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HomeMy WebLinkAbout1718-8 HS-Fiscal Revenue Controls (Final 10-15-18)Health Services - Fiscal Revenue Controls report #1718-8 October 2018 Health Services – Fiscal Revenue Controls To request this information in an alternate format, please call (541) 330-4674 or send email to David.Givans@Deschutes.org Deschutes County, Oregon David Givans, CPA, CIA, CGMA County Internal Auditor 1300 NW Wall St Bend, OR 97703 Audit committee: Daryl Parrish, Chair - Public member John Barnett - Public member Tom Linhares - Public member Lindsey Lombard – Public member Wayne Yeatman - Public member Anthony DeBone, County Commissioner Nancy Blankenship, County Clerk Dan Despotopulos, Fair & Expo Director Health Services - Fiscal Revenue Controls report #1718-8 October 2018 TABLE OF CONTENTS: HIGHLIGHTS 1. INTRODUCTION 1.1. Background on Audit …………..……………………………………………………………. 1 1.2. Objectives and Scope ……………….………………………………….…………………… 1 1.3. Methodology …………………………………….…………………………………………… 1-2 1.4. Background on Health Services ………….………….……………………………… 2-4 2. FINDINGS and OBSERVATIONS 2.1. Revenue and Collections ……………………..…………………………………….… 5-14 2.2. Custody of Assets …………………………………………………………………….… 14-16 2.3. Other Internal Controls ….………………………………………..………………... 16-19 2.4. Other Compliance ……………………………………………………………………… 19-20 3. MANAGEMENT RESPONSES Deschutes County Health Services ……………………………………………..…... 20-26 Deschutes County Finance ………………………………………………………………..…. 26 Health Services - Fiscal Revenue Controls report #1718-8 October 2018 HIGHLIGHTS Why this audit was performed: A periodic review of internal controls over revenues. What was recommended: Recommendations include: • actively collaborating on financial discussions involving the CCO; • coordinating on revision of collection policies and procedures to collect copays and balances due; • updating policies for considering waivers of fees for financial hardship; • developing written procedures for staff on billing and collections procedures; • establishing periodic review to sliding scale information; and • updating to a consistent single sliding fee scale. Health Services - Fiscal Revenue Controls What was found The department receives significant resources under the Coordinated Care Organization (CCO). Reconciliations for 2016 and 2017 between the County and the CCO are resulting in significant amounts owing to the CCO. These highlight the need for better collaboration on the funding model and communication on these fiscal matters within the County. The County‘s external auditors are calling the resulting late accruals of amounts owing a “material weakness” evidenced by the need to restate prior year financial information. {pg. 5} Current Behavioral Health policies waived selected programs from the collection of copays and other collection efforts. There are well publicized alerts regarding the inappropriateness of routine waivers of copayments or deductibles. Waivers will require establishing financial hardship criteria on a customer by customer basis. This primarily impacts clients under Medicare or private insurance, which have increased. {pg. 7} Billing and collection staff need additional guidance for proper handling of payments. Billing management does not have sufficient reports to manage and provide oversight to collection activities. {pg. 8} Twenty-five percent (25%) of clients are setup with inaccurate information for applying the sliding fee scale. This has pushed these clients to pay no fees. The Public Health and Behavioral Health Divisions currently have different sliding fee scales and approaches. {pg. 9} Overall, the department performed well in providing custody over assets as well as providing fiscal controls over collected revenues. Some additional findings and recommendations were offered in these areas that had limited issues. {pg. 14 and 16} Deschutes County Internal Audit Health Services - Fiscal Revenue Controls report #1718-8 October 2018 Page 1 1. Introduction 1.1 BACKGROUND ON AUDIT Audit Authority: The Deschutes County Audit Committee authorized the audit of Fiscal Revenue Controls in the 2017- 2019 Internal Audit Program Work Plan. The audit is a periodic audit to revisit the control environment for revenues. The last audit of these controls was with Behavioral Health in 2005 (0405-06) and with Public Health in 2006 (#0506-04). These departments were formally merged in February 2009. 1.2 OBJECTIVES and SCOPE “Audit objectives” define the goals of the audit. Objectives included: 1) Verify custody of cash-like assets (petty cash, change, and prepaid cards). 2) Evaluate system of management control over revenues. This would include billing and receivable systems as well cash receipting and associated controls. 3) Reconcile (or review reconciliations) between revenue systems in department to county systems. 4) Be aware of any issues with compliance with federal and state regulations and requirements, as may be applicable. Scope and timing: The audit commenced in June 2018 and extended through August 2018. Periods for reconciliation work were judgmentally selected. Health Service funds include Fund 261, 270, 273, 275, 274, 276, and 280. 1.3 METHODOLOGY Audit procedures included: • Interviewed and observed staff on practices and procedures regarding petty cash, change cash, receipting, billing and prepaid gift card activities. • Observed a majority of the petty and change cash monies. Health Services - Fiscal Revenue Controls report #1718-8 October 2018 Page 2 “Audit procedures are created to address the audit objectives” • Researched billing and control information relevant to health services. • Reconciled and reviewed revenue activities through to County financial system. • Analyzed department revenue sources over time. • Judgmentally examined support for some revenue streams. • Reviewed documentation from department on internal controls and procedures as well as observed practices. • Collection and analyses of revenue data. • Researched and reviewed department’s sliding fee scales. • All prior recommendations with the department were indicated as completed. 