Performance audit, Department of Economic Security, Division of Developmental Disabilities Report 00-19

              State of Arizona
Office
of the
Auditor General
PERFORMANCE AUDIT
Report to the Arizona Legislature
By Debra K. Davenport
Auditor General
DIVISION OF
DEVELOPMENTAL
DISABILITIES
November 2000
Report No. 00-19
DEPARTMENT
OF
ECONOMIC SECURITY
The Auditor General is appointed by the Joint Legislative Audit Committee, a bipartisan committee
composed of five senators and five representatives. Her mission is to provide independent and impar-tial
information and specific recommendations to improve the operations of state and local government
entities. To this end, she provides financial audits and accounting services to the state and political
subdivisions and performance audits of state agencies and the programs they administer.
The Joint Legislative Audit Committee
Representative Roberta L. Voss, Chairman
Senator Tom Smith, Vice-Chairman
Representative Robert Burns Senator Keith Bee
Representative Ken Cheuvront Senator Herb Guenther
Representative Andy Nichols Senator Darden Hamilton
Representative Barry Wong Senator Pete Rios
Representative Jeff Groscost Senator Brenda Burns
(ex-officio) (ex-officio)
Audit Staff
Shan Hays—Manager
and Contact Person (602) 553-0333
Miriam Seymore—Team Leader
Angelica Gonzalez—Team Member
Nancy Cameron—Team Member
Copies of the Auditor General’s reports are free.
You may request them by contacting us at:
Office of the Auditor General
2910 N. 44th Street, Suite 410
Phoenix, AZ 85018
(602) 553-0333
Additionally, many of our reports can be found in electronic format at:
www.auditorgen.state.az.us
2910 NORTH 44th STREET • SUITE 410 • PHOENIX, ARIZONA 85018 • (602) 553 -0333 • FAX (602) 553-0051
DEBRA K. DAVENPORT, CPA
AUDITOR GENERAL
STATE OF ARIZONA
OFFICE OF THE
AUDITOR GENERAL
November 2, 2000
Members of the Legislature
The Honorable Jane Dee Hull, Governor
Mr. John L. Clayton, Director
Department of Economic Security
Transmitted herewith is a report of the Auditor General, A Performance Audit of the
Department of Economic Security’s Division of Developmental Disabilities. This report is in
response to a June 16, 1999, resolution of the Joint Legislative Audit Committee and was
conducted in response to the requirements of Laws 1996, Chapter 290 §3. Additionally, the
audit considered concerns raised by the Joint Legislative Developmental Disabilities
Oversight Committee in a letter to the Auditor General dated February 24, 2000. I am also
transmitting with this report a copy of the Report Highlights for this audit to provide a quick
summary for your convenience.
As outlined in its response, Department agrees with all of the findings and will implement all
of the recommendations.
My staff and I will be pleased to discuss or clarify items in the report.
This report will be released to the public on November 3, 2000.
Sincerely,
Debbie Davenport
Auditor General
OFFICE OF THE AUDITOR GENERAL
Program Fact Sheet
Department of Economic Security
Division of Developmental Disabilities
Services: The Division of Developmental Disabilities provides services and programs to
approximately 18,000 clients. Services include: 1) Case Management—support coordinators
determine eligibility and help clients assess needs and obtain services; 2) Early Intervention
for Children—provides services such as therapies, day care, and assistive technology to
approximately 3,000 children from birth to three years; 3) Home and Community Based
Services—promotes and enhances clients’ ability to live with their families or independently
by providing services such as room and board, personal care, homemaker, and respite; 4)
Medical Services—provides medical services to eligible children and adults through con-tracted
health plans; 5) State Operated Facilities—operates Intermediate Care Facilities for
the Mentally Retarded (ICFs/MR) and group homes.
Program Revenue: $372 million
(fiscal year 2000)
$0
$50,000,000
$100,000,000
$150,000,000
$200,000,000
$250,000,000
$300,000,000
$350,000,000
$400,000,000
1998 1999 2000
General Fund Federal Revenue Other
Six Regional Districts
Mohave
La Paz
Yuma
Pima
Santa
Cruz
Coconino
Yavapai
Navajo
Apache
Gila
Pinal
Cochise
Graham
Greenlee
Maricopa
District I District IV
District II District V
District III District VI
Facilities: 46 satellite offices, 13 ICF/MR facili-ties,
and 20 group homes. The Division operates
the Arizona Training Program at Coolidge serving
168 clients. Seven of the Division’s group homes
are leased, at a cost of $90,065 in fiscal year 2000.
The remaining ICFs/MR and group homes are
owned by the Division.
Personnel: 1,560 full-time staff
(fiscal year 2000)
Support
Coordination
(503)
Medical
Services (37)
Administration
(350)
Intermediate Care
Facilities (79)
Arizona Training
Program at
Coolidge (444)
Home and Community
Based Services
Including Group
Homes (147)
OFFICE OF THE AUDITOR GENERAL
Equipment: The Division owns several
items which are primarily used by its
ventilator-dependent clients, including:
n Vehicles with wheelchair lifts (5)
n Electric and battery-powered wheel-chairs
(17)
n Ventilators (18)
n Hospital beds (10)
Program Missions: (fiscal year 2000)
The Division has 4 programs which among
them have 21 goals. The programs and
their missions include: 1) Administra-tion—
develops, enhances, and supports
environments that will enable clients to
achieve and maintain their maximum po-tential;
2) Case Management—
coordinates services and supports for cli-ents
and their families; 3) Home and
Community Based Services—helps meet
clients’ needs in the least restrictive home-and
community-based settings and pro-motes
independence and inclusion in the
community; and 4) Institutional Ser-vices—
provides services to clients to
maximize their functional capabilities and
pursues home- and community-based
placement whenever appropriate.
Adequacy of Goals and Performance
Measures:
The Division has developed 91 performance
measures, which include output efficiency
and quality measures. However, the Divi-sion
could improve its performance meas-ures:
n Despite the large number of perform-ance
measures the Division uses, two
important outcomes do not appear to be
sufficiently addressed. First, there are no
outcome measures addressing success in
assisting clients to reach or maintain
their maximum functional level. Second,
although Arizona is recognized as a
leader in placing clients in the least re-strictive
setting, the measures to not
adequately address this information.
n The large number of measures used may
detract from the measures’ effectiveness.
i
OFFICE OF THE AUDITOR GENERAL
SUMMARY
The Office of the Auditor General has conducted a performance
audit of the Department of Economic Security’s Division of De-velopmental
Disabilities (Division) in response to a June 16, 1999,
resolution of the Joint Legislative Audit Committee. This audit
was conducted in response to the requirements of Laws 1996,
Chapter 290 §3. Additionally, the audit considered concerns
raised by the Joint Legislative Developmental Disabilities Over-sight
Committee in a letter to the Auditor General dated Febru-ary
24, 2000.
The Division provides services to about 18,000 persons who have
mental retardation, autism, cerebral palsy, and epilepsy, as well
as to the families that care for them. These services include
therapies, day care, respite, and other services and supports to
help clients attain and keep a maximum functional level. The
Division determines eligibility for services, develops plans for
addressing client needs and monitoring outcomes, and contracts
with agencies and individual providers for the provision of ser-vices.
While most services are provided under contracts, Divi-sion
staff also directly provide services in state-operated facilities,
such as group homes.
Coordination Between the
Division and CPS
Can Be Improved
(See pages 13 through 19)
The Division can better coordinate its efforts with Child Protec-tive
Services (CPS) in serving foster care children who have de-velopmental
disabilities. In June 2000, the Division and CPS
shared responsibility for 524 such children. The two staffs each
have their own responsibilities: CPS staff conduct abuse and
neglect investigations and work with the courts, while Division
staff assess service needs for children with developmental dis-abilities
and locate service providers. However, the Division and
CPS do not have up-to-date policies on sharing and transferring
The Division and CPS
need updated transfer
policies and cross-training.
Summary
ii
OFFICE OF THE AUDITOR GENERAL
cases, resulting in delays in obtaining services. Further, staff in
the two units do not receive comprehensive cross-training to
enable them to better understand—or, if needed, carry out—the
other’s duties and ensure children receive services promptly.
The need for better coordination is heightened by a recent state
law requiring more timely services for abused, neglected, and
abandoned children, and by an increasing number of such chil-dren
in foster care. To improve services to these clients, the De-partment
of Economic Security (DES) could transfer some CPS
case managers to the Division’s existing foster care unit and pro-vide
cross-training to the unit’s staff.
Inadequate Information Systems
Hamper Efforts to Meet Clients’
Needs and Manage
Business Operations
(See pages 21 through 27)
The Division’s current information systems do not meet its
needs. For example, the Division’s main information system,
ASSISTS, does not capture key client information, cannot be used
to manage the client waiting list for services, and cannot provide
up-to-date reports to help support coordinators authorize ser-vices.
Even the limited information already contained on
ASSISTS is not available to many staff, because they do not have
adequate computer equipment to access it.
The systems also provide limited help in coordinating the De-partment’s
various business functions, such as licensing provid-ers,
authorizing services, and bill payments. As a result, the sys-tems
cannot generate critical decision-making information for
Division managers or the Legislature. In 1995, consultants de-termined
that ASSISTS could not be sufficiently upgraded due to
numerous deficiencies and estimated that replacing the system
would cost $25 million. However, the Division has not yet pre-pared
replacement proposals in sufficient detail for legislative
review. To address this critical need, the Division and DES need
to work with the State’s Government Information Technology
Agency in building a better and fuller justification for the project.
The Division’s main infor-mation
system, ASSISTS,
cannot provide key infor-mation.
Summary
iii
OFFICE OF THE AUDITOR GENERAL
The Division Does Not
Adequately Maintain and
Manage Its Waiting List
(See pages 29 through 34)
One specific management system issue that needs to be ad-dressed
is the list of clients waiting for services, which does not
contain complete or reliable information. For example, when the
Division recently attempted to measure the service needs for
children who were eligible for state-funded services, it could
document only 75 percent of the children on the official waiting
list as waiting for services. The waiting list also lacks accurate
information on how long clients wait for services, in part because
the ASSISTS system cannot capture historical data. Due to these
problems, Division managers cannot effectively ensure that cli-ents
receive services as soon as possible, determine whether the
highest priority needs are met first, or tell the Legislature how
much money would be needed to meet clients’ needs.
Division managers acknowledge the list’s deficiencies. They
stated that some clients are not included because the clients be-come
discouraged with the wait and ask to have their names
removed. In other cases, errors or omissions occur because staff
are not adequately trained. However, because waiting list prob-lems
significantly affect clients, the Division needs to improve
the accuracy and reliability of the information on the list. The
Division should revise its policies, improve training, and estab-lish
an alternative procedure for tracking service needs until
ASSISTS can be replaced.
The Division Needs to
Further Improve Its Management
of Unusual Incident Reports
(See pages 35 through 40)
The Division can further improve its management of Unusual
Incident Reports (UIRs), which record incidents of client abuse
and neglect. The Division has taken steps to improve the UIR
system since a 1993 Auditor General’s report (Report No. 93-2),
which identified several problems. The Division has established
UIR Quality Assurance units in three of the Division’s largest
The waiting list contains
incomplete and unreliable
information.
Summary
iv
OFFICE OF THE AUDITOR GENERAL
districts, improved reporting procedures, developed a database
to track UIRs, and established program monitors who receive
special investigative training.
Despite these improvements, management problems remain.
Central Office still provides poor oversight and duplicates dis-tricts’
decisions on whether to investigate incidents. Under-staffing
at Central Office, combined with numerous UIRs, con-tinues
to hinder timely entry of UIR data. As a result, the Central
Office has a long-standing data entry backlog, which has delayed
follow up on client incidents until it was too late for meaningful
action. Although the Division has designed a pilot project that
streamlines UIR practices and eliminates Central Office duplica-tion,
the Division needs to do more, such as eliminating the UIR
backlog and ensuring district staff are properly trained on the
new process.
The Division Has Improved Its
Contract Management Practices
(See pages 41 through 44)
The Division has significantly improved its contract manage-ment.
Previous audits found several problems with the Divi-sion’s
contracting practices, including failure to comply with
procurement code requirements, overuse of consultant contracts,
and a lack of Central Office oversight over district contracting
practices. Although the current audit found no indication of
these past problems, one recent Request for Proposals (RFP)
lacked clear language and resulted in a contract challenge. To
help avoid similar problems in the future, the Division plans to
hire a consultant to review its procedures. Since Division con-tracts
represented approximately 78 percent or $255 million in
fiscal year 1999, the Division should continue its efforts to im-prove
contracting practices.
