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Department of Public
Health Fails to Collect Fines from Nursing Homes and Hospitals, New Audit Finds.
The Department of
Public Health failed to collect more than $15 million in penalties and fines
that would have benefited both state and federal coffers, according to a state
audit released June 17.
The department, which is
responsible for licensing and monitoring health care facilities, is authorized
to impose a civil penalty if a health care facility is not operating within
compliance of state or federal regulations. Penalties collected are deposited
into a special fund for the State Health Facilities Citation Penalties Account
or the Federal Health Facilities Citation Penalties Account. The collected
penalties and fines are used to protect patients from abuse or neglect. The
audit reviewed the department's operations between 2003 and 2007.
The state auditor recommended
a number of changes, including changing state laws regarding how penalties are
imposed and adjusting the penalty to reflect inflation. The auditor also
recommended requiring the department to deposit penalties into an account that
generates interest. Other recommendations suggested making sure that funds are
not based on poor estimates and that facilities are surveyed every two years, as
required by state law, to ensure that the facilities meet state and federal
compliance. (Source: California State Audit Report 2010-108, June 17.)
Cal-Tax recommendation: The
auditor's recommendations should be followed. Monitoring the quality of nursing
homes is important, and state officials should improve their process for doing
this work.
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State Auditor
Finds Lack of Transparency in Program for Low-Income Women.
The state auditor reported June 10 that the Department of Public Health's
administration of the Every Woman Counts (EWC) program has been lax in several
respects.
The auditor found:
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Contrary to its
previous claims, the Department of Public Health has a great deal of flexibility
to use existing EWC program funds to provide screening services to women. "We
estimate that had Public Health redirected one-half of the amount it spent on
various contracts for nonclinical activities in fiscal year 2008-09, it could
have dedicated nearly $5.1 million to pay for screening activities," the auditor
wrote. "This funding would have allowed more than 41,500 additional women to
obtain services from EWC."
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The department's
ability to redirect funds is hampered because it cannot easily identify funds it
uses for activities that do not directly support women. "Public Health's ability
to identify and redirect funds toward activities that directly support women is
hampered by the fact that Public Health cannot determine how much its
contractors spend on other activities," the auditor reported. "For example,
Public Health spent more than $10 million on various contracts with local
governments and nonprofit organizations during fiscal year 2008-09; however, it
does not know how much these contractors spent on each contracted activity."
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The department does
not provide the Legislature with estimates of the number of women it expects to
serve in a fiscal year, even though it provides this information to the federal
government to secure federal funds.
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The department has
not fully complied with certain aspects of state law. Specifically, it has not
developed regulations that implement the EWC program – nearly 16 years after the
program began – nor has it evaluated the effectiveness of the EWC program in
annual reports to the Legislature (since 1994, only one report has been
submitted). "This lack of information on the effectiveness of the EWC program
limits Public Health's ability to advocate for appropriate funding and hampers
the Legislature's and the public's ability to exercise oversight," the auditor
said.
Spending nearly
$52.1 million in fiscal year 2008-09, the EWC program provides funding for
breast and cervical cancer screening services for low-income women. During
fiscal year 2008-09, Public Health provided EWC services to nearly 350,000
women. Under the EWC program, medical providers submit claims to the state for
the screening services they provide to women enrolled in the program.
The auditor also
found that funding the program will likely be more difficult in the future in
part because it relies on a declining revenue source – the tobacco tax. (Source:
State Auditor Report: "Department
of Public Health: It Faces Significant Fiscal Challenges and Lacks Transparency
in Its Administration of the Every Woman Counts Program," June
10.)
Cal-Tax
recommendation: The state needs to increase oversight of this program and all
others, and staffers should rededicate themselves to providing their important
services in the most transparent and cost-effective manner possible.
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State Wasted $13 Million
on Prison Drug Program, Auditor Says.
A report from the inspector general
for the state prison system says California wasted at least $13 million last
year through inefficiencies in the way it delivers prescription drugs to
prisoners.