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. (2011 Revision of Government Auditing Standards, issued by the Comptroller General of the United States.) 1.4 BACKGROUND ON HEALTH SERVICES Deschutes County Health Services (DCHS) provides public health and behavioral health programs and services benefiting county residents. The department includes around 300 employees across eight sites, working in a diverse range of programs over three divisions: Public Health, Behavioral Health, and Administrative Services. The department is second only to the Sheriff’s Office in terms of number of personnel. Health Services - Fiscal Revenue Controls report #1718-8 October 2018 Page 3 DIAGRAM I – High level organizational chart – Health Services {Full time equivalents (FTE) from FY 2019 budget} CHART I – Composition of primary revenue sources for FY 2018 for Health Services FY2018 was the first full year of the Certified Community Behavioral Health Clinic (CCBHC) two year pilot program. The funding for the two-year program concludes on March 31, 2019. Many of the personnel brought on for this program are limited duration employees and will not continue when the program stops. (Note: As of the release of this report, it appears the CCBHC has received some extension of funding.) Source: County financial systems (health service funds excluding working capital and transfers between funds) Health Services Director {3 FTE} Behavioral Health Division {184 FE} Public Health Division {68 FTE} Administrative Services Division {44 FTE} Health Services - Fiscal Revenue Controls report #1718-8 October 2018 Page 4 CHART II – Trend in primary resources by FY for Health Services The largest ongoing source of revenue is Federal and State monies, many of which are tied to providing services to indigent and Oregon Health Plan members. The Health Services Department receives the largest contribution of general fund support of the non-general fund associated funds. The general fund transfer was increased in the FY 2019 budget to $6.078 million. Source: County financial systems (health service funds excluding working capital and transfers between funds) Resources for 2018 and adopted budget 2019 (pre-CCBHC) provide an overall similar level of resources to the department. This was partly accomplished through increases in provided general fund resources. Charges for services and other revenues represent only 5% of revenues and are the primary revenues collected and managed through fiscal controls. The largest revenue streams are transacted at the county level through bank transfers. Health Services - Fiscal Revenue Controls report #1718-8 October 2018 Page 5 2. Findings and Observations The audit included limited procedures to understand the systems of internal control around revenues. Audit findings result from incidents of non-compliance with stated procedures and/or departures from prudent operation. The findings are, by nature, subjective. The audit disclosed certain policies, procedures, and practices that could be improved. The audit was neither designed nor intended to be a detailed study of every relevant system, procedure, or transaction. Accordingly, the opportunities for improvement presented in the report may not be all-inclusive of areas where improvement may be needed and does not replace efforts needed to design an effective system of internal control. The first finding is considered a “material weakness” by the County’s external auditors due to the need to restate prior year financial information. This is the only finding in this report rising to a level of significant deficiency and/or of a material nature. A significant deficiency is defined as an internal control deficiency that could adversely affect the entity’s ability to initiate, record, process, and report financial data consistent with the assertions of management in the financial statements. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the company's annual or interim financial statements will not be prevented or detected on a timely basis. 2.1 REVENUES AND COLLECTIONS Resource model under Coordinated Care Organization (CCO) is changing and is an area of risk for the department. The current model in which Health Services receives money from the state for OHP clients has been changing. Currently the CCO (which is operated by Pacific Source) and the County are without a new contract and recent reconciliations of costs for Calendar years 2016 and 2017 have shown marked increases in costs being paid by the CCO for inpatient hospitalizations as well as panel providers. Health Services - Fiscal Revenue Controls report #1718-8 October 2018 Page 6 “The County is currently in negotiations for the payment of services under the CCO.” Since moving from Webco (an intergovernmental intermediary with the CCO), the County continues to have monies withheld from capitation payments. These were to offset some estimated costs borne by the CCO primarily for inpatient hospitalization and panel providers. After the close of the year, reconciliations between the withheld amounts and the costs incurred will result in monies to be repaid or monies owing. The initial reconciliations for calendar year 2016 and estimated 2017 weren’t received until October 2017 and indicated amounts owing by the County. The County has accrued $3.8 million for these 2016 and 2017 amounts owing and has nearly $4.5 in fund balance to cover any further costs of the reconciliation. Updated amounts were received in June 2018 indicating a potential liability of $5.7 million, an increase over the anticipated amounts. The Health Services Department is disputing some of these costs. It isn't clear where the amounts owing will end up, but this reconciliation is occurring well into FY 2018. There were some difficulties in sharing timely information from certain Behavioral Health management staff to Administrative Services Division and County fiscal staff. These delays appeared to be because of the work being performed to dispute some of the cost claims being made. These amounts owing from the reconciliation have resulted in the restatement of County financial reporting. In the absence of quality and timely information on the costs