Central Office provides
poor oversight of system for
reporting client abuse and
neglect.
Summary
v
OFFICE OF THE AUDITOR GENERAL
Other Pertinent Information
(See pages 45 through 49)
During the audit, other pertinent information was collected on
the future expansion of service needs and the Division’s efforts to
implement a legislatively mandated Fair and Equitable Rate
Structure. First, service needs for Arizonans with developmental
disabilities will expand. The Division does not know the full
extent of service needs, since many potential clients do not re-quest
or receive its services. However, the number of clients
needing services will expand as older parents can no longer care
for their adult children with developmental disabilities. In addi-tion,
if Arizona adopts the more liberal federal definition of eligi-bility
based on functional limitations, approximately 10,685 indi-viduals
would qualify for services at an additional cost of $95
million annually.
Second, the Division is finally making progress in implementing
a Fair and Equitable Rate Structure. Such a rate structure will
establish statewide uniform contract rates paid for services pro-vided
to clients. Legislation adopted in 1994 mandated that the
Division implement a “rate structure that ensures an equitable
funding basis.” Subsequent legislation in 1998 and 1999 pro-vided
a new implementation date of December 31, 1999, and
required a field test of provider rates. The Division and its De-sign
Team have completed a review of current rates and the
proposed rates for its pilot project. By February 2001, the Divi-sion
anticipates beginning the rate structure pilot test, with pro-viders
selected under a Request for Proposal.
Service needs will expand
in the future.
The Division is finally
making progress on Fair
and Equitable Rates.
vi
OFFICE OF THE AUDITOR GENERAL
(This Page Intentionally Left Blank)
vii
OFFICE OF THE AUDITOR GENERAL
TABLE OF CONTENTS
Page
Introduction and Background.......................... 1
Finding I: Coordination Between the
Division and CPS Can Be Improved........... 13
Responsibilities of
CPS and the Division...................................................... 13
Coordination Between
the Division and CPS
Is Important..................................................................... 14
DES Should Improve Policies and
Provide More Cross Training......................................... 16
Jointly Staffing Specialized Unit
Could Help Resolve Problems....................................... 18
Recommendations .......................................................... 19
Finding II: Inadequate Information
Systems Hamper Efforts to
Meet Clients’ Needs and Manage
Business Operations................................... 21
Good Information Systems
Are a Key Component to
Operating Effectively...................................................... 21
Existing Systems Do
Not Meet Key Needs ...................................................... 22
Action Needed to Develop Proposal
for Legislative Consideration......................................... 25
Recommendations .......................................................... 27
Table of Contents
viii
OFFICE OF THE AUDITOR GENERAL
TABLE OF CONTENTS (cont’d)
Page
Finding III: The Division Does Not
Adequately Maintain and
Manage Its Waiting List................................ 29
Waiting List’s Purpose Is
to Identify Unmet Needs................................................ 29
Division’s Waiting List
Incomplete and Unreliable............................................. 30
Lack of Reliable List Affects
Clients and Weakens
Program Management.................................................... 31
Division Needs to Update
Policies and Improve Training
on the Waiting List.......................................................... 33
Recommendations .......................................................... 34
Finding IV: The Division Needs to
Further Improve Its Management
of Unusual Incident Reports........................ 35
Unusual Incident Reports............................................... 35
Improvements Made
Since Prior Audit............................................................. 36
Management Problems Remain..................................... 37
Pilot Program Shows Promise, but
Division Needs to Do More............................................ 38
Recommendations .......................................................... 40
Table of Contents
ix
OFFICE OF THE AUDITOR GENERAL
TABLE OF CONTENTS (cont’d)
Page
Finding V: The Division Has Improved
Its Contract Management
Practices....................................................... 41
Contracts Form
a Large Part of
Division Expenditures.................................................... 41
Previous Contracting
Problems Corrected........................................................ 42
Division Can Continue
to Improve Its
Contracting Practices...................................................... 44
Recommendation............................................................ 44
Other Pertinent Information ............................. 45
Agency Response
Figures
Figure 1 Department of Economic Security
Division of Developmental Disabilities
Clients by Age
As of May 31, 2000........................................ 4
Figure 2 Department of Economic Security
Division of Developmental Disabilities
Clients by Residence
As of July 31, 2000......................................... 4
Figure 3 Department of Economic Security
Division of Developmental Disabilities
Six Regional Districts
As of July 1, 2000........................................... 7
Table of Contents
x
OFFICE OF THE AUDITOR GENERAL
TABLE OF CONTENTS (concl’d)
Page
Table
Table 1 Arizona Department of Economic Security
Division of Developmental Disabilities
Statement of Revenues and Expenditures
Years Ended June 30, 1998, 1999, and 2000
(Unaudited)................................................... 6
Photos
Photo 1 State-operated group home.......................... 9
Photo 2 Arizona Training Program at Coolidge....... 9
Photo 3 Client room at Coolidge ............................... 9
1
OFFICE OF THE AUDITOR GENERAL
INTRODUCTION AND BACKGROUND
The Office of the Auditor General has conducted a performance
audit of the Arizona Department of Economic Security, Divi-sion
of Developmental Disabilities pursuant to a June 16, 1999,
resolution of the Joint Legislative Audit Committee. This audit
was conducted in response to the requirements of Laws 1996,
Chapter 290 §3. In addition, the audit reviewed concerns raised
in a February 24, 2000, letter from the Joint Legislative Devel-opmental
Disabilities Oversight Committee. These concerns
included the Division’s coordination with Child Protective Ser-vices
regarding foster care children with developmental dis-abilities
and the Division’s information systems.
Division Serves Approximately
18,000 Clients with
Developmental Disabilities
The Arizona Department of Economic Security, Division of De-velopmental
Disabilities provides services and programs to
individuals with developmental disabilities and their families.
Approximately 18,000 persons with developmental disabilities
are currently receiving services through the Division. Although
there are no income requirements for clients served with state-only
funds, potential clients must meet the statutory definition
of developmental disability, through assessments of mental and
physical impairments and functional limitations, to be eligible
for services. A.R.S. §36-551 defines developmental disability as
a severe, chronic disability of a person that:
n is attributable to mental or physical impairment such as
mental retardation, cerebral palsy, epilepsy, or autism.
n is manifested before age 18.
n is likely to continue indefinitely.
The Division serves 18,000
adults and children who meet
eligibility criteria.
Introduction and Background
2
OFFICE OF THE AUDITOR GENERAL
Division philosophy fo-cuses
on providing ser-vices
to meet an individ-ual’s
needs at home or in
other community-based
settings, rather than in
institutions.
n results in substantial functional limitations in three or more
of the following major life areas: self-care, receptive and ex-pressive
language, learning, mobility, self-direction, capac-ity
for independent living, and economic self-sufficiency.
n reflects the need for a combination and sequence of special
services that are lifelong or of extended duration.
Children and adults who are eligible for services through the
Division may also be eligible for services through the Arizona
Long Term Care System (ALTCS). The Arizona Health Care Cost
Containment System, as the designated Medicaid agency, ad-ministers
the ALTCS program with a combination of state and
federal monies. Division clients may be eligible for ALTCS ser-vices
if they are determined to be at immediate risk of institu-tionalization,
and meet income, asset, medical, and the afore-mentioned
eligibility qualifications. ALTCS clients are entitled to
both acute care (medical) services and medically necessary
home- and community-based services. Approximately 11,000 (60
percent) of the Division’s 18,000 clients are eligible for ALTCS.
Division Provides
Diverse Services to
Clients in Varied Settings
To accomplish its mission, the
Division directly provides case
management, institutional care, and
some group home care, and also
contracts with individuals and
agencies for the provision of other
services. Services are provided to
eligible individuals based on the
person’s needs, state and/or federal guidelines, and available
funding. Services help clients attain and keep a maximum func-tional
level through training, socialization, therapies, and habili-tation.
Examples of other services provided include:
n Case management services—Clients receive help from a
support coordinator in determining eligibility, assessing
needs, and obtaining services and supports.
Introduction and Background
3
OFFICE OF THE AUDITOR GENERAL
n Early intervention for children—Children from birth to
three years of age who have a developmental delay and
who are eligible for services through the Division may also
be eligible for services through the federally-funded Ari-zona
Early Intervention Program and through ALTCS. Ap-proximately
3,000 children with developmental disabilities
receive early intervention services, such as therapies, day
care, and assistive technology.1
n Daily living assistance—Services to assist clients and their
families with daily living, such as room and board, atten-dant
care, housekeeping, and respite.
The Division’s clients represent a broad spectrum of ages and
varying living situations. (See Figure 1, page 4 for clients by
age, and Figure 2, page 4 for client living arrangements.)
Self-Determination
Initiative
In keeping with statutory direction and nationwide initiatives,
the Division is continuing to implement changes that will in-crease
clients’ and families’ control over their lives. In 1995, the
Division formed a Design Team comprised of clients, family
members, Division staff, providers, and stakeholders. The De-sign
Team promotes self-determination to give clients and fami-lies
more authority and choice in Arizona’s developmental dis-abilities
system. The Self-Determination Model, when fully
1 Once children reach three years of age, they receive services from the
Arizona Department of Education (ADE). For example, ADE provides
screening and referral services, counseling, and speech and occupational
therapies. The Division will continue to provide DDD-eligible children
with services ADE cannot provide. ADE services continue until the
child’s 22nd birthday.
Introduction and Background
4
OFFICE OF THE AUDITOR GENERAL
Figure 1
Department of Economic Security
Division of Developmental Disabilities
Clients by Age
As of May 31, 2000
Ages 0 to 17
54%
Ages 18 to 54
43%
Ages 55 and
older
3%
Source: Division of Developmental Disabilities Management Report,
as of May 31, 2000.
Figure 2
Department of Economic Security
Division of Developmental Disabilities
Clients by Residence
As of July 31, 2000
Skilled Nursing
Facilities (1%)
Private Homes with Families,
with Roommates, or
Independent (85%)
Group
Homes
(11%)
Intermediate Care
Facilities for the
Mentally Retarded
(1%) Adult Development
Homes (2%)
Source: Division of Developmental Disabilities Management Report,
as of July 31, 2000.
Introduction and Background
5
OFFICE OF THE AUDITOR GENERAL
implemented, will include individual client budgets based on
need, client choice over budgetary spending and which services
are most needed, the ability to change services and providers
easily, and the ability to choose a support coordinator or have
family members serve as the support coordinator. The Division
hopes to have the model fully implemented in 2001.
Division Budget,
Organization, and Personnel
The Division is funded through state appropriations, federal
Medicaid Title XIX monies from the ALTCS program, charges
for services, and other revenues. In fiscal year 2000, the Division
expects to receive a total of $372 million. Fifty-six percent came
from federal funds (including ALTCS pass-throughs) and 40
percent came from state funds. (See Table 1, page 6.) The Divi-sion’s
contracts for budget fiscal year 1999 accounted for ap-proximately
$255 million, or 78 percent, of Division expendi-tures.
An assistant director oversees the Division which is comprised
of six regional districts (see Figure 3, page 7), approximately 46
satellite offices, and the Central Office located in Phoenix. Each
regional district has a district program manager, area program
managers, support coordinators (case managers), and various
other program and operations staff. In order to better serve the
large client population in District I (Maricopa County), the Di-vision’s
Assistant Director has submitted a plan to DES that will
divide District I into three subregions—Central, East, and West.
