Performance audit, Department of Health Services, Division fo Family Health Services

              PERFORMANCE AUDIT
DEPARTMENT OF HEALTH SERVICES
DIVISION OF FAMILY HEALTH SERVICES
Report to the Arizona Legislature
By the Auditor General
April 1989
89- 1
Apri l 1989 Report No. 89- 1
The O f f i c e of the Auditor General has conducted a performance a u d i t of
the Arizona Department of Health Services, D i v i s i o n o f Family Health
Services, i n response to a June 2, 1987, r e s o l u t i o n o f the J o i n t
L e g i s l a t i v e Oversight Committee. This performance a u d i t was conducted as
part of the Sunset Review set f o r t h i n Arizcna Revised Statutes ( A . R . S . )
$ 941 - 2351 through 41 - 2379.
This i s the t h i r d i n a s e r i e s of reports to be issued on the Arizona
Department of Health Services ( DHS). Overal I , our a u d i t work i d e n t i f ied
few major problems w i t h the D i v i s i o n of Family Health Services ( FHS)
programs. This report focuses on three areas. These include the need
for the Women, I n f a n t s , and Children ( W I C ) program t o expand i t s service
c a p a b i l i t i e s through the implementation o f cost saving techniques, the
adequacy of DHS' management of complaints against hearing aid dispensers
and midwife l i c e n s i n g programs, and the need for continued evaluation o f
DHS' Chi l d r e n ' s Rehabi l i t a t i v e Services ( CRS) program.
WIC Program Is Adequately Managed, But
Could Serve Additional People by Negotiating
Rebates with Infant Formula Manufacturers
The Arizona n u t r i t i o n program for women, i n f a n t s , and c h i l d r e n appears to
be well managed, but the use o f i n f a n t formula rebates could increase the
number of people served. Comparison of Arizona's WIC program w i t h those
i n other western states suggests that DHS management i s adequate, when
measured by s e r v i c e l e v e l s and program costs. However, Arizona could
save as much as $ 310,000 per month, which would allow serving up t o 6,900
additiai- tal people, by impiementing an i n f a n t formula rebate program
s i m i l a r t o those used i n other s t a t e s . Although research by Arizona WIC
s t a f f concluded that rebates would allow Arizona to expand services, DHS
management was r e l u c t a n t to implement a rebate program because o f
possible p r i c e increases a f t e r the rebates are e s t a b l i s h e d . However, DHS
could include provisions i n i t s rebate agreements to protect against such
increases.
The s t a t e WIC o f f i c e could also improve r e l a t i o n s w i t h local agencies by
providing more information about fund a l l o c a t i o n decisions. These
agencies feel that DHS has a l l o c a t e d funds for i t s own a d m i n i s t r a t i v e
purposes to the detriment of the local programs, and has also u n f a i r l y
l i m i t e d the agencies' a b i l i t y to negotiate for a v a i l a b l e WIC monies.
These concerns appear misplaced since federal requirements l i m i t DHS'
n e g o t i a t i n g p o t e n t i a l . However, DHS could improve communication w i t h
local agencies about funding decisions.
The D i v i s i o n o f Family Health Services Has Not Adequately
Managed Hearing Aid Dispenser and Midwife Licensing Complaints
FHS' management of complaints against hearing a i d dispensers and midwives
has not been adequate. Previous complaint tracking and logging e f f o r t s
for each program have been l i m i t e d . P r i o r to our a u d i t neither program
had a complaint log, and s t a f f were unaware of the scope, content, and
status of the complaint p o p u l a t i o n . Formal complaint i n v e s t i g a t i o n
procedures were also lacking, which has resulted i n inconsistent and
poorly documented i n v e s t i g a t i o n s . Each program now logs and tracks a l l
complaints received, and i n v e s t i g a t i o n procedures have also been
developed, but not formalized.
Both programs have slso been hinde: by inadequate enforcement options.
Neither program ha: the abi l i t y to gose i n t e ~ e d i a t e sanctions such as
c i v i l p e n a l t i e s . The only enfor. , ent options are extreme, license
suspension or revocation. Also, DHS cannot r e q u i r e hearing aid dispenser
licensees to make r e s t i t u t i o n to customers, even though t h i s i s the
request of most of the complaints we reviewed. Nor does DHS have the
a u t h o r i t y t o access a l l records necessary for midwife complaint
i n v e s t i g a t i o n s .
DHS Should Continue E f f o r t s To
Reevaluate CRS Program
The present s t r u c t u r e of the C h i l d r e n ' s R e h a b i l i t a t i v e Services section
may be inappropriate due to changing needs and medical advances. The
program only covers c e r t a i n medical conditions o f c h r o n i c a l l y i l l
c h i l d r e n . However, the l i s t of conditions covered developed
i ncremen t a l l y as medical technology advanced and funding became
a v a i l a b l e . As a r e s u l t , some serious i l l n e s s e s such as hemophilia,
bronchopulmonary d i s p l a s i a , severe asthma, and diabetes are not covered
while other i l l n e s s e s which are now more e a s i l y t r e a t e d , such as ear
i n f e c t i o n s , are s t i l l covered.
There has been n a t i o n a l debate over which conditions should be covered
and how treatment should be provided by such programs. Most states cover
a l i s t of speci f ied condi t ions much l ike A r i z o n a ' s . However, research i s
c u r r e n t l y underway to develop other methods of coverage. For example, one
s t a t e covers any c o n d i t i o n , but only for f a m i l i e s w i t h a very low income
($ 9,00O/ year for a fami l y o f f o u r ) . FHS i s attempting to develop the
a b i l i t y to determine coverage based on the c o n d i t i o n ' s impact on the
c h i l d and f a m i l y . Arizona should continue to evaluate the r o l e of the
CRS program, s p e c i f i c a l l y the conditions covered and the level of
f i n a n c i a l assistance a v a i l a b l e .
STATE OFARIZONA
DOUGLAS R. NORTON, CPA
AUDITOR GENERAL OFFICE OFTHE
AUDITOR GENERAL
LINDA J BLESSING, CPA
DCPUTYAUDITOR GENERAL
Apri l 24, 1989
Members of the Arizona L e g i s l a t u r e
The Honorable Rose Mofford, Governor
Mr. Ted W i l l i a m s , D i r e c t o r
Department of Health Services
Transmitted herewith i s a report of the Auditor General, A Performance
Audit of the Department of Health Services, D i v i s i o n of Family Health
Services. This report i s i n response to a June 2, 1987, r e s o l u t i o n of
the J o i n t L e g i s l a t i v e Oversight Committee. The performance a u d i t was
conducted as a p a r t o f the Sunset Review set f o r t h i n Arizona Revised
Statutes $ 341 - 2351 through 41 - 2379.
This i s the t h i r d i s a series of reports to be issued on the Department
of Health Services. The report addresses issues i n three areas. We
found the Women, I n f a n t s and Children ( WIC) food program i s generally
we1 l managed but could be expanded to serve addi t ional people by
n e g o t i a t i n g rebates on i n f a n t formula sold t o program p a r t i c i p a n t s . We
also found the d i v i s i o n needs t o continue to improve i t s handling of
complaints f i l e d a g a i n s t h e a r i n g a i d dispensers and midwives by
e s t a b l i s h i n g c o n s i s t e n t i n v e s t i g a t i o n procedures and seeking s t a t u t o r y
a u t h o r i t y f o r i n t e r m e d i a t e s a n c t i o n s . F i n a l l y , the C h i l d r e n ' s
R e h a b i l i t a t i v e Services program should be reviewed to ensure that the
conditions e l i g i b l e f o r coverage are the most e f f e c t i v e use of the
l i m i t e d funds a v a i l a b l e .
My s t a f f and I w i l l be pleased to discuss or c l a r i f y items i n the
r e p o r t .
S i n c e r e l y ,
~ ol($ las R. Norton
Auditor General
S t a f f : W i l l i a m Thomson
Mark Fleming
Martha B. Dorsey
Kurt L. Schulte
Shan D. Hays
%-/ r) N( lO FiKH CEhl TRAL. AVE 8 SI. IITE 700 b PHOENIX, ARIZONP, 05004 B ( 602) 255- 4385
The O f f i c e of the Auditor General has conducted a performance a u d i t of
the Arizona Department of Health Services, D i v i s i o n of Family Health
Services, i n response to a June 2, 1987, r e s o l u t i o n of the J o i n t
L e g i s l a t i v e Oversight Committee. This performance a u d i t was conducted as
part of the Sunset Review set f o r t h i n Arizona Revised Statutes ( A. R. S.)
9541- 2351 through 41 - 2379.
This i s the t h i r d i n a s e r i e s of reports to be issued on the Arizona
Department of Health Services ( DHS). O v e r a l l , our a u d i t work i d e n t i f i e d
few major problems w i t h the D i v i s i o n o f Family Health Services ( FHS)
programs. This report focuses on three areas. These include the need
for the Women, I n f a n t s , and Children ( WIC) program to expand i t s service
c a p a b i l i t i e s through the implementation of cost saving techniques, the
adequacy of DHS' management of complaints against hearing a i d dispensers
and midwife l i c e n s i n g programs, and the need for continued evaluation of
DHS' Chi l d r e n ' s Rehabi l i t a t ive Services ( CRS) program.
