New report from Auditor Fitzpatrick finds the Department of Health and Senior Services needs to improve oversight of federal food programs

The misuse of millions of dollars reimbursed from two federal food programs managed by the state to organizations such as New Heights and Sisters of Lavender Rose led to federal indictments, and now a new report released by Missouri State Auditor Scott Fitzpatrick details how lacking oversight by the Missouri Department of Health and Senior Services may have played a significant role in allowing the fraud to be perpetrated. The audit released today gives the department a rating of "fair" for its management of both the Child and Adult Care Food Program (CACFP) and the Summer Food Service Program (SFSP).

"There is no doubt the COVID-19 pandemic resulted in these programs expanding significantly, which produced a huge spike in the amounts they were reimbursing and made it much more difficult to monitor the number of meals served by programs that were receiving these reimbursements. And while the federal government may not have strong oversight requirements for these funds, this is the Show-Me State and there is no question the Department of Health and Senior Services could have done a much better job of showing us that it takes oversight of these programs seriously. Had the department done a better job reviewing the estimates provided by organizations like New Heights, it would have significantly reduced the risk of reimbursing fraudulent claims," said Auditor Fitzpatrick. "I urge the department to take our recommendations to heart and to make substantive improvements that can protect the millions of dollars provided through these food programs to ensure they are going to feed those in need and not to line the pockets of unscrupulous actors."

The audit details how the Bureau of Community Food and Nutrition Assistance (BCFNA) does not adequately monitor, or safeguard against, potentially ineligible reimbursement payments. The report notes sponsors participating in both the Child and Adult Care Food Program (CACFP) and the Summer Food Service Program (SFSP) could be terminated in one of those programs for violations of program regulations, but not have program claims in the other program reviewed for propriety or potentially recouped. A review of claims for 6 sponsors terminated from the CACFP totaling $1,711,752 (33 percent of total reimbursements the sponsors received) notes the BCFNA determined there were $1,702,597 in overpayments (99.5 percent payment error rate) for the claims reviewed. These same 6 sponsors were paid reimbursements of $18,248,441 from the SFSP over the same timeframe that were not reviewed. Similarly, a review of 4 claims for sponsors terminated from the SFSP totaling $724,212 (34 percent of total reimbursements the sponsors received) notes the BCFNA determined there were $515,213 in overpayments (71 percent payment error rate) for the claims reviewed. These same 4 terminated facilities were also paid reimbursements of $678,169 from the CACFP over that timeframe that were not reviewed. In all cases, even though the BCFNA terminated the sponsors in both programs, it only reviewed the prior reimbursements claims for one program and not both to determine if similar eligibility issues existed in those claims. The report notes the identification of deficiencies in a sponsor's procedures in one program increases the risk of additional deficiencies in other claims and in other programs.

The report also found the monitoring policies and procedures used by the BCFNA do not require timely action by the agency and allow sponsors with significant weaknesses identified through monitoring visits to continue submitting claims for extended periods without further follow up. As a result, ineligible claims can be paid up to 12 months before initial subsequent monitoring takes place, and potentially an additional 12 months of additional ineligible claims would be allowed before the sponsor was terminated from the program. A review of monitoring visits found one facility that failed multiple monitoring visits with 100 percent overpayments that was allowed to continue to submit potentially ineligible claims without timely follow up. In total, this facility received $13,706 in reimbursements between the 100 percent overpayment monitorings that were not reviewed, and also received $13,256 in reimbursements from their last failed monitoring through when the facility was eventually terminated.

Additionally, the audit finds the BCFNA needs to improve its controls over reimbursements for both programs. The report notes that during the COVID-19 pandemic, information was submitted by the sponsor regarding the number of allowable meals they provided, but this information was not verified by the BCFNA for reasonableness or accuracy. If they had verified the information, the BCFNA would have had reliable edit checks that would have triggered a review when a sponsor submitted overstated program reimbursements. Having these sorts of checks in place would have helped to prevent the alleged fraud committed by New Heights and Sisters of Lavender Rose.

The final finding in the report notes that over a three-year period the BCFNA discovered 3 facilities were inappropriately using Supplemental Nutrition Assistance Program (SNAP), Temporary Assistance for Needy Families (TANF), or Special Supplemental Nutrition Assistance for Women, Infants, Children (WIC) funds to pay for groceries while also seeking reimbursement from the CACFP and the SFSP, which is a violation of federal regulations. While DHSS officials indicated they had reported the WIC payments to personnel in the Bureau of WIC and Nutrition Services within the Division of Community and Public Health, they had no documentation of their notification of the SNAP and TANF payments. The audit recommends the department report all potential fraudulent use of other programs to the appropriate administering agency, and maintain supporting documentation of such reports pursuant to Missouri State and Local Records Law. 

The full report for the audit of the Department of Health and Senior Services - Child and Adult Care Food Program and Summer Food Service Program is available here.