The Central Office provides for administration, business opera-tions,
program functions (ALTCS Title XIX and state-funded
programs), and managed care operations. Most services are
provided by contractors and are coordinated through the Divi-sion’s
district staff. However, approximately 266 clients receive
services provided directly by Division staff in state-operated
facilities, such as group homes and Intermediate Care Facilities
for the Mentally Retarded. The Division has a total of 1,560 full-time
equivalent positions (FTEs), organized into the following
six sections:
Introduction and Background
6
OFFICE OF THE AUDITOR GENERAL
Table 1
Arizona Department of Economic Security
Division of Developmental Disabilities
Statement of Revenues and Expenditures 1
Years Ended June 30, 1998, 1999, and 2000
(Unaudited)
1998
(Actual)
1999
(Actual)
2000
(Estimated)
Revenues:
ALTCS:
Capitated - 2
Enrollees $144,345,137 $170,678,480 $201,505,100
Ventilator dependent 2,394,930 2,624,199 2,668,332
Fee for service and reinsurance claims 197,606 1,086,003 822,969
State General Fund appropriations:
Division of Developmental Disabilities:
Developmental disabilities 36,844,792 43,162,859 44,065,700
Long-term care state match 84,006,600 91,128,798 102,282,700
General administrative activities 3 4,240,762 4,582,442 4,486,613
Charges for services 9,120,081 9,075,175 9,374,478
Federal grants 1,905,228 3,361,175 2,121,766
Other 4 3,193,903 3,852,600 5,025,573
Total revenues 286,249,039 329,551,731 5 372,353,231
Expenditures:
Administration 24,451,951 25,831,053 27,051,261
Case management 13,323,017 16,269,606 17,999,454
Home- and community-based services 188,655,726 210,001,241 238,799,859
Institutional care services 8,896,965 10,529,965 11,369,893
Medical services (acute care) 30,446,318 34,958,501 42,020,456
Arizona training program at Coolidge 15,133,871 15,950,394 15,563,107
Arizona training program at Tucson 4,892
State-funded long-term care services 6 14,731,784 16,330,204
Total expenditures 280,912,740 328,272,544 369,134,234
Reversions to the State General Fund 7 2,397,420 2,388,000
Total expenditures and reversions to the State General Fund 283,310,160 330,660,544 8 369,134,234
Excess of revenues over (under) expenditures and reversions to the State
General Fund $ 2,938,879 9 $ (1,108,813)5,8 $ 3,218,997
1 This statement is presented on a budgetary basis.
2 Capitated revenues are the contract payments from the Arizona Health Care Cost Containment System (AHCCCS) for providing
health care services to eligible enrollees of the AHCCCS Arizona Long Term Care System program for the developmentally disabled
(ALTCS). State matching monies are reported separately.
3 The Department allocates support service costs to its various divisions. The State’s share of the support service costs allocated to the
Division was funded by the Department's State General Fund appropriation for general administrative activities and is reported as
revenue in this statement. The Division’s total allocated support service costs were $8,422,930; $9,194,901; and $9,812,568; for 1998, 1999,
and estimated for 2000, respectively.
4 Consists primarily of Targeted Case Management program, Long-Term Care Client Trust, and interest revenues.
5 Excludes proceeds of $4,261,615 from the Phoenix Arizona Training Program land sale. These monies are not available for the general
operations. According to Arizona Revised Statutes §36-572, these monies may be spent only with the approval of the Developmentally
Disabled Advisory Council for client services provided by the Department to the developmentally disabled and to extend services to
developmentally disabled persons not presently served.
6 The State pays for long-term care program client services that are not reimbursable through AHCCCS. Before 1999, the Legislature
appropriated monies for these services in the home- and community-based services special line item. In 1999, the Legislature began
using the state-funded long-term care services special line item.
7 Includes Division-estimated reversions to the State General Fund. Since lapsing appropriations are not closed until two years after the
end of the fiscal year, total actual reversions were not available at the time of this report. Actual 1998 reversions as of February 29, 2000,
were $1,907,886.
8 Does not include ALTCS program medical and health care claims that were incurred, but not reported. The Department estimates that
these claims are approximately $2,257,600 as of February 29, 2000. The Legislature authorized the Department to spend up to
$2,374,400 of its 2000 appropriation to pay outstanding 1999 claims.
9 Includes $2,374,800 of a $4,474,800 supplemental appropriation authorized in Laws 1998 that was unexpended. The appropriation is
restricted and any reversion to the State General Fund is subject to approval by AHCCCS.
Source: The State of Arizona Appropriations Report and various reports of the Arizona Department of Economic Security Financial Man-agement
Control System for the years ended June 30, 1998 and 1999; and Division estimates as of February 29, 2000, of financial
activity for the year ended June 30, 2000 (actual amounts not available at the time of this report).
Introduction and Background
7
OFFICE OF THE AUDITOR GENERAL
Figure 3
Department of Economic Security
Division of Developmental Disabilities
Six Regional Districts
As of July 1, 2000
Mohave
La Paz
Yuma
Pima
Santa
Cruz
Coconino
Yavapai
Navajo
Apache
Gila
Pinal
Cochise
Graham Greenlee
Maricopa
District I District IV
District II District V
District III District VI
Source: Division of Developmental Disabilities.
n Administration (350 FTEs)—Administration is responsible
for overseeing the Division’s programs, staff, and business
operations, both at the Central Office and in each of the six
regional districts. Central Office administration directs
ALTCS Title XIX and state-funded programs and manages
Introduction and Background
8
OFFICE OF THE AUDITOR GENERAL
compliance with federal funding and program require-ments.
Other administrative functions include: Office of the
Medical Director, children’s services coordination, devel-opmental
home licensing and monitoring, provider certifi-cation,
program monitoring, Management Information Sys-tems,
personnel, and contracting. District administration
also handles therapy services, home-based services, support
coordination supervision, and business operations.
n Support Coordination (503 FTEs)—Support coordinators
help individuals and their families determine eligibility for
services, assess needs, develop an Individual Support Plan,
and obtain services and supports. Support coordinators are
also responsible for placing clients on the Division’s waiting
list for services.
n Home and Community Based Services (147 FTEs)—
Home and Community Based Services help children and
adults receive services that promote and enhance their abil-ity
to live alone, with their family, or with others. Services
include physical, speech, and occupational therapies; day
treatment and training; habilitation; respite; and non-emergency
transportation. Services are provided by con-tracted
service providers at private facilities or by 147 state
staff at 20 state-operated group homes, which are commu-nity
residential facilities for up to six residents that provide
room, board, personal care, supervision, and habilitation.
n Medical Services (37 FTEs)—Medical services are pro-vided
to ALTCS-eligible children and adults to help them
maintain their health through contracted health plans. This
section also coordinates behavioral health services through
the Department of Health Services’ Regional Behavioral
Health Authorities (RBHAs).
n Intermediate Care Facilities (79 FTEs)—The Division op-erates
13 Intermediate Care Facilities for the Mentally Re-tarded
(ICFs/MR) that provide health and rehabilitative
services above the supervisory or personal care and the
room-and-board levels of service, but are less intensive than
skilled nursing facilities. Institutional placements, such as
these, account for approximately 2 percent of the Division’s
clients.
Introduction and Background
9
OFFICE OF THE AUDITOR GENERAL
Photo 1: State-operated group home.
n Arizona Training Program at Coolidge (444 FTEs)—The
Arizona Training Program at Coolidge (ATP-C) is the only
state-run institution for individuals with developmental
disabilities in Arizona and serves approximately 168 clients.
Photo 2: Arizona Training Program at Coolidge.
Photo 3: Client room at Coolidge.
Introduction and Background
10
OFFICE OF THE AUDITOR GENERAL
Audit Scope
and Methodology
A combination of methods was used to study issues addressed
in this audit. Auditor General staff obtained an understanding
of Arizona’s developmental disabilities system from key stake-holders.
For example, Auditor General staff interviewed key
Division management and staff, located at the Central Office
and in each of the six districts. In addition, staff interviewed
representatives of the Developmental Disabilities Advisory
Committee and the Governor’s Council on Developmental Dis-abilities.
Auditors also interviewed representatives from four
other states.1
In addition to these interviews, auditors conducted the follow-ing
activities:
n To assess the Division’s interaction with Child Protective
Services, auditors interviewed 7 CPS case managers and 17
Division support coordinators regarding their interaction,
training issues, and improvements needed to ensure chil-dren
receive appropriate services. In addition, auditors re-viewed
training materials for both Division support coordi-nators
and CPS case managers, including training modules
for case managers who handle foster care children’s cases.
Auditors also attended a Division training session.
n To assess the Division’s information systems, staff examined
the Division’s ASSISTS system, including districts’ com-puter
equipment and resources, training, and computer-related
user documents. A 1995 consultant study, which as-sessed
the Division’s need to upgrade its information sys-tems,
was also reviewed. Further, auditors interviewed a
representative of GITA regarding the Division’s information
systems.
n To assess the Division’s management of its client waiting list
for services, auditors reviewed the waiting list portion of the
1 Other states contacted during the audit include Colorado and Utah, for
their proximity and similarity to Arizona’s system; and Pennsylvania
and Ohio, which are recognized as leaders in state developmental
disabilities systems.
Introduction and Background
11
OFFICE OF THE AUDITOR GENERAL
Division’s management reports for November 1999 and
February and March 2000.
n To assess the Division’s system to record client abuse and
neglect through Unusual Incident Reports (UIRs), auditors
validated original paperwork for 50 of these reports that the
regional 6 districts submitted to the Central Office against
data contained on the Central Office’s database for the same
UIRs.
n To assess the Division’s contracting practices and compli-ance
with the Procurement Code, auditors reviewed 650
contracts and 20 Individual Service Agreements (ISAs), in-terviewed
representatives from the State Procurement Of-fice
(SPO) regarding the Division’s contracting practices,
and reviewed all 26 contracts the Division referred to SPO
during the last three fiscal years.
This audit contains findings and recommendations in five ar-eas:
n The need for better coordination between caseworkers at
the Division and Child Protective Services regarding foster
care children who become involved with both agencies;
n The need to replace the Division’s information systems;
n The need to better track clients waiting for services;
n The need to continue making improvement in the Division’s
system for reporting, tracking, and analyzing trends in cli-ent
abuse and neglect through the Division’s Unusual Inci-dent
Reports (UIRs);
n The need for further improvements in Division contracting
practices.
An Other Pertinent Information section also provides informa-tion
on potential increases in clients who will need services in
the future and an update on the Division’s efforts to implement
a legislatively mandated Fair and Equitable Rate Structure.
Introduction and Background
12
OFFICE OF THE AUDITOR GENERAL
This audit was conducted in accordance with government au-diting
standards.
The Auditor General and staff express appreciation to the Di-rector
of DES, the Assistant Director of the Division of Devel-opmental
Disabilities, Division staff, advocacy groups, and ser-vice
providers for their cooperation and assistance throughout
the audit.
13
OFFICE OF THE AUDITOR GENERAL
FINDING I COORDINATION BETWEEN
THE DIVISION AND CPS
CAN BE IMPROVED
The Division of Developmental Disabilities and Child Protective
Services (CPS) need to better coordinate their work so that foster
care clients served jointly can receive proper services in a timely
manner. The importance of such coordination has been height-ened
by recent state law requiring more timely services for
abused, neglected, and abandoned children, and by an increas-ing
number of foster care children. However, outdated or un-clear
policies have created confusion and disagreement in the
sharing and transferring of children served by the two divisions.
In addition, neither division provides enough cross-training to
enable workers to understand each other’s roles. The Division
and CPS must clarify their transfer policy and should also con-sider
jointly staffing a specialized unit for handling mutual cli-ents.
Responsibilities of
CPS and the Division
Two DES divisions are responsible for meeting the needs of chil-dren
with developmental disabilities who are in foster care.
Child Protective Services (CPS), within the Division of Children,
Youth, and Families, handles reports of abused or neglected
children, and places children in foster care when necessary. CPS
investigates the reports and files dependency petitions with the
court as needed, as well as providing family services to enable
the child to eventually live safely at home. Many children in-volved
with CPS have special needs, including developmental
disabilities. The Division of Developmental Disabilities (Divi-sion)
provides services to these children if they meet eligibility
criteria. As of June 30, 2000, CPS and the Division shared 524 fos-ter
care cases, over half (280) of whom resided in Maricopa
County.
Finding I
14
OFFICE OF THE AUDITOR GENERAL
In June 2000, CPS had
guardianship of 259
foster care children
with developmental
disabilities, while the
Division had guardi-anship
of 265.
When a court has awarded DES custody of a child with a devel-opmental
disability, either CPS or the
Division may have primary
responsibility for case management,
which includes working to reunite the
family or find a permanent placement
for the child. Due to the high number
of such cases in Maricopa County, the
Division has established a specialized
foster care case management unit in Phoenix to provide services
for these children. The unit provides case management and other
needed services, and assumes all legal responsibility until a per-manent
placement is identified.
Coordination Between
the Division and CPS
Is Important
The Division and CPS must coordinate their efforts to ensure
children receive appropriate services in a timely manner. Case
management for foster care children with developmental dis-abilities
requires arranging for a combination of services, some
related to developmental disabilities and others related to court
cases and family reunification efforts. The 1997 Model Court Pro-ject
legislation and its rigorous timelines make effective
coordination even more critical. The two DES divisions need to
work together to provide timely services.
