations on a
monthly basis.
Reasons for write-offs of insurance and client receivables should be reviewed
Customer accounts receivable balances (insurance and client) are adjusted for a number of
reasons. The Department does not have any written co llect ion procedures. Collect ion efforts are
limited and many balances are written off. Most insurance billings are automat ically adjusted to
write-off the unpaid balance. Insurance providers to varying degrees provide reasons for their
lack of payment. Staff have been making limited efforts into investigating the reasons for non-
payment.
Staff should monitor insurance billings to ascertain the reason for the lack of payment by
insurance companies or customers. Collect ion efforts and write-offs should be suitable for the
situation. There should be adequate supervisio n over the process.
Many balances are written-off wit hout any addit ional co llect ion efforts. Without interpreting the
reasons why the insurance bills are not being paid, the MH Department will not be able to
recover addit ional do llars in the future. It is very possible addit ional payments could be received
if services are tailored to the insurance requirements.
It is recommended for the Department to develop collection procedures identifying the extent
of collection efforts.
It is recommended that staff Department staff developed some common codes to identify the
main reasons why insurance and customers do not pay. Reasons might include lack of
information, location codes, provider licensing, etc... If these are incorporated into the
business system, reports could be developed to identify how to collect from certain insurance
providers and in oversight of the collections process. Additional reports need to be developed
to monitor the reasons provided for non-payment by payor. Staff have found calling the
insurance providers to get additional information has helped in their collection efforts. It is
recommended that write-off’s be reviewed periodically by supervisory personnel.
Coordinated oversight needed over professional service providers
Services billed by physicians and nurse pract itioners are reviewed against their established
schedules. However, there are no direct service performance standards established and client
services billed are not compared to the hours charged by providers. On average for 2004, 58%
of time billed was spent providing direct services client by psychiatrist and nurse practit ioners. It
is also conceivable, fro m the other findings in this report, that some of the services provided may
not be making it to billings, which likely reduces the calculated direct services rates.
Report# 04/05 - 6 (Dated June 2, 2005) Page 19
From discussio ns with program managers and business office staff, it was not apparent that
approval of service provider invo ices required info rmat ion other than appo int ment schedules
(such as reports on services provided). In a separate finding, research ident ified that some service
tickets from providers might be missing.
The Department pays these service providers on an hourly rate and should recover as much as
possible in direct services. There should be sufficient reports to address the amount of services
being provided by physicians and nurse practit ioners. Management should establish a
performance standard for providers on percentage direct chargeable to assure productivit y for the
mo nies paid. Wit hout such oversight, it is difficult to know how much is being delivered in
services since the only thing we are current ly mo nitoring is their schedule of services.
It is recommended for the Department to develop a performance standard (such as % directly
chargeable services) with providers so administrative time can be kept to a minimum. It is
recommended for the Department within their computerized business system to develop reports
by physician and nurse practitioner covering those performance standards. The reports
should be date sensitive so service hours could be compared to billings by those service
providers.
Input inefficient for some service provider claims being processed
Certain service provider claim t ickets received (chemical dependency providers) have mult iple
lines o f data and the Department’s co mputerized business system requires a significant amount
of re-entry of data to input the claim.
The Department’s co mputerized business system should allow efficient data entry o f these types
of claims. After discussio ns wit h the software programmer, it was determined an easy so lution
was available.
It is recommended the Department consider having improvements made to the computerized
business system to allow more efficient data entry for these types of claims.
Lack of communication on personnel/payroll issues
During discussions with the Department’s payro ll staff, it was noted they were having so me
difficult y in receiving timely informat ion on personnel changes affect ing payro ll.
Business office staff responsible for payroll should be knowledgeable in what is going on with
personnel in the Depart ment.
Wit hout knowledge of personnel changes, inadequate informat ion may be processed for the
underlying payro ll. This will lead to inaccurate and inefficient processing of payro ll
It is recommended the Personnel Department copy the Department’s payroll staff on any
personnel changes. Within the Department, as changes are approved, these should be
communicated and copied to the payroll staff. This recommendation was discussed with the
Report# 04/05 - 6 (Dated June 2, 2005) Page 20
Personnel Department who will be making efforts to communicate changes to the
Department’s payroll staff.
Services by client not properly maintained
The Department’s co mputerized business system maintains informat ion by each individual
service provided. Staff routinely posts payments and write-off unco llect ible balances by service
provided. In some circumstances, the payments and adjust ments applied do not equal the original
services billed. Staff focused on clearing total balances and not on the underlying service line
items. This results in open balances or credit balances by service line item. Reports that detail
outstanding balances will cont inue to show these as open even though staff was attempt ing to
clear these amounts.
