The annual Single Audit of the State of Rhode Island for the fiscal year ended June 30, 2021, resulted in 78 findings related to the administration of federal programs and the state’s key financial operations. Total federally funded expenditures increased dramatically to more than $8.4 billion for fiscal 2021 of which $3.6 billion was COVID-19 related. An extensive array of services to individuals and costs to support pandemic response efforts were reimbursed under these programs. Nearly $2.3 billion was expended for unemployment benefits.
The Single Audit Report, prepared by Auditor General Dennis E. Hoyle, was recently released by the Joint Committee on Legislative Services. The annual audit is required by both state and federal law as a condition of continued federal assistance.
The Single Audit Report also includes a detailed schedule of federal award expenditures and reports outlining internal control deficiencies and noncompliance relating to financial reporting and the administration of federal programs. The report includes the state’s financial statements which were previously communicated in the state’s Fiscal 2021 Annual Comprehensive Financial Report.
Federal assistance is received under more than 500 individual programs. Many programs are jointly financed with federal and state funding. Medicaid is the single largest program with fiscal 2021 expenditures totaling approximately $3.1 billion – the federal government shared $2.1 billion of that cost.
Of the 78 findings included in the report, 41 relate to the administration of federal programs and the remainder to the state’s controls over financial reporting.
The auditors reported that controls over final centralized approval of expenditures funded by the Coronavirus Relief Fund (CRF) should be improved. The state has not implemented sufficient overall subrecipient monitoring activities for Coronavirus Relief Fund amounts passed-through to subrecipients. Questioned costs totaling $508 thousand were identified for expenditures reimbursed from the Coronavirus Relief Fund program.
The state had insufficient controls to ensure expenditures were not reimbursed from more than one award under federal programs with similar pandemic response related objectives.
Controls over the processing of unemployment insurance claims were ineffective to sufficiently prevent fraudulent unemployment insurance benefit payments. The Department of Labor and Training (DLT) estimated approximately $98 million of fraudulent claims have been paid and an additional $550 million are considered suspected fraudulent claims.
Controls were also ineffective to ensure compliance with the documentation of self-employment income for the Pandemic Unemployment Assistance (PUA) program. Supplemental unemployment benefits funded through the Presidential Declared Disaster Assistance to Individuals and Households program were paid to claimants that did not meet the minimum benefit threshold required for eligibility. Questioned costs totaling $6.3 million were identified by the auditors.
Capitation payments to managed care organizations represent approximately 64% of Medicaid benefit expenditures. EOHHS needs to improve controls over managed care financial activity to ensure compliance with allowable cost principles for related program expenditures.
Controls can be improved to timely terminate Medicaid eligibility for deceased individuals to prevent continued payment of managed care capitation after death. Payments totaling $942 thousand were made for individuals who had been deceased for more than 90 days. The federal share of these questioned costs totaled $681 thousand.
The state is not currently in compliance with federal regulations requiring states to implement certain program integrity safeguards when administering Medicaid managed care programs.
The state should improve controls to ensure that its managed care organizations (MCOs) are effectively identifying third party liability insurance coverage for Medicaid recipients and cost avoiding for claims covered by other insurance. Medicaid should be the payor of last resort when processing medical claims for individuals covered by other insurance.
The state did not materially comply with Children’s Health Insurance Program eligibility requirements during fiscal 2021 – RIBridges is not fully evaluating all eligibility criteria to ensure compliance with federal regulations.
Data discrepancies exist between the systems used to determine Medicaid and CHIP eligibility (RIBridges) and the claims/capitation payment system. This impacts controls to ensure payments are only made on behalf of eligible individuals and has resulted in duplicate capitation payments to managed care organizations.
The auditors previously communicated (in a separate report released in April 2022) findings related to the state’s controls over financial reporting. A link to that separate report, which also includes 16 management comments (not included in the Single Audit Report) is shown below:
http://www.oag.ri.gov/reports/2021_FinStmt_FindingsMC.pdf
Management’s response and planned corrective actions are included within the Single Audit Report. A Summary Schedule of Prior Audit Findings, which reports the status of findings from prior audits, is also included.
The state’s Single Audit Report was submitted to the Federal Single Audit Clearinghouse – this data is then made available to all federal funding agencies. The Single Audit Report and related Audit Summary are available on the Office of the Auditor General’s website:
http://www.oag.ri.gov/reports/SA_RI_2021_Summary.pdf
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