Case management requires two kinds of expertise—Case
management is complicated for children with different types of
needs, and calls for the specialized expertise of both DES divi-sions.
CPS staff regularly handle reports of abuse and neglect,
conduct investigations, and work with the courts; while Division
staff identify eligible individuals, assess service needs, and pro-vide
or procure services. However, in these complex cases, the
CPS caseworker must recognize the developmental delay and
seek appropriate services, while the Division support coordina-tor
must work with the legal system and the separated family.
Further, case management staff at both DES divisions must learn
the protocol for transferring cases between CPS and the Division.
Finding I
15
OFFICE OF THE AUDITOR GENERAL
The following case illustrates the importance of involving the
most expert division when children have specialized needs:
Timeliness important for both CPS- and Division-related
needs—Recent Model Court legislation requires more timely
services for abused, neglected, and abandoned children, making
effective coordination even more important. The Model Court
Project is a national movement to expedite juvenile dependency
cases, reduce the time children spend in foster care, and more
quickly establish a permanent plan. It requires courts to hold a
conference and a preliminary protective hearing within five to
seven days after a child is removed from the home. During these
meetings, interested parties meet to discuss the child’s case plan,
visits, services, and placement, if necessary. This process leads to
quicker resolution of family reunification plans, severance, and
adoption, but places more pressure on CPS and Division work-ers
to quickly identify services.
Even without the Model Court requirements, timeliness is a criti-cal
service delivery element for children with developmental
disabilities. According to literature, early intervention services
can reduce or eliminate the effects of developmental disabilities.
For example, one child, who was born prematurely and had
numerous physical problems, no longer needs Division services
after receiving therapy through an early intervention program.
Due to parental abuse of her siblings, CPS removed
a child with a developmental disability from her
home and placed her in foster care. The child was
eligible for Division services but was not their client,
and the Division did not participate in decisions
about her services. While in foster care, the child
had surgery to remove her adenoids. Although this
type of surgery is not problematic for most children,
it is inappropriate for children with this child’s dis-ability
because it can result in various complications,
including speech difficulties, as it did in her case.
The Division’s early involvement might have pre-vented
this problem.
Early intervention services
can reduce or eliminate the
effects of developmental
disabilities.
Finding I
16
OFFICE OF THE AUDITOR GENERAL
Children involved with CPS who meet the Division’s eligibility
requirements should also receive prompt services. However, this
does not always occur. For example, one 7-year-old-child was
removed from her home by CPS and did not receive services
from the Division for the almost seven months she spent in a
shelter care facility. The child has since been returned home to
her relatives and now receives services from the Division.
DES Should Improve Policies and
Provide More Cross Training
Updated policies and integrated training are needed to better
serve children. DES policies regarding transferring cases be-tween
the divisions need to be clarified and updated. In addition,
since CPS and Division case management staff have different
qualifications and receive different, specialized training, staff
should receive additional cross training in order to better serve
children who are involved with both divisions.
Undefined and outdated policies lead to disputes—Many dis-agreements
arise due to poorly defined and outdated transfer
policies. Currently, DES policy requires CPS to handle foster care
cases until the court determines the children are dependents of
the State, at which time the Division assumes responsibility for
children who meet its eligibility criteria. This policy was devel-oped
informally, after many years of disputes between the two
divisions. However, it lacks sufficient detail regarding roles, re-sponsibilities,
and exceptions; thus, disputes continue to occur.
CPS can attempt to transfer cases prior to the court finding, and
the Division may accept or reject them. The policy has not been
updated to reflect the new Model Court timelines, which speed
up the court determination date. Further, it does not address co-ordination
of cases prior to the dependency determination. Fi-nally,
the policy does not provide adequate guidance to CPS for
cases where children have special needs but do not meet the Di-vision’s
eligibility requirements, resulting in some frustrated at-tempts
to transfer children.
Differing staff resources, training affect coordination—While
CPS and Division staff have similar overall responsibilities, in
that they use a family-centered approach to serve children and
their families, the divisions have different educational require-
Outdated policies and dif-ferences
in training and
resources hinder effective
coordination.
Finding I
17
OFFICE OF THE AUDITOR GENERAL
ments and provide different training for case management
workers. CPS classifies its employees as child protection special-ists,
a position that requires a bachelor’s degree. Division support
coordinators are classified as human service specialists, a posi-tion
that does not require a college degree. Further, CPS case-workers
perform several specialized functions not required of
Division support coordinators, including working in the court
system and working to reunite separated families. In addition,
Division support coordinators may have limited access to
ASSISTS, their internal computer system, and no access to the
CHILDS computer system used by CPS caseworkers, as noted in
Finding II (see pages 21 through 27).
Additionally, the Division and CPS each have training that suits
their own needs, but neither division’s staff are fully cross-trained
to carry out their counterpart’s duties. CPS uses a na-tional
training model, endorsed by the Child Welfare League of
America and used by 29 other states. The model provides 18
days of core training, and includes some references to develop-mental
delays, but does not provide specialized training regard-ing
children with developmental disabilities. Similarly, Division
support coordinators receive specialized training that focuses on
obtaining services for children with developmental disabilities
and their families, but most do not receive extensive training re-garding
the legal system and family reunification.
DES does not provide sufficient cross training to enable Division
and CPS workers to understand each other’s roles and effectively
serve their mutual clients. DES has begun some cross-training for
certain Division support coordinators. A Training Officer pro-vides
initial child welfare core training, with an emphasis on the
Division’s issues, to Division support coordinators who provide
case management to children in foster care. While this 3-year-old
specialized training has helped educate some Division workers,
participants would like to receive more hands-on training, such
as writing court reports. In addition, DES does not have a similar
program for CPS caseworkers, who readily admit that they need
to learn more about the Division and eligibility requirements.
The limitations in policy, resources, and cross training have had
a greater effect in Maricopa County than in other districts
throughout the State. In most districts, Division staff and CPS
staff work in the same offices, staff turnover is relatively low, and
Finding I
18
OFFICE OF THE AUDITOR GENERAL
the number of mutual clients is small, so informal work practices
appear adequate to ensure appropriate service for these clients.
In addition, the Division’s Pima County office also has two foster
care specialists, including one who previously worked for CPS,
and both work closely with CPS. However, Maricopa County
has over half of the statewide total of mutual clients, and lacks
the formal and informal interactions between Division and CPS
staff that enable other regions to overcome these limitations.
Jointly Staffing Specialized Unit
Could Help Resolve Problems
In addition to improving transfer policies and training, DES
could establish a specialized, interdivisional DES unit to in-crease
communication and help resolve some coordination
problems. DES could transfer some CPS case managers into the
Division’s existing foster care unit and provide cross-training.
The unit could permit case managers and support coordinators
to draw upon each others’ expertise, and provide all its case
management staff with access to the same computer systems and
other resources. In addition, it could provide children with de-velopmental
delays who are not eligible for Division services
with an avenue for obtaining appropriate services through CPS.
Finding I
19
OFFICE OF THE AUDITOR GENERAL
Recommendations
1. DES should continue its efforts to develop a transfer policy
that will help ensure CPS-involved children who are eligible
for Division services receive appropriate and timely services.
2. Once the policy is developed, DES should train all CPS case-workers
and Division support coordinators on implementing
the policy.
3. DES should provide more cross training for CPS caseworkers
regarding developmental disabilities and obtaining assis-tance
from the Division, and should expand its cross training
for Division support coordinators to include training on court
procedures relating to foster care children.
4. Once the above recommendations are implemented, DES
should examine the need to enhance the Division’s existing
foster care unit in Maricopa County for children involved
with CPS who have developmental delays. If enhancement is
necessary, DES should:
a. Staff the unit with case managers drawn from CPS in ad-dition
to its current complement of Division support co-ordinators.
b. Provide appropriate cross training for all unit case man-agers.
c. Provide access to necessary computer resources, includ-ing
CHILDS and ASSISTS.
20
OFFICE OF THE AUDITOR GENERAL
(This Page Intentionally Left Blank)
21
OFFICE OF THE AUDITOR GENERAL
FINDING II INADEQUATE INFORMATION
SYSTEMS HAMPER EFFORTS
TO MEET CLIENTS’ NEEDS AND
MANAGE BUSINESS OPERATIONS
The Division’s existing information systems create inefficiency in
delivering services to clients and managing its business opera-tions.
These information systems lack many of the key features
needed for effective management. The Division’s main client
tracking system, in place since 1985, does not allow staff to
quickly obtain needed information, sometimes delaying deci-sions
about client services for months. Further, the Division’s
systems fail to provide critical data and reports for internal man-agement
and staff purposes and for external users, such as the
Legislature—which is a concern raised by the Joint Legislative
Developmental Disabilities Oversight Committee. These short-comings
have been apparent for at least five years. DES has up-graded
similar systems using federal funds, but any efforts to
upgrade the Division’s current information systems do not qual-ify
for such funding. Past proposals submitted for legislative
consideration have been inadequate. To address this critical
need, the Division and DES need to work with the State’s Gov-ernment
Information Technology Agency in building a better
and fuller justification for the project.
Good Information Systems
Are a Key Component
to Operating Effectively
Information systems are an important component of the Divi-sion’s
ability to serve its clients. These systems supply the back-bone
of information about clients—their needs, the services they
are or should be receiving, and the progress they are making.
Effective systems have the ability to merge key operations, such
as tying service authorizations to bill-paying functions, or to gen-erate
reports that provide the information needed for good deci-sion
making by agency managers and the Legislature.
Finding II
22
OFFICE OF THE AUDITOR GENERAL
The Division relies on two primary information systems to serve
clients and track their needs, operate business functions, and
help management make decisions. The Arizona Social Services
Information and Statistical Tracking System (ASSISTS) is the Di-vision’s
main client tracking and bill payment system. Obtained
in 1985, ASSISTS also records provider information and author-ized
rates to be paid for all services except acute medical care.
The second major system, called INC for Information Network
Corporation, which operates it, tracks acute care medical claims,
payments, and authorizations. Currently, the Division pays
$25,000 per month for INC to maintain and operate this system
off-site.
These two information systems are not integrated, so informa-tion
cannot be transmitted between them electronically. Like-wise,
the two systems are not linked with other important sys-tems
containing information about some of the Division’s clients,
such as the DES Child Protective Services’ CHILDS (Children
Information Library and Data Source) and the Department of
Juvenile Correction’s JOLTS (Judicial On-Line Tracking System).
Existing Systems Do
Not Meet Key Needs
The Division’s current information systems impede Division
staff from effectively serving its clients or managing business op-erations.
ASSISTS, in particular, has very limited capacity to cap-ture
important information. As a result, staff spend much of their
time maintaining paperwork files with information that cannot
be put into the system. Neither system provides sufficient infor-mation
to help Division management manage business opera-tions
or create meaningful information for legislative oversight.
Inadequate systems limit knowledge regarding clients and their
needs—ASSISTS does not adequately capture or even contain
information on clients waiting for services, client abuse and ne-glect,
or contracts with service providers.
ASSISTS hampers support
coordinators’ efforts to help
clients.
Finding II
23
OFFICE OF THE AUDITOR GENERAL
n Key client information is not available
1. ASSISTS does not contain key client information, forcing
support coordinators to spend more time on paperwork
than on helping clients. For example, ASSISTS does not
capture:
Ø case notes on client progress and outcomes,
Ø strategies to help clients,
Ø changing service needs, or
Ø incidents of client abuse and neglect (see Finding IV,
pages 35 through 40).
Therefore, support coordinators rely heavily on paper
files to obtain a complete understanding of clients and
their needs.
2. In addition, the Division has limited internal electronic
mail capability, which cannot be used to transmit docu-ments
via a local area network, meaning that staff must
routinely mail or fax documents in order to transfer criti-cal
client information.1 According to a consultant report,
support coordinators spend an estimated 50 to 60 percent
of their time on paper-driven tasks that cannot be accom-plished
using ASSISTS.
n Client services cannot be authorized in a timely man-ner—
Districts do not receive timely reports to help authorize
services to meet client needs. Districts rely on client roster re-ports
for information on eligibility and which support coor-dinator
is responsible for addressing clients’ service needs.
District management and support coordinators must often
wait for Central Office staff to produce, print, copy, and mail
these reports. As a result, the information may be up to two
months old by the time it is received.
n System does not help manage the waiting list for ser-vices—
ASSISTS cannot record or track information in a way
that helps the Division and its staff determine the number of
1 A local area network is a group of computers located within a limited
area and linked by high-performance cables. Such networks allow users
to communicate with each other via electronic mail to share files and
databases containing client and business information.
