Report 2009-118 All Recommendation Responses

Report 2009-118: Department of Developmental Services: A More Uniform and Transparent Procurement and Rate-Setting Process Would Improve the Cost-Effectiveness of Regional Centers (Release Date: August 2010)

Recommendation #1 To: Developmental Services, Department of

To ensure that consumers receive high-quality, cost-effective services that meet the goals of their individual development plans (IPPs) consistent with state law, Developmental Services should require the regional centers to document the basis of any IPP-related vendor selection and specify which comparable vendors (when available) were evaluated.

Annual Follow-Up Agency Response From October 2016

As previously reported, the Department does not believe it has legal authority to implement the State Auditor's recommendations as it would place DDS in a role inconsistent with the intent of the Lanterman Developmental Disabilities Act (Lanterman Act). The Lanterman Act delegates a great deal of decision making to the regional centers. By design, DDS does not have a direct role in the Individual Program Plan (IPP) development and if DDS required extensive documentation of one factor and not all factors considered in the IPP process, this would likely lead to a legal challenge that DDS has overstepped its authority. Though DDS does not believe it can intercede in the IPP process, it will use its oversight authority to ensure adherence to the law. DDS issued a directive on August 16, 2010, to regional centers to update their internal review process and associated policies and procedures to ensure the regional centers' compliance with all current statutes. The directive also requires regional centers to inform their staff of the updates to its policies and procedures. The State Auditor conducted a follow-up audit in 2015, Report 2015-501 dated July 2015, in which DDS reiterated the same legal position. In this follow-up report the State Auditor recommended the Legislature amend the governing Lanterman Act statute to require regional centers to document vendor cost considerations when they offer comparable services meeting the consumer's needs and retain that documentation.

California State Auditor's Assessment of Annual Follow-Up Status: Will Not Implement

Annual Follow-Up Agency Response From September 2015

As previously reported, the Department of Developmental Services (DDS) does not believe it has legal authority to implement the California State Auditor's (CSA) recommendation as it would place DDS in a role inconsistent with the intent of the Lanterman Act. The Lanterman Act delegates a great deal of decision making to the regional centers. By design, DDS does not have a direct role in the Individual Program Plan (IPP) development and if DDS required extensive documentation of one factor and not all factors considered in the IPP process, this would likely lead to litigation that DDS has overstepped its authority. Though DDS does not believe it can intercede in the IPP process, it will use its oversight authority to ensure adherence to the law. DDS has issued a directive on August 16, 2010, to regional centers to update their internal review process and associated policies and procedures to ensure the regional centers' compliance with all current statutes. The directive also requires regional centers to inform their staff of the updates to its policies and procedures. The CSA conducted a follow-up audit in 2015, Report 2015-501 dated July 2015, in which DDS reiterated the same legal position. In this follow-up report CSA recommended the Legislature amend the governing Lanterman Act statute to require regional centers to document vendor cost considerations when they offer comparable services meeting the consumer's needs and retain that documentation.

California State Auditor's Assessment of Annual Follow-Up Status: Will Not Implement

Annual Follow-Up Agency Response From October 2013

As previously reported, the Department of Developmental Services (DDS) does not believe it has legal authority to implement the California State Auditor's recommendation as it would place DDS in a role inconsistent with the intent of the Lanterman Developmental Disabilities Services Act (Lanterman Act). The Lanterman Act delegates a great deal of decision making to the regional centers. By design, DDS does not have a direct role in the Individual Program Plan (IPP) development and if DDS required extensive documentation of one factor and not all factors considered in the IPP process, this would likely lead to litigation that DDS has overstepped its authority. Though DDS does not believe it can intercede in the IPP process, it will use its oversight authority to ensure adherence to the law. DDS has issued a directive on August 16, 2010 to regional centers to update their internal review process and associated policies and procedures to ensure the regional centers' compliance with all current statutes. The directive also requires regional centers to inform their staff of the updates to its policies and procedures.

California State Auditor's Assessment of Annual Follow-Up Status: Will Not Implement

Annual Follow-Up Agency Response From November 2011

DDS does not believe it has legal authority to implement the BSA recommendation as it would place DDS in a role inconsistent with the intent of the Lanterman Act. The Lanterman Act delegates a great deal of decision making to the regional centers. By design, DDS does not have a direct role in the IPP development and if DDS required extensive documentation of one factor and not all factors considered in the IPP process, this would likely lead to litigation that DDS has overstepped its authority. Though DDS does not believe it can intercede in the IPP process, it will use its oversight authority to ensure adherence to the law. DDS has issued a directive on August 16, 2010 to regional centers to update their internal review process and associated policies and procedures to ensure the regional centers' compliance with all current statutes. The directive also requires regional centers to inform their staff of the updates to its policies and procedures.