The computerized business system requires that adjust ments and payments be appropriately
posted by service line.
There is no overall net affect to balances except that reports will cont inue to show these services
as unpaid or as credits.
It is recommended that staff post all payments and adjustments by service line. In order to
make current reports accurate, staff should review older services, identify these unbalanced
service lines, and make corrections.
Oregon Health Plan (OHP) client with capitated services was charged
During a review of client files, there was ident ified an OHP client who was setup as a client
without insurance since their OHP coverage had no mental healt h benefits. During August 2004,
OHP standard clients did get some mental healt h benefits and for many clients this was shown.
For this particular client, this was not ident ified and they cont inued making payments on services
received. At the time OHP standard clients became covered, no billings for services should have
been billed since the County receives mo nies for these clients (on a capitated basis).
All o f these OHP standard clients, in August 2004, should have been ident ified and their
coverage updated to reflect the changes in benefits.
It is possible there are addit ional clients whose benefits have not been updated since this change
by OHP. The billings paid by the ident ified client for services billed and paid fro m 8/1/04
through 12/31/04 amounted to $21. Since insurance was not billed, the encounter data was not
shared with the State, which could reduce future monies to the County.
It is recommended the Department make efforts to identify other self-pay clients that were
OHP standard and received benefits as of 8/1/04. Monies paid by clients when services are
covered by OHP will need to be repaid.
Report# 04/05 - 6 (Dated June 2, 2005) Page 21
Medicare card support not obtained
During the review of client files, a client was identified that represented himself or herself as
having Medicare insurance coverage. However, the Medicare card was not obtained and
therefore the insurance was never billed and the client was billed. Follow-up by the accounts
receivable clerk resulted in obtaining a copy of the Medicare card.
When clients ident ify potential insurance coverage, sufficient efforts should be made to attain the
insurance informat ion and assess the specifics o f the coverage.
Insurance was not billed and it is possible so me o f the services will not be able to be billed if
greater than a year old. Client payments of $615 were identified to be refunded to the client.
It is recommended the Department establish procedures to follow-up on client insurance
information that is not acquired on their initial visit.
Park Place billings support not organized
In review of client files, noted the billings support for park place services did not include
procedure codes and in many cases was difficult to fo llow and so me dates of service could not be
matched easily wit h the corresponding billing data.
The Parks Place program is no longer in place but future programs may use similar procedures.
Billing service data should be reasonably organized so date(s), hour(s), procedure code(s) for the
service performed can be input and billed.
It could not be assessed whether there was missing or inadequately billed data fro m the
informat ion available.
It is recommended when these programs are developed that better procedures be in place to
accumulate services provided by date and by procedure.
3.4 Requires Additional Information
Should “flex fund” monies be loaned?
Current ly, Oregon Health Plan (OHP) clients receiving “flex funds” are usually asked to sign a
loan form and make efforts to repay the monies if they can. The Department receives “flex
funds” fro m ABHA for Oregon Health Plan clients to be used to support one time assistance wit h
housing, emplo yment, therapy, workshops, and other assistance supporting their treatment plans.
Clinicians will periodically ident ify these flex funds for clients in crisis. Business office staff do
not administer these flex funds as loans nor is the accounting based on a loan obligation. Staff
make no efforts to follow up on repayment and only so me of these flex fund loans are repaid.
Business office staff explain these repayments allo w clinicians to distribute more flex funds.
Report# 04/05 - 6 (Dated June 2, 2005) Page 22
ABHA’s purpose for providing “flex funds” appears to be for providing relief to crisis clients. It
is not clear whether the addit ion of a repayment requirement by so me clinicians is contrary to the
purpose for which the money was given to the Count y by ABHA. Adding the repayment terms
could place addit ional financial strain on these mental patients. It is not clear that the County
should ask for repayment of ABHA funds already dedicated to these OHP clients.
It is recommended the Department determine the appropriateness of requesting repayment
from OHP clients of “flex funds” received from ABHA. If it is not appropriate, the
Department should notify these clients so there will be no misunderstanding. If these truly are
loans, they should be accounted for and managed as loans.
4. FINDINGS – Contracting practices
4.1 Controls
Lease deposits not utilized at end of lease term
A lease for Mental Healt h, init iated by Count y Administration, included a $1,000 securit y
deposit ($500 was refundable) and first and last month rent at incept ion. The last month’s rent
($1,250) appears to have been paid without reference to the deposit made at the incept ion of the
lease.
Staff should identify in their contract files when prepayments and deposits occur so they may be
properly accounted for at the end of the lease.
The original deposits were paid wit h project development funds since a County facilit y project
displaced one of Mental Health’s spaces. The Mental Healt h Department subsequent ly overpaid
by paying the last months lease payment again of $1,250. The County may be due $500 of the
original deposit depending on the condit ion of the leased space.