Support coordinators spend
50 to 60 percent of their time
on paper-driven tasks.
Report information may be up
to two months old by the time
it is received.
Finding II
24
OFFICE OF THE AUDITOR GENERAL
clients waiting for services, how long they have been waiting,
or the extent of their service needs (For information on the
client waiting list, see Finding III, pages 29 through 34). Fur-ther,
Division staff do not have on-line access to client wait-ing
list summary reports, since ASSISTS cannot easily be
queried and reports require programming expertise from the
Division’s Central Office Management Information Systems
staff.
n Lack of equipment to access available information—
Even the limited information in ASSISTS is difficult to access,
because staff do not have adequate equipment. Most districts
report they have one computer with ASSISTS access for
every four to five support coordinators, even after obtaining
additional computers and equipment through state surplus
equipment. In one district, administrators require staff to
schedule their usage. Lack of ready access hampers staff abil-ity
to complete recordkeeping tasks and return to their other
duties.
Systems do not provide needed management information—
Besides making it difficult for staff to meet clients’ needs, the Di-vision’s
information systems do not provide information needed
to manage its operations. Key business functions are not inte-grated,
while other elements, such as contracts, are missing en-tirely.
Further, the Division cannot rely on its information sys-tems
to determine the impact of changes in funding on its clients
or the services they receive.
n No integration of key business functions—ASSISTS does
not integrate key business functions. For example, ASSISTS
does not link service provider licensing information, service
authorizations, contracts, or bill payment functions. ASSISTS
does not contain complete information on the Division’s con-tracts
with service providers. Division contracts staff believe a
mechanism to track contracts is crucial and have therefore
developed a stand-alone database to meet their needs (see
Finding V, pages 41 through 44). However, this stand-alone
system has no link to other business functions such as licens-ing,
payments for services to clients, and budgeting, and it
cannot provide Division staff with a complete picture of a
contractor’s status.
Finding II
25
OFFICE OF THE AUDITOR GENERAL
n Systems cannot generate critical information—Problems
with information systems mean that the Division has not
been able to provide critical, timely information to the Legis-lature.
Joint Legislative Budget Committee, House, and Sen-ate
staff consulted during the audit noted that the Division’s
information systems cannot provide some key information
for decision-making purposes, such as tracking the impact of
funding increases for client services. As a result, the Legisla-ture
has experienced growing dissatisfaction with informa-tion
and reports provided by the Division.
Action Needed to Develop Proposal
for Legislative Consideration
Although the need for improved Division information systems
has been recognized for several years, the Division has not done
enough to assemble a proposal for serious legislative considera-tion.
The existing systems cannot be sufficiently upgraded to
meet the Division’s needs. In 1995, a consultant conducted a
comprehensive study and concluded that the systems needed
replacement, at a cost of about $25 million. Unlike some other
Division systems, these systems do not qualify for federal match-ing
funds. Thus far, the Division has not prepared a detailed
plan for the Legislature to evaluate.
Existing system cannot be upgraded—For several reasons,
ASSISTS cannot be upgraded to meet the Division’s current or
future needs. Since the Division obtained ASSISTS in 1985, nu-merous
changes have been made to the system’s programming
code. However, the Division has not maintained documentation
of these changes. Consequently, the Division’s management
information system staff cannot predict the impact of any
changes made to ASSISTS. For example, when the staff modified
the ASSISTS programming code for Y2K compliance, the system
began producing duplicate authorizations and payments for ser-vices.
The staff has yet to determine how this problem occurred
or locate the problematic programming code.
New system requirements identified—A 1995 consultant study
determined the Division’s information systems needs, costs, and
timeline for implementation. As part of this review, the Divi-sion’s
consultant determined that the ASSISTS system could not
1995 consultant study con-cluded
ASSISTS cannot
meet the Division’s needs.
Finding II
26
OFFICE OF THE AUDITOR GENERAL
be reasonably upgraded to meet the Division’s needs due to
numerous undocumented programming changes, different op-erating
platforms and software, and a general inability to expand
the system as needed in the future. The consultant obtained in-put
from users of the Division’s information systems and per-formed
an extensive analysis of costs and implementation time
frames. According to the consultant’s report, the Division’s best
option is an entirely new information system that would require
new mainframe servers, computer equipment (personal com-puters,
workstations, and printers) for Division and district staff,
a common operating platform and software, and local area net-work
and wide area network access. In 1995, the study estimated
that a new Division information system would cost approxi-mately
$25 million. Such a system would require three years to
implement, but according to the consultant would meet Division
needs better than outsourcing or upgrading the current systems.
Federal funds not available to help pay for the system—DES
has not given top priority to replacing or upgrading the Divi-sion’s
information systems, in part because it cannot obtain fed-eral
funding to help offset the cost. As a subcontractor to
AHCCCS, which is Arizona’s Medicaid entity, the Division can-not
receive federal funding for this purpose. In contrast, DES
gave higher priority to its Administration on Children, Youth,
and Families (ACYF), which was eligible for and received federal
matching funds to help pay for an improved information system.
The ACYF replaced ASSISTS with the Children’s Information
Library and Data Source (CHILDS), a comprehensive case man-agement
system. Federal funding accounted for $19.8 million, or
62 percent, of CHILDS’ $32 million development and implemen-tation
costs.1
Division needs to prepare complete proposal for legislative
consideration—To deal with this critical need, DES needs to do a
better job of developing a proposal for the Legislature’s consid-eration.
Although DES has submitted various proposals to up-grade
small portions of the system, its proposals have not been
thorough enough to justify a new system, according to Joint Leg-
1 The consultant considered the CHILDS option for the Developmental
Disabilities program but concluded that it would not meet the Division’s
needs.
Finding II
27
OFFICE OF THE AUDITOR GENERAL
islative Budget Committee staff. They noted that previous re-quests
have included only one-page summaries, which is inade-quate
to fully explain and justify such a large expenditure.
To enable the Legislature to make an informed decision regard-ing
funding for a new system, the Division and DES should
work with the Government Information Technology Agency
(GITA) and prepare detailed plans to support any funding re-quest.
GITA can assist the Division in completing a Project and
Investment Justification that determines Division needs, system
requirements, and costs, and may help identify alternative fund-ing
sources.
Recommendations
1. The Division should work with GITA to determine its infor-mation
system needs, identify alternative funding sources,
and complete GITA’s Project and Investment Justification
document, to help provide the Legislature with adequate in-formation
to evaluate whether to fund a new information
system.
2. The Division should provide staff with adequate access to
information. To do so, the Division, in its next budget request
to DES, should make obtaining more computer equipment
for its district offices a high priority. The Division should do
this, whether or not a new information system is obtained.
28
OFFICE OF THE AUDITOR GENERAL
(This Page Intentionally Left Blank)
29
OFFICE OF THE AUDITOR GENERAL
The waiting list is
intended to serve as
the official, active reg-ister
that describes
the type, duration,
and intensity of ser-vices
needed but not
yet provided.
FINDING III THE DIVISION DOES NOT
ADEQUATELY MAINTAIN
AND MANAGE ITS
WAITING LIST
Besides improving management systems in general, the Divi-sion
needs to address another specific management system is-sue—
the list of clients waiting for services. This list is intended
to be the official register of clients who are waiting for services,
but it contains incomplete and unreliable information. As a re-sult,
it cannot be used to show whether clients received services
in a timely manner, or can the Division use it to show the Legis-lature
how much money would be needed to address these
unmet needs. In addition to addressing information systems,
the Division needs to update policies and procedures and im-prove
staff training on maintaining the list.
Waiting List’s Purpose Is
to Identify Unmet Needs
To keep track of services clients need but have not received, the
Division directs its support
coordinators to enter information into
a waiting list contained in the
ASSISTS computer system. Under the
Division’s intended approach, when
services outlined in a client’s
Individual Service Plan are
unavailable, support coordinators
should enter the information onto the
waiting list, and indicate the priority of the need: emergency,
immediate, current, or future. Then, district managers should
review the list, assess the priorities, and ensure that clients re-ceive
the waited-for services as soon as a provider or appropriate
funding becomes available. Finally, Division management
should be able to use the list in order to determine funding needs
and allocate resources to the appropriate priorities.
Finding III
30
OFFICE OF THE AUDITOR GENERAL
Division’s Waiting List
Incomplete and Unreliable
In practice, the waiting list is not being maintained and used as
intended. The list does not capture all clients waiting for ser-vices.
Further, some of the information it does contain is incor-rect
and unreliable.
Waiting list does not contain complete information—The wait-ing
list does not accurately reflect clients’ unmet service needs.
During the audit, the Division’s Assistant Director estimated
that the waiting list was only 75 percent complete. Further, Di-vision
staff responsible for producing waiting list reports dis-couraged
auditors from using the reports to determine the
kinds of services clients needed and how long they waited, be-cause
they believed the waiting list was incomplete.
According to support coordinators and other Division staff, the
list is deficient for several reasons:
n Clients deliberately omitted from the list—Some clients
lose hope that they will ever receive services after being on
the waiting list for several years, and ask to have their
names removed. Division staff state that this occurs fre-quently.
Similarly, support coordinators sometimes do not
place clients on the waiting list because they know funding
is not available or there is no suitable provider in the client’s
geographic area.
n Lack of training—Some support coordinators do not place
clients on the list because they do not understand the wait-ing
list requirement. For example, one support coordinator
told auditors she did not place ALTCS-eligible clients on the
waiting list because Medicaid mandates that they receive
services within 30 days. Another support coordinator ap-parently
did not know a waiting list even existed, according
to one parent who complained that his son was delayed in
being placed on the list.
Information in waiting list unreliable—Besides a complete lack
of information about some clients, the waiting list has errone-ous
information about clients who are listed. In particular, the
Division management es-timates
waiting list is only
75 percent complete.
Finding III
31
OFFICE OF THE AUDITOR GENERAL
waiting list lacks reliable information on the length of time cli-ents
have waited for services. For example, in the records of one
client that auditors reviewed, a printout dated in March 2000
showed the client had received services after a two-day wait,
but another printout dated in June 2000 indicated the client had
waited nearly four months for the same services. The support
coordinator recently assigned to the client could not determine
the reason for the discrepancy. According to Division staff,
support coordinators may enter some dates inconsistently; for
example, by using different definitions of “date needed.” Since
one primary purpose for using a waiting list is to avoid exces-sive
delays, these date errors are particularly problematic.
Further, the waiting list does not accurately indicate immediacy
of need. When entering a service on the list, support coordina-tors
must indicate whether the need is emergency, immediate,
current, or future. However, the Division has not adequately
defined these terms or trained its support coordinators on when
to use each category. As a result, district and Division man-agement
cannot use the waiting list to ensure the highest prior-ity
needs receive attention first. The Division may wish to con-sult
with developmental disabilities stakeholders and decision-makers
to refine waiting list priorities.
Lack of Reliable List Affects
Clients and Weakens
Program Management
The lack of a complete and reliable waiting list negatively af-fects
clients and weakens the State’s ability to manage the pro-gram
effectively. Clients are directly affected because the Divi-sion
does not know if they are receiving services in a timely
manner. Because the list is incomplete, the Division cannot use
it to tell the Legislature how much money would be needed to
meet clients’ needs. Other states face lawsuits over not address-ing
unmet needs in a timely manner.
Clients may not receive services in a timely manner—Due to
the waiting list’s incompleteness and unreliability, district staff
cannot always ensure that clients are receiving services in a
timely manner. As mentioned previously, support coordinators
cannot easily determine why information on the list has
Finding III
32
OFFICE OF THE AUDITOR GENERAL
changed and, therefore, cannot use the list to determine if a cli-ent
has received services or if information was erroneously
changed or deleted. The timing for children’s services is espe-cially
problematic, since early intervention services are in-tended
to help children during critical periods of development
and may even negate the need for future Division services.
Division cannot determine how much money is needed to serve
its clients—Without complete and reliable waiting list informa-tion,
the Legislature cannot make educated funding decisions
and clients may not get the services that they need. Although
the Legislature has expressed willingness to provide money to
serve people on the waiting list, management reports generated
using waiting list information do not provide complete and ac-curate
information that would justify requests to the Legislature
to fund and reduce the waiting list. The Legislature provided
the Division with additional appropriations in 1996 and 1999 to
eliminate the waiting list; however, the Division was unable to
show where the money went or how many clients benefited
from it.
