Federal Reports

What We Looked AtWe queried and downloaded 35 single audit reports prepared by non-Federal auditors and submitted to the Federal Audit Clearinghouse between July 1, 2020 and September 30, 2020, to identify significant findings related to programs directly funded by the Department of Transportation (DOT). What We FoundWe found that reports contained a range of findings that impacted DOT programs. The auditors reported significant noncompliance with Federal guidelines related to 8 grantees that require prompt action from DOT’s Operating Administrations (OA). The auditors also identified questioned costs totaling $25,838 for one grantee. RecommendationsWe recommend that DOT coordinate with the impacted OAs to develop a corrective action plan to resolve and close the findings identified in this report. We also recommend that DOT determine the allowability of the questioned transactions and recover $25,838, if applicable.

We audited the U.S. Department of Housing and Urban Development’s (HUD) response to COVID-19 to determine if it appropriately, effectively, and efficiently tracked, monitored, and issued Federal Housing Administration (FHA) refunds owed to homeowners with terminated loans. During our field work, the Coronavirus 2019 (COVID-19) pandemic began and as a result, we developed a second, more urgent audit objective to determine how COVID-19 has affected policies, procedures, and distribution of FHA refunds and whether HUD’s response was appropriate. We determined that COVID-19 generally did not affect the Single Family Insurance Operations Division’s (SFIOD) FHA refund policies and procedures; however, SFIOD did not fully notify homeowners of operational changes to its physical mail procedures, which potentially impacted its distribution of refunds. We issued this interim report to ensure HUD was made aware of the issues identified during our review and could act in a timely manner to address them. The audit prompted HUD to take immediate corrective action for all three recommendations, one of which will be closed concurrently with the issuance of this memorandum and two that will be completed during audit resolution.

We determined that PA Education generally had sufficient internal controls to ensure that LEAs developed IEPs in accordance with Federal and State requirements for children with disabilities who attend virtual charter schools and that these students were provided with the services described in their IEPs. These internal controls included developing model policies and procedures; monitoring LEAs; and providing technical assistance, guidance, and training. However, we found that PA Education could strengthen its monitoring process to ensure that LEAs also have written procedures on how they implemented the model policies for IEP development and how they provided and documented service delivery for students with disabilities.

The Federal Emergency Management Agency approved New York State’s Division of Homeland Security and Emergency Services (DHSES-NY) application for approximately $40.8 million to provide Disaster Case Management Program (DCMP) services to disaster survivors for household recovery efforts. FEMA did not provide the oversight needed to ensure DHSES-NY, as the grantee, carried out its responsibilities. DHSES-NY and its managing contractor did not always properly account for FEMA grant funds in accordance with Federal regulations and FEMA guidelines when approving contractor costs claimed, resulting in questioned costs of $12.2 million. DHSES-NY’s paper-based system used to track DCMP grant funding and expenditures was not sufficient to ensure contractors claimed eligible costs for payment. As a result, there is no assurance the contractors’ claimed costs are valid putting Federal funds and taxpayers’ money at risk of fraud, waste, and abuse. We made six recommendations to FEMA that, when implemented, should help strengthen oversight of FEMA’s individual assistance grant funds. FEMA concurred with all six recommendations. We consider recommendations 1, 2, 3, 4, and 5 resolved and open with an estimated completion date of July 30, 2021. Recommendation 6 is considered unresolved and open.

The OIG received allegations that the Veterans Health Administration (VHA) reported inaccurate data on the VA public website about the electronic wait list for patient appointments. The allegations, made by a VHA employee, stated that the data did not include wait list entries older than two years or administrative entries, such as patients requesting care at a different facility. The resulting OIG audit examined these allegations and two additional issues: whether VHA managed the wait list in accordance with scheduling requirements for veteran care and whether VA medical facilities complied with policies for managing the wait list. Although it substantiated the employee’s allegations, the audit team found that VA’s Office of the Medical Inspector had also identified the issues and made recommendations for corrective action. VHA began including wait list entries older than two years in 2018 and developed procedures to manage administrative wait list entries in a new tracking system in 2019. The OIG audit team further found that wait list entries were not reviewed and validated as required. Patients were not removed from the wait list when appropriate, indicating that employees at medical facilities did not review entries daily and supervisors did not validate the list weekly. Insufficient oversight increases the risk that patients will not receive care in a timely manner or at their preferred facility. It could also lead to excess entries on the wait list, which makes it seem as though veterans are experiencing longer delays for appointments than they are. Although VHA made advances in managing its wait list, the OIG made three recommendations for improvement. These focused on monitoring and routinely reviewing scheduling for patients who are waiting for care and overseeing wait list entries transferred to the new tracking system.

The Medicaid program provides medical assistance to low-income individuals and individuals with disabilities. The Federal and State Governments jointly fund and administer the Medicaid program. At the Federal level, the Centers for Medicare & Medicaid Services (CMS) administers the program. Each State administers its Medicaid program in accordance with a CMS-approved State plan. Although the State has considerable flexibility in designing and operating its Medicaid program, it must comply with applicable Federal requirements.States use the standard Form CMS-64, Quarterly Medicaid Statement of Expenditures for the Medical Assistance Program (CMS-64 report), to report actual Medicaid expenditures for each quarter. CMS uses the CMS-64 reports to reimburse States for the Federal share of Medicaid expenditures. The amounts that States report on the CMS-64 report and its attachments must be actual expenditures with supporting documentation. The amount that the Federal Government reimburses to State Medicaid agencies, known as Federal financial participation (FFP) or Federal share, is determined by the Federal medical assistance percentage (FMAP), which varies based on a State’s relative per capita income. Although FMAPs are adjusted annually for economic changes in the States, Congress may increase or decrease FMAPs at any time. During our audit period, Nebraska’s FMAP ranged from 51.16 percent to 52.55 percent. Medicaid Coverage of Targeted Case Management ServicesThe Social Security Act (the Act) authorizes State Medicaid agencies to provide case management services to Medicaid beneficiaries (§ 1905(a)(19)). Furthermore, the Act defines case management services as “services which will assist individuals eligible under the [State] plan in gaining access to needed medical, social, educational, and other services” (§ 1915(g)(2)). Federal regulations (42 CFR § 440.169(b)) refer to case management services as TCM services when they are furnished to specific populations in a State. Federal regulations state that allowable TCM services include assessment of an individual to determine service needs, development of a specific care plan, referral and related activities to help the individual obtain needed services, and monitoring and followup activities (42 CFR § 440.169(d)). However, Federal regulations also state that TCM services do not include the direct delivery of the underlying medical, educational, social, or other services to which the Medicaid-eligible individual has been referred, including services such as providing transportation (42 CFR § 441.18(c)).The CMS State Medicaid Manual states that FFP is not available for the specific services needed by an individual as identified through case management activities unless they are separately reimbursable under Medicaid. Also, FFP is not available for the cost of the administration of the services or programs to which beneficiaries are referred (CMS State Medicaid Manual § 4302.2(G)(1)).Nebraska Medicaid Program and Targeted Case ManagementIn Nebraska, the State agency administers the provision and payment of Medicaid services. The State agency uses the Medicaid Management Information System (MMIS), a computerized payment and information reporting system, to process and pay Medicaid claims.