It is recommended for the County’s Property and Facility Director to follow-up on the
recovery of these monies from the lessor of the property. It is recommended the Department in
their lease files utilize a cover sheet identifying significant items that need to be resolved
before, during or at the end of the lease such as deposits, prepaid rent and property tax
exemptions.
4.2 Laws, Regulations and County Policies
County insurance requirements not always fulfilled before contracts are in
place
In review of the Department’s contract files, the insurance certificates required by the contract
could not be located in many instances. Some of the certificates were reviewed by Risk
Report# 04/05 - 6 (Dated June 2, 2005) Page 23
Management and found to be deficient.
The County requires providers of service to provide certain levels o f insurance prior to staring
work under the contract. Risk management has recent ly provided procedures to be used by
departments to make sure these requirements are met. They are taking responsibilit y to ident ify
what is required and whether the provided insurance certificates meet their requirements.
The County has settled recent lawsuit s for hundreds of thousands of do llars for not having these
insurance requirements in place.
It is recommended the Department fulfill all insurance requirements as required by legal and
follow the procedures as outlined by Risk Management. The insurance certificates or other
documentation should be maintained in the vendors’ contract file and the associated renewal
dates, if the certificate expires before the end of the contract.
Services continue after expiration of contracts
Ident ified a couple of expired contracts for which the Depart ment was paying invo ices after the
contract period had expired. It appears the County is continuing to receive services in the
absence of a valid contract.
Contract practices would normally require a contract be in place before payments occur.
One of the contracts identified was subsequent ly signed so me 8 months after the commencement
of the lease. The other contract ident ified has not been renewed but services cont inue to be
performed.
It is recommended for the Department to monitor the expiration dates of their contracts. One
suggestion is utilizing a contract log with pertinent information for following up on contracts.
One suggestion that came out of meetings with the business managers was to put one-year
extension clauses into contracts to simplify the renewal process.
Privacy Officer suggests use of business associate agreements
County Depart ments including Mental Health are faced with requirements to comply wit h
HIPAA regulat ions. Current contracts include some language on compliance wit h HIPAA. The
County’s Privacy Officer is suggest ing that a separate and more extensive business associate
agreement be completed with so me contractors. This is not a current practice in contracting for
these services. A number of service providers might fall under the definit io n of business
associate in context with the services provided by Mental Health.
A business associate for these purposes is an independent contractor who regularly uses and or
discloses protected healt h informat ion in their performance of service. The agreement sets forth
the terms and condit io ns to which protected health informat ion is provided by, created by, or
received by the business associate fro m or on behalf o f Deschutes County.
Report# 04/05 - 6 (Dated June 2, 2005) Page 24
The Privacy Officer is suggest ing all ident ified business associates for HIPAA purposes be asked
to sign the County’s business associate agreement.
In the absence of the agreement, parties may not properly conform to the policies and procedures
developed by the Count y to comply with HIPAA. No specific areas of non-co mpliance were
noted.
It is recommended the Department review with the Privacy Officer those potential service
providers could be classified as business associates for HIPAA purposes. The Department
should then follow the Privacy Officer’s guidance and Legal Counsel in obtaining appropriate
agreements to assure HIPAA compliance.
4.2 Performance
Contract files are incomplete and unorganized
The Mental Healt h Department’s contract files do not contain many of the current contracts,
revisio ns, insurance requirements, or aides for monitoring. Contracts are organized
alphabet ically and include many expired contracts. Staff fro m Mental Healt h and other County
departments believe the ongoing contract environment is burdensome.
Contract files are an important resource for managing contracts in the department.
Wit hout sufficient and available contract informat ion, the Department cannot effectively manage
in a timely manner the contract payments, contract collect ions and monitor compliance wit h
contracts.
It is recommended the organization of contracts be improved. Suggestions include:
· making sure there is a master log of all contracts with the department
· maintaining all contracts in a central location (provide for a checkout system so the files
can be used by staff)
· organizing contracts by type (revenue or expenditure) and then alphabetically.
· removing expired contracts to a separate part of the folder, folder or area
· developing a “summary sheet” for each contract file indicating:
o the value of the contract (if applicable),
o significant terms of the contract (price or rate, length, start and end date),
o dates for insurance coverage and when they need to be followed up on, if
applicable
o who has responsibility for the contract and its administration,
o any significant requirements and any associated monitoring activities,
o any prepaid amounts or deposits to be monitored for
o options for extension of contract (if applicable)
Report# 04/05 - 6 (Dated June 2, 2005) Page 25
Oversight of service providers could be improved
A review was performed of selected service billings from one of the County’s providers of
chemical and drug dependency treatment. The services are provided under two separate
contracts. There was adequate support for services billed under one contract. The review of
billings made for clients under the newer contract did indicate some issues with co mplying wit h
the terms of the contract including:
· No current insurance certificate conforming to Count y policy was received. A certificate of
insurance provided by the provider still did not conform to County po licy.