incurred in the CCO model it will be difficult to influence and manage it. Changes in CCO funding could impact staffing and general fund resources. The Administrative Services Division which includes the Department’s business manager have not been fully involved in the CCO activities/reconciliations. It is recommended for the Department to actively utilize and share information with the Administrative Services Division, County Finance, and County Administration for all financial discussions involving the CCO on resource modeling, reconciliations, and accounting issues. Health Services - Fiscal Revenue Controls report #1718-8 October 2018 Page 7 “… practitioners may waive the copayment in consideration of a particular patient's genuine financial hardship.” Current behavioral health policies interpreted to eliminate collection efforts for certain programs. Behavioral Health Division staff have not been collecting copayments and other balances due for clients in certain programs. These programs were directly exempted by management in policies and procedures. This impacted a number of Medicare and private pay insurance clients that would have otherwise had copays and amounts owing. These types of clients occur more frequently under the CCBHC program. There are well publicized alerts regarding the inappropriateness of routine waivers of copayments or deductibles. One important exception to the prohibition against waiving copayments and deductibles is that practitioners may waive the copayment in consideration of a particular patient's genuine financial hardship. This hardship exception should be based upon • a particular patient’s financial hardship; • the provider not routinely providing waivers; and • determining in good faith that the individual is in financial need (based on facts and circumstances) or reasonable collection efforts have failed. The government does not specify the financial status that would justify a waiver, so the approach developed should be applied consistently and documented. The County might want to obtain a release from the patient to share any financial documents over to the insurance company, if requested. Except in such special cases, a good faith effort to collect balances and copayments must be made. Division policies appear to be written to exclude certain programs from collection efforts when the intent appears to have been to eliminate barriers to providing services when there are uncollected payments for services. It appears the division management did not follow-up on how these policy statements were being interpreted. The current collection policy does address sufficiently the financial hardship considerations for an appropriate waiver of fees. Health Services - Fiscal Revenue Controls report #1718-8 October 2018 Page 8 It was not possible to determine the dollar amount or extent of exemptions for payments applied erroneously. Based on information from the department, there were balances and copays written off of $50 thousand for July 2018 for charges in the fee waived programs. Though not all of this might have been collected or due, this indicates the extent of the write-off under this policy. Submitting false Medicare claims (in the case of routinely not collecting copayments) could be unlawful. Similarly, insurance carriers for clients that are supposed to be paying copays could pursue recovery. It is recommended for the Behavioral Health Division in coordination with their Administrative Services Division revise the collection policies and procedures to collect the required copays and balances due from all programs (while taking into account appropriate sliding fee scales) and take steps to educate staff on the changes. It is recommended the policies developed above include the process for considering waivers of fees for financial hardship. It is recommended for those situations where waivers are being considered for financial hardship, that staff document the initial rationale and periodically revisit that assessment over time. The policy in developing a case for financial hardship should consider factors, which might include local cost of living, income, assets, expenses, and scope of the individual’s medical bills. Billing and collection staff unsure about posting of copays. Behavioral Health billing and collection staff aren’t certain how payments should apply. Staff was questioning whether they could post copayments to balances owing. Insurance companies often require as part of their benefits the upfront payment of copays. Attributing those payments to another activity could inadvertently run afoul of agreements with the insurance Health Services - Fiscal Revenue Controls report #1718-8 October 2018 Page 9 “Insurance companies partly control benefit usage through copays.” companies’ to collect such payments for services. The collected copayments are attributable to the date of service. In some circumstances copays are billed. Billing management has not provided billing and front desk staff with written procedures to follow for application of payments. As previously discussed, some insurance companies and Medicare require copayments at date of service. The routine waiver of copayments could serve as a basis for a recoupment audit, during which insurance companies request proof of collection of copayments for five randomly selected patients. If the clinic cannot prove it collected, or at least exhausted all reasonable means of collection, then the insurance company may demand a refund for any benefits paid across a large patient population. It is not clear how much this could be, but it could apply to all self-pay clients as well as some Medicare clients. Since starting of the CCBHC in 2018, there have been more clients seen under private pay insurance as well as Medicare. It is recommended for the billing manager to develop written procedures for staff on billing and collections procedures including how to properly process and apply payments received. It is recommended for copayments collected to be attributed by date of service. Information used for behavioral health sliding fee scale needs improvement. Staff sometimes receive inadequate information