The audit was initiated based
on pharmacy staff who approached inspectors from the Office of the Inspector
General during a regular review of prison facilities. The staff was "concerned
about the sheer amount of wasted medication in prison pharmacies," the report
said.
The report continued: "This
report highlights the results of our review and focuses on waste in prison
pharmacy operations in four areas: the failure to restock millions of dollars in
unused medications each year; the lack of adherence to the formulary, which is
an approved list of medications, resulting in millions of dollars overspent on
medications each year; the functionally unreliable computerized pharmacy
inventory system that bears no relation to the actual stock of medications at
any prison pharmacy; and the inconsistent practices among prisons when
transferring inmates with medications, resulting in excess medications that are
most often destroyed. Contrary to expectation, there are almost no procedures
for identifying and restocking medications. This managerial void costs taxpayers
at least $7.7 million, and very likely close to $20 million, every year. In
addition, due to the absence of oversight, CDCR clinicians routinely prescribe
non-formulary medications, costing taxpayers at least another $5.5 million in
2009 alone."
Additional costs were
incurred for staff time "as pharmacists find ways around the state-wide
computerized inventory system, a system so unreliable that pharmacists prefer to
rely on handwritten tallies," the report said. And in the absence of consistent
medication transfer procedures when inmates are transferred among prisons,
prison pharmacies routinely generate unnecessary prescription refills, which are
often destroyed. Since more than 100,000 inmates on medications are transferred
among California's state prisons each year, with each of those inmates receiving
an average of 5.5 prescription medications, the report said "the costs of
filling and destroying unnecessary and unused prescriptions are tremendous."
The federal receiver who
oversees prison medical care said he is making many of the changes recommended
in the report, including using more generic drugs and improving tracking of
prescriptions. (Sources: The Sacramento Bee, April 14; report from Office
of the Inspector General, April 15.)
Cal-Tax recommendation: The
inspector general should review the situation later this year to ensure that the
problem areas are being addressed, and state officials should review any other
program that purchases and distributes prescription drugs to ensure that similar
waste in not occurring there, as well.
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Worker Claims Retaliation
After Helping Auditors.
An employee at California's Prison Health Care Services agency has filed suit
against a manager, alleging that she was intimidated and threatened for
cooperating with state auditors on improper contracting practices by the
receiver's office.
The complaint was filed last
year, and was recently heard by an officer of the State Personnel Board. A
ruling has not yet been issued.
The Sacramento Bee
reports: "Susan Lew, a contract manager who filed the complaint, said Director
of Administrative Services Mitzi Higashidani retaliated against her after Lew
disclosed information on a $26.7 million information technology contract signed
without competitive bidding."
State Auditor Elaine Howle
said in a 2009 report that Prison Health Services "created an environment that
discourages Corrections' staff working both inside and outside Prison Health
Services from raising concerns about its contracting."
Ms. Lew, who was demoted
after helping the auditor, is seeking reinstatement to her old job with back
pay, along with reimbursement for stress and a transfer to another agency. She
also wants Ms. Higashidani to be disciplined. (Source: The Sacramento Bee,
March 25.)
(Cal-Tax recommendation: We
will wait for the case to be decided before declaring anyone guilty, but the
claims made in this case do seem consistent with the way state whistleblowers
have been treated in the past. If Ms. Lew wins her case, the taxpayers will have
to pay for her manager's mistakes, but there may be long-term savings if other
potential whistleblowers are encouraged to report government waste, fraud and
mismanagement.)
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Santa Clara County Hires
$100,000 Consultants to Provide Same Services That $20 Million Consultants
Recently Provided.
Santa Clara County's chief executive, Jeff Smith, recently signed a $100,000
contract with two consultants who are charged with scouring the Valley Medical
Center's finances and finding a way to keep the county-run hospital afloat. The
San Jose Mercury News reports: "The contract comes less than a year after
another consulting group, hired for $20 million to provide a strikingly similar
service, delivered its recommendations to the county."