· One client file was missing and could not be located.
· The support in the file for the clients’ indigent status was not consistent and to the level
indicated in the contract.
· The provider billed for clients after only three sessio ns. This was not the level o f service
indicated in the contract before services could be billed.
· The level o f service was billed at a higher rate than supported by the file documentation.
· The provider billed for completed services for some clients that were terminated prior to
complet ion of services.
· One indigent client was billed for services and paid even though the County required under
the contract that clients not be billed.
Simple monitoring of this contract with the provider would have ident ified these issues at an
earlier date. At the beginning of a new contract, someone in the Depart ment should have
reviewed wit h the service provider how performance on the contract would be measured and
resolve any quest ions on contract terms.
In this review, the provider had billed and been paid up to the contract limit. There was
indicat ion they were cont inuing to provide services to indigent clients. The billings were not
revisited but the additional services were ant icipated to be more than the reduction in over-
billings.
It is recommended the Department visit with providers, especially under new contract
arrangements, near the beginning of the contract to make sure the work is being performed in
accordance with the contract. Potential areas of monitoring should be identified in advance.
The Department should detail how things are to be documented and supported before
payment. In this case, the Department should obtain a certification of the client’s completion
in the program from the provider. Program staff should revisit the billings done before
additional monies are granted and paid.
Report# 04/05 - 6 (Dated June 2, 2005) Page 26
5. REPONSE FROM MANAGEMENT
To: Deschutes County Audit Committee
David Givans, CPA, County Internal Auditor
From: Scott Johnson, Director
Deschutes County Mental Health (DCMH)
Date: June 2, 2005
Subj: Management Response to Report # 4/05-6
Mental Health Department – Review of Business and Contracting Practices
We are in receipt of the draft Review of DCMH Business and Contracting Practices. We are
grateful for this report, its findings and recommendations. This report will help us as we continue
in our efforts to operate an effective and efficient operation for the benefit of the residents of
Deschutes County.
Planned Actions
In the coming months, DCMH will create an Action Plan to prioritize and address key findings
and recommendations contained in a number of recent and upcoming audits1. Because we
expect literally dozens of recommendations from these various reports and audits, a prioritization
process is essential. The Action Plan will likely be two years in length. The Plan will prioritize and
assign all tasks to the most appropriate party and provide a target date for completion. The
Plan will be prepared and shared with the Department Advisory Board and the County
Commissioners. We have every intention of addressing the most important items in each of
these external reviews.
Initial Response to Findings
All members of our Management Team have received a copy of the Report for their
consideration. Given the nature of the Report, the primary responsibility for working with the
findings and recommendations rests with the DCMH Business Office and our Business Manager,
Greg Canfield. At the same time, assistance and support is needed from our program
managers, supervisors and clinicians in a number of areas (e.g. consistency and thoroughness in
completion of service tickets and use of the scheduling system to log appointments and track
service to clients).
Based on a preliminary review and consultation with our Business Manager, we are particularly
focused on the report’s findings in three areas:
1. Software - Use of technology and the best software option(s) and associated personnel
needs for future medical records and business applications.
2. Contracting - Development of an effective contracting system and staffing capacity to
ensure compliance with statutory, regulatory and policy requirements, efficiency in
1 2004 ABHA Report, 2005 Givans Report, Two State Office of Mental Health and Addiction
Services Certification Reviews (June 2005).
Report# 04/05 - 6 (Dated June 2, 2005) Page 27
completing, tracking and reporting on all contracts and effectiveness in monitoring and
reporting on contract performance.
3. Documentation – Formal policies and procedures for all business applications and
improved systems for consistently capturing service and billing information.
Requested Follow-up
1. Identification of 3-5 findings deemed most urgent from the auditor’s perspective.
2. Written consultation regarding the fiscal impact of findings and recommendations. We
are in need of assistance in identifying the cost associated with the recommendations
(e.g. capacity to improve our Contracting Process – requested in 2005-06 County budget
process, not funded; capacity to improve program and business software).
3. Identification of recommendations that will most likely reduce costs within the
Department or increase revenue for public services.
Again, we are very appreciative of our auditor’s professionalism and consultation with DCMH
staff throughout this process. We welcome the results and look forward to making improvements
in the operation of our Department.
Cc Becky Wanless and Leo Mottau, Mental Health, Alcohol & Drug Advisory Board
DCMH Management Team