WIC Program Is Adequately Managed, But
Could Serve Additional People by Negotiating
Rebates with Infant Formula Manufacturers ( see pages 5- 10)
The Arizona n u t r i t i o n program f o r women, i n f a n t s , and c h i l d r e n appears to
be well managed, but the use of i n f a n t formula rebates could increase the
number of people served. Comparison of Arizona's WIC program w i t h those
i n other western states suggests t h a t DHS management i s adequate, when
measured by service levels and program costs. However, Arizona could
save as much as $ 310,000 per month, which would allow serving up to 6,900
a d d i t i o n a l people, by implementing an i n f a n t formula rebate program
simi l a r to those used i n other s t a t e s . Although research by Arizona WIC
s t a f f concluded that rebates would allow Arizona to expand services, DHS
management was r e l u c t a n t to implement a rebate program because of
possible p r i c e increases a f t e r the rebates are established. However, DHS
could include provisions i n i t s rebate agreements to p r o t e c t against such
increases.
The s t a t e WIC o f f i c e could also improve r e l a t i o n s w i t h local agencies by
providing more information about fund a l l o c a t i o n decisions. These
agencies feel that DHS has allocated funds for i t s own a d m i n i s t r a t i v e
purposes to the detriment of the local programs, and has also u n f a i r l y
l i m i t e d the agencies' abi l i t y to negotiate for avai lable WIC monies.
These concerns appear misplaced since federal requirements l i m i t DHS'
n e g o t i a t i n g p o t e n t i a l . However, DHS could improve communication with
local agencies about funding decisions.
The D i v i s i o n o f Family Health Services Has Not Adequately
Managed Hearing Aid Dispenser and Midwife Licensing Complaints
( see pages 11- 17)
FHS' management of complaints against hearing aid dispensers and midwives
has not been adequate. Previous complaint tracking and logging e f f o r t s
for each program have been l i m i t e d . P r i o r to our audit n e i t h e r program
had a complaint log, and s t a f f were unaware of the scope, content, and
status of the complaint population. Formal complaint i n v e s t i g a t i o n
procedures were a l s o l a c k i n g , which has resulted i n inconsistent and
poorly documented i n v e s t i g a t i o n s . Each program now logs and tracks a l l
complaints received, and i n v e s t i g a t i o n procedures have also been
developed, but not formalized.
Both programs have also been hindered by inadequate enforcement options.
Neither program has the abi l i t y to impose intermediate sanctions such as
c i v i l p e n a l t i e s . The only enforcement options are extreme, license
suspension o r revocation. Also, DHS cannot require hearing a i d dispenser
licensees to make r e s t i t u t i o n to customers, even though t h i s i s the
request of most of the complaints we reviewed. Nor does DHS have the
a u t h o r i t y t o access a l l records necessary for midwife complaint
i n v e s t i g a t i o n s .
DHS Should Continue E f f o r t s To
Reevaluate CRS Program ( see pages 19- 23)
The present s t r u c t u r e o f the C h i l d r e n ' s R e h a b i l i t a t i v e Services section
may be inappropriate due to changing needs and medical advances. The
program only covers c e r t a i n medical conditions o f c h r o n i c a l l y i l l
c h i l d r e n . However, the l i s t of conditions covered developed
i nc remen t a l l y as med i ca l techno l ogy advanced and fund i ng became
a v a i l a b l e . As a r e s u l t , some serious i l l n e s s e s such as hemophilia,
bronchopu Imonary d i sp Ias i a, severe asthma, and d i a b e t e s a r e not covered
while other i l l n e s s e s which are now more e a s i l y t r e a t e d , such as ear
i n f e c t i o n s , are s t i l l covered.
There has been n a t i o n a l debate over which c o n d i t i o n s should be covered
and how treatment should be provided by such programs. Most s t a t e s cover
a i i s t of s p e c i f i e d c o n d i t i o n s much l i k e Arizona's. However, research i s
c u r r e n t l y underway to develop other methods of coverage. For example, one
s t a t e covers any c o n d i t i o n , but only for fami l i e s w i t h a very low income
($ 9,00O/ year for a family of f o u r ) . FHS i s attempting to develop the
a b i l i t y to determine coverage based on the c o n d i t i o n ' s impact on the
c h i l d and f a m i l y . Arizona should continue t o evaluate the r o l e of the
CRS program, s p e c i f i c a l l y the c o n d i t i o n s covered and the level of
f i n a n c i a l assistance a v a i l a b l e .
TABLE OF CONTENTS
Page
INTRODUCTION AND BACKGROUND . . . . . . . . . . . . . . . . . . 1
FINDING I: THE WOMEN, INFANTS, AND CHILDREN FOOD PROGRAM IS
ADEQUATELY MANAGED, BUT COULD SERVE ADDITIONAL PEOPLE
BY NEGOTIATING REBATES WITH INFANT
FORMULA MANUFACTURERS . . . . . . . . . . . . . . . . . . . 5
The Women, Infants, and Children Program I s A Food
Supplement Program. . . . . . . . . . . . . . . . . . . . . 5
Family Health Services Seems to
AdequatelyManageProgram . . . . . . . . . . . . . . . . . 5
Rebates on Infant Formula Would Provide
Funds to Increase Coverage. . . . . . . . . . . . . . . . . 7
Recomnendations . . . . . . . . . . . . . . . . . . . . . . 10
FINDING II: THE DIVISION OF FAMILY HEALTH SERVICES HAS NOT
ADEQUATELY MANAGED HEARING AID DISPENSER AND
MIDWIFE LICENSING COMPLAINTS. . . . . . . . . . . . . . . . 11
Hearing Aid Dispenser Complaint
Management Has Been Poor. . . . . . . . . . . . . . . . . . 11
Midwife Licensing Program Also Has Poor
Complaint Management. . . . . . . . . . . . . . . . . . . . 15
ProgressHasBeenMade. . . . . . . . . . . . . . . . . . . 16
Recomnendations . . . . . . . . . . . . . . . . . . . . . . 17
FINDING I l l : DHS SHOULD CONTINUE EFFORTS
TO REEVALUATE CHILDREN'S REHABILITATIVE
SERVICESPROGRAM. . . . . . . . . . . . . . . . . . . . . . 19
Children's R e h a b i l i t a t i v e Services Program Treats
Children With Certain Medical Conditions. . . . . . . . . . 19
Debate Centers on Extent of Coverage
andDeliveryMethod. . . . . . . . . . . . . . . . . . . . 21
Changes Involve D i f f i c u l t Choices . . . . . . . . . . . . . 22
Recomnendation. . . . . . . . . . . . . . . . . . . . . . . 23
AREAS FOR FURTHER AUDIT WORK. . . . . . . . . . . . . . . . . . 25
AGENCY RESPONSE
LIST OF TABLES
Page
TABLE 1 - Division o f Family Health Services
Fiscal Year 1987- 88 Program Expenditures
and FTEs by Revenue Source . . . . . . . . . . . . 3
TABLE 2 - WIC S t a t i s t i c s for
Western States Region. . . . . . . . . . . . . . . 7
l NTRODUCT l ON AND BACKGROUND
The O f f i c e of the Auditor General has conducted a performance audit of
the Arizona Department of Health Services, D i v i s i o n of Family Health
Services i n response t o a June 2, 1987 r e s o l u t i o n of the J o i n t
L e g i s l a t i v e Oversight Committee. This performance audit was conducted as
part of the Sunset Review set f o r t h i n Arizona Revised Statutes ( A. R. S.)
4441- 2351 through 41- 2379. This i s the t h i r d i n a s e r i e s o f r e p o r t s t o
be issued on the Arizona Department of Health Services.
The D i v i s i o n of Family Health Services ( FHS) administers a v a r i e t y of
food, medical, educational, and social services programs. FHS i s divided
i n t o f i v e o f f i c e s : N u t r i t i o n Services, Maternal and Child Health,
Children's R e h a b i l i t a t i v e Services, Dental Health, and Assistant
D i r e c t o r / A d m i n i s t r a t i o n . These o f f i c e s are responsible for managing a
t o t a l of 34 separate programs.
The Office of Nutrition Services provides services and funding to
promote good health through good n u t r i t i o n . The o f f i c e spent $ 19.5
m i l l i o n during f i s c a l year 1987- 88, of which almost $ 19 m i l l i o n was
at located to the Women, I n f a n t s , and Chi ldren ( WIC) program. The WIC
program i s federal l y funded, and i s designed to provide supplemental food
and n u t r i t i o n education to h i g h - r i s k pregnant women as we1 I as t o i n f a n t s
and children to f i v e years of age. Other programs administered by the
o f f i c e provide n u t r i t i o n a l consulting to the e l d e r l y , deveIopmentaIIy
disabled, c h i l d daycare centers, and c h i l d r e n w i t h special health care
needs.
The O f f i c e o f Maternal and Child Health has the mission of promoting
the health of women i n c h i Idbearing years and c h i l d r e n . The o f f i c e has
two sections: maternal health and c h i l d health. The maternal health
section of the O f f i c e of Maternal and Child Health provides a statewide
system of c o n s u l t a t i o n and t r a n s p o r t a t i o n f o r h i g h - r i s k pregnant women.