Other states’ lawsuits underscore importance of addressing
unmet needs—At least nine other states face pending litigation
over clients’ inability to obtain timely services.1 Courts in other
states have ruled that clients must be removed from state wait-ing
lists, and their service needs met in a reasonable amount of
time. Understanding unmet client needs will become increas-ingly
important in the future as the number of Division clients,
and their service needs, increase. (See Other Pertinent Informa-tion,
pages 45 through 49, for more information on future ser-vice
needs.)
1 The nine states auditors identified were Florida, Hawaii, Massachusetts,
Montana, New Hampshire, New Mexico, Oregon, Pennsylvania, and
West Virginia.
Waiting list cannot be used
to determine if clients re-ceive
services in a timely
manner, if at all.
Finding III
33
OFFICE OF THE AUDITOR GENERAL
Division Needs to Update
Policies and Improve Training
on the Waiting List
To improve the waiting list, the Division needs to take action in
two main ways: updating policies and procedures to reflect
current practices and conducting additional staff training to en-sure
problems with the waiting list do not continue.
Policies and procedures outdated—The portion of the Divi-sion’s
policies and procedures manual related to the waiting list
is inaccurate. The waiting list policy has not been thoroughly
updated since it was developed in 1993, and it contains instruc-tions
on procedures that the waiting list cannot perform. For
example, the policy describes requirements for recording how
long clients have been waiting for services, and the duration
and intensity of services, but the waiting list cannot capture this
information. The Division should develop an alternative proce-dure
for recording this information until such time as it can ad-dress
the deficiencies in the ASSISTS waiting list. The Division
also needs to establish procedures to regularly check the accu-racy
of its waiting list data. The experience of other states cur-rently
in litigation over unmet service needs may provide help-ful
direction in developing these policies.
Training needs to be improved—The Division needs to improve
its training to ensure that problems plaguing the current wait-ing
list do not continue. The Division should develop and con-duct
statewide training to educate staff on the waiting list’s im-pact
on clients, proper policies and procedures to follow, and
the importance of the waiting list in justifying additional fund-ing
to the Legislature. The training should emphasize to sup-port
coordinators the importance of recording every authorized
service that is not provided, in order to obtain complete and re-liable
information on clients’ unmet needs.
Finding III
34
OFFICE OF THE AUDITOR GENERAL
Recommendations
1. The Division should instruct support coordinators to
promptly enter all authorized but unmet service needs into
the waiting list, including those for ALTCS clients whose
service needs should be met within 30 days.
2. The Division should meet with the Joint Legislative Devel-opmental
Disabilities Oversight Committee, JLBC staff, and
stakeholders to help them determine how waiting list pri-orities
should be defined.
3. The Division should update its policies to reflect definitions
of waiting list priorities and its procedures for updating and
maintaining the list.
4. Until a more accurate and accessible information system is
in place, the Division should have its districts manually
compile waiting list information, in addition to the waiting
list, to ensure that all clients’ needs are captured.
35
OFFICE OF THE AUDITOR GENERAL
FINDING IV THE DIVISION NEEDS TO
FURTHER IMPROVE ITS
MANAGEMENT OF UNUSUAL
INCIDENT REPORTS
The management of the Division’s process for investigating and
tracking Unusual Incident Reports (UIRs) can be further im-proved.
Although the Division has taken steps to address previ-ously
identified problems with its system for investigating client
abuse and neglect, several management problems continue. Cur-rently,
the Division is in the process of implementing a new pilot
program for handling abuse and neglect reports. This program
shows promise, but more needs to be done.
Unusual Incident Reports
Whenever client abuse or neglect is observed, alleged, or sus-pected,
Division management must be notified by means of an
Unusual Incident Report (UIR). UIRs capture unusual incidents
involving any client, service provider staff, or Division staff. UIRs
are filed for a wide range of incidents, including client deaths;
physical, sexual, and verbal abuse of clients; provider fraud; theft;
accidents and minor injuries; and media involvement. Although
the UIR system is intended to record and track serious incidents of
client abuse or neglect, the system also captures many less serious
events, such as provider staff illness, minor auto accidents, and
community complaints. Licensing regulations (R6-6-803.A) re-quire
service provider employees to report certain incidents im-mediately
to the Division in writing or by telephone. Division
policies and procedures require that Division employees verbally
inform a supervisor immediately upon learning about the incident
from the agency, a client, or by their own observation, and prepare
a written UIR within 24 hours. UIRs are usually investigated by
district staff, but Central Office staff may conduct the investiga-tions
depending on the nature and severity of the incident. In fis-cal
year 1999, approximately 3,300 unusual incident reports were
submitted.
Finding IV
36
OFFICE OF THE AUDITOR GENERAL
Improvements Made
Since Prior Audit
A previous Auditor General report (Report No. 93-2) found prob-lems
with the Division’s system for reporting client abuse and
neglect; however, the Division has since made many improve-ments.
Prior audit found problems—A prior Auditor General report
found problems with the Division’s practice for addressing client
abuse and neglect reports. In 1993, this report identified the fol-lowing
problems. First, the Division had not resolved some inci-dents
appropriately. For example, some incidents did not result in
UIRs. Some UIRs were slowly or inadequately investigated or
were inappropriately turned over to provider agencies for investi-gation,
while other investigations did not lead to appropriate ac-tion.
Second, the Central Office did not receive UIRs and investi-gation
reports, even though policy required districts to send a
copy of each to the Central Office. A limited review found that
Central Office files were so incomplete that they were unusable.
Third, districts did not keep complete files, and review of those
files revealed that UIR information and references were inconsis-tently
maintained. Further, the Central Office had only one ad-ministrative
assistant and one-half of one manager’s time to moni-tor,
review, file, and track all the Division’s UIRs and to handle
any incidents that were too sensitive to be investigated by the dis-tricts.
Finally, the previous audit also found that investigative staff
lacked training. Most districts did not have staff who specialized
in investigations or who received any training in investigation
methods.
Current audit found progress—The Division has since made many
improvements to address the problems identified in the prior re-port.
For example, the Division formed Quality Assurance Units,
improved reporting, devised a computer database to track reports,
and created Central Office and district-level program monitors.
n Quality assurance units—Three of the Division’s largest
districts established quality assurance units to work in part-nership
with the Central Office unit on unusual incidents
and investigations. These units are responsible for reviewing
all UIRs, providing additional recommendations regarding
investigations, and forwarding reports to the Central Office.
Finding IV
37
OFFICE OF THE AUDITOR GENERAL
n Improved reporting procedures to Central Office—From
1993 to 1999, the Division changed from a decentralized system
to a centralized approach involving both the Central Office and
the districts. Districts are still responsible for notifying the Cen-tral
Office within 48 hours of an UIR. At the end of each week,
district staff are responsible for sending UIRs to the Central Of-fice
via hard copy and disk.
n Central Office database to track reports—The Division de-signed
a computerized database to standardize reporting,
which enables the Division to generate and track investigations
and outcomes. For example, the Division has the ability to pro-duce
reports that track the number of UIRs that involve Ari-zona
Long Term Care Services clients or UIRs that take place in
group homes.
n Program monitors—In 1995, the Division created the position
of program monitor. The Central Office now has eight pro-gram
monitors who review licensing requirements and con-duct
sensitive investigations, in addition to 14 district-level
monitors. All program monitors are required to take a two-day
specialized investigative training course.
Management Problems Remain
While the Division has made several improvements, further man-agement
problems remain. The Central Office collects too much
information, uses a confusing coding scheme, cannot accurately
determine investigation status, and has a backlog of incidents not
yet entered into its database. In addition, the Division has not ad-dressed
the understaffing problem noted in the 1993 audit report.
n Information collected creates confusion—The Central
Office collects too much information, which creates confu-sion.
Districts send all UIRs, including many that do not in-volve
client abuse and neglect, to the Central Office. In addi-tion,
the Division categorizes incidents into 91 separate
codes, leading to inconsistent coding among districts and
the Central Office. As a result, Central Office staff cannot eas-ily
review important incidents to ensure they have received
appropriate attention at the districts.
Finding IV
38
OFFICE OF THE AUDITOR GENERAL
n Investigation information incomplete—Despite efforts to
collect complete information on all UIRs, the Central Office
lacks accurate information on the status of district investiga-tions.
For example, auditors reviewed 50 UIRs submitted by
districts in fiscal year 1999, but could not determine from Cen-tral
Office records if the investigations had been completed. As
a result of the incomplete information, the Central Office often
sends letters to districts requesting investigations after the dis-tricts
have already completed them.
n Data entry backlogged—The high volume of UIRs submitted
by the districts has led to a backlog that has persisted since
1991. The two- to three-year backlog of UIRs represents infor-mation
not yet entered into the Central Office database. Service
providers and district administrators note that the delay in ad-dressing
incidents immediately renders investigative follow-up
useless. In addition, the Division cannot analyze UIRs caught
in the backlog to identify patterns of abuse or neglect and miti-gate
potentially harmful environments for Division clients.
n Staffing still inadequate—Although the centralized approach
requires that every UIR be read in the Central Office, the Divi-sion
still has only one staff person and one manager assigned
to monitor UIRs. The staff person spends most of her time en-tering
UIRs into the database, monitoring district submission of
investigation reports, and filing UIR paperwork. This leaves lit-tle
opportunity for the Central Office to conduct meaningful
analysis of UIR information in order to ensure clients are ade-quately
protected.
Pilot Program Shows Promise, but
Division Needs to Do More
The Division designed an UIR pilot program to streamline its prac-tices
and solve many of the remaining problems. However, since
the program is not fully implemented, the Division should review
the pilot program’s procedures with the remaining districts. The
Division needs to manage its backlog so that the pilot program is
not impacted by it. Further, the Division should ensure that district
staff are properly trained with new procedures and a computer
database.
High volume of reports
submitted by districts has
led to a substantial back-log.
Finding IV
39
OFFICE OF THE AUDITOR GENERAL
Pilot program streamlined processes—A recent pilot program
streamlined many of the Division’s processes for handling client
abuse and neglect reports. For example, the number of incident
codes was decreased from 91 to 11. The pilot also screens reports
using 5 priority levels, sending only high-priority cases to the Cen-tral
Office.
From October to December 1999, District 3 (Apache, Navajo, Co-conino,
and Yavapai Counties) participated in the pilot program
for reporting client abuse and neglect. Each district’s Quality As-surance
Unit was designated to receive unusual incident reports.
Quality Assurance staff are responsible for handling and prioritiz-ing
all investigations, so that only high-priority reports are sent to
the Central Office. Two staff at the Quality Assurance Unit must
agree upon which of the 11 incident codes best characterizes the
UIR. The new system collects time-sensitive information, which
allows the Division to keep and track performance measures on
service providers and staff. As part of this pilot program, the Divi-sion
should also continually assess and adjust performance meas-ures
as necessary. To date, the pilot has not been implemented
statewide. Currently, only District 3 is using the new system.
However, Districts 2 (Pima County) and 6 (Cochise, Graham,
Greenlee, and Santa Cruz Counties) will implement the pilot pro-gram
during the summer of 2000.
Division needs to manage its backlog—The Division’s Office of
Compliance and Review (OCR) continues to operate with a sub-stantial
backlog of UIRs. As previously mentioned, the unit re-sponsible
for UIRs remains understaffed with only one manager
and one staff person. Further, the Division has only one part-time
Medical Director to review and close the files. The Division
should dedicate more staff to eliminating the current backlog so
that the new pilot program does not immediately fall behind.
Division should ensure district staff are properly trained for the
pilot program—The Division should ensure that all appropriate
staff are adequately trained for the new pilot program. For ex-ample,
support coordinators and provider agencies must be
made aware of the new process for handling client abuse and
neglect reports. Further, district staff responsible for UIR process-ing
need to be trained using Access, a newer database. Although
the Division currently uses Paradox to track and report UIRs, it
would like all districts to begin using Access, because it is easier
Under pilot program, only
high-priority reports are
sent to Central Office.
Finding IV
40
OFFICE OF THE AUDITOR GENERAL
to use and creates better reports. In the future, the Division
would like to track more information, analyze trends, and look at
indicators related to potential risk and service quality.
Recommendations
1. The Division should continue to monitor the implementation
of its pilot project to better monitor reports of client abuse
and neglect, with particular attention to District 1 in Mari-copa
County.