or verbal information to properly assess whether clients should receive reduced fees under the divisions sliding fee scale. In those circumstances, staff will enter an “override” income level of $8 or $9 per year for a family of 1 if they are expecting more information. This pushes the billing systems to fully discount the services under the division’s sliding fee scale prior to receiving validation of income and family status. Health Services - Fiscal Revenue Controls report #1718-8 October 2018 Page 10 CHART III – Sliding fee scale outcomes for 12 months of new clients. “a sliding fee scale requires family income and size” The following graph indicates for the last twelve months of clients what the system sees as the sliding scale. At 25% of the clients, the overrides could be having an impact on enforcement of the sliding fee scale policy. Source: Division information The sliding fee scale uses the federal poverty levels to establish how much clients should pay. In order to properly establish the fee scale, clients are to provide income and family size. The Division’s procedures indicate the waived or reduced fees require completed documentation of income and family size. Services shall not be discontinued if an individual refuses to pay or provide the financial information. In discussions with the Billing Supervisor, they would like to see the default for lack of information be for clients to pay the full amount as indicated in their procedures. The Department does not have procedures, currently, to periodically analyze and fix any overrides. Health Services - Fiscal Revenue Controls report #1718-8 October 2018 Page 11 Overrides are made from numerous client entry points and do not receive immediate review. The division does not have a process to timely rectify any misinformation entered for sliding scale purposes. These clients are being re-assessed after a year. It is recommended for the department to establish a periodic review to correct overridden income and family members entered. It is recommended for the department to default to no sliding scale to reinforce the receipt of support for financial information. “Federal poverty levels are the basis for sliding fee scales.” Department’s divisions have disparate sliding fee scales. The Behavioral Health Division’s sliding fee scale uses flat charges and these are not ratably increased over the poverty level spectrum of the scale developed. Behavioral Health’s sliding scale discounts end at 400% of federal poverty levels (FPL). The flat dollar amounts were utilized to be easier since fees vary significantly based on procedure and provider of the service. Behavioral Health scale results in inconsistent rate jumps and jumps from $75 to the actual fee rate at the last step. The Public Health Division’s sliding fee scale is materially different in many respects. The sliding fee scale results in a percentage of fee calculation. Public Health’s sliding scale discounts end at 250% of federal poverty levels. This approach is more typical of the fee scales reviewed from other medical type clinics. Development of both sliding scales starts with usage of the federal poverty scale. Both divisions used the same poverty scale information to come up with significantly different approaches and results. The Federal government provides very little guidance on how their federal poverty levels are turned into a sliding fee scale. Health Services - Fiscal Revenue Controls report #1718-8 October 2018 Page 12 CHART IV – Comparison of division sliding fee scales at different income levels (and FPL%) (Family of 4 with a $150 fee) Behavioral health’s sliding fee scale approach results in lower fees over a higher extended range of income levels. Behavior Health’s full fees come to play at income levels 60% higher than Public Health. This approach might be encouraging higher income clients to utilize services and result in a greater use of County resources. Since these scales are under the same department, it seems appropriate there be some consistent and uniform approach within the department. It is not clear the Department has analyzed the impacts from adopting the two scales. There was insufficient information to assess the impacts. As indicated in Chart III above, a majority of Behavioral Health clients pay little or no fees based on the current sliding scales. It is recommended for the Department with support from the Administrative Services Division consider updating to a consistent single sliding fee scale, further developing the parameters around its use, and assessing the impacts from the scale to County resources. Health Services - Fiscal Revenue Controls report #1718-8 October 2018 Page 13 “Collection activities are not consistently handled in department.” More oversight needed over collections. The billing manager has no access to data or reports to independently create and/or generate reports on collection activities from the clinic systems (this would include billed payments, payments collected, reversals, and adjustments). There hasn’t been any development of reports for monitoring and managing collections. It isn’t clear there are audit trails on collection activities. Billing staff have the ability to reverse payments whereas front desk staff do not. Billing staff for the Health and Behavioral Health system (OCHIN) do not get involved with other department billing activities. Billing staff do not have comprehensive written policies and procedures. There should be periodic oversight and monitoring of all collection activities. This can be accomplished through routine reporting. Billing supervisory staff in the department should be able to review and understand what modifications can occur to original data entry. It helps to have all collection activities centralized. In the absence of oversight and controls, money might be received and then the record of the receipt could be removed or adjusted, leaving the whereabouts of the money in question. It is not clear the department is using appropriate reports to understand the nature and types of adjustments occurring and whether they are appropriate. Staff has not identified any issues with the current