Other programs p e r t a i n to the promotion of maternal and i n f a n t h e a l t h ,
family planning, social s e r v i c e s c o n s u l t a t i o n , and communications
consultation to communities about health programs. This section i s also
responsible for the l i c e n s i n g and r e g u l a t i o n of midwives.
The major c h i l d h e a l t h program i s the newborn i n t e n s i v e care program,
which accounted f o r $ 4.1 mi I l i o n of the o f f i c e ' s $ 7.8 mi I I ion
expenditures during f i s c a l year ( f y ) 1987- 88. This program w i l l provide
t r a n s p o r t a t i o n , h o s p i t a l care, physician c o n s u l t a t i o n , and follow- up
services for c r i t i c a l l y i l l newborns. Other programs i n the c h i l d h e a l t h
section include c o n s u l t a t i o n w i t h communities on e a r l y childhood issues,
case management by nurses of h i g h - r i s k c h i l d r e n and adolescents ( f i v e
counties), c h i l d h e a l t h planning ( f i v e c o u n t i e s ) , c h i l d i n j u r y
prevention, and technical assistance to school h e a l t h s t a f f .
The O f f i c e o f C h i l d r e n ' s R e h a b i l i t a t i v e Services p r i m a r i l y provides for
the comprehensive medical care of e l i g i b l e c h i l d r e n under 21 years of age
who are c h r o n i c a l l y i l l or p h y s i c a l l y disabled. The c h i l d r e n must meet
medical and f i n a n c i a l e l i g i b i l i t y c r i t e r i a . Overall o f f i c e expenditures
f o r f i s c a l year 1987- 88 exceeded $ 12.7 m i l l i o n . The m a j o r i t y o f t h i s
money was used to contract services for these c h i l d r e n . The o f f i c e also
administers smaller programs p e r t a i n i n g to h e a r i n g c o n s e r v a t i o n and
v i s i o n screening f o r c h i l d r e n , and s i c k l e c e l l anemia screening and
c o n s u l t a t i o n - f o r both a d u l t s and c h i l d r e n . The hearing conservation
program i s responsible f o r the l i c e n s i n g of hearing a i d dispensers.
The O f f i c e o f Dental Health coordinates dental prevention and treatment
programs for the homebound, the f r a i l and e l d e r l y , and for c h i l d r e n from
f a m i l i e s not e l i g i b l e f o r Arizona Health Care Cost Containment System
( AHCCCS) reimbursement but who are below f e d e r a l p o v e r t y l e v e l .
Prevention programs include the use o f f l u o r i d e mouthrinse and dental
sealant to prevent dental problems among school c h i l d r e n . Treatment i s
provided by mobile dental u n i t s i n the r u r a l areas of the s t a t e where the
need i s g r e a t e s t .
The o f f i c e also p u b l i s h e s a n e w s l e t t e r on continuing education f o r dental
p r o f e s s i o n a l s . Other o f f i c e functions include dental c o n s u l t a t i o n f o r
AHCCCS and the s t a t e h o s p i t a l , as well as r e g u l a t i n g prepaid dental plans
and programs i n Arizona h e a l t h maintenance o r g a n i z a t i o n s ( HMOs). Total
o f f i c e expenditures f o r fy 1987- 88 were over $ 1.1 m i l l i o n .
The Assistant Director/ Office of Administration i s responsible f o r
budget development and c o n t r o l , c o n t r a c t management, word processing, and
personnel s e r v i c e s . T o t a l f i s c a l year 1987- 88 expenditures exceeded
$ 740,000.
Table 1 summarizes the D i v i s i o n of Family H e a l t h S e r v i c e s ' f i n a n c i n g and
s t a f f i n g .
TABLE I
OlVlSlON OF FAMILY HEALTH SERVICES
FISCAL YEAR 1987- 88 PROGRAM EXPENDITURES AND FTEs
BY REVENUE SOURCE
FHS State
Off ice Funds
N u t r i t i o n
Services $ 602,239
Children's
Rehab. 6,495,724
Maternal/ Chi Id
Health 5,319,983
Dental Health 455,531
Asst. D i r e c t o r /
Admin. 737 629
TOTAL $ 13.611.1~
SOURCE
Federal Total
Grants Expenditures State Federal Total
( a) AS of February 1989.
( b ) IGAs represent the total dollars DHS rece~ ved for these programs through intergovernmental
agreements with other state agencies. . Figures also include donation amounts of $ 11.047 for
Children's Rehabilitative Services and $ 80,569 for Oental Health.
Source: Auditor General analysis of DHS expenditure data for f i s c a l year 1987- 88
FTE data provided by FHS O f f i c e o f A d m i n i s t r a t i v e Services.
Audit Scope and Purpose
This audit was conducted to evaluate the e f f e c t i v e n e s s of operations
w i t h i n the Department of Health Services, D i v i s i o n of Family Health
Services, focusing on these s p e c i f i c areas:
a The need for DHS to implement a d d i t i o n a l cost- saving measures i n
order to increase service by the WIC program.
a The adequacy of DHS' complaint management f o r the hearing dispenser
and midwife l i c e n s i n g programs.
r The need to reevaluate the CRS program
The a u d i t scope focused on these three areas only because few problems
d i r e c t l y r e l a t e d t o FHS programs and a c t i v i t i e s were i d e n t i f i e d during
the p r e l i m i n a r y a u d i t work. Most concerns about FHS centered on the
extent to which medical care and services a r e g e n e r a l l y a v a i l a b l e i n
Arizona, e s p e c i a l l y f o r f a m i l i e s lacking h e a l t h insurance b u t n o t
e l i g i b l e f o r AHCCCS. Addressing the broader questions about a v a i l a b i l i t y
and financing of medical care would have exceeded the resources a v a i l a b l e
f o r the audi t . Complaint management review was conducted because of
problems found i n DHS' handling of complaints i n other recent Auditor
General performance a u d i t s . ( See reports number 88- 5 and 88- 12.)
The section e n t i t l e d Areas f o r F u r t h e r A u d i t Work addresses issues
i d e n t i f i e d during the course of our a u d i t work, but which we were unable
to research due to time c o n s t r a i n t s . ( See pages 25- 26.)
This a u d i t was conducted i n accordance w i t h generally accepted
governmental a u d i t i n g standards.
The Auditor General and s t a f f express a p p r e c i a t i o n to the D i r e c t o r of the
Department of Health Services and the s t a f f of the D i v i s i o n of Family
Health Services f o r t h e i r cooperation and assistance during the course of
our a u d i t .
FINDING I
THE WOMEN, INFANTS, AND CHILDREN FOOD PROGRAM IS ADEQUATELY
MANAGED, BUT COULD SERVE ADDITIONAL PEOPLE BY NEGOTIATING
REBATES WITH INFANT FORMULA MANUFACTURERS
The Special Supplemental Food Program for Women, I n f a n t s , and Children
( WIC) i s generally well run but i t s service could be expanded by using
rebates on i n f a n t formula. Rebates s i m i l a r t o those used by other states
could provide approximately $ 310,000 per month in food and a d m i n i s t r a t i v e
funds to serve an estimated 6,900 more i n d i v i d u a l s .
The Women, I n f a n t s , and Children Program
I s A Food Supplement Program
WIC i s a program funded by the U. S Department of A g r i c u l t u r e ( USDA) to
improve the n u t r i t i o n of low income pregnant and postpartum women and
c h i l d r e n under the age of f i v e through the use of food supplements. WIC
i s e n t i r e l y funded by federal grants. The federal government a l l o c a t e d
approximately $ 19.8 m i l l i o n to Arizona for f i s c a l year 1988- 89.
The Department of Health Services administers the WIC program at the
s t a t e level through i t s D i v i s i o n of Family Health Services ( FHS). FHS
contracts w i t h county health departments, Indian t r i b e s , and o t h e r l o c a l
h e a l t h agencies to administer WIC s e r v i c e s . P a r t i c i p a n t s f i r s t v i s i t
local c l i n i c s for screening, education, and r e f e r r a l to other h e a l t h
services. They next o b t a i n vouchers l i s t i n g foods which w i l l meet t h e i r
special n u t r i t i o n a l needs. The p a r t i c i p a n t s take the vouchers to
authorized r e t a i l stores and exchange them for the foods l i s t e d .
Family Health Services Seems to
Adequate l y Manage Program
Comparisons of Arizona's WIC program w i t h those i n other western states
suggest that DHS manages the program adequately. The few c r i t i c i s m s of
program management came from local agencies. However, those c r i t i c i s m s
appear to stem from poor communication rather than actual problems.