2. The Division should eliminate the current backlog of UIRs.
3. The Division should continually re-assess and adjust per-formance
measures as necessary during statewide imple-mentation.
4. The Division should ensure that district staff responsible for
UIRs are adequately trained using Access.
41
OFFICE OF THE AUDITOR GENERAL
FINDING V THE DIVISION HAS IMPROVED
ITS CONTRACT MANAGEMENT
PRACTICES
The Division has made progress and should continue its efforts
to improve contract management. Previous audits found several
problems with the Division’s contracting practices. The current
audit found that past problems had been corrected, in that the
Division now complies with procurement code, appropriately
uses consultant contracts, and has developed a database to track
its contracts. However, because the Division spends so much
money contracting for client services, it needs to look for ways to
identify and correct problems. Auditors identified one instance
in which a recent Request for Proposals lacked clear language
and may result in contract challenges. The Division is taking
steps to prevent a recurrence.
Contracts Form
a Large Part of
Division Expenditures
Most of the services the Division provides to its developmentally
disabled clients are handled through contracts and Individual
Service Agreements (ISAs). Contracts cover services such as
group homes; room and board; speech, occupational, or physical
therapy; day treatment and training; nursing; and other medical
services. The Division also contracts with consultants (usually
physicians or psychologists) who evaluate eligibility; assess a
potential client’s medical, psychological, or functional limita-tions;
or determine if there have been changes in a current cli-ent’s
functional levels. Through ISAs, individuals provide ser-vices
such as housekeeping, attendant care, and transportation.
Currently, the Division has 961 contracts with agency providers
and 1,566 ISAs with individual providers.
Contracts represent a significant amount of the Division’s
budget. In fiscal year 1999, contracts and ISAs totaled
Finding V
42
OFFICE OF THE AUDITOR GENERAL
approximately $255 million, or 78 percent of the Division’s ex-penditures.
The volume of work done through contracts and
ISAs underscores the need for sound procurement practices.
Any problems with the contracts, or with the Requests for Pro-posals
that solicit these contracts, can significantly affect the Divi-sion’s
ability to ensure that clients receive services without dis-ruptions
or delays.
Previous Contracting
Problems Corrected
While previous audit reports found problems with the Division’s
contracting practices, the current audit found that these prob-lems
had been largely resolved. Generally, the Division complies
with the State’s Procurement Code. In contrast to previously re-ported
overuse of consultant contracts, the Division now appro-priately
uses consultant contracts to obtain professional services.
Finally, the Division’s contract manager has developed a com-prehensive
database that accurately tracks contracts.
Prior audits found contracting problems—Previous audit re-ports
identified problems with the Division’s contracting prac-tices.
In 1993, an Auditor General report (Report No. 93-2) identi-fied
the following contracting problems. The Division needed to
strengthen the Central Office’s support and oversight role and
business operations to ensure that the districts followed proper
procurement procedures. A limited file review indicated that
several files lacked important contract documentation, the con-tracting
manual had not been updated, and the Division did not
provide adequate contract training to District staff. Additionally,
the Contracts Manager lacked the authority necessary to ensure
that District staff complied with the Division’s contracting poli-cies
and procedures.
Contracting issues were also identified in the Auditor General’s
1995 performance audit of the Department of Economic Security
Contracting Practices (Report No. 95-10.) The audit recom-mended
that DES needed to better manage its use of consultants
and specifically identified the Division of Developmental
The Division spent ap-proximately
$255 million
on contracts to provide
services to clients in 1999.
Finding V
43
OFFICE OF THE AUDITOR GENERAL
Disabilities as having used these services most extensively, in-cluding
some consultants who held decision-making positions
that should have been filled by Division employees.
Division now complies with procurement code—The current
audit determined that problems with inadequate and incomplete
contract file documentation identified in 1993 no longer exist.
Although this review found a few procedural problems, all of
the problems had already been identified and corrected by the
Division. The Division now maintains appropriate documenta-tion,
complies with procurement code requirements such as con-tract
amendments, provides training to district staff on proper
contracting policies and procedures, and appropriately refers
issues to the State Procurement Office for approval when re-quired
by the procurement code.
Appropriate use of consultant contracts—The Division now
appropriately uses consultant contracts to obtain professional
services. Auditors examined the Division’s 26 current consultant
contracts. Many consultants are either physicians or psycholo-gists
who evaluate eligibility, and assess a potential client’s
medical, psychological, or functional limitations. Consultants are
also used to determine if there have been changes in a current
client’s functional levels. Auditors found all consultant contract
files to be complete, containing appropriate documentation re-garding
services provided and rates paid. During the file review,
auditors did not find any consultants inappropriately replacing
Division employees, a concern previously identified in the 1995
audit.
Contract database developed—The Division now has a compre-hensive
contract management database developed by the Divi-sion’s
contract manager. Prior to 1999, the Division lacked a
comprehensive contract tracking system, resulting in several
issues such as the inability to track contracts and their processing
times, issuing duplicate contracts to the same contractor, and the
possibility of duplicate payments made to the same contractor.
However, in 1999, the Division’s contracts manager developed a
comprehensive contract database that can record, monitor, and
accurately track contracts and their processing times. In addition,
all Division contracts, including contracts negotiated by district
Finding V
44
OFFICE OF THE AUDITOR GENERAL
staff, are first reviewed by its contracts manager or the DES con-tracts
management supervisor before being entered into the con-tract
database, ensuring statewide compliance with the Divi-sion’s
contracting policies and procedures.
Division Can Continue
to Improve Its
Contracting Practices
The Division can continue to improve its contracting practices by
identifying and correcting contracting issues before they become
problematic. Due to the large amount of funds the Division con-tracts
for client services, problems with Division contracts could
significantly impact its ability to provide needed services. For
example, in 1998 the Division issued a Request for Proposals
(RFP) and contract that lacked clear, concise language and re-sulted
in a contract challenge. According to management, the
Division plans to hire a consultant with expertise in writing clear
RFPs/contracts and in negotiating contracts. The consultant will
review the Division’s RFP process, clarify language used in
RFPs/contracts, provide staff training in these areas, and train
staff in contract negotiations. Many staff who negotiate contracts
work in the Division’s district offices and are not experts in con-tracting.
Hiring an outside consultant with contracting expertise
should help ensure that RFPs/contracts contain specific lan-guage
that is not subject to misinterpretation and legal chal-lenges.
Recommendation
The Division should continue with its plans to obtain the services
of a consultant with contract negotiation skills and expertise in
writing clear, concise RFPs to review its contracting practices.
Large amount of con-tracted
funds underscores
the need for strong con-tracting
practices.
45
OFFICE OF THE AUDITOR GENERAL
OTHER PERTINENT INFORMATION
During the audit, auditors developed information on two other
issues. First, the Division will need to provide services to more
clients in the future, as aging parents can no longer care for their
adult children who have developmental disabilities. A potential
expansion of Arizona’s eligibility criteria will also increase the
need for services. Second, information was gathered regarding
the Division’s progress in implementing a Fair and Equitable
Rate Structure to establish uniform contract rates paid for ser-vices.
Future Service
Needs Will Expand
Two factors could cause future service needs for people with
developmental disabilities to significantly expand. Many Arizo-nans
with developmental disabilities do not request or receive
Division services. Although their needs are currently unknown
to the Division, these needs will increase as they and their family
members grow older. In addition, Arizona’s possible expansion
to the federal definition of developmental disabilities would in-crease
the number of clients served by the Division.
Some eligible Arizonans do not request Division services—
Many people with developmental disabilities in Arizona are not
known to the Division, because they do not request or currently
receive services. Adults with developmental disabilities who live
at home with their parents may not request and receive services
from the Division. An increasing number of such people are be-ing
cared for by elderly parents or family members. A recent
Division survey found that Arizona developmental disabilities
caregivers average 58 years of age. Hence, the demand for ser-vices
can be expected to increase in the future, as elderly parents
are no longer able to provide care.
More children and adults
with developmental dis-abilities
will turn to the
Division for services in the
future.
Other Pertinent Information
46
OFFICE OF THE AUDITOR GENERAL
Definition of eligibility could expand—In 1999, the Legislature
amended Laws 1997, Chapter 299, §6 (Laws 1999, Chapter 204),
to examine the impact of expanding the statutory definition for
those who qualify for support and services from the Division.
The Arizona definition of “developmental disability” differs
markedly from the federal definition (45 CFR parts 1385-88). Ari-zona’s
definition requires at least one of four qualifying diagno-ses,
while the federal definition is based on functional limita-tions.
The Division, along with representatives from selected
disability advocacy groups that are not currently included in the
Arizona definition, formed a workgroup charged with identify-ing
potentially qualifying population groups if the federal defini-tion
were used. Workgroup members were asked to anticipate
the number of individuals per population group who might be
added to the Division’s service population and estimate the costs
for specific disability groups, such as Asperger’s Syndrome, Spi-nal
Cord and Traumatic Brain Injuries, Fetal Alcohol Syndrome,
and others. The workgroup found that expanding the definition
could potentially cost the State an additional $95,207,200 annu-ally
to serve approximately 10,685 individuals.1 This estimate
does not include an additional $58 million in federal Title XIX
matching funds and would represent a 26 percent increase in the
Division’s expenditures.
Division Finally Making Progress
Toward Implementing a Fair and
Equitable Rate Structure
Despite delays, the Division is finally making progress to im-plement
a Fair and Equitable Rate Structure. Such a structure
will ensure providers are paid according to statewide uniform
contract rates, instead of using historical rates or relying on nego-tiation
skills, as the Division currently does. Although several
pieces of legislation have required the Division to adopt a Fair
and Equitable Rate Structure, the Division has not, until recently,
obtained the support needed from stakeholders to implement it.
Recent Division efforts are showing progress, including a pilot
1 According to the report, only an estimated 20 percent of total individuals
who may be eligible actually apply for services. The figures mentioned
here reflect the 20 percent estimate.
Other Pertinent Information
47
OFFICE OF THE AUDITOR GENERAL
project to compare current contract rates against statewide rates
to be paid under the new structure.
Purpose of a Fair and Equitable Rate Structure—A Fair and Eq-uitable
Rate Structure establishes statewide uniform contract
rates paid for services provided to clients with developmental
disabilities. At least seven states have implemented a uniform
rate structure for services for people with developmental dis-abilities.
States that have implemented a Fair and Equitable Rate
Structure report eliminated payment inequities, improved rela-tions
with providers, and an improved ability to focus on quality
rather than costs. Currently, Arizona does not have a Fair and
Equitable Rate Structure. As a result, contractors receive different
reimbursement rates for providing the same services to clients
who have similar needs, creating rate inequities. Generally, rates
are set after the Division analyzes the provider’s proposed cost
for each individual service. These proposed costs and the pro-vider’s
historical rates serve as the basis for rate negotiations.
However, the primary influence on rates continues to be the
provider’s contract negotiation skills.
Fair and equitable rate legislation—Concern over rate differ-ences
led the Legislature to adopt several pieces of legislation
regarding a Fair and Equitable Rate Structure. In 1994, legislation
required DES to establish a fair rate structure for Division ser-vices.
A.R.S. §36-557.K directs the Division to “establish a rate
structure that ensures an equitable funding basis for private non-profit
and for profit agencies. In fiscal year 1995-1996 and each
fiscal year thereafter, the division shall review and may adjust
the rate structure. . . .” In addition to this legislation, the Auditor
General’s 1995 performance audit of the Department of Eco-nomic
Security Contracting Practices (Report No. 95-10) recom-mended
that DES should develop uniform rate setting for hu-man
service contracting agencywide.
Although a 1998 bill clarified requirements of the 1994 legislation
and added a new timeline for rate structure implementation, the
Division still lacked stakeholder support to implement the new
structure. Laws 1998, Chapter 227, §2(A) mandated that the Divi-sion
“…shall formulate an equitable model rate structure for
contracted services prescribed pursuant to section 38-558, Ari-zona
Revised Statutes.” Subsection D of this legislation required
the Division to “complete the model rate structure on or before
Fair and Equitable Rate
Structure will ensure uni-form
rates for contracted
services.
Other Pertinent Information
48
OFFICE OF THE AUDITOR GENERAL
October 15, 1998 and shall implement it from and after June 30,
1999.” Subsequently, Laws 1999, Chapter 55, changed the model
rate structure implementation date again, this time to no later
than December 31, 1999. It also required that the implementation
phase include a field test. The Division contends that progress in
implementing the rate structure could not be made until re-cently,
when it obtained support and input from numerous de-velopmental
disabilities system stakeholders.