oversight for billings. The department has not reviewed and addressed the adjustments that can occur within the system. The lack of reporting hampers effective monitoring, and management of billing and collection activities. It is unclear what the impact is. There were over $5 thousand dollars’ worth of reversals from January 2018 through June 2018. Health Services - Fiscal Revenue Controls report #1718-8 October 2018 Page 14 It is recommended for the Department to consider centralizing the overall department collection supervision duties. It is recommended for the Department to put in place appropriate controls over adjustments to any collections. It is recommended for the billing manager to have the ability to collect, analyze and report data on the activities they supervise/oversee. It is recommended for the Department to understand, evaluate, and monitor the audit trails available for its collection system. It is recommended for the Department to develop written policies and procedures over the billing and collection oversight activities. 2.2 CUSTODY OF ASSETS Overall, the department performed well in providing custody over assets. The following observations represent infrequent occurrences. “An example of a prepaid gift card is a $10 prepaid gas card.” Oversight of prepaid gift cards could be improved. The department utilizes prepaid gift cards in a number of programs. A number of staff are purchasing these gift cards and there doesn’t appear to be a periodic review for the accountability for those cards. In reviewing the gift cards with staff noted one instance where one gift card was not accounted for. In a couple of other instances noted the gift cards were being used to purchase benefits for clients and were not being given to clients (as anticipated). In these circumstances, receipts would have been available Health Services - Fiscal Revenue Controls report #1718-8 October 2018 Page 15 and should have been used to provide documentation of the use of the gift card. Prior work with the department on gift cards had recommended gift cards should not be used for employee expenses. Most staff, who have custody of the gift cards, use a log to appropriately account for the gift cards purchased. Those logs are remitted to Administrative Services Division staff when all gift cards have been issued. Administrative Services Division staff used to review the gift card logs but recently, have not had sufficient time to check on gift cards. In the absence of sufficient control over gift cards, they may be stolen or used in a manner not intended. It is recommended for the Administrative Services Division (or selected supervisors) periodically audit gift card accounting in a comprehensive way and periodically check custody logs for completeness and accuracy. It is recommended staff use another procurement method (petty cash, purchasing cards, or employee reimbursement) with receipts to make approved purchases for the benefit of clients. Closed checking account needs authority rescinded. County resolution 2008-150 authorized the Behavioral Health Division to have a checking account of $1,000. In 2018, the department closed this account and returned the money. The authority for the checking account should be removed. It is recommended for the County to rescind the checking account authority by resolution. Health Services - Fiscal Revenue Controls report #1718-8 October 2018 Page 16 “The petty cash policy relies on receipts for accountability.” Petty cash policy adherence could be improved. Noted one instance where petty cash had been used to provide monies for a client to travel to their appointment. A supervisor approved the disbursement. Noted another instance where there was a receipt missing. Petty cash is supposed to be for nominal department expenses where receipts can be obtained. In the case of providing support to clients no receipt can be obtained. The current policy doesn't expressly prohibit usage for a department cost for clients. Receipts are an expected part of the reconciliation process and should be anticipated when monies are utilized. Some of the Department’s grant funds have stipulations that cash is not to be provided to clients. The petty cash policy (F-8) does not expressly prohibit giving cash to clients, nor does it address what is supposed to happen when receipts are not available. It is recommended for the petty cash custodians periodically be educated on the usage and documentation required for petty cash. 2.3 OTHER INTERNAL CONTROLS Overall, the department performed well in providing fiscal controls over collected revenues. The following observations are noted to help further improve the procedures put into place. Health Services - Fiscal Revenue Controls report #1718-8 October 2018 Page 17 “Mail logs are a useful control for monies not receipted to a client.” Log prepared from funds received by mail is not being used as a control. Two staff prepare a log on receipt of monies in the mail. Currently, the mail log is not used after that point to consider whether all of the monies received (and recorded on the log) have in fact been deposited. In some cases the monies received may not be the County’s and must be resolved. The mail log establishes an important control for identifying immediately on receipt a control over the received monies in the mail and, which the customer has not received a receipt from any financial system. Most of the funds received by mail are checks. County Policy 1999-075 requires any monies received to be deposited within 24 hours. In the absence of sufficient controls all monies received may not be accounted for in deposits. Recent turnover in the division has resulted in staff not reviewing the mail logs. Administrative Services Division staff have been receiving the log but have not had time to track where each receipt has been deposited. It is recommended Administrative Services Division staff re-establish the control for assuring monies received are deposited in accordance with County policy. Better efficiency and control could be possible with use of state fiscal systems. Currently staff (in Vital records and Environmental Health) have a couple