An Audit Report on Substance Abuse Program Contract Monitoring at the Department of State Health Services
May 2011
Report Number 11-030
Overall Conclusion
The Department of State Health Services (Department) should implement an agencywide monitoring plan to coordinate and focus the monitoring of substance abuse contractors currently performed by:
- Three primary organizational units that directly monitor contracts (including the Contract Management Unit, which is responsible for managing all aspects of the contracting process, from contract planning through final contract close-out).
- Three secondary organizational units that perform functions that are related to the functions of the primary organizational units.
Having an agencywide monitoring plan would make contract monitoring more effective and efficient by ensuring that (1) there are no gaps or duplication in contract monitoring activities, (2) the Department monitors contractors with the highest risk of noncompliance, and (3) contractors implement corrective action.
In addition, when awarding and renewing substance abuse contracts, the Department should consider past monitoring results and ensure that contractors have implemented corrective action.
Examples of gaps in the Department's monitoring of substance abuse contractors include the following:
- The Department does not review user access to the Web-based Electronic Health Record and Billing System at the contractor level. At the 4 contractors that auditors visited, from 3 percent to 43 percent of the user accounts for that system were for individuals who were no longer contractor employees.
- The Department has no method to easily track which contractors it has reviewed and the results of those reviews. This limits the Department's ability to identify contractors that it has not reviewed and contractors with a history of noncompliance with requirements.
The Department also should review its substance abuse contract monitoring activities for possible duplication of effort. For example, both the Contract Management Unit and the Program Staff Unit review contractors' performance measure data. In addition, both the Quality Management and Compliance Unit and the Substance Abuse Compliance Group test contractors' compliance with standards of care in the Texas Administrative Code.
In addition, the Department should focus its monitoring on substance abuse contractors with the highest risk of noncompliance with requirements. To do this, the Department should complete risk assessments that consider results from contractors' single audit reports and monitoring conducted by all Department units. In fiscal years 2008 through 2010, the Department was able to perform financial reviews for only 72 percent of the contractors that had a contract in each of those fiscal years. In addition, the Department was able to perform Quality Management and Compliance Unit reviews on only 48 percent of those same contractors during fiscal years 2008 through 2010. Because the Department does not review all contractors, it should focus on the substance abuse contractors with the highest risk of noncompliance.
The Financial Monitoring Unit also should improve the risk assessment it uses to select substance abuse contractors for review by considering results from contractors' single audit reports and other organizational units' reviews. The Quality Management and Compliance Unit should develop and use a risk assessment process to select substance abuse contractors for review and the types of reviews it will conduct. The Contract Management Unit should implement a process to monitor substance abuse contractors with the highest risk of noncompliance with requirements.
After it reviews substance abuse contractors, the Department does not have a process to ensure that contractors implement corrective action. Reviewing for contractors' implementation of corrective action helps to ensure that the issues identified during monitoring have been corrected and helps provides assurance that funds are spent as intended.
Auditors also identified other less significant issues that were communicated separately in writing to the Department.