Program management appears adequate - Arizona WIC program management
appears to be adequate compared w i t h other western s t a t e s when measured
by service l e v e l s and program c o s t s . WIC s e r v i c e l e v e l s i n Arizona are
comparable t o other western s t a t e s . Approximately 41,000 Arizonans w i l l
receive WIC b e n e f i t s each month i n f i s c a l year 1988- 89. This represents
about 32 percent o f the estimated p o t e n t i a l l y e l i g i b l e p o p u l a t i o n . The
average service l e v e l i n the Western Region - 34 percent - i s only
s l i g h t l y h i g h e r . USDA s t a t i s t i c s summarized i n Table 2 ( see page 7) show
A r i z o n a ' s WIC program compared w i t h other s t a t e s i n USDA's Western
Region. Arizona ranks near the middle i n percent o f e l i g i b l e p o p u l a t i o n
served, percent o f a d m i n i s t r a t i v e money passed through t o l o c a l agencies,
and food cost per c l i e n t . The a d m i n i s t r a t i v e cost per c l i e n t l a s t year
was lower i n Arizona than i n any o t h e r s t a t e i n the Western Region.
However, comnunication with WIC contractors can be improved - The s t a t e
WIC o f f i c e could imprave r e l a t i o n s w i t h l o c a l agencies by p r o v i d i n g more
i n f o r m a t i o n about WIC fund a l l o c a t i o n d e c i s i o n s . When a u d i t o r s v i s i t e d
l o c a l agencies, some h e a l t h a d m i n i s t r a t o r s reported d i s s a t i s f a c t i o n w i t h
WIC. They f e l t that DHS a l l o c a t e d funds f o r i t s own a d m i n i s t r a t i v e
purposes t o the detriment o f l o c a l programs. Local a d m i n i s t r a t o r s a l s o
f e l t that DHS u n f a i r l y l i m i t e d t h e i r a b i l i t y t o n e g o t i a t e f o r a v a i l a b l e
WIC monies. This concern appears misplaced s i n c e f e d e r a l requirements
l i m i t the n e g o t i a t i n g p o t e n t i a l i n WIC c o n t r a c t s . However, DHS could
improve communication w i t h l o c a l agencies about funding d e c i s i o n s . DHS
i s c u r r e n t l y working w i t h l o c a l program a d m i n i s t r a t o r s t o r e v i s e the
method f o r d i s t r i b u t i n g funds t o c o u n t i e s . T h i s may improve the l o c a l
agencies' understanding o f the f e d e r a l and f i n a n c i a l c o n s t r a i n t s on the
WIC program and reduce some o f t h e l o c a l concerns.
TABLE 2
WIC STATISTICS FOR
WESTERN STATES REGION
Monthly Monthly
Administrative Food Percent
Percent Cost per Cost Per Passed
State Served C l ient( a) Cl ient( b) Through( c)
A l aska
Arizona
Cal i fornia
Hawa i i
l daho
Nevada
Oregon
Washington
Ave rage 34.0% $ 10.18 $ 35.66 7 4%
Arizona's rank 5th 8 t h 4 t h 3rd
( a ) Administrative funds are used f o r c l i e n t service ( h e a l t h evaluation, enrollment,
and education) as well as f o r program a d m i n i s t r a t i o n expenses such as data
processing and other overhead.
( b) Food cost per c l i e n t i s the s t a t e ' s t o t a l food expenditures d i v i d e d by the s t a t e ' s
t o t a l number of p a r t i c i pants.
( c ) Percent passed through r e f e r s to the p o r t i o n of t o t a l a d m i n i s t r a t i v e funds provided
to l o c a l health agencies f o r o p e r a t i n g t h e program. The remainder i s spent a t the
state l e v e l .
( d) Data not a v a i l a b l e .
Note: Cost f i g u r e s are f o r f i s c a l year 1987- 88. Percent of funds passed through
and percent of t a r g e t population served are f o r f i s c a l year 1986- 87. These are the
most recent f i g u r e s avai lab1 e from USDA.
Source: Information provided by USDA's Western Region Office
Rebates on Infant Formula Would
Provide Funds to Increase Coverage
Arizona could save as much as $ 310,000 per month, which would allow
serving up to 6,900 additional people, by implementing an infant formula
rebate program l i k e those used in other states. Several states have
adopted rebates to comply with a 1988 federal law requiring
implementation of cost containment measures i n order to serve more
people. A1 though research by Arizona WlC s t a f f concluded that rebates
would allow Arizona to expand services, DHS management was r e l u c t a n t t o
implement a rebate program u n t i l r e c e n t l y .
Several states use rebates - Federal law now requires s t a t e s t o
implement WIC cost containment measures, and a number of states have
selected an i n f a n t formula rebate program to s a t i s f y t h a t requirement. A
1987 federal law encourages states to introduce cost savings by a l lowing
them to r e t a i n some of the savings f o r a d m i n i s t r a t i v e purposes. The
remainder must be used to provide a d d i t i o n a l WIC s e r v i c e s . The most
recent federal appropriations b i l l requires states to i n i t i a t e cost
containment systems by August 30, 1989. Several s t a t e s have chosen to
focus t h e i r cost containment e f f o r t s on i n f a n t formula, possibly because
many WIC p a r t i c i p a n t s are i n f a n t s , and i n f a n t formula averages about 36
percent of t o t a l WIC food costs. These s t a t e s c o n t r a c t w i t h one or more
manufacturers to provide a WIC approved formula, and the manufacturers
send monthly rebate checks to the administering s t a t e agency for a
p o r t i o n of the p r i c e of the formula sold to WIC c l i e n t s . A September
1988 USDA memorandum indicates nineteen states were e i t h e r i n the process
of implementing rebate programs or had already s t a r t e d the program.
Savings have been s u b s t a n t i a l , as i l l u s t r a t e d by the f o l l o w i n g examples.
r I n Texas, the WIC program c h i e f a n t i c i p a t e s serving more p a r t i c i p a n t s
by saving $ 35 m i l l i o n per year due t o c o n t r a c t i n g w i t h a s i n g l e
manufacturer who wi I I provide a1 I WIC i n f a n t formula a t a 99.6 cents
per can rebate.
a C a l i f o r n i a expects to serve 135,000 a d d i t i o n a l c l i e n t s each month
w i t h t o t a l savings of $ 57 mi l I ion per year by c o n t r a c t i n g w i t h one
manufacturer who has agreed t o provide a rebate of $ 1 .45 per can.
e Colorado and New Mexico both contract w i t h two manufacturers instead
of a s i n g l e source, but were s t i l l able to obtain agreements at a
rebate of 87 cents per can from each manufacturer.
Arizona could increase s e r v i c e by using rebates - The Arizona WIC
program could expand services by implementing an i n f a n t formula rebate
program. The Arizona WlC d i r e c t o r conducted research on the rebate
program and obtained o f f e r s from the two l a r g e s t manufacturers to provide
rebates. Figures developed i n l a t e 1987 i n d i c a t e d p o t e n t i a l savings of
$ 179,025 ( or 3,892 i n d i v i d u a l s ) per month at a rebate of 55 cents per
can. One manufacturer r e c e n t l y o f f e r e d Arizona a minimum rebate of 87
cents per can f o r l i q u i d i r o n f o r t i f i e d concentrate ( other types of
formula would y i e l d h i g h e r r e b a t e s ) . The 87 cent rebate would provide
Arizona w i t h approximately $ 310,000 per month, which would enable the
program to serve an estimated a d d i t i o n a l 6,900 p a r t i c i p a n t s each
month.")
DHS r e c e n t l y approved the rebate plan - Although the department i s now
i n the process of n e g o t i a t i n g f o r rebates, DHS management was r e l u c t a n t
to implement the rebate program u n t i l r e c e n t l y . The a c t i n g a s s i s t a n t
d i r e c t o r o f Family H e a l t h S e r v i c e s was concerned t h a t manufacturers might
raise p r i c e s a f t e r the WIC rebate i s implemented. A p r i c e increase would
reduce the program's abi l i t y to serve c l i e n t s and may force the s t a t e t o
drop c l i e n t s who depend on the program. Other s t a t e s , however, have
w r i t t e n p r o t e c t i v e clauses i n t o t h e i r contracts so that rebates increase
t o o f f s e t most p r i c e increases. ( 2 ) In a d d i t i o n , the existence of at
least three major i n f a n t formula manufacturers should assure enough
competition i n the marketplace to p r o t e c t against any future p r i c e
manipulation, b a r r i n g c o l l u s i o n among the manufacturers.
( 1 ) Savings and service l e v e l s a r e c a l c u l a t e d as f o l l o w s :
Current i n f a n t enrollment/ month
Average cans of formula/ month
Total cans/ month
Rebate/ can
Total month1 y savings
Less 25% ( estimated) a d m i n i s t r a t i v e costs
Avai 1 able food funds
Divided by average food c o s t / p a r t i c i p a n t
Additional participants/ month
( 2) USDA determines an acceptable i n f l a t i o n rate f o r WIC foods annual1 y, and p r o t e c t i v e
clauses allow manufacturers to r e t a i n enough of any p r i c e increase to cover the
USDA approved i n f l a t i o n r a t e .
Even i f future p r i c e increases l i m i t the number of persons served,
reducing program enrollment can be accomplished by a t t r i t i o n . The
federal regulation r e q u i r i n g r e c e r t i f i c a t i o n at six- month i n t e r v a l s
provides a mechanism f o r a d j u s t i n g caseload. Local agencies already use
t h i s method to accommodate funding changes and population s h i f t s . When
they need to reduce caseload, they simply stop accepting and r e c e r t i f y i n g
applicants i n the lower p r i o r i t y groups. "' Thus, the WIC program
could adjust to p r i c e increases by the same method already used to
respond to funding changes.