Mr. Smith said the previous
work is no longer useful because rapid changes in the economy have made the
county's financial situation even worse. The new $500-an-hour consultants will
provide an updated financial review and, according to the Mercury News,
will suggest "a plan to increase income."
Joy Alexiou, spokeswoman for
Valley Medical Center, told the newspaper that $60 million in savings were
realized as a result of recommendations in the $20 million analysis, but Mr.
Smith disagreed. (Source: San Jose Mercury News, March 11.)
(Cal-Tax recommendation: The
county should give the original plan a chance to work. The original plan for
increasing the hospital's efficiency was written during very bad economic times,
so it should remain valid despite worsening conditions, and the hospital's
representative indicates that the recommendations are paying off. The county
shouldn't spend $100,000 to reinvent the wheel, especially when the county's
stated goal is to cut back on unnecessary spending.)
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Millionaires' Tax Fails to
Help Foster Children.
A new study shows that the "Millionaires' Tax" approved by voters in 2004 with
passage of Proposition 63 does not provide mental health services to the extent
promised during the campaign.
Known as the Mental Health
Services Act, Proposition 63 imposed a 1 percent tax on personal incomes over $1
million. Revenue generated by the tax is intended to be used on mental health
services.
A study released by the
University of San Diego School of Law shows that children in state foster-care
programs are in need of mental health programs – however, the funds raised by
Proposition 63 to date have gone to prison inmates and toward destigmatizing
mental illnesses, rather than to help these children. The study argues that
foster children are in need of mental health services because they are more
likely than their peers to commit suicide, serve jail time, drop out of school
or be homeless.
(Cal-Tax recommendation:
Voters should scrutinize how money from new tax initiatives will be used. In
this case, convicted felons are getting preference over foster children – a
priority that most voters likely do not share. Meanwhile, the tax is adding to
California's status as a high-tax state, thereby reducing employment
opportunities for former inmates, teenage foster children and all other
Californians.)
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Whistleblower Sued for
Reporting Welfare Fraud.
Laura Zine, a former employee at a medical billing company, testified and helped
convict her ex-boss on charges of Medi-Cal fraud. Now, her former boss is suing
her.
Medi-Cal fraud costs the
state approximately $10 billion per year. To reduce fraud and to convict
criminals, the Department of Health Care Services encourages people to report
cases of fraud, and even allows individuals to report cases anonymously if they
fear retribution.
In Ms. Zine's case, she
reported the fraud, testified in court, and her boss was sentenced to prison.
After serving his time in prison, he sued her, costing Ms. Zine $4,000 in legal
expenses. The federal government recently agreed to represent her in court.
"If you witness a crime, the
good Samaritan shouldn't have to pay the bill for reporting it," Ms. Zine said.
(Source: KCRA Channel 3 News, February 16.)
(Cal-Tax recommendation: The
state already has whistleblower protections for government employees, but
policymakers should look into this situation to see if additional laws are
needed to protect non-government whistleblowers from frivolous lawsuits. People
like Ms. Zine should not be penalized for reporting fraud.)
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Dead People Received IHSS
Benefits, Controller Reports.
Lax state and county
oversight of In-Home Supportive Services (IHSS) program payments may have cost
the state more than $11 million in 2008, Controller John Chiang said, noting
that this money was distributed despite the providers or recipients of care
being deceased.
As samples, the controller
reviewed Fresno and San Diego counties, where questionable payments totaling
$464,000 and $538,700, respectively, were made in 2008 in cases involving IHSS
providers or recipients whose names and Social Security numbers were listed in
the Social Security Administration Death Master File or the California
Department of Public Health's Vital Statistics Death File.
The IHSS program is
administered by the California Department of Social Services. The program
provides services such as housecleaning, meal preparation, shopping and personal
care to keep eligible individuals in their homes instead of in nursing homes or
board-and-care facilities.
The controller's survey
showed that counties were slow to take action to stop payment or to recoup
overpayments, even when evidence suggested the payments were fraudulent.
