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Legislative Audit Commission Meeting


January 23, 2009

Members Present:

Representative Michael Beard Senator David Hann
Representative Rick Hansen Senator James Metzen
Representative Mary Liz Holberg Senator Ann H. Rest
Representative Steve Simon Senator Claire Robling

Members Absent:

Representative Bill Hilty Senator Don Betzold
Representative Ron Shimanski    Senator Joe Gimse

Other Non-LAC Members Present:
Senator Linda Berglin

Representative Rick Hansen, Chair, called the Legislative Audit Commission (LAC) meeting to order at 10:30 a.m. Representative Hansen noted that there had been several legislators named to the commission and that formal elections need to be done at a later meeting. Mr. Nobles mentioned that the next report to be released would be to a standing committee and not to the LAC, so it would be awhile before another meeting would be held. Representative Hansen asked Mr. Nobles to explain the Topic Selection process. Mr. Nobles explained that a letter would be sent to all legislators asking for topics and suggestions. Then a survey would be taken on all the topics. Mr. Nobles also said that follow-up audits would be done soon on previous evaluations. In response to Representative Hansen’s question, Senator Robling said that the topic selection process should get going because the process does take a long time. The purpose of the meeting was to release the evaluation, Personal Care Assistance, and to discuss the financial audit of the Department of Natural Resources, which was released January 15, 2009.

Mr. Nobles explained that personal care assistance (PCA) services are very important, and they involve a lot of state money. He said that the cost of PCA services grew 164% from 2002 to 2007, now totaling over $400 million a year. He said it is going to take significant effort to change the problems. Mr. Nobles introduced Joel Alter, manager for the PCA evaluation. Mr. Alter explained that PCA services provide support for individuals to lead fuller lives. Provider agencies receive state funding for PCA services and obtain statements of medical need for recipients. Mr. Alter said there are three reasons for the cost increases: 1) growth in the number of people served, not in the cost per recipient; 2) expansion in who is eligible to receive PCA services or be a paid caregiver; and 3) limits on availability of other services. There was a lot of discussion regarding fraud problems with the PCA services. The number of provider agencies has grown a lot over the past several years, as there are not many restrictions governing them. They do not have to be licensed, although in February 2009 the Department of Health is set to recommend possible changes in provider standards for PCA provider agencies. Mr. Alter discussed several of the main recommendations the evaluation made to the Department of Human Services and the Legislature.

Representative Hansen welcomed Brian Osberg, Assistant Commissioner of Health Care for the Department of Human Services (DHS). Mr. Osberg said DHS supports the key recommendations of the OLA report. DHS has concerns about one recommendation, related to whether DHS should investigate maltreatment allegations involving unlicensed PCA agencies. DHS would like to discuss this issue with the Department of Health and come back to the Legislature with recommendations. Osberg said that PCA services have been critical for DHS’s clients. He said DHS has taken some recent steps to improve financial integrity—limiting payments for individuals to 24 hours a day and issuing a request for information related to program integrity in various service areas. Senator Rest said that DHS’s response to the OLA report was not specific enough. Osberg said DHS would soon be proposing additional changes in legislation. He noted that DHS does not have resources to expand its current efforts, so he wants to see more prevention of fraud rather than relying on post-payment review. Senator Rest said that DHS should already have these types of internal controls in place. Osberg said he would provide members with written descriptions of existing controls. Senator Berglin said that existing control mechanisms in the PCA program—such as the physician statement of need and independent assessments—have proven to be inadequate. Representative Holberg asked whether disciplinary steps have been taken against any personal care assistants, PCA agencies, or DHS employees as a result of this evaluation. Osberg said that no DHS employees have been disciplined. He said DHS has probably erred on the side of ensuring client access to PCA services, but its ability to manage the service has not kept up with program growth. Ron Nail, manager of DHS’s fraud unit, said most PCA providers probably intend to bill correctly. In cases where they haven’t, his unit has referred more than 50 cases for possible prosecution to the Attorney General and has revoked enrollment for more than 30 personal care assistants. Implementing an enrollment process for PCAs was an important step taken by Minnesota, he said. Mr. Nail said that some PCA agencies have probably billed for multiple PCAs under a single PCA identification number. He said oversight of PCA services is daunting because the agencies are spread out in so many locations. Representative Hansen asked Mr. Nail whether he favors licensure of PCA agencies; Mr. Nail said that if licensure would improve oversight and lead to more provider standards, it would be a good thing. Senator Berglin said that DHS has made many staffing cuts since 2003, and this has limited the agency’s ability to manage services properly. Mr. Nobles said OLA will present the PCA report to Senator Berglin’s committee and others.

The meeting turned to the next item on the agenda regarding the financial audit, Department of Natural Resources. Cecile Ferkul, Deputy Legislative Auditor for the Financial Audit Division, gave a brief overview of the audit and introduced David Poliseno, the manager of the audit. Mr. Poliseno said that the report had 17 audit findings and DNR had not resolved three of six prior audit findings. Some of the key findings were 1) the department did not fully reimburse the Game and Fish fund for costs associated with its hosting of the North American Wildlife Enforcement Officers Association’s annual conference; 2) the department did not sufficiently reduce the risk created by incompatible access to the state’s accounting system; 3) the department did not review a key report to validate electronic payroll transactions—which payroll amounts to 2/3 of the divisions expenditures; and 4) the department did not ensure compliance with policies related to cell phone and purchase card use by its employees and did not always have documentation to support authorization of special expenses.

Representative Hansen invited Mark Holsten, Commissioner from the Minnesota Department of Natural Resources, to respond to the OLA findings and recommendations. Mr. Holsten said that audits are essential tools. He said that DNR is making a lot of day-to-day changes inside the agency, which the Legislature cannot see. He explained that when you make such large administrative changes, there is bound to be “hiccups” or problems while things get perfected. All the findings were in areas where the department is in transition or was in transition. Mr. Holsten said that DNR is now ready to lead the state with a “robust internal audit process.” Representative Hansen said that he appreciated the commissioner showing up at the meeting and noted that many audits have no commissioners show up at all.

Representative Hansen said that the commission would schedule a meeting for the following week for the election of officers. With no further discussion or comments, the meeting was adjourned at 12:46 p.m.


Representative Rick Hansen, Chair

Shelly Watterud, Recording Secretary


Office of the Legislative Auditor ♦ Room 140, 658 Cedar St., St. Paul, MN 55155