According to DHS o f f i c i a l s , the department has completed preliminary
steps toward e s t a b l i s h i n g a rebate program and expects to implement the
program i n July 1989.
Recomnendations
1. DHS should n e g o t i a t e c o n t r a c t s w i t h i n f a n t formula manufacturers to
provide rebates on WIC approved formula. The contracts should
include p r o v i s i o n s t o increase rebates to meet p r i c e increases and to
ensure open competition for each y e a r ' s c o n t r a c t .
2. P r i o r to annual WIC contract n e g o t i a t i o n meetings, DHS should inform
local health agencies about a v a i l a b l e funding l e v e l s , d i s t r i b u t i o n of
funds, and requirements imposed by federal or s t a t e laws and
regulations.
( ' ) WIC p a r t i c i p a t i o n i s r e s t r i c t e d t o people w i t h n u t r i t i o n a l r i s k f a c t o r s . The
f a c t o r s are c l a s s i f i e d i n t o s i x groups and p r i o r i t i z e d by federal r e g u l a t i o n .
Therefore, people who a1 ready have a medical c o n d i t i o n such as anemia are a higher
p r i o r i t y than people whose d i e t i s inadequate which might lead t o anemia.
10
FINDING I I
THE DIVISION OF FAMILY HEALTH SERVICES HAS NOT ADEQUATELY
MANAGED HEARING AID DISPENSER AND MIDWIFE
LICENSING COMPLAINTS
The Department of Health Services ( DHS) management of hearing a i d
dispenser and midwife l i c e n s i n g program complaints has been poor.
Previous e f f o r t s to track and log complaints for each program have been
l i m i t e d . In a d d i t i o n , both programs lack s u f f i c i e n t enforcement
a u t h o r i t y t o e f f e c t i v e l y i n v e s t i g a t e complaints. However, program s t a f f
have made progress r e c e n t l y towards improving complaint a d m i n i s t r a t i o n .
Arizona law gives DHS a u t h o r i t y to enforce complaint actions against
hearing a i d dispensers ( HADs) and midwives. A. R. S. 536- 1934 gives the
DHS d i r e c t o r a u t h o r i t y to suspend or revoke a HAD'S license f o r reasons
such as unethical conduct, and gross i n e f f i c i e n c y o r ignorance i n the
conduct of p r a c t i c e . A. R. S. 536- 756 gives DHS the a u t h o r i t y to deny,
suspend, or revoke the license of any midwife engaging i n conduct or
p r a c t i c e detrimental to the h e a l t h or safety of the mother or chi I d , or
a l l o w i n g o r a b e t t i n g the commission of an unlawful a c t . The D i v i s i o n of
Family Health Services ( FHS) i s responsible f o r managing these two
l i c e n s i n g functions.
Hearing Aid Dispenser Complaint
Management Has Been Poor
The HAD program has had a h i s t o r y of poor complaint management.
Complaints have not been tracked or logged, and no formal i n v e s t i g a t i o n
procedures existed u n t i l r e c e n t l y . I n a t least one instance, t h i s has
hindered DHS1 a b i l i t y to take a c t i o n against an incompetent licensee.
Options for enforcement a c t i o n have also been l i m i t e d .
Complaint management - Although DHS has had the r e s p o n s i b i l i t y f o r HAD
l i c e n s i n g and enforcement since at least 1970, i t d i d not have a
complaint t r a c k i n g system or formalized i n v e s t i g a t i v e procedures u n t i l
1989. As a r e s u l t , HAD program personnel were i n i t i a l l y unable to
provide a l i s t i n g of complaints against HADs when requested by a u d i t
11
s t a f f . Program s t a f f d i d demonstrate a general knowledge of which
licensees had c o m p l a i n t s , b u t d i d not know the t o t a l number of
complaints, t h e i r c o n t e n t , o r s t a t u s . Program s t a f f were also unsure of
the l o c a t i o n o f a l l of the complaint i n f o r m a t i o n . Informal p o l i c y had
been to keep them i n the l i c e n s e e ' s regular license f i l e . Several days
a f t e r our request f o r complaint data, HAD program s t a f f found a box of
complaints f i l e d p r i o r t o 1985 that had been kept separately from the
license f i l e s .
The current program s t a f f were aware of t h i s problem and were developing
a computerized system t o track complaints but had not entered data p r i o r
to the a u d i t . E v e n t u a l l y , program s t a f f compiled a computerized l i s t of
172") complaints f i l e d against the 409"' current a c t i v e
licensees. We reviewed the 21 complaints f i l e d since July 1 , 1987, and
found that 16 were f i l e d by consumers and pertained to HAD product and
service problems. The other 5 complaints were about a d v e r t i s i n g .
Thirteen of the consumer complaints s p e c i f i c a l l y requested refunds for
u n s a t i s f a c t o r y product and s e r v i c e . I n v e s t i g a t i o n and r e s o l u t i o n of
these complaints i s important f o r consumer p r o t e c t i o n , p a r t i c u l a r l y since
DHS o f f i c i a l s believe the HAD s t a t u t e s address u n f a i r business p r a c t i c e s .
Investigation procedures - The HAD program also lacks formal complaint
i n v e s t i g a t i o n procedures. Our review of HAD complaint f i l e s showed
inconsistent use o f i n v e s t i g a t i o n procedures. For example, some f i l e s
contained summary sheets documenting a l l i n v e s t i g a t i v e a c t i v i t i e s , while
others d i d n o t . Also, a n a l y s i s of the newly created computerized
complaint log i d e n t i f i e d 14 complaint records( 3) ( out of 172 t o t a l ) of
unknown status due to i n s u f f i c i e n t information i n the f i l e . The program
s t a f f has d r a f t e d p o l i c i e s and rules f o r complaint i n v e s t i g a t i o n s
although they have not yet been formalized.
( 1 ) This f i g u r e includes a l l records since 1970.
( 2 ) There are a1 so approximate1 y 600 i n a c t i v e 1 i censees f o r which comprehensive
complaint information i s not a v a i l a b l e . According t o the HAD manager, these
licensees have few complaints.
( 3) A l l 14 of these complaints were f i l e d p r i o r t o 1986.
Enforcement actions - The HAD manager i s aware of at least four
enforcement actions since 1984. One licensee received a two- month
license suspension for numerous s t a t u t o r y v i o l a t i o n s . Another
licensee went to hearing for i l l e g a l business p r a c t i c e , but received no
d i s c i p l i n a r y a c t i o n . Another recent case involves unlicensed a c t i v i t y ,
for which DHS and the Attorney General are seeking an i n j u n c t i o n . One
licensee has had numerous complaints since 1982, but DHS d i d not deny h i s
license renewal u n t i l December 1988. The circumstances p e r t a i n i n g to
t h i s case are described below.
Case Example
Fifty- two complaints have been f i l e d against one licensee since
1983. According t o a n a l y s i s by HAD s t a f f , these complaints contained
over 90 s p e c i f i c a l l e g a t i o n s . The HAD manager stated that at least
13 of these a l l e g a t i o n s could be considered v i o l a t i o n s of s t a t u t e and
r u l e , such as refusing to honor 30- day t r i a l period agreements,
charging f o r r e p a i r s w h i l e the hearing aid was under warranty, and
medical problems related to improperly f i t t e d hearing aids. There
were also 8 complaints about the licensee v e r b a l l y harassing
customers, 1 instance of the licensee p h y s i c a l l y harming a customer,
and 2 complaints of sexual advances to employees and customers. Most
of the remaining complaints involved u n s a t i s f a c t o r y merchandise.
HAD program management has unsuccessfully attempted to take
d i s c i p l i n a r y a c t i o n since at least 1983. They were aware of the
licensee's complaint h i s t o r y , but poor complaint tracking and
i n v e s t i g a t i v e procedures prevented them from developing a case that
the Attorney General would take to hearing. They were lacking a
comprehensive and d e t a i l e d summary of the scope and magnitude of
these complaints. They also had not developed evidence or witnesses
that could be used i n a hearing. Attempts to impose a license
suspension pending an i n v e s t i g a t i o n were unsuccessful, as the
Attorney General stated t h i s could not be done l e g a l l y .
( I ) A f t e r a d i s c i p l i n a r y hearing, t h i s licensee also paid a $ 500 penalty as the r e s u l t
of a settlement agreement negotiated w i t h the Attorney General. DHS does not have
the s t a t u t o r y a u t h o r i t y t o impose a d m i n i s t r a t i v e p e n a l t i e s , and would have been
unable t o impose t h i s penalty i n the absence of the agreement.
By May of 1987, DHS s t i l l did not have a s u f f i c i e n t l y strong case
against t h i s licensee, and so renewed h i s license. However, by t h i s
time, a f u l l - s c a l e i n v e s t i g a t i o n was underway by DHS and the Attorney
General. A d e t a i l e d review was done of the complaints and charges
against t h i s licensee, and by December 1988, DHS and the Attorney
General were able to deny renewal of h i s license. The licensee
v o l u n t a r i l y relinquished h i s license just p r i o r to t h i s a c t i o n .
