Across Philadelphia, the opioid crisis has wreaked havoc on neighborhoods – since 2017, more than 1,000 Philadelphians have died from drug overdoses annually, with more than 80 percent of those deaths occurring as a result of opioid overdoses. At the same time, Philadelphia has experienced a dramatic increase in shootings and four years of increasing homicides. In 2020, Philadelphia had its second highest homicide rate since 1990 and through July of 2021, there has already been a 33 percent increase in homicides over last year. The trauma of this violence has left communities bereft and afraid. These crises demonstrate the need for high quality behavioral health supports for Philadelphians who desperately need them.
The Department of Behavioral Health and Intellectual disAbility Services (DBHIDS) offers behavioral health care, including mental health and addiction treatment and services, and intellectual disability supports to vulnerable Philadelphians. Despite an annual budget of more than $1.3 billion for the HealthChoices Behavioral Healthcare Program (HealthChoices) and average annual expenses of nearly $1 billion, DBHIDS has yet to undergo a rigorous performance audit. As such and pursuant to Section 6-400(c) of the Philadelphia Home Rule Charter, the Office of the City Controller initiated an audit of the HealthChoices Program, administered by Community Behavioral Health (CBH) under the oversight of DBHIDS, for fiscal year 2017 to determine whether CBH and DBHIDS were properly and effectively using public financial resources in the administration of HealthChoices to support vulnerable Philadelphians.
Under a contract with DBHIDS, CBH serves as the Managed Care Organization for HealthChoices, the Commonwealth of Pennsylvania’s program for delivering mental health and/or drug and alcohol services to medical assistance recipients, in Philadelphia county. DBHIDS disperses Medicaid funds from the Commonwealth of Pennsylvania for the program to CBH. CBH contracts with third party healthcare providers and reimburses them for services provided to patients through local programs. While CBH is responsible for monitoring and oversight of its service providers, as well as administrative support services, DBHIDS serves as the oversight function for CBH. Despite the multi-layered monitoring and oversight structure for HealthChoices, the engagement identified many compliance and internal control deficiencies, shortcomings in monitoring and oversight efforts, and an overall lack of accountability.
To assist with our audit, the Controller’s Office engaged Mercadien, P.C., Certified Public Accountants (“Mercadien, P.C.” or “MPC”) as subject matter experts to provide consulting services and conduct Phase II of the engagement. The results of their separate engagement are detailed in the Consulting Report section of this document.
KEY PHASE I FINDINGS
Providers are required to maintain key clinical documentation to support Medicaid-related claims, demonstrate the quality of care provided, and show patient progress. Testing identified 149 instances of non-compliance with documentation requirements across 27 providers sampled. The inability to provide required clinical documentation calls into question whether CBH should have reimbursed providers for these claims, as well as the validity of the services provided and the quality of care administered. Moreover, auditors’ review of CBH provider profiles, which summarize CBH’s monitoring of providers, found that CBH was well aware of providers’ claims-related deficiencies in the past, including insufficient or missing documentation, incomplete treatment plans, billings for non-billable services, conflicting information in supporting documentation, re-use of progress notes and late entries in progress notes. Importantly, the monitoring units identified considerable claims-related deficiencies and/or high error rates even though the testing samples were small and the results of the testing were not extrapolated. Despite knowing that certain providers had a history of documentation issues, CBH did not appear to undertake additional scrutiny of those providers. It does not appear that DBHIDS performed any review of CBH’s monitoring efforts.
Since 2007, CBH has run the Community Integrated Recovery Centers (CIRC) program. Thirteen providers administer services under the CIRC program. These providers were permitted to set individual treatment options and rates, and were paid a fixed monthly payment for a contracted number of patients to be served. Providers were paid the full payment regardless of whether the provider reached full service capacity. During the audit period, CBH distributed approximately $33 million in varying amounts to CIRC program providers. On average, CIRC program providers reached 65 percent of their patient capacity during the audit period. Only one of the 13 CIRC providers exceeded capacity. In total, CBH paid CIRC program providers $10.4 million for services that were not actually provided to patients from July 2016 through June 2017. While auditors did not review other years, it is likely that CBH has paid providers millions of dollars annually for services not rendered to actual patients since the program’s inception. Auditors noted no formal monitoring program for CIRC providers or formal intervention by CBH or DBHIDS to reduce budgeted capacity to a realistic level.