of choices on how they issue receipts for monies. Currently they are double entering receipts into two systems - their state operated software and the county's financial systems (Munis). Most of these receipts are by check. The control issue is assuring the two systems reconcile. They are reconciling between their Munis receipts and the Health Services - Fiscal Revenue Controls report #1718-8 October 2018 Page 18 “The County operates many State programs and therefore is often required to use State software.” deposit. They are not reconciling between their receipting in their state system and the county deposit prepared. These methods should equal but a reconciliation/validation isn’t being performed. There are significant controls over Munis receipt entries but should these not be captured in Munis, any differences would be captured in a reconciliation between the two systems. Finance has a policy (P-1999-075) that revenues should be reconciled to the system. The system is the state system and/or the certificates issued (in the case of vital records). It is normal for departments to issue receipts from their systems and, in those situations, system reports are used to reconcile to the deposit to be made to Munis. The state system isn’t always practicable for all receipts. There also has not been any resources put towards pushing the data from one system to the other to reduce the double entry. In the absence of a consolidated approach it may be possible for some monies to not be accounted for. It is recommended for the Environmental health program and Vital Records Program to consider how they might consolidate receipting. This might allow them to eliminate the duplicate receipting efforts through importing those transactions to Munis. It is recommended for Administrative Services Division to consider including in workflow a daily or periodic reconciliation of revenues in the two systems to the amounts deposited. Health Services - Fiscal Revenue Controls report #1718-8 October 2018 Page 19 Written fiscal policies and procedures are not up to date. Current fiscal procedures over cash handling are fairly comprehensive for but have not been updated for some of the technological improvements put in place by the latest business manager. In addition, written procedures have not been developed for billing/collection processes. Under the green book, an essential principle for internal control is documenting your policies and procedures as they change. In the absence of the updates, it is difficult to have continuity of expectations and to determine if all risk are being addressed. Most of these additions relate to new technological enhancements for reports and closing processes for revenues. It is recommended for the department to update their fiscal policies and procedures. 2.4 OTHER COMPLIANCE “This approach to medical record fees is fairly common.” Some department fees not on County fee schedule. There are some medical record requests charged a miscellaneous fee that did not appear to follow the County fee schedule or conform to the specific departmental schedule. Fees assessed for medical records are using a template that charge a rate of $18.65 for the first 10 pages and 20 cents for the next 10 pages and 10 cents thereafter. Their form also allows for a search fee of $35 and $20 for a rush. None of these fees are included on the County fee schedule for the department or the County. Health Services - Fiscal Revenue Controls report #1718-8 October 2018 Page 20 The County fee schedule is used to outline all of the fees that can be charged for services. The County typically charges 25 cents per black & white copy. It is not clear the department has been reviewing for new fees that should be incorporated into the schedule. In this particular case, their billings looked to be in excess of what would be allowable from the County fee schedule. It is recommended the department update their billing to follow the County fee schedule and/or develop and propose in the budget process a new fee schedule for these items. It is recommended for the department to periodically review their billings for compliance to the County fee schedule. 3. Management responses Deschutes County Health Services To: David Givans, County Internal Auditor 2.1 Revenues and Collections FINDING #1: Resource model under Coordinated Care Organization (CCO) is changing and is an area of risk for the department RECOMMENDATION #1: It is recommended for the Department to actively utilize and share information with the Administrative Services Division, County Finance, and County Administration for all financial discussions involving the CCO on resource modeling, reconciliations, and accounting issues. Health Services - Fiscal Revenue Controls report #1718-8 October 2018 Page 21 Health Services Comments – continued RESPONSE #1a: Dave Inbody, Deputy Director of the Administrative Services Division, is a part of the department’s team negotiating a new contract with PacificSource, the local coordinated care organization (CCO). RESPONSE #1b: Once the new contract with PacificSource has been finalized, the Business Intelligence Team, which is a part of the Administrative Services Division, will develop modeling and reporting supporting for the tracking of services provided and the distribution of revenue from PacificSource. [December 31, 2018] FINDING #2: Current behavioral health policies interpreted to eliminate collection efforts for certain programs. RECOMMENDATION #2a: It is recommended for the Behavioral Health Division in coordination with their Administrative Services Division revise the collection policies and procedures to collect the required copays and balances due from all programs (while taking into account appropriate sliding fee scales) and take steps to educate staff on the changes. RESPONSE #2a: Once the new process (described in RESPONSE #2b) has been finalized, all relevant policies and procedures will be updated to reflect the changes. Any changes to the sliding fee scales will require approval from the Board of Commissioners. [June 30, 2019] RECOMMENDATION #2b: It is recommended the policies developed above include the