According to the HAD manager, the Attorney General i s continuing i t s
i n v e s t i g a t i o n of p o s s i b l e c r i m i n a l charges r e l a t i n g to these
complaints, and t h i s licensee has recently been investigated by the
DHS O f f i c e of Special I n v e s t i g a t i o n s f o r unlicensed a c t i v i t y .
Enforcement a u t h o r i t y - The HAD program presently lacks the a u t h o r i t y
to arder r e s t i t u t i o n by licensees, although t h i s i s the reason for the
m a j o r i t y of complaints reviewed. According to DHS o f f i c i a l s , the
department p o l i c y for handling these cases i s t o r e f e r the complainant to
the Attorney General- Consumer Fraud D i v i s i o n , the B e t t e r Business Bureau,
or the Small Claims Court. According to these same o f f i c i a l s , DHS does
not have the resources t o a d j u d i c a t e these cases and feels s u f f i c i e n t
a l t e r n a t i v e s for r e s t i t u t i o n are a v a i l a b l e for the consumer. However,
DHS has received only 13 r e s t i t u t i o n cases since July I , 1987, and only 9
were not resolved w i t h the licensee providing a f u l l refund. Thus,
resolving these few cases does not appear to be beyond DHS' e x i s t i n g
resources.
In contrast to DHS, other Arizona medical l i c e n s i n g boards have the
a u t h o r i t y t o order r e s t i t u t i o n . A. R. S. 532- 1693 gives the Board of
Dispensing Opticians t h i s a u t h o r i t y through a decree of censure. The
Board of Medical Examiners has t h i s a u t h o r i t y through A. R. S. 532- 1451
F . ( 4 ) .
No intermediate sanctions - HAD program s t a f f want the a b i l i t y to take
action against a licensee without having to suspend or revoke the
license. C u r r e n t l y , suspension o r revocation are the o n l y o p t i o n s
a v a i l a b l e f o r d i s c i p l i n a r y a c t i o n . A t least s i x Arizona health
regulatory boards have the s t a t u t o r y p r o v i s i o n f o r a d m i n i s t r a t i v e
p e n a l t i e s . These include the statutes governing Arizona o p t o m e t r i s t s ,
nurses, c h i r o p r a c t o r s , osteopaths, pharmacists, and medical doctors.
Midwife Licensing Program Also Has
Poor Complaint Management
DHS has a l s o p o o r l y managed the midwife complaint f u n c t i o n . Despite
receiving complaints i n v o l v i n g death and other s i g n i f i c a n t harm from
actions by licensees, midwife l i c e n s i n g program personnel have only
recently begun formally tracking and logging complaints. Complaint
investigations have also been hindered by inadequate enforcement
a u t h o r i t y .
Complaint management - The midwife l i c e n s i n g program has lacked formal
complaint tracking and i n v e s t i g a t i o n procedures. The program manager was
only aware of nine complaints. Also, the lack of formal procedures lead
to nonuniform and poorly documented i n v e s t i g a t i o n s .
Proper management and i n v e s t i g a t i o n of these complaints i s important
because the p o t e n t i a l for p u b l i c harm i s great. Although there are only
nine complaints which the manager i s aware o f , three of these pertained
to i n f a n t death. For example, one complaint alleged that an i n f a n t was
s t i l l b o r n because the midwife d i d not obtain medical c o n s u l t a t i o n when
the p a t i e n t e x h i b i t e d abnormal symptoms. A second complaint involved a
s t i l l b o r n i n f a n t d e l i v e r e d a f t e r the normal 42 weeks. The t h i r d instance
involved an i n f a n t born w i t h severe complications who died a f t e r three
days.
In a d d i t i o n , two of the nine complaints are alleged v i o l a t i o n s of Rule
9- 16- 205 C. which requires the midwife to make formal arrangements w i t h a
licensed physician for back- up medical care during the d e l i v e r y . The
remaining four complaints dealt p r i m a r i l y w i t h a d v e r t i s i n g , business
p r a c t i c e , and f a l s i f y i n g an a p p l i c a t i o n . A l l were closed w i t h no a c t i o n
taken against the licensee.
Enforcement a u t h o r i t y - The midwife l i c e n s i n g program also lacks
adequate enforcement a u t h o r i t y to e f f e c t i v e l y carry out complaint
investigations. There presently i s no s t a t u t o r y or r u l e p r o v i s i o n which
would allow midwife l i c e n s i n g program s t a f f to access p a t i e n t records
from the admitting h o s p i t a l w i t h o u t f a m i l y consent. According to the
program manager, lack of t h i s a u t h o r i t y has hindered a c u r r e n t
i n v e s t i g a t i o n o f i n f a n t death. Other Arizona l i c e n s i n g boards have t h i s
a u t h o r i t y .
15
A. R. S. $ 32- 1451.01 A . gives the Board of Medical Examiners the a u t h o r i t y
to access any records needed f o r an i n v e s t i g a t i o n . The Board of Nursing
i s granted s i m i l a r a u t h o r i t y through A. R. S. 532- 1664.1.
A l s o , according to both the midwife l i c e n s i n g program manager and the DHS
legal counse l , the physician back- up and consul t a t ion ( R9- 16- 205 A . and
C . ) requirements need c l a r i f i c a t i o n . The c o n s u l t a t i o n requirement i s
weak as i t does not specify t h a t the physician be an o b s t e t r i c i a n . Also,
midwives have d i f f i c u l t y complying w i t h the physician back- up requirement
because of m i s t r u s t by the medical community. Some midwives i n Yuma have
established back- up agreements w i t h physicians i n Phoenix, which may not
be adequate should complications a r i s e during d e l i v e r y .
The program manager also expressed the need for i n t e r m e d i a t e s a n c t i o n s
such as a d m i n i s t r a t i v e p e n a l t i e s . C u r r e n t l y , the only enforcement
options a v a i l a b l e are e i t h e r license suspension or revocation. As
mentioned e a r l i e r , numerous s t a t e medical l i c e n s i n g boards have the
s t a t u t o r y a u t h o r i t y to impose a d m i n i s t r a t i v e p e n a l t i e s .
Progress Has
Been Made
Complaint management has r e c e n t l y improved at both the program and
department l e v e l . Each program now has a complaint t r a c k i n g system.
Also, DHS i s moving towards developing l e g i s l a t i o n which would
standardize the use of c i v i l p e n a l t i e s f o r a l l i t s enforcement f u n c t i o n s .
Both the HAD and midwife l i c e n s i n g programs now log and t r a c k a l l
complaints f i l e d . The HAD program now has complaint population
information that was p r e v i o u s l y u n a v a i l a b l e . The midwife l i c e n s i n g
program has had far fewer complaints, and the manager has been aware of
a l l complaints f i l e d since t a k i n g over r e s p o n s i b i l i t y f o r the l i c e n s i n g
program. A complaint log has also been established f o r the midwife
l i c e n s i n g program. Each program has also developed complaint
i n v e s t i g a t i o n procedures, though these have yet to be formal ized or
w r i t t e n i n t o r u l e .
DHS has i n i t i a t e d an e f f o r t to develop l e g i s l a t i o n which would
standardize c i v i l p e n a l t i e s for a l l l i c e n s i n g programs. The l e g i s l a t i o n
would also give the a u t h o r i t y to invoke these penalties to programs which
c u r r e n t l y do not have that power. According to DHS management, t h i s
l e g i s l a t i o n w i l l probably not be introduced u n t i l the next l e g i s l a t i v e
session.
Recornendations
1. Both the HAD and midwife l i c e n s i n g programs should formalize
complaint i n v e s t i g a t i v e procedures by w r i t i n g them i n t o t h e i r rules
and regulations.
2. DHS should continue i t s e f f o r t to develop c i v i l penalty l e g i s l a t i o n ,
and include the hearing a i d dispenser and midwife l i c e n s i n g programs
i n t h i s e f f o r t . The l e g i s l a t u r e should consider amending:
r A. R. S. 9936- 1901 through 36- 1938 t o g i v e DHS the a u t h o r i t y to
order HAD licensees to make r e s t i t u t i o n to complainants.
8 A. R. S. 9936- 751 through 36- 757 to give midwife l i c e n s i n g program
personnel the a u t h o r i t y t o access patient records from the
admitting h o s p i t a l .
3. DHS and the Attorney General should evaluate and c l a r i f y Rule
9- 16- 205 A. and C . r e l a t i n g t o requirements for physician back- up and
consultation.
FINDING I l l
DHS SHOULD CONTINUE EFFORTS TO REEVALUATE
CHILDREN'S REHABILITATIVE SERVICES PROGRAM
Because of changing needs and medical advances, the present s t r u c t u r e of
the O f f i c e o f C h i l d r e n ' s R e h a b i l i t a t i v e Services ( CRS) may be
inappropriate. CRS provides services to c h i l d r e n who are c h r o n i c a l l y i l l
or who have d i s a b l i n g conditions which can be improved w i t h treatment.