California State Auditor's Assessment of Annual Follow-Up Status: Will Not Implement

Recommendation #2 To: Developmental Services, Department of

To ensure that consumers receive high-quality, cost-effective services that meet the goals of their IPPs consistent with state law, Developmental Services should review a representative sample of this documentation as part of its biennial waiver reviews or fiscal audits to ensure that regional centers are complying with state law—and particularly with the July 2009 amendment requiring selection of the least costly available provider of comparable service.

Annual Follow-Up Agency Response From October 2016

As previously reported, the Department does not believe it has legal authority to implement the State Auditor's recommendations as it would place DDS in a role inconsistent with the intent of the Lanterman Developmental Disabilities Act (Lanterman Act). The Lanterman Act delegates a great deal of decision making to the regional centers. By design, DDS does not have a direct role in the Individual Program Plan (IPP) development and if DDS required extensive documentation of one factor and not all factors considered in the IPP process, this would likely lead to a legal challenge that DDS has overstepped its authority. Though DDS does not believe it can intercede in the IPP process, it will use its oversight authority to ensure adherence to the law. DDS issued a directive on August 16, 2010, to regional centers to update their internal review process and associated policies and procedures to ensure the regional centers' compliance with all current statutes. The directive also requires regional centers to inform their staff of the updates to its policies and procedures. The State Auditor conducted a follow-up audit in 2015, Report 2015-501 dated July 2015, in which DDS reiterated the same legal position. In this follow-up report the State Auditor recommended the Legislature amend the governing Lanterman Act statute to require regional centers to document vendor cost considerations when they offer comparable services meeting the consumer's needs and retain that documentation.

California State Auditor's Assessment of Annual Follow-Up Status: Will Not Implement

Annual Follow-Up Agency Response From September 2015

As previously reported, the Department of Developmental Services (DDS) does not believe it has legal authority to implement the California State Auditor's (CSA) recommendation as it would place DDS in a role inconsistent with the intent of the Lanterman Act. The Lanterman Act delegates a great deal of decision making to the regional centers. By design, DDS does not have a direct role in the Individual Program Plan (IPP) development and if DDS required extensive documentation of one factor and not all factors considered in the IPP process, this would likely lead to litigation that DDS has overstepped its authority. Though DDS does not believe it can intercede in the IPP process, it will use its oversight authority to ensure adherence to the law. DDS has issued a directive on August 16, 2010, to regional centers to update their internal review process and associated policies and procedures to ensure the regional centers' compliance with all current statutes. The directive also requires regional centers to inform their staff of the updates to its policies and procedures. The CSA conducted a follow-up audit in 2015, Report 2015-501 dated July 2015, in which DDS reiterated the same legal position. In this follow-up report CSA recommended the Legislature amend the governing Lanterman Act statute to require regional centers to document vendor cost considerations when they offer comparable services meeting the consumer's needs and retain that documentation.

California State Auditor's Assessment of Annual Follow-Up Status: Will Not Implement

Annual Follow-Up Agency Response From October 2013

As stated in the response to the previous recommendation and as previously reported, DDS does not believe it can intercede in the IPP process, but will use its oversight authority to ensure adherence to the law. DDS has issued a directive on August 16, 2010 to regional centers to update their internal review process and associated policies and procedures to ensure the regional centers' compliance with all current statutes. The directive also requires regional centers to inform their staff of the updates to its policies and procedures. In addition, DDS's review of regional centers' purchase of service policies for compliance with law is an ongoing process which includes ensuring regional centers are implementing the least costly provision contained in statute.

California State Auditor's Assessment of Annual Follow-Up Status: Will Not Implement

Annual Follow-Up Agency Response From November 2011

As stated in the response to the previous recommendation, DDS does not believe it can intercede in the IPP process, but will use its oversight authority to ensure adherence to the law. DDS has issued a directive on August 16, 2010 to regional centers to update their internal review process and associated policies and procedures to ensure the regional centers' compliance with all current statutes. The directive also requires regional centers to inform their staff of the updates to its policies and procedures. In addition, DDS's review of regional centers' purchase of service policies for compliance with law is an ongoing process which includes ensuring regional centers are implementing the least costly provision contained in statute.

