Contracting Practices for Tennessee Home and Community-Based Services for Mentally Retarded Persons

EXECUTIVE SUMMARY:

The objective of our audit was to determine whether the State Medicaid agency complied with Federal and State regulations in awarding and monitoring contracts for the home and community-based services (HCBS) mental retardation and developmental disabilities program in the State of Tennessee. The State Medicaid agency, through the Division of Mental Retardation Services (DMRS), did not comply with Federal and State regulations in awarding and monitoring HCBS contracts. Of the 11 judgmentally selected HCBS contracts we reviewed, none completely complied with regulations. The regulatory violations occurred because the State Medicaid agency did not establish adequate procedures to monitor DMRS's contracting activities, and DMRS lacked sound administrative controls over the contracting process. By not following Federal and State regulations governing the awarding and monitoring of contracts, the State agency had no assurance that the 4,300 mentally retarded and developmentally disabled beneficiaries received the intended HCBS benefits.

We recommended that the State Medicaid agency: (1) establish a system of procedures and controls that ensures all HCBS contracts are awarded using a process that follows Federal and State regulations and the Centers for Medicare & Medicaid Services program guidelines and (2) increase its contracting and monitoring oversight to include tracking documents through the award process, maintaining contracting records, establishing a system to ensure that contracts are monitored in a timely manner, and retaining monitoring reports. In written comments to the draft report, State agency officials concurred with our conclusions and recommendations.