process for considering waivers of fees for financial hardship. It is recommended for those situations where waivers are being considered for financial hardship, that staff document the initial rationale and periodically revisit that assessment over time. RESPONSE #2b: A workgroup will be created to identify means to collect payments from all programs and eliminate any programmatic exemptions. The current guidelines (a statement every 30 days and two past due letters) will be used for all clients, which should meet requirements to attempt to collect payments. Simultaneously, the sliding fee scale amounts and thresholds will be reviewed in response to concerns about the billing of a delicate and sometimes unstable population of clients. The current individualized exemption process relies on medical criteria in determining exceptions. This process will be revised to remove medical criteria and replace it with financial hardship criteria. This may require renewed authorization from the client to release financial information to their insurance company. [December 31, 2018] FINDING #3: Billing and collection staff unsure about posting of copays. Health Services - Fiscal Revenue Controls report #1718-8 October 2018 Page 22 Health Services Comments - continued RECOMMENDATION #3a: It is recommended for the billing manager to develop written procedures for staff on billing and collections procedures including how to properly process and apply payments received. RESPONSE #3a: Upon completion of the training (identified in RESPONSE #3b), the Billing Team will begin applying copays to date of service paid. A procedure addressing the distribution and application of copays and payments to client accounts will be created. [June 30, 2019] RECOMMENDATION #3b: It is recommended for copayments collected to be attributed by date of service. RESPONSE #3b: The Billing Team will receive training on the requirements regarding attribution of a copayment to date of service paid rather than carrying an outstanding balance. [October 31, 2018] FINDING #4: Information used for behavioral health sliding fee scale needs improvement. RECOMMENDATION #4a: It is recommended for the department to establish a periodic review to correct overridden income and family members entered. RESPONSE 4a: The Billing Supervisor will review a Federal Poverty Level (FPL) report annually to identify and correct overridden income and family members entered. The review of this report will correspond with the annual update to the Federal Poverty Guidelines, released March 1 of each year. [February 28, 2019] RECOMMENDATION #4b: It is recommended for the department to default to no sliding scale to reinforce the receipt of support for financial information. RESPONSE #4b: A new default to no sliding fee schedule will be established. Any clients currently defaulting to a sliding fee schedule will be expired and replaced with the new default system. [December 31, 2018] FINDING #5: Department’s divisions have disparate sliding fee scales. RECOMMENDATION #5: It is recommended for the Department with support from the Administrative Services Division consider updating to a consistent single sliding fee scale, further developing the parameters around its use, and assessing the impacts from the scale to County resources. RESPONSE #5: Based on the unique funding requirements and the variable nature of billed rates in between Public Health and Behavioral Health, the Health Services Department does not see a viable means to establish one sliding fee scale to serve both the Public Health Division and the Behavioral Health Division. Health Services - Fiscal Revenue Controls report #1718-8 October 2018 Page 23 Health Services Comments - continued Public Health and Behavioral Health receive funding through two different divisions of the State and are required to follow different federal guidelines. Reproductive Health funding is from a Title X grant from the U.S. Department of Health and Human Services office. Behavioral Health funding is by Title XIX reimbursement through Medicaid. Title X guidelines specifically state, “Projects should not have a general policy of no fee or flat fee or minimum fees of any sort (no-show fees, dispensing fees, family planning lab handling fees, etc.) may be charged.”1 Title X guidelines also state that the client should be considered “full fee” once their FPL status 1 is at or above 250%. Title XIX guidelines have no such language. Since the use of flat fees are strictly prohibited in Reproductive Health (Public Health Division), in order to implement one sliding fee scale Behavioral Health would have to adopt a percentage-based sliding fee scale rather than the flat-fee scale it currently utilizes. In Behavioral Health, the billed amount for a service can vary greatly depending on a number of factors, such as the credential of the clinician, length of time for the service, and type of group service provided. A percentage-based fee schedule will prevent staff from providing clients with any certainty regarding out-of-pocket costs for prior to service delivery. Although one consistent sliding fee schedule for both the Public Health Division and Behavioral Health Division may not be viable, both schedules will be reviewed by the Administrative Services Division for both operational and fiscal considerations. Monitoring of fiscal implications of each sliding fee scale will be ongoing. Based on this review and monitoring, necessary revisions will be made to create more consistent and financially equitable sliding fee scales across both divisions. [June 30, 2019] FINDING #6: More oversight needed over collections. RECOMMENDATION #6a: It is recommended for the Department to consider centralizing the overall department collection supervision duties. 