State health panel: Staffing issues led to problems
Policy group says it’s working to correct deficiencies cited by audit
The state Office of Health Strategy paid for services it never received, failed to effectively manage purchases and did not evaluate contractors, a new audit found.
“OHS paid its contractor for services it did not perform,” state auditors said, referring to a $4.8 million contract to provide a variety of services.
In response, the agency agreed with the finding and said it had hired additional legal staff as a result.
A spokesperson for the OHS did not respond to requests for additional comment.
The audit covered the fiscal years between 2018 and 2021.
Folded within the Department of Health, OHS is tasked with organizing state resources and centralizing health care policymaking to advance health reform initiatives. The agency works to improve health, reduce consumer costs and support modernization efforts.
Services not provided
Auditors said they reviewed one contract and related amendments to provide a variety of activities and deliverables, including technical support and advisory services for the planning of an electronic clinical quality measures and analytics solution, procurement and implementation of health information exchange services, and development of sustainability models.
OHS paid the contractor in full but, auditors noted, the contractor did not develop sustainability models, which meant OHS had paid for services not provided.
“This contract was initially valued at $2.1 million,” auditors said. “The final amendment increased the total value to $4,8 million. The contract did not breakdown the costs for the sustainability models.”
Auditors said OHS staff indicated it did not have adequate staffing during the audited period.
“The Office of Health Strategy should strengthen internal controls to ensure that its contractors perform all services required by the terms of their contracts,” auditors said.
In responses included with the audit, OHS said it agreed with the finding and has taken corrective action.
“To ensure future compliance, the former oneperson legal office has been replaced with a General Counsel and 3 Staff Attorneys 2 [one of the 3 Staff Attorney positions is presently vacant and in the process of being refilled],” the agency said.
“Both the General Counsel and one Staff Attorney 2 presently oversee the contracts process in conjunction with a contract specialist and the Chief Fiscal Officer and, going forward, will ensure its integrity with the requisite level of oversight to see that contracts are properly and completely performed,” OHS said.
Failed to document purchases
Auditors noted rules regarding use of electronic “purchasing cards” issued to employees require that a P-Card Coordinator provide cardholders with a purchasing log. Cardholders are required to record all purchases via the log and maintain supporting documentation for the transactions.
“OHS was unable to provide the supporting documentation for P-Card transactions for the two months we reviewed,” auditors said. “These transactions totaled $3,797 and $3,525.”
The auditors added “There is less assurance that purchases were made for a legitimate state business purpose and in compliance with purchasing card policies” and noted “OHS indicated it did not have adequate staffing during the audited period.”
The agency agreed with the finding.
“Effective immediately, the OHS business office staff shall use a purchasing log to ensure compliance with this audit finding,” OHS said.
Didn’t evaluate contractors
The audit pointed out that state procurement standards require agencies to prepare a written evaluation of a contractor’s performance within 60 days of completion of the work and OHS contracts require contractors to submit programmatic or financial reports.
“OHS could not provide evidence that it completed evaluations for six of seven contracts reviewed totaling $17.6 million,” auditors said. “OHS did not perform procedures to track, review, or monitor whether contractors submitted their required financial or programmatic reports.”
In all, the audit notes OHS paid $57.6 million to contractors during the audited period and contracts totaling $22.4 million required evaluations during the audited period.
“Without timely contractor evaluations, the office may be renewing agreements with nonperforming or underperforming contractors,” auditors said. “The inadequate review of reports can lead to inappropriate spending, unauthorized activities or undelivered services.”
OHS indicated that lack of adequate staffing and the COVID-19 crisis caused these conditions, the audit said.
“The Office of Health Strategy should promptly perform personal services and purchase of service contractor evaluations to better assess the contractor’s quality of work, reliability, and cooperation,” auditors said. “The office should establish policies and procedures to ensure that contractors submit all required reports.”
The agency agreed with the findings.
“Some of the lapses in contract oversight resulted from staff turnover during the term of the contract,” OHS explained. “OHS shall assign new Project Leads to contracts upon the departure of Project Leads who departed to ensure that contractors are in compliance with completing contractual obligations and also will be responsible for completing evaluations.”
Self-assessments not conducted
The state comptroller requires all agencies to complete an annual internal control self-assessment by June 30 and keep it on file. The purpose of the questionnaire is to help managers evaluate their internal control systems and identify possible deficiencies within their areas of responsibility, the audit explained.
“OHS did not complete its annual internal control self-assessment for the fiscal years ended June 30, 2018, 2019, 2020, and 2021,” auditors noted. “OHS may not have properly evaluated its internal controls or identified possible deficiencies.”
Auditors added “it appears that OHS was unaware of this annual requirement. The Office of Health Strategy should ensure that it completes the annual internal control questionnaire and maintains a copy on file.”
The agency agreed with the finding.
“Effective immediately, OHS shall take full responsibility to complete and submit the Annual Internal Control Self-Assessment Questionnaire to OSC and maintain a copy at the agency,” OHS said.