Auditor General DePasquale Says Department of Public Welfare Mismanaged Home Care Worker Payroll Providers

Pay Delay Caused Undue Stress on Workers, People Receiving Care; Unnecessarily Costing Taxpayers Millions of Medicaid Dollars Per Year

November 14 2013

Auditor General DePasquale Says Department of Public Welfare Mismanaged Home Care Worker Payroll Providers

Pay Delay Caused Undue Stress on Workers, People Receiving Care; Unnecessarily Costing Taxpayers Millions of Medicaid Dollars Per Year

Click to access full audit report

HARRISBURG (Nov. 14, 2013) – Auditor General Eugene DePasquale today said an audit of a Department of Public Welfare shows long-term mismanagement of home care worker payroll providers caused undue financial and emotional strain on tens of thousands of people. Thousands of workers had paychecks delayed for up to four months. Thousands of care recipients switched to a more expensive care model that is costing taxpayers at least $7 million annually.

“Thousands of people who provide services that help the elderly, and children and adults with disabilities, stay in their home — out of institutional care — went for weeks and months without a paycheck because DPW failed to provide adequate oversight and demand accountability of contracted payroll providers,” DePasquale said about the problematic transition in January from 36 payroll providers to Public Partnerships Limited LLC (Public Partnerships Limited), of Boston, Mass.

“Our audit found that problems with the transition caused so much fear and confusion that at least 1,500 people receiving home care services switched to a more expensive model of care that is unnecessarily costing at least $7 million more per year.”

Prompted by calls and complaints from home care program participants and their direct care workers across the state, DePasquale launched the special performance audit in February.

Home care services provide the elderly, and children and adults with disabilities, with personal care assistance that enables them to remain in their homes rather than entering long-term care facilities. Such services include assistance with bathing, meal preparation and breaks for family caregivers. Home care services are supported by state and federal funds through the Medical Assistance (Medicaid) program.

Beginning in December 2008, DPW had agreements with 36 different providers for payroll services of home care workers across the state. However, from 2009 through 2012, auditors found that DPW did not adequately monitor these providers resulting in numerous instances of noncompliance with applicable state and federal laws, regulations, and financial services standards by some of the providers.

“Instead of taking corrective actions against the providers, auditors found that DPW allowed the noncompliance to continue for years,” DePasquale said. “Then they took the easy way out when they decided to start over with a new provider because DPW believed aggressive monitoring of the former providers was ‘cumbersome.’”

DPW issued a request for applications in January 2012, and in August 2012 selected the Boston, Mass.-based vendor, Public Partnerships Limited, to provide payroll service statewide. In the short time frame that DPW had to transition 20,000 care recipient files to Public Partnerships Limited, DPW ignored many red flags — including concerns expressed by the vendor — that the new vendor was not fully prepared to pay all direct care workers by the DPW-imposed Jan. 1, 2013 deadline.

The audit also found significant flaws in the procurement process used to select Public Partnerships Limited.

“The fact that the procurement process was unfair to other vendors is nearly as disturbing as DPW’s disregard for the workers and home care participants harmed in this process,” DePasquale said. “For example, DPW initially told interested vendors that no cash advance would be provided as working capital during the transition. Then, after awarding the contract to Public Partnerships Limited, the company requested, and DPW provided, an $18 million cash advance for payroll expenditures. The state provided $18 million up front — and cash advances that continue — and still workers’ paychecks were delayed. ”

Also troubling was DPW’s unfair “conflict-free” requirement in the procurement process that eliminated potential vendors from being selected or competing because it mandated — among other things — that the provider cannot work for, or be affiliated with, an existing provider of home and community-based services.

“By doing a flip-flop on the multi-million dollar cash advance and mandating a conflict-free requirement, DPW essentially rolled out the red carpet for the Boston-based firm to take over Pennsylvania payroll provider services. At best, this procurement process appears to be questionable,” DePasquale said.

The audit also found that DPW:

• failed to ensure that only allowable hourly wage rates were paid to direct care workers and allowed this noncompliance to continue for years which resulted in a significant decrease in pay when Public Partnerships Limited followed the appropriate guidelines; and
• continues to put the well-being of home care program participants and care workers at risk by not adequately monitoring Public Partnerships Limited.

The audit report includes six findings and seven recommendations for DPW to implement to improve its oversight of home care worker payroll services. The report also includes DPW’s response to each finding.

“DPW said that they will ‘consider’ our recommendations,” DePasquale said. “It is clear through our audit findings that DPW must do more than ‘consider’ our recommendations.

“People are tired of state and federal governments not taking responsibility for their actions and the consequences of those actions. DPW must make sure that a situation like this does not happen again.

“Knowing Secretary Mackereth, I would be surprised if she doesn’t demand her staff do more than ‘consider’ our recommendations,” DePasquale said.

A copy of the full adit report is available here.

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