1 Program Requirements for Title X Funded Family Planning Projects, Version 1.0, April 2014, Section 8.4 Charges, Billing, and Collections Health Services - Fiscal Revenue Controls report #1718-8 October 2018 Page 24 Health Services Comments - continued RECOMMENDATION #6b: It is recommended for the Department to put in place appropriate controls over adjustments to any collections. RESPONSE #6a, b: The Health Services Department will assess the feasibility of means to centralize, track and report on all collections activities. [December 31, 2018] RECOMMENDATION #6c: It is recommended for the billing manager to have the ability to collect, analyze and report data on the activities they supervise/oversee. RESPONSE #6c: The Billing Supervisor has been provided with access to reporting tools, usually limited to the Business Manager, in the Epic electronic health records (EHR) system. Additional software tools and applications will be assessed to enable the Billing Supervisor to more effectively access and analyze data regarding billing and payments. [December 31, 2018] RECOMMENDATION #6d: It is recommended for the Department to understand, evaluate, and monitor the audit trails available for its collection system. RESPONSE #6d: Leveraging the Business Intelligence Team, tools will be developed to enable the Billing Team to track and report on collections activities. [June 30, 2019] RECOMMENDATION #6e: It is recommended for the Department to develop written policies and procedures over the billing and collection oversight activities. RESPONSE #6e: Once responses #6a-#6d have been completed, billing policies and procedures will be revised or developed to reflect current practices. [June 30, 2019] 2.2 Custody of Assets FINDING #7: Oversight of prepaid gift cards could be improved. RECOMMENDATION #7a: It is recommended for the Administrative Services Division (or selected supervisors) periodically audit gift card accounting in a comprehensive way and periodically check custody logs for completeness and accuracy. RESPONSE #7a: The Administrative Services Division will establish an annual process to audit gift card accounting. [June 30, 2019] RECOMMENDATION #7b: It is recommended staff use another procurement method (petty cash, purchasing cards, or employee reimbursement) with receipts to make approved purchases for the benefit of clients. . RESPONSE #7: The Administrative Services Division will conduct a review of gift card utilization and examine possible alternatives with program leadership. [March 31, 2019] Health Services - Fiscal Revenue Controls report #1718-8 October 2018 Page 25 Health Services Comments - continued FINDING #8: Closed checking account needs authority rescinded. RECOMMENDATION #8: It is recommended for the County to rescind the checking account authority by resolution. RESPONSE #8: The Business Manager will work with the Finance Department to rescind authority for the closed checking account. [October 31, 2018] FINDING #9: Petty cash policy adherence could be improved. RECOMMENDATION #9: It is recommended for the petty cash custodians periodically be educated on the usage and documentation required for petty cash. RESPONSE #9: Petty cash custodians will be required to receive annual training on the usage and documentation required for petty cash. [December 31, 2018] 2.3 Other Internal Controls FINDING #10: Log prepared from funds received by mail is not being used as a control. RECOMMENDATION #10: It is recommended Administrative Services Division staff re-establish the control for assuring monies received are deposited in accordance with County policy. RESPONSE #10: The Business Manager will review current process and make necessary changes to ensure monies received by mail are deposited in accordance with County policy. [December 31, 2018] FINDING #11: Better efficiency and control could be possible with use of state fiscal systems. RECOMMENDATION #11a: It is recommended for the Environmental health program and Vital Records Program to consider how they might consolidate receipting. This might allow them to eliminate the duplicate receipting efforts through importing those transactions to Munis. RESPONSE #11a: The Administrative Services Division will work with leadership in the Public Health Division to examine the feasibility of receipt consolidation including the use of Munis. [December 31, 2018] RECOMMENDATION #11b: It is recommended for Administrative Services Division to consider including in workflow a daily or periodic reconciliation of revenues in the two systems to the amounts deposited. Health Services - Fiscal Revenue Controls report #1718-8 October 2018 Page 26 Health Services Comments - continued RESPONSE #11b: The Administrative Services Division will implement revenue reconciliation processes for all programs where multiple systems of tracking are utilized. [March 31, 2019] FINDING #12: Written fiscal policies and procedures are not up to date. RECOMMENDATION #12: It is recommended for the department to update their fiscal policies and procedures. RESPONSE #12: Fiscal policies and procedures will be update and/or created to reflect current practices. [September 30, 2019] 2.4 Other Compliance FINDING #13: Some department fees not on County fee schedule. RECOMMENDATION #13a: It is recommended the department update their billing to follow the County fee schedule and/or develop and propose in the budget process a new fee schedule for these items. RECOMMENDATION #13b: It is recommended for the department to periodically review their billings for compliance to the County fee schedule. RESPONSE #13a, b: A comparison of current billing practices to county fee schedules will be conducted with any disparities corrected in the FY 2020 fee schedule. This process will be repeated annually to ensure ongoing compliance. [June 30, 2019] Deschutes County Finance Wayne Lowry, Finance Director The Finance Department relies on Departments to provide timely financial information for use in the Comprehensive Annual Financial Report (CAFR). The development of the CAFR each year requires decisions to properly account for transactions and to prepare required footnote disclosures. Timely financial information from departments is vital to meeting these requirements. We concur with the recommendation that significant financial information from the Health Services department be communicated to Finance in a timely manner. {End of Report} Please take a survey on this report by clicking on the attached link: https://www.surveymonkey.com/r/HealthServicesFiscalRevenueControls1718-8