Virtual Conversation | 2021 Re-Wire Policy Conference, Dec 15, 2021 Register

Auditor, DSHS at odds over per-day billing

In a report released this June, the Washington State Auditor’s Office questioned whether more than $291 million in federal Centers for Medicare and Medicaid Services funding which Washington state spend was properly documented. 

That number reflects the federal portion of roughly $588 million which the Washington state Medicaid program spent on supported living services during fiscal year 2020, which funded care for roughly 4,000 clients. While the audit examined the federal dollars, it did not look into the state’s portion.

These supported living services vary, but Shaw Seaman, chief of communications for the Developmental Disabilities Administration, the agency within the Washington State Department of Social and Health Services which administers the program, said most of their supported living clients need around-the-clock assistance. 

Supported living clients are people with disabilities who live in their own homes, but need care or assistance. 

The Department of Social and Health Services used to provide reimbursement to care providers by factoring individual service hours into the repayment rate, but this proved to be difficult, Seaman said. Given the nature of continuous care, he described trying to account for each hour of service for each client every day as counting beans.

“It created all kinds of problems,” he said. “And people get sick, moms and dads pick up their kids for the weekend, and all these things. It’s called life in the community, and it’s not an hourly service.” 

Since 2019, the Department has used a tiered rate method, where the individual client’s needs are assessed and included in a daily rate, which can change depending on what services are provided that day. 

However, in its report the Auditor’s Office raised several concerns about how the Department of Social and Health Services monitors daily rates that are billed to the state.

In a cost report audit for seven service providers, the Auditor’s Office found that six did not include detailed payroll expenditure information. None of the seven had supporting documentation to verify amounts they billed for in these cost reports. 

Additionally, it found the Developmental Disabilities Administration didn’t require documentation from service providers proving their costs were for allowed activities. 

The Department of Social and Health Services should increase oversight and reviews of costs billed from service providers, said Jim Brownell, assistant director of State Audit and Special Investigations with the Auditor’s Office. 

“From our perspective, this really comes down to a key phrase, and that’s fiscal accountability, or lack thereof.”

The Auditor’s Office has raised similar concerns during the past eight audits. In the audit for fiscal year 2019, they questioned the $114 million in federal dollars that the state spent on these programs, which the Centers for Medicare and Medicaid Services asked the state to repay. 

However, Seaman said they were able to provide the needed documentation and cost reports, and ended up repaying only $2.9 million.

The Auditor’s report states that in its opinion, the Department of Social and Health Services still needs to ensure payments are used only for allowable purposes with proper documentation, even in a per-day payment system. 

The Department’s payroll expenses often didn’t include the required level of detail, and as a result they were only checking whether the service provider was paid the correct daily rate, and not whether the payments were for allowable uses. 

The Department of Social and Health Services measures success based on whether client outcomes and services are being properly delivered, Seaman said. Using per-day rate calculations is a better way to factor payments and is less cumbersome than having providers account for each service rendered.

“That’s really what our chief indicator is: Are they implementing the plan? Are they meeting the clients needs?” Seaman said. “I just think the State Auditor’s Office hasn’t totally gotten their head around where we are today with social service delivery.” 

In a response to the Auditor’s finding, the Department of Social and Health Services laid out a number of ways they oversee and monitor services and payments. These include quality assurance reviews, contract monitoring and certification, and Medicaid service verifications, among others.

In its report, the Auditor’s Office said that while these oversight and monitoring strategies were useful to ensure clients did receive proper services, they’re not focused on ensuring payments to providers were for allowed activities to a level that satisfied federal requirements. 

Seaman said that his agency is diligent in looking for misappropriations. Last year, they found roughly $1 million in cost report discrepancies, which the service providers had to repay to the state.


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