Other findings include:
- CBH submitted expenses totaling approximately $200,000 for reimbursement to DBHIDS, including $149,000 for costs related to CBH’s 20th anniversary celebration and more than $54,000 in various health and wellness programming for CBH employees. These expenses were submitted as administrative costs despite not being related to the administration of HealthChoices. It does not appear that DBHIDS performed any review of CBH administrative expenses for appropriateness; and
- The quality of services provided may not be accurately depicted as part of the performance bonus structure for the Pay-for-Performance program, a state initiative aimed at improving the quality, efficiency, and overall value of managed health care providers. There appears to be a lack of transparency and communication by CBH to providers regarding the Pay-for-Performance program, which has led to confusion among providers.
KEY PHASE II OBSERVATIONS
CBH is responsible for credentialing and recredentialing providers, a vital process to ensure patients receive high quality care by qualified professionals and staff. Per the CBH Provider Manual, facility organizations/agencies are solely responsible for ensuring that the staff they employ, or contract with, meet all educational and experiential requirements for the positions held and possess all the appropriate certifications and clearances. The engagement found that CBH’s credentialing process for HealthChoices providers in a facility organization/agency needs strengthening.
The engagement identified several instances in which CBH incorrectly requested and received reimbursements from DBHIDS. From February 2014 through June 2018, CBH submitted duplicate expenses totaling more than $6.4 million to DBHIDS for reimbursement. The amount in question was eventually returned to the City. However, neither CBH nor DBHIDS performed a reconciliation of reimbursements for HealthChoices and non-HealthChoices reimbursements to identify over reimbursements in a timely manner. From July 2014 through December 2017, CBH submitted reimbursement requests related to voided transactions totaling nearly $1.5 million. As of March 2020, nearly $1.1 million was still not returned to the City. The lack of adequate internal controls over the invoice review process could create the potential for fraud or waste to occur undetected. Lastly, CBH submitted inaccurate requests for reimbursement for payroll and payroll related expenses from the City for six of 26 pay periods during the testing period. Despite payroll being a relatively consistent and standard expense, the overpayment, totaling almost $1.5 million, was not identified in a timely manner. The amounts in question were returned to the City almost a year later. No review occurred by CBH or DBHIDS to timely identify the inaccurate requests prior to the reimbursements being made. CBH does not have adequate controls in place to prevent inaccurate requests from being made or erroneous under or overpayments from being identified. Without a consistently followed review process in place by both CBH and DBHIDS or a formal reconciliation process, it is possible that additional erroneous payroll requests occurred outside of the engagement scope.
During the course of the engagement, testing identified several instances in which CBH’s administrative procurements violated parts of the Philadelphia Code to which they were subject, and/or CBH failed to follow its own internal procurement protocols. Specifically, CBH entered into sole source contracts for professional services, including one contract that was awarded to a then-current CBH employee for consulting services. CBH also entered into three separate administrative contracts utilizing old RFPs to procure services without issuing a new RFP. Two of the three contracts were expired and had no renewal provisions, and one contract had a renewal for which the new services were not applicable. Despite these shortcomings, CBH awarded these contracts as renewals. Additionally, the engagement found no evidence that DBHIDS provided adequate oversight for any of these procurements. These examples call into question whether these procurements were transparent and represent the best value, that is, an efficient use of public resources. Given the limited scope of the testing period, the wide-ranging examples of non-compliance with procurement standards, and DBHIDS’s lack of oversight over CBH’s procurements, it is possible that many of CBH’s other procurements over the years were inappropriate.
CBH issued 41 advances totaling more than $6.5 million to 13 providers during the testing period. The engagement found 16 instances in which those advances were not in compliance with CBH’s policy governing advances/loans to providers, including six instances in which the stated reason for the advance did not conform to the policy requirement relating to a contracting or billing system issue. While most of the providers who received advances repaid them, two of the 13 providers defaulted on the repayment of the advances they received totaling $236,574 and $3,835,000, respectively. One of these providers closed prior to repaying the advances and one entered into bankruptcy proceedings. CBH ultimately wrote the advances/loans off as “bad debts.” As such, it is unlikely that the City will be able to recoup these funds. Weaknesses in internal controls, like CBH improperly documenting approvals or allowing non-authorized individuals to approve advances, could lead to fraud or waste going undetected. DBHIDS’s lack of oversight of CBH’s operations could also contribute to fraud, waste or abuse going undetected.
CBH allows providers to apply for rate increases on an ad-hoc basis. The policy for requesting a rate increase details required documentation standards, including the reason for the rate increase request. The engagement found that CBH did not consistently follow the guidelines established in its policies and procedures and did not have sufficient processes in place for documentation retention. It does not appear that DBHIDS provides any review or oversight over CBH’s rate increase process.
To improve CBH’s administration of the HealthChoices Program and ensure the proper and efficient use of public resources, it is recommended that CBH implement considerably stronger internal controls regarding provider monitoring and compliance with its own and City policies, as well as DBHIDS’s oversight of CBH’s operations, which are detailed in the following reports.