California State Auditor's Assessment of Annual Follow-Up Status: Will Not Implement

Recommendation #3 To: Developmental Services, Department of

To ensure that it is providing oversight in accordance with state law and Medicaid Waiver requirements, Developmental Services should ensure that it performs audits of each regional center every two years as required.

1-Year Agency Response

As of December 2011 Developmental Services appears to be on track to complete fiscal audits of each regional center every two years as required. (2012-406, p. 103)

California State Auditor's Assessment of 1-Year Status: Fully Implemented

Recommendation #4 To: Developmental Services, Department of

Developmental Services should require that the regional centers prepare and follow written procedures for their purchase of services that detail what documents will be retained for payment of invoices. Additionally, if regional centers move to an electronic authorization process, Developmental Services should determine whether it needs to revise its regulations.

1-Year Agency Response

Developmental Services issued a directive dated August 16, 2010, to regional centers requiring them to update their administrative policies and procedures for purchasing consumer services and retain required documentation for payment of invoices. Developmental Services revised its regulations to allow for electronic authorizations and record keeping for regional centers’ purchase of services. (2012-406, p. 103)

California State Auditor's Assessment of 1-Year Status: Fully Implemented

Recommendation #5 To: Developmental Services, Department of

Developmental Services should ensure that the system Valley Mountain implements to correct its transportation invoicing process collects individual consumer data as necessary to ensure compliance with Medicaid Waiver requirements.

1-Year Agency Response

Based on the results of a follow-up review Developmental Services performed in October 2010, Valley Mountain implemented a new invoicing process that is now in compliance with Medicaid Waiver requirements. (2012-406, p. 104)

California State Auditor's Assessment of 1-Year Status: Fully Implemented

Recommendation #6 To: Developmental Services, Department of

To ensure that negotiated rates are cost effective, Developmental Services should require regional centers to document how they determine that the rates they negotiate or otherwise establish are reasonable for the services to be provided.

1-Year Agency Response

Developmental Services issued a directive dated August 16, 2010, to regional centers requiring them to maintain documentation on the process used to determine and the rationale for granting any negotiated rate. (2012-406, p. 104)

California State Auditor's Assessment of 1-Year Status: Fully Implemented

Recommendation #7 To: Developmental Services, Department of

To ensure that negotiated rates are cost effective, Developmental Services should encourage regional centers to use, when applicable, the cost statement approach exemplified by Far Northern.

1-Year Agency Response

Developmental Services issued a directive dated August 16, 2010, to regional centers requiring them to maintain documentation on the process used to determine and the rationale for granting any negotiated rate. (2012-406, p. 104)

California State Auditor's Assessment of 1-Year Status: Fully Implemented

Recommendation #8 To: Developmental Services, Department of

To ensure that negotiated rates are cost effective, Developmental Services should follow and refine, as necessary, its newly established fiscal audit procedures requiring a review of a representative sample of negotiated rates as part of its biennial fiscal audit of each regional center.

1-Year Agency Response

Developmental Services expanded its fiscal audit protocols to include a review of negotiated rates during its biennial fiscal audits. (2012-406, p. 104)

California State Auditor's Assessment of 1-Year Status: Fully Implemented

Recommendation #9 To: Developmental Services, Department of

If Developmental Services believes it needs statutory or regulatory changes to provide effective oversight of the regional centers’ rate setting practices, the department should seek these changes.

1-Year Agency Response

Developmental Services issued a directive dated August 16, 2010, to regional centers requiring them to maintain documentation on the process used to determine and the rationale for granting any negotiated rate. Legislative Action: Legislation enacted. Chapter 9, Statutes of 2011 (Senate Bill 74), includes a requirement for regional centers to timely disclose requests for proposals, contract awards, and payment rates for service providers on their Web sites. (2012-406, p. 104)

California State Auditor's Assessment of 1-Year Status: Fully Implemented

Recommendation #10 To: Developmental Services, Department of

Unless rescinded by the Legislature, Developmental Services should carry out its newly developed fiscal audit procedures for ensuring compliance with provisions of the Legislature’s July 2008 rate freeze. If Developmental Services needs to streamline its current fiscal audit program to enable it to incorporate this review of rate freeze compliance and still adhere to mandated deadlines, we encourage it to do so.

1-Year Agency Response

Developmental Services expanded its fiscal audit protocols to include testing for compliance with the July 2008 rate freeze. (2012-406, p. 105).