However, only c e r t a i n conditions are covered. DHS and an Arizona
advocacy group have joined the n a t i o n a l debate over which conditions
should be covered and how treatment should be provided. Since the
program has l i m i t e d funds, planning for the most e f f e c t i v e use o f funds
i s e s s e n t i a l .
CRS i s a program that provides medical and o t h e r s e r v i c e s to c h i l d r e n
w i t h special health- care needs. CRS c l i n i c s t r e a t chi ldren free or a t a
reduced char- ge i f t h e i r f a m i l i e s meet f i n a n c i a l e l i g i b i l i t y c r i t e r i a .
However, for some c o n d i t i o n s , such as spina b i f i d a , CRS i s the only
source of the required m u l t i d i s c i p l i n a r y care. Because CRS i s the only
source of care in these cases, c h i l d r e n who would normally be f i n a n c i a l l y
i n e l i g i b l e for such care can receive treatment i f t h e i r f a m i l i e s pay f u l l
p r i c e f o r i t . The department contracts for c l i n i c services i n Phoenix,
Tucson, F l a g s t a f f , and Yuma.
Children's R e h a b i l i t a t i v e Services Program Treats Children
With Certain Medical Conditions
CRS t r e a t s only s p e c i f i e d c o n d i t i o n s . The present CRS program descended
from the Crippled C h i l d r e n ' s Service, a federal program begun i n the
1930s when orthopedic problems such as p o l i o were the most common
handicapping conditions. According to the program's current d i r e c t o r ,
doctors who volunteered time to the program added t h e i r s p e c i a l t i e s to
the conditions covered. More conditions were added incrementally as
med i ca l techno l ogy advanced and fund i ng became ava i l ab l e . Thus, the
program's scope appears to be more the r e s u l t o f circumstance than any
conscious design.
I n a d d i t i o n , funding I imi t s the program's coverage. Unti 1 1980,
according to CRS' d i r e c t o r , Arizona's l e g i s l a t u r e granted supplemental
appropriations each year when the program ran out of funds, so CRS was
able to cover new c o n d i t i o n s as c h i l d r e n requested treatment. Since
1980, CRS has had t o stay w i t h i n i t s o r i g i n a l budget. I t cannot add new
conditions and may even c u r t a i l coverage of approved c o n d i t i o n s . For
example, the department does not p u b l i c i z e i t s coverage of a r t h r i t i s ,
since the program manager f e e l s the large number of cases") could use
up funds the department needs f o r t r e a t i n g c h i l d r e n w i t h more serious
c o n d i t i o n s .
Although CRS receives a l a r g e r s t a t e a l l o c a t i o n than any other FHS
program, i t s funding f a l l s far short of the estimated need. In f i s c a l
year 1987- 88, CRS' s t a t e a l l o c a t i o n was $ 6.2 m i l l i o n , and the program
a c t u a l l y c o n t r o l led a t o t a l of $ 12.7 m i l l ion i n c l u d i n g federal funds and
payments from AHCCCS. This represents about $ 850 for each of CRS' 15,000
p a t i e n t s , f a r below the cost of t r e a t i n g many c h r o n i c c o n d i t i o n s . ( 2 )
DHS believes that an actual 36,000 to 60,000 Arizona c h i l d r e n may f a l l
w i t h i n the broad category of " c h i l d r e n w i t h special health-- care needs."
Serving only 36,000 a t the current average cost would require over $ 30
m i l l i o n - a 136 percent increase.
A 1988 National Center f o r Health S t a t i s t i c s r e p o r t estimated the incidence of
a r t h r i t i s as 2.3 per 1,000 persons under 18. DES p r o j e c t s Arizona has 1,027,000
c h i l d r e n under 18, so about 2,362 may have a r t h r i t i s .
Data on A r i z o n a ' s average c o s t p e r c h i l d f o r each c o n d i t i o n i s not a v a i l a b l e , but
i n f i s c a l year 1982- 83 average b i l l i n g s per c h i l d i n C a l i f o r n i a ranged from $ 500
( ear and mastoid process) t o $ 8,000 ( l e u k e m i a ) . The annual cost of t r e a t i n g one
c o n d i t i o n , hemophilia, i s expected t o increase from $ 5,500 per c h i l d t o as much as
$ 50,000 per c h i l d because o f precautions needed t o p r o t e c t against t r a n s m i t t i n g
AIDS.
Debate Centers on Extent o f Coverage
and Delivery Method
Advocates f o r c h i l d r e n w i t h special health- care needs disagree on the
best way to determine medical e l i g i b i l i t y for and how to provide
treatment. We encountered d i f f e r e n t points of view, none of which
favored r e t a i n i n g A r i z o n a ' s c u r r e n t system. Parents and p u b l i c h e a l t h
o f f i c i a l s agree, however, that changes should be made i n the way care i s
delivered to these c h i l d r e n . Arizona's program, l i k e others across the
nation, i s i n t r a n s i t i o n .
Advocates debate on conditions t o cover - The Arizona Consortium for
Children w i t h Chronic I l l n e s s ( ACCCI) would l i k e to see more conditions
covered. They suggest reevaluating the current I i s t . ACCCI c r i t i c i z e s
CRS for covering some common and e a s i l y t r e a t e d c o n d i t i o n s such as ear
i n f e c t i o n s but not covering c h i l d r e n w i t h hemophilia, bronchopulmonary
d i s p l a s i a , severe asthma, or diabetes. Some other s t a t e s , i n c l u d i n g
Michigan and ~ ai flo r n i a , " ) cover more conditions than Arizona. Both
cover hemophilia and severe asthma, among many other c o n d i t i o n s .
Some researchers suggest covering a l l conditions. F l o r i d a has adopted
t h i s method, and uses income as a basis to l i m i t expenditures.
Proponents of t h i s idea b e l i e v e that excluding c h i l d r e n based on
diagnosis i s not e t h i c a l l y o r l e g a l l y defensible. However, income l i m i t s
may be very r e s t r i c t i v e under t h i s method unless funding i s increased.
F l o r i d a l i m i t s e l i g i b i l i t y to those w i t h family incomes ( net of medical
expenses) below $ 9,00O/ year for a family of four.
Arizona's CRS d i r e c t o r advocates changing to a functional d e f i n i t i o n
instead of the current " laundry I i s t " approach. This means that the
c o n d i t i o n ' s p o t e n t i a l impact on the c h i l d ' s l i f e would determine whether
CRS would provide treatment. I f t h i s proposal i s adopted, CRS would be
( 1 1 We interviewed s t a t e agencies using various approaches i n p r o v i d i n g chi 1 d
r e h a b i l i t a t i v e services. The s t a t e s contacted were recommended by a r e p r e s e n t a t i v e
of the National Maternal and C h i l d Health Resource Center.
able to cover the conditions mentioned most often by c h i l d r e n ' s
advocates: hemophilia, bronchopulmonary d i s p l a s i a , severe asthma, and
severe diabetes. The d i r e c t o r says he i s working on developing a
" severity index'' t o p r o v i d e an o b j e c t i v e basis for treatment decisions.
However, one researcher i n d i c a t e s t h a t s e v e r i t y i s hard to define and
even harder to measure o b j e c t i v e l y .
Treatment methods could be changed - ACCCl also suggests a change i n
how CRS provides s e r v i c e . The group wants CRS to provide coordinated
care i n each chi I d ' s community instead of t r e a t i n g chi ldren at
c e n t r a l i z e d c l i n i c s . This r e f l e c t s a n a t i o n a l movement towards community
based, family centered programs focused on coordinated case management.
A 1987 Surgeon General's report recommended encouraging normal patterns
of l i v i n g and focusing on the needs o f f a m i l i e s .
CRS has already taken steps i n t h i s d i r e c t i o n . I t recently opened
c l i n i c s i n Yuma and F l a g s t a f f t o make treatment a v a i l a b l e c l o s e r t o home
for many c h i l d r e n . CRS' m u l t i d i s c i p l i n a r y c l i n i c s provide the services
of social workers, educators, n u t r i t i o n i s t s , and others to help meet the
m u l t i p l e needs of c h i l d r e n and t h e i r f a m i l i e s . This approaches the goal
of community based care without s a c r i f i c i n g comprehensive care.
Changes Involve
D i f f i c u l t Choices
Program changes must incorporate planning i n order to make e f f e c t i v e use
o f l i m i t e d funds. This includes decisions concerning which c h i l d r e n or
which conditions w i l l be covered, as well as a determination of the role
Arizona's program w i l l play.
C r i t e r i a must be established to determine which c h i l d r e n w i l l remain in
the program, and whether some conditions among the many chronic i l l n e s s e s
and handicapping conditions w i l l be excluded. Because funding i s
r e s t r i c t e d , changing the program w i l l probably require turning some
c u r r e n t l y e l i g i b l e c h i l d r e n away. This decision i s made more d i f f i c u l t
by the lack of r e l i a b l e data on the number o f c h i l d r e n w i t h chronic
i l l n e s s e s and handicapping c o n d i t i o n s , and on the actual costs of care
for each c o n d i t i o n .
