Paul Hammel
LINCOLN — More than $21 million in questionable spending of federal pandemic funds by the Nebraska Department of Health and Human Services was revealed in a newly released statewide audit.
The expenditures on such services as talent recruitment for nursing homes are considered suspect, State Auditor Mike Foley said Tuesday, because his team was unable to find adequate documentation that the money was distributed and used properly.
He noted that examples cited in the audit are “far from comprehensive” — and said pandemic-related dollars are just a part of ineffective oversight by DHHS, including its handling of Medicaid funds.
Overall, his team pointed to possibly tens of millions of misspent or unaccounted for federal dollars.
DHHS pledges attention
While disappointed by what he called a poor showing, Foley said he has faith in CEO Steve Corsi to implement corrective action on the audit findings.
“He inherited an agency with some major issues,” the state auditor said, calling Corsi a “no-nonsense” kind of person.
Corsi has reviewed the findings and, according to a statement, has reaffirmed his intention to correct internal safeguards on monitoring and using tax dollars.
“DHHS can and will resolve these issues,” said Corsi. “We will do the work and make the changes necessary to ensure tax dollars are spent both wisely and appropriately.”
The annual statewide single audit report of more than 250 pages examined all state agencies through last June, but Foley said he focused on DHHS for now because of its size and lion’s share of federal funding.
He found the latest audit more concerning overall than in past years in part because it reflected a large infusion of federal pandemic dollars. Much of that money was “not spent wisely, it was spent fast,” Foley said.
‘Longstanding fraud and abuse’
The audit followed a management letter that Foley released a month ago on “longstanding fraud and abuse” in the DHHS-administered “personal assistance services” program, which is funded by Medicaid.
That letter was a prelude to the full audit, Foley said. He said Corsi has started to address the longstanding problems in the personal assistance services program.
But Foley said the full audit report exposed “further examples of mishandling, including lack of proper oversight, of federal funds by DHHS.”
The auditing team noted as “particularly disturbing” the “apparent inability” of two DHHS investigatory programs to adequately safeguard Medicaid funds.
Auditors tested 20 cases in the Program Integrity division, which investigates cases of potential Medicaid fraud, and six cases in the Special Investigations Unit, which pursues allegations of recipient fraud.
That testing found five cases of suspected wrongdoing that had not been brought to satisfactory resolution.
Foley’s statement said that “whether the result of human error or ineptness,” the examples cited by his team were not all-encompassing. “Nevertheless, they account for tens of millions of possibly misspent or unaccounted for federal dollars.”
Examples cited by auditors
Among the audit findings:
- “Known questioned costs” of $21,410,994 are due to the “inability” of DHHS to properly document spending of federal Coronavirus State and Local Fiscal Recovery Funds (CSLFRF). Those monies, the auditing team said, were allocated by the Nebraska Legislature for employee retention and recruitment by nursing and assisted-living facilities and providers of developmental disability services. However, they were reportedly disbursed without subsequent verification that recipients used the funds as they were supposed to.
- DHHS reported having paid $5,000 in the coronavirus funds for allegedly fraudulent nursing scholarship applications submitted by a person who claimed falsely to be enrolled in a nursing program.
- Another $1.9 million in “known questioned costs” was noted because of DHHS’ “ineffective control procedures” when disbursing federal child care and development block grant funds. The federal regulations required those dollars to be obligated by Sept. 30, 2022; however, auditors noted that DHHS was spending them as late as June 28, 2023.
- Furthermore, $32,000 in the federal child care and development block grant monies were designated as questioned costs because DHHS did not ensure that recipients met criteria for increased awards. An example, the auditors said, was that one recipient received an additional $5,000 in student loan reduction for having a master’s degree, but it was learned she had yet to complete her schooling. “Even worse, she had not completed a class since 2012,” the auditors said. Because the questioned costs were based upon a sample, the potential dollars at risk were estimated to be $5,293,516.
- DHHS reportedly spent $163,622 in federal child care development funds in violation of federal and state requirements. The auditors noted a lack of support for disbursements, duplicate claims and payments surpassing amounts authorized. One example that was said to be “unreasonable” included billed hours when school-age children should have been in school. Another provider billed 240 hours of overtime in one month, but no documentation could be found to support that amount. “Shockingly, previous audits of DHHS have produced similar findings for the past 17 years,” the auditor team said.
- A sample testing of 25 long-term care facility payments revealed the “known misuse” of $20,153 in Medicaid funds by DHHS. Errors were attributed mostly to DHHS not property verifying recipient income and resources to ensure eligibility. In one example, a recipient sold a home for $144,000, but DHHS did not confirm the proceeds when determining eligibility. Based on the sample tested, the auditors put the potential dollars at risk at an estimated $31,763,196.