California State Auditor's Assessment of 1-Year Status: Fully Implemented

Recommendation #11 To: Developmental Services, Department of

Developmental Services should review the five instances of noncompliance with the rate freeze that we identified and require corrective action by the respective regional centers. This corrective action should include remedies for future rate payments to these vendors as well as repayment by the regional centers of any state funds awarded in a manner not in compliance with state law.

1-Year Agency Response

Developmental Services completed its reviews of the five instances identified in our audit report and found over $4.1 million in payments that violated rate freeze provisions ($3.2 million at Inland Regional Center; $742,000 at San Andreas Regional Center; $146,000 at Tri-Counties Regional Center) and that must be repaid to the State. (2012-406, p. 105).

California State Auditor's Assessment of 1-Year Status: Fully Implemented

Recommendation #12 To: Developmental Services, Department of

To ensure that the regional centers achieve the greatest level of cost effectiveness and avoid the appearance of favoritism when they award purchase of service contracts, Developmental Services should require regional centers to adopt a written procurement process that specifies the situations and dollar thresholds for which contracts, RFPs, and evaluation of competing proposals will be implemented.

1-Year Agency Response

Developmental Services' contract with each regional center now requires regional centers to have a board-approved policy specifying the circumstances under which the regional center will issue request for proposals, the applicable dollar thresholds, and how the submitted proposals will be evaluated. (2012-406, p. 105)

California State Auditor's Assessment of 1-Year Status: Fully Implemented

Recommendation #13 To: Developmental Services, Department of

To ensure that the regional centers achieve the greatest level of cost effectiveness and avoid the appearance of favoritism when they award purchase of service contracts, Developmental Services should require regional centers to adopt a written procurement process that, when applicable, requires the regional centers to notify the vendor community of contracting opportunities and to document the competitive evaluation of vendor proposals, including the reasons for the final vendor selection decision

1-Year Agency Response

Developmental Services’ contract with each regional center now requires regional centers to have a board approved policy specifying the circumstances under which the regional center will issue request for proposals, the applicable dollar thresholds, and how the submitted proposals will be evaluated. (2012-406, p. 105).

California State Auditor's Assessment of 1-Year Status: Fully Implemented

Recommendation #14 To: Developmental Services, Department of

To ensure that the regional centers adhere to their procurement process, Developmental Services should review the documentation for a representative sample of purchase of service contracts during its biennial fiscal audits.

1-Year Agency Response

Audit procedures are now in place to review the procurement policies and processes of regional centers during the department’s biennial fiscal audits. (2012-406, p. 106).

California State Auditor's Assessment of 1-Year Status: Fully Implemented

Recommendation #15 To: Developmental Services, Department of

To deter unsupported and potentially wasteful spending of state resources by the regional centers, Developmental Services should determine the extent to which Inland needs to repay state funds it provided to a transportation vendor for an assessment of Inland’s transportation conditions.

1-Year Agency Response

Developmental Services conducted a review of Inland in fall 2010 and found over $4.2 million in payments to the transportation vendor (roughly $1 million related to the transportation assessment and $3.2 million related to how the regional center established transportation vendor’s rate of payment) that were not appropriate and that must be repaid to the State. (2012-406, p. 106).

California State Auditor's Assessment of 1-Year Status: Fully Implemented

Recommendation #16 To: Developmental Services, Department of

To ensure that regional center employees have a safe avenue for reporting suspected improprieties at the regional centers, Developmental Services should follow its newly documented process for receiving and investigating these types of allegations it put into writing in July 2010 and should continue to notify all regional centers that such an alternative is available.

1-Year Agency Response

Developmental Services now has a formal intake and investigation process for complaints about regional centers and vendors. The department includes information about this process on its Web site and instructed the regional centers to do the same. All regional centers have posted Developmental Services’ and their own whistleblower complaint policies on their Web sites. (2012-406, p. 106).

California State Auditor's Assessment of 1-Year Status: Fully Implemented

Recommendation #17 To: Developmental Services, Department of

To ensure that appropriate action is taken in response to allegations submitted by regional center employees, Developmental Services should centrally log these allegations and track follow up actions and the ultimate resolution of allegations, as required by its new procedures.

1-Year Agency Response

In July 2010 Developmental Services formally documented procedures that describe how it accepts, tracks, and resolves complaints from regional center employees and others. We confirmed, as of December 2011, that Developmental Services continues to use a central log of allegations that documents complaints, follow-up actions, and ultimate resolutions. (2012-406, p. 106).

California State Auditor's Assessment of 1-Year Status: Fully Implemented

All Recommendations in 2009-118

Agency responses received after June 2013 are posted verbatim.