Program changes w i l l also depend on the desired r o l e of Arizona's
program. T r a d i t i o n a l l y , the program here and i n other states has had two
r o l e s : p r o v i d i n g f i n a n c i a l assistance to the group not e l i g i b l e for
AHCCCS but unable t o o b t a i n p r i v a t e insurance, and p r o v i d i n g services n o t
otherwise a v a i l a b l e . F i n a n c i a l assistance i s e s s e n t i a l f o r many
f a m i l i e s , as insurance i s impossible to o b t a i n f o r c h i l d r e n w i t h some
conditions and treatment costs q u i c k l y reach b e n e f i t c e i l i n g s for
others. The service aspect i s also important, as many conditions need
the m u l t i d i s c i p l i n a r y approach which may only be a v a i l a b l e at CRS
c l i n i c s . Other conditions are rare, and treatment may not be r e a d i l y
a v a i l a b l e outside CRS. Determining the most e f f e c t i v e use of Arizona's
l i m i t e d funds w i l l require a compromise between these r o l e s .
RECOWENDATION
DHS should continue to evaluate i t s CRS program, and make recommendations
to the l e g i s l a t u r e for needed changes.
AREAS FOR FURTHER AUDIT WORK
During the course of our a u d i t we i d e n t i f i e d p o t e n t i a l issues that we
were unable to pursue due to time c o n s t r a i n t s .
0 Have fund t r a n s f e r s to AHCCCS reduced the fami Iy health services
a v a i l a b l e i n Arizona?
The D i v i s i o n of Family Health Services t r a d i t i o n a l l y provided health care
services through county c l i n i c s . Recently, however, some FHS programs
have been t r a n s f e r r e d to t h e Arizona Health Care Cost Containment System
( AHCCCS). E l i g i b i l i t y requirements for AHCCCS are more d i f f i c u l t to meet
than county requirements, and AHCCCS may not provide the range of
services previously o f f e r e d by the counties. For example, AHCCCS i s now
apparently the only s t a t e source of prenatal care for low income women.
State and local h e a l t h p r o f e s s i o n a l s r e p o r t t h a t the number of b i r t h s
w i t h no prenatal care i s r i s i n g , and they are concerned that some
pregnant women are unable to o b t a i n care. In a d d i t i o n , r e l a t e d services
that were part of the county programs - such as s o c i a l s e r v i c e s ,
n u t r i t i o n education, counseling, and family planning r e f e r r a l - may not
be o f f e r e d by AHCCCS.
There may be other areas where the r o l e s of the D i v i s i o n of Family Health
Service and AHCCCS should be reexamined. Further study i s needed to
evaluate whether services are lacking and to determine the cost of
providing care.
a Wil I the D i v i s i o n o f Family H e a l t h S e r v i c e s ' new computer system meet
users' needs?
The D i v i s i o n of Family Health Services i s developing a new i n t e g r a t e d
management information system ( FHAMIS) to replace computers c u r r e n t l y i n
use. The cost for development of the new system w i l l be approximately
$ 1.3 m i l l i o n . Some s e r v i c e p r o v i d e r s w i l l be connected to FHAMIS through
remote terminals, and county h e a l t h departments w i l l use FHAMIS software
on personal computers and submit data by modem. FHAMIS i s expected to
provide d e t a i l e d i n f o r m a t i o n f o r program planning and e v a l u a t i o n , a l l o w
the t r a c k i n g of i n d i v i d u a l s between a l l of the D i v i s i o n of Family Health
Services programs, and permit counties to p r i n t t h e i r own WIC vouchers.
Since the system i s s t i l l under development, we were unable t o evaluate
i t during the a u d i t . However, county a d m i n i s t r a t o r s said t h e i r
information needs were neglected i n planning, and they may be unable to
purchase the necessary computer hardware. Further study i s needed to
determine whether the system, when i n place, s a t i s f i e s the requirements
of a l l users, i n c l u d i n g county h e a l t h departments.
0 I s the D i v i s i o n of Family Health Services a p p r o p r i a t e l y s t a f f e d ?
Two questions arose concerning s t a f f i n g at FHS. F i r s t , according to one
o f f i c e c h i e f , the D i v i s i o n of Family Health Services has a high s t a f f
turnover r a t e , which they a t t r i b u t e to low job c l a s s i f i c a t i o n s i n
technical p o s i t i o n s . Many FHS s t a f f provide expert technical assistance
to others. One county h e a l t h a d m i n i s t r a t o r expressed concern that new
s t a f f may not have the e x p e r t i s e needed, and s t a f f may leave s h o r t l y
a f t e r gaining enough experience to be r e a l l y h e l p f u l . Second, the
d i v i s i o n has several vacant s t a f f p o s i t i o n s . Since the remaining s t a f f
seems to be adequately c a r r y i n g out the d i v i s i o n ' s d u t i e s , some of the
vacant p o s i t i o n s may not be necessary. Further study i s needed to
evaluate the cause and e f f e c t of s t a f f turnover, and the necessity of
f i l l i n g a l l vacant p o s i t i o n s .
' ARIZONA DEPARTMENT OF HEALTH SERVICES
Office of the Director
a ROSE MOFFORD. GOVERNOR
TED WILLIAMS, DIRECTOR
April 18, 1989
Douglas R. Norton
Auditor General
2700 North Central Avenue
Suite 700
Phoenix, Arizona 85004
Dear Mr. Norton:
Thank you once again for the opportunity to review the draft performance audit for the
Division of Family Health Services, Department of Health Services. Our comments are
attached.
Sincerely yours,
c l y n G. Caldwell, M. D.
Deputy Director
Attachment
The Department of Health Services is An Equal Opportunity Affirmative Action Employer.
I,
State Health Building 1740 West Adams Street Phoenix, Arizona 85007
ARIZONA DEPARTMENT OF HEALTH SERVICES
COMMENTS ABOUT SUNSET AUDIT
DIVISION OF FAMILY HEALTH SERVICES
In general we feel the audit was reasonable and for the most part the auditors understood
the relevant issues and recognized the complexity of the Division. The following comments
from the Division are compiled using the findings listed in the draft report.
FINDING I - OFFICE OF NUTRITION SERVICES
Recommendation 1 - WIC Rebates
The Office of Nutrition Services has already taken the following steps towards the
implementation of infant formula rebates:
I. included provisions for an infant formula rebate in the FY 1989 WIC State Plan of
Operations ( this plan has received federal approval);
2. held, as required by federal regulations, Public Hearings in order to gain an
understanding of the preferences of the community in regard to this issue;
3. solicited ( and received) Request for Proposal from other states which have
implemented infant formula rebate cost containment systems;
4. met with staff from the Procurement Office to establish guidelines for
developing the Arizona RFP for infant formula rebates; and
5. met with staff from the Controller's Office to establish procedures for
accounting for rebate funds.
The Office of Nutrition Services anticipates publishing an RFP for infant formula rebates
by May 1989 with implementation to start in July 1989. I t has been useful to proceed
cautiously as, in the interim from initial consideration, t h e S t a t e has been able to build
community support for this initiative and federal laws have been enacted to protect states
from sudden drops in administrative reimbursement rates ( which are tied to food package
costs). Additionally, Arizona will be able to take advantage of concessions won, by other
states, from the formula manufacturers ( e. g. an increase in the wholesale price would cause
an increase in the rebate rate).
Recommendation 2 - Local Agency Funding
The Office of Nutrition Services formed a committee composed of county health officers,
local agency nutritionists and state staff to review and revise, as necessary, the process for
distributing WIC administrative funds. The group met on several occasions to discuss the
method by which t h e S t a t e allocation is determined by the Federal granting agency and the
procedures used at the State for apportioning the grant. The committee decided:
I ) not to change the current system until a f t e r t h e current automation initiative ( FHAMIS)
is completed;
2) to accept a minimum of a two percent inflation increase to the base payment rate.
A report of the committee's work was presented to all Health Officers at one of their
quarterly meetings.
FINDING I1 - HEARING AID DISPENSER AND MIDWIFE LICENSING COMPLAINTS
Recommendation 1 - HAD and Midwife Complaint Investigation Procedures
The Midwife Licensing Program staff is in the process of revising the rules and regulations •
for the program. The process for complaint investigation will be included.
The current HAD staff are aware of this problem and have set up a computerized system to
track complaints and have drafted policies and rules for complaint investigations.
Recommendation 2 - Civil Penalties
There is a half- time staff person working on the HAD program. The staff committment is
insufficient for current program demands. Additional responsibility would not be possible
without adding another half- time FTE.
Program staff will offer a proposal for statutory changes in A. R. S. Cj 36- 751 through 36- 757
which will include authority to access medical records for the Midwife Licensing Program.
Recommendation 3 - Physician Back- up for Midwives
ADHS and the Attorney General's Office are in the process of reviewing and clarifying Rule
9- 16- 205 A. and C.
FINDING IV - CHILDREN'S REHABILITATIVE SERVICES
Recommendation - Continue Evaluation and Make Recommendations to Legislature
The Office of Children's Rehabilitative Service agrees that the program needs further
refinement and expansion. Program staff will continue to work closely with CRS families, •
physicians and advocacy groups to evaluate the scope and structure of the program. This
group will strive to develop a concensus position to present to the Legislature regarding the
future of the program.