In one case, Fresno County
referred a case involving a deceased recipient to the county fraud investigation
unit on February 9, 2009. As of June 2009, the county was continuing to submit
claims for services provided to this apparently dead recipient.
The controller's report
recommends that the Department of Social Services develop comprehensive policies
and procedures for counties to follow to determine the validity of payments, and
to improve case file tracking. In addition, the report recommends that the
department conduct periodic field visits to ensure county compliance. (Source:
State Controller John Chiang news release, February 1.)
(Cal-Tax recommendation: We
urge the state and local governments to implement the recommendations made by
the controller. We also recommend that the controller build upon his good work
by expanding the review of IHSS payments to additional counties.)
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Tribal Welfare Program
Uses Tax Money to Pay Employee's Parking Tickets.
Reporter Keith Matheny of The Desert Sun recently completed a lengthy
investigation of the finances of the Torres-Martinez Temporary Assistance for
Needy Families Program, a taxpayer-funded program to assist the Torres-Martinez
Desert Cahuilla Indians in Los Angeles and Riverside counties. Among the many
irregularities he discovered:
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Tax dollars were used to pay
for multiple parking tickets received by one of the welfare program's
caseworkers. The program's former director said the spending was legitimate
because the employee "was at risk of losing her job due to missing work because
of transportation problems." Cal-Tax Vice President of Communications and
Research David Kline, quoted in the news story, said, "When taxpayers pay for
programs to help out the less fortunate, they expect that money to go for
necessities like food, clothing, shelter." Mr. Kline said that if parking
tickets are simply shifted to the taxpayers, "there's no real effect of the
penalty."
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More than $50,000 in credit
card expenditures were not documented.
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The tribe purchased 45 cars
for use by 90 employees, but failed to track how the vehicles were used.
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Every audit of the program
since 2002 has found serious, negative findings.
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The program is serving
thousands fewer families than anticipated when it was formed in 2001, but that
has not appeared to affect its annual funding. The annual funding was based on
an estimated average monthly caseload of more than 5,200 families, the program
actually serves fewer than 400 families per month.
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In some cases, the same
problems have persisted for years despite assurances from the tribe that it is
implementing solutions.
A forensic government auditor
and fraud investigator who reviewed the program's financial reports for the
newspaper said, "The federal government, tribal families and taxpayers in
general should be outraged at the degree of mismanagement and waste highlighted
in these reports."
The newspaper's review of
more than 40 tribal welfare programs nationwide found that more than one-third
has serious, negative audit findings in each of their past three audits, and
nearly half had such findings in at least two of the past three years. (Source:
The Desert Sun, January 17.)
(Cal-Tax recommendation:
There are plenty of government agencies that are supposed to be monitoring this
spending – someone needs to take charge and solve the lingering problems that
have been identified. The current system is not only wasting tax dollars, but is
depriving truly needy tribal members of benefits they are supposed to be
receiving.)
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Investigation Finds
Sacramento In-Home Care Fraud.
An investigation of
Sacramento County's In-Home Supportive Services program has found 19 cases of
fraud in the first four months, according to the county district attorney. The
Governor's Office estimates that similar abuses of in-home services may amount
to 25 percent of the program's cost statewide.
In Sacramento County, the 19
cases account for $315,000 in overpayments by 42,000 caregivers and clients.
The state approved $10
million in 2009 for counties to develop IHSS investigative units, such as the
one in Sacramento County. Other counties that have developed such task forces
include Fresno, San Diego and Riverside.
Assistant Chief Deputy
District Attorney Laura Green said: "We believe as long as In-Home Supportive
Services is in existence, there will always be fraud." Ms. Green's office is in
charge of Sacramento County's fraud prevention task force. (Source: The
Sacramento Bee, January 22.)
(Cal-Tax recommendation: At a
time when local government funds are slim, counties must continue to provide
oversight to ensure that every dollar and cent goes to programs that operate
efficiently. Californians who rely on these programs need quality services, and
taxpayers need assurance that their money is not being wasted. When looters
steal from the public treasury, local governments and Californians lose.)