Recent efforts showing progress—Despite delays in implement-ing
a Fair and Equitable Rate Structure, the Division is finally
making progress. By bringing together a Design Team made up
of various stakeholders in the developmental disabilities com-munity,
the Division has developed a plan to pilot such a struc-ture
with interested service providers. The Division’s pilot pro-ject
will track the rates that otherwise would have been paid to
participants under their current contracts to determine the differ-ences
in rates. The Division plans to closely monitor the pilot rate
structure to determine its impact on the Division’s budget before
continuing the pilot for one full year.
The Division’s most recent efforts and projected timeline for im-plementing
a Fair and Equitable Rate Structure include:
n November 1999—A consultant employed by the Division
developed a Rate Structure and Recommendations report
that included a comprehensive review of the current rate
structure and recommended a rate-setting methodology con-sistent
with the Design Team’s recommendations.
n April-May 2000—During April, letters were sent to 49 pro-viders
interested in participating in the Fair and Equitable
Rate Field Test Pilot Project. The interest letter included a pi-lot
rate list, informing potential participants of reimburse-ment
rates to be paid during the pilot project. As of May, the
Division received responses from 22 providers interested in
participating in the Fair and Equitable Rate Pilot Project.
However, another provider filed a protest seeking inclusion
in the pilot project. After consultation with DES, its Contract
Management Section, and the Attorney General’s Office, the
Division will conduct the rate structure test under a Request
Other Pertinent Information
49
OFFICE OF THE AUDITOR GENERAL
for Proposal (RFP). By issuing an RFP, all providers are given
the opportunity to participate in the test and selected provid-ers
will be under contract to participate for two years.
n September 2000—The Division anticipates issuing an RFP,
which will include rate tracking for two services, Habilitation
and Room and Board. Providers will be selected to partici-pate
in the rate structure test.
n February 2001—The Division anticipates beginning the rate
structure pilot test. After two years, the Division will decide
whether to continue the pilot project.
50
OFFICE OF THE AUDITOR GENERAL
(This Page Intentionally Left Blank)
OFFICE OF THE AUDITOR GENERAL
Agency Response
OFFICE OF THE AUDITOR GENERAL
(This Page Intentionally Left Blank)
_______________ARIZONA DEPARTMENT OF ECONOMIC SECURITY_____________
1717 W. Jefferson - P.O. Box 6123 - Phoenix, Arizona 85005
Jane Dee Hull John L. Clayton
Governor Director
Ms. Debbie Davenport
Auditor General
2910 N. 44th Street, Suite 410
Phoenix, AZ 85018
Dear Ms. Davenport:
Thank you for this opportunity to review and respond to the draft report on the
Department of Economic Security, Division of Developmental Disabilities. The
Department welcomes this opportunity to offer our comments and responses to the
findings in the report. The Department also desires to extend our appreciation for a
thorough and professionally done report. Your staff is to be comended for their
diligence and comprehensive presentation of complex issues.
Should you need additional information or further clarification, please contact Eileen
Colleran, Administrative Coordinator, Division of Developmental Disabilities at
542-6857 or me at 542-5678.
Sincerely,
John L. Clayton
Response from the
Division of Developmental Disabilities
The Report from the Auditor General’s staff on the performance of the Division of
Developmental Disabilities accurately reflects several of the challenges faced by the
Division. The Division’s response to the Report is in two Sections. Section 1 provides
information on specific findings contained in the report. Section 2 presents the
Division’s response to the recommendations contained in the report.
Section 1: General Comments:
PROGRAM FACT SHEET
The following comments and suggestions are intended to add clarification or to provide
additional information on several findings.
The report lists concerns around the Division’s utilization of performance measures. In
the Program Fact Sheet three areas are noted:
·  The number of performance measures (91);
·  Lack of measures addressing success in assisting clients to reach their
maximum functioning level, and;
·  Measures do not adequately address whether clients live in the least
restrictive settings.
First, the number of performance measures stems from many requirements. The Division
has reporting requirements, which results in such a large number of performance
measures. The Division agrees that such a large number may compromise the Division’s
ability to focus on core and essential areas for measurement. The Division will undertake
a review of the 91 performance measures in order to ascertain which can be eliminated or
consolidated in an effort crystallize the Division’s focus.
The second area noted involves the measuring of client-specific growth outcomes. The
Division partially agrees with this finding. It is accurate to note that the Division does
not collect information on whether among the outcomes for services is an enhancement
of an individual’s progress towards his or her maximum potential. Due to financial and
infrastructure constraints, the Division agrees to develop and implement a demonstration
project to collect and analyze this information. The Division notes, however, that
through individually developed support plans such information is captured and known
among the planning and treatment teams. The problem is that the Division has not
aggregated this information from this informal network to a formal database that would
allow for a system evaluation of overall effectiveness.
A concomitant issue centers on the difficulty in defining maximum functioning level in a
manner that can capture the Division’s effectiveness. There are many individuals
supported by the Division for whom personal growth, enhancing skills and independence
are viable goals. There are also individuals supported by the Division for whom
maintaining existing levels of abilities or minimizing the decline in abilities are the
measures of successful intervention and the desired outcomes of the services and supports
provided. While examining individualized plans of support can be an aid in determining
effectiveness it still is more of an art than a science in understanding and predicting
potential.
Finding and maintaining balance between “quality of life” and “quality of care” adds an
additional variable to the difficulty in measuring system effectiveness regarding
maximizing a person’s optimal abilities. Stereotypic views exist on the abilities and
capabilities of people with developmental disabilities. Holding such views can result in
perceptions that contradict the true abilities people have or are capable of mastering.
Efforts to introduce opportunities that can result in a greater degree of self- sufficiency
can be compromised by competing interest. The risk associate with individual choice and
decision-making compared against the system’s responsibility to ensure health and safety
can influence services offered and provided. Defining the parameters of such a balance is
the product of a collaborative effort not only involving the Division, people enrolled with
the Division and their families but also legislators, service providers and other
stakeholders.
The third finding addressed assessments for less restrictive settings. The Division will
include in its review of the performance measures, what measures may be included to
demonstrate the high priority of ensuring that people with developmental disabilities are
living in the least restrictive setting.
WAITING LIST
The Division agrees that improvements in the collection of data on people waiting for
services are needed. This is another area where collaboration is critical. Waiting List
information on the surface seems rather self-evident. There are many variables, however,
which makes the collection a challenge and the usability of the information relevant. For
this reason the Division agreed to establish a workgroup with the task of designing a
system and methodology to collect and update information on people waiting for
services.
One of the significant challenges for the Division in accomplishing this task is the ability
to gather and utilize information from other organizations. The Division has the capacity
to capture information on people enrolled in the DD system. However, there is no
current mechanism that allows for information from other organizations such as schools
to provide data on the support and service needs for people who could qualify but are not
currently enrolled. The Division has grown an average of 10% for the past three years.
Not having access to information nor the automation capacity that would allow for
accurate trend analysis on the services and supports required provides the Division with a
challenge.
A major issue with the collection of information on waiting list centers on the difference
between people with developmental disabilities enrolled in the ALTCS program and
people who qualify for services from the Division but do not qualify for the ALTCS
program. The reference made in the Report noting the discouragement from some
people with developmental disabilities about the wait time and their subsequent decision
to remove themselves from a waiting list is probably an outcome for people not enrolled
in ALTCS program. The ALTCS program is an entitlement and the reason for waiting
for services is usually exclusively tied to the lack of service providers in a given area. If
people do not qualify for the ALTCS program the usual reason for waiting is the lack of
resources to procure the services.
The Division disagrees with the statement in Finding III that the expenditures for the
waiting list are not tracked and monitored. For the past year, the Division has manually
tracked and recorded money provided for the waiting list. Additionally, the Division will
include in any new automation plan a mechanism to facilitate tracking clients and
expenditures related to the waiting list.
AUTOMATION
The Department has requested funding in the FY2002 and FY2003 budget request for the
replacement of the ASSISTS system. If the request for additional funding is approved,
the Department will work with GITA on completing a Project and Investment
Justification. The Division would add two other points for consideration. First, the
Division has two automation systems, ASSISTS is one and an acute care information
system being the other. The other is currently subcontracted to INC and focuses on acute
care medical services. The Division is also seeking to upgrade or replace this system.
Section II: Recommendations:
Finding I:
1. The Division agrees and will continue to support the collaborate efforts of the
two divisions in the development and implementation of policies to ensure
services are provided to eligible children in a timely manner. The policy will
include addressing the issues around eligibility, service transition, sharing
contracted services and dispute resolution. In addition, an individual has been
identified from each division with the authority to determine, on a case by
case basis, the role and responsibility of each division when a dispute arises.
2. The Division agrees and a training plan will be developed in conjunction with
DCYF after the new policy is finalized to ensure that everyone knows and
understands the new protocols.
3. The Division agrees and will work with DCYF to review existing cross
training protocols and to modify and expand the training to ensure better
communications. The training plan will include collapsing duplicated training
to one division and providing for staff from each division to access training
from the other division.
4. The Division agrees and once the recommendations above are implemented
will assess the need to enhance the foster care unit in Maricopa County.
Finding II:
1. The Department agrees and has requested funding in the FY2002 and FY2003
budget request for replacement of the ASSISTS system. If the request for
additional funding is approved the department will work with GITA on
completing a Project and Investment Justification. If request is not approved,
the Department will convene an internal workgroup to evaluate alternate
options that can enhance the Division's automation.
2. The Division agrees and is committed to ensure that field offices have the
ability and the capacity to maximize available automation. The Division has
already expanded automation to the districts and hired consultants to assist
with installation of new automation equipment.
Finding III:
1. The Division agrees with this recommendation. Once the workgroup has
completed its work and the Division develops its policies and protocols for
capturing waiting list information, all support coordinators will be training in
the new protocols.
2. The Division agrees and will arrange for meetings with JLBC and OSPB on
waiting list information, priorities and to seek guidance on the type of
information useful and relevant.
3. The Division agrees and will incorporate this recommendation after the
workgroup has completed its assignment.
4. The Division agrees and will update its waiting list information and ensure to
the degree possible that it reflects current information and accurately captures
service and support needs.
Finding IV:
1. The Division agrees and is continuing its pilot of usual incident reports and
expanding the pilot to two other districts.
2. The Division agrees and has eliminated the backlog.
3. The Division agrees and will include this recommendation in the evaluation of
the Pilot.
4. The Division agrees and will develop and implement a plan that ensures staff
are aware of the policies and procedures and can utilize Access database to
review information, trends and complete any required or desired analysis.
Finding V:
1. The Division agrees and has completed this recommendation.
Other Performance Audit Reports Issued Within
the Last 12 Months
99-19 Department of Health Services—
Sunset Factors
99-20 Arizona State Board of Accountancy
99-21 Department of Environmental
Quality—Aquifer Protection Permit
Program, Water Quality Assurance
Revolving Fund Program, and
Underground Storage Tank Program
99-22 Arizona Department of Transportation
A+B Bidding
00-1 Healthy Families Program
00-2 Behavioral Health Services—
Interagency Coordination of Services
00-3 Arizona’s Family Literacy Program
00-4 Family Builders Pilot Program
00-5 Arizona Department of Agriculture—
Licensing Functions
00-6 Board of Medical Student Loans
00-7 Department of Public Safety—
Aviation Section
00-8 Arizona Department of Agriculture—
Animal Disease, Ownership and
Welfare Protection Program
00-9 Arizona Naturopathic Physicians
Board of Medical Examiners
00-10 Arizona Department of Agriculture—
Food Safety and Quality Assurance
Program and Non-Food Product
Quality Assurance Program
00-11 Arizona Office of Tourism
00-12 Department of Public Safety—
Scientific Analysis Bureau
00-13 Arizona Department of Agriculture
Pest Exclusion and Management
Program
00-14 Arizona Department of Agriculture
State Agricultural Laboratory
00-15 Arizona Department of Agriculture—
Commodity Development Program
00-16 Arizona Department of Agriculture—
Pesticide Compliance and Worker
Safety Program
00-17 Arizona Department of Agriculture—
Sunset Factors
00-18 Arizona State Boxing Commission
Future Performance Audit Reports
Department of Corrections—Security Operations
Department of Public Safety—Drug Abuse Resistance Education (D.A.R.E.) Program
Department of Economic Security—Division of Child Support Enforcement