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Office of the State Auditor of Missouri
Claire McCaskill


August 26, 2003

Report No. 2003-88

The following problems were discovered as a result of an audit conducted by our office of the Department of Mental Health, Higginsville Habilitation Center.

From July 1999 to March 2001, the Higginsville Habilitation Center (HHC) paid employees over $130,000 related to three bonus/incentive programs which were established to address shortages in direct support staff.The HHC did not review the legality of these bonuses/incentives before implementing these programs.

Two of the programs were implemented in July 1999, with one involving the payment of a $200 "finders fee" to any staff who recruited a new employee for the direct support workforce.The other program involved the payment of a $200 "sign on bonus" to any new employee who became a permanent employee after successfully completing their probation period.The "finder's fee" program was discontinued in January 2000, but the "sign on bonus" program was revised to pay a $500 bonus to new employees hired after that date.From July 1999 through March 2001, the facility expended $1,600 and $18,700 on "finder's fees" and "sign on bonuses", respectively.

The third program, effective March 1, 2000, involved paying a monthly bonus of $100 to each direct support staff employee who met the following conditions:

Between March 1, 2000 and March 1, 2001, the facility spent $110,400 on this incentive program.In March 2001, the bonus/incentive programs still in effect were discontinued due to budget constraints and the anticipated downsizing of staff. The Missouri Constitution prohibits the granting of additional compensation to a public officer or employee after the services have been performed.

Northwest Community Services is an organizational unit of the HHC and it oversees the operations of 25 separate individualized supported living homes (ISLs) located in an adjoining three-county area.The ISLs have been established as either one-bed, two-bed, or three-bed homes.

For the year ended June 30, 2002, the average per client cost incurred by the state for clients living in the three-bed homes totaled $72,956.This compares to an average per client cost in the two-bed homes and one-bed home of $94,286 and $134,847, respectively.Each home requires the same basic round-the-clock staffing.Therefore, the more clients living at a home, the less the average costs that are required to care for them.Standard criteria and procedures have not been established to document and justify why clients might need to be placed in a more expensive placement setting.

Although the state receives reimbursement for a portion of the direct care personal service costs incurred in the homes, the costs borne by the state related to these homes are substantial.During the year ended June 30, 2002, the total cost of HHC's state-operated homes totaled $4.9 million.Of this amount, $2.5 million was reimbursed by the Medicaid waiver program, leaving about $2.4 million or approximately $38,000 per client to be paid for by the state.

A comparison of the monthly census reports of clients on campus to the reports of days billed to Medicaid disclosed that HHC billed Medicaid for days of service in which Medicaid-eligible clients were in uncertified beds, resulting in overbillings to Medicaid.During a review of the monthly census reports, we identified instances in which the number of Medicaid-eligible clients in a unit exceeded the number of certified beds.We determined these situations generally occurred when the facility was over capacity and temporary beds needed to be set up to house the extra clients.It appears the reimbursement officer who handles the Medicaid billings was not consistently notified when a Medicaid-eligible client was placed in an uncertified bed.The overbillings identified totaled $276,203, resulting in excess net revenues of $168,513 (based on a Medicaid reimbursement rate of 60 percent).Although HHC officials believe the overbilling amount cited in the audit was overstated due to inaccuracies in the monthly census reports, they could not identify any specific errors in the reports.

The two employees who work in the canteen were paid from the state's General Revenue Fund, and the salary and benefit costs of these employees during the two years ended June 30, 2002, totaled approximately $100,000.During this period, no reimbursements were made to the General Revenue Fund-State to offset these costs.As a result, the General Revenue Fund-State was substantially subsidizing the canteen operation.This condition has also been reported in previous audits.

The audit report also notes some other concerns related to canteen operations, and client funds and property.

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Missouri State Auditor's Office