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06-30077-15

December 07, 2015
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SUMMARY OF: A Performance Audit of the Department
of Health and Social Services (DHSS),
Division of Alaska Pioneer Homes (DAPH)

Why DLA Performed This Audit

In an effort to address concerns over the costs of operating the Alaska pioneer homes, an audit of the agency was requested. This audit examines the division’s operating costs and effectiveness of cost containment efforts, DHSS’ Medicaid waiver rate setting methodology, and the status of the prior audit recommendations. The audit was also directed to compare the degree of care required by residents in privately-owned assisted living homes to the degree of care required by residents in pioneer homes.

Report Conclusions

This audit concludes that pioneer homes are heavily subsidized by the State’s general fund. Total general fund subsidy for the five-year period, FY 10 through FY 14, was $191.7 million. Monthly resident rates have not been reviewed for adequacy since FY 09.

Except for pharmacy operations, the audit found a general lack of fiscal accountability in administering the pioneer homes and a lack of efforts toward containing costs. Efforts to collect accounts receivable were minimal, and staff did not have an accurate accounting of amounts owed by residents. The audit also found certain grants made to residents were not within DAPH’s statutory authority. Furthermore, pioneer homes residents were allowed to apply and receive general funded payment assistance without first applying for payment assistance through Medicaid. No formal analysis has been conducted to ensure staffing levels are reasonable and efficient.

The methodology for establishing the proposed Medicaid reimbursement rate was reviewed and found to be consistently applied and capture all allowable costs.

The prior 1999 pioneer homes audit report contained seven recommendations. Five of the seven recommendations were implemented or resolved. The prior recommendation regarding compliance with federal regulations in the handling of controlled substances was partially implemented. The pioneer homes’ pharmacist established procedures for tracking prescribed controlled substances, including those sent to each home. However, the Sitka Pioneer Home registered nurse has not complied with these procedures. The prior recommendation directing the DAPH director to select the most effective method of providing pharmacy services to residents was not addressed. However, audit fieldwork found no compelling reason to privatize pharmacy operations.

The audit was unable to examine the degree of care required for residents in the privately-owned assisted living homes due to the confidentiality requirements of the Health Insurance Portability and Accountability Act and the lack of authority to examine the records of privately-owned homes. However, the audit did compare the average age of pioneer homes residents to the average age of residents of private assisted living homes with more than 17 beds. Pioneer homes residents’ average age was 86 years, compared to private homes residents’ average age of 80 years.

Findings and Recommendations

  1. DAPH’s director should obtain assistance from DHSS’ Financial Management Services accountants to properly deploy QuickBooks so that it can correctly function as a subsidiary accounting system.
  2. DAPH management should allocate resources to actively pursue collection of past due amounts.
  3. DAPH management should enforce all requirements for the payment assistance program.
  4. DAPH’s director should discontinue unauthorized grants to pioneer home residents.
  5. DHSS’ commissioner should annually review the pioneer homes’ monthly rates.
  6. DAPH’s director should ensure all pioneer homes comply with the pharmacy’s policies for controlled substances.
DHSS Division of Alaska Pioneer Homes
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