Horace Mann Educational Associates, Inc. Administration of Limited Unit Rate Service Agreements

The Auditor was reviewing DDS human-service contracting to check accountability, transparency, and whether state contracting money was being used cost-effectively.

“The overall audit of DDS was conducted as part of OSA’s ongoing efforts to audit human-service contracting activity by state agencies and to promote accountability, transparency, and cost effectiveness in state contracting.”

The report says LUSA funds are supposed to cover limited, unexpected client services, but DDS used them in ways that may have overpaid contractors or paid for services without enough proof.

“As a result, if a LUSA agreement is erroneously used to pay for services that have already been effectively reimbursed through a regular contract, the contractor may improperly receive excessive or duplicative reimbursement of program costs.”

For an ordinary taxpayer, this matters because the report questions whether public money for services to people with developmental disabilities was properly approved, documented, and spent.

“The lack of adequate documentation violated provisions of the Commonwealth Terms and Conditions for Human and Social Services, and as a result, there was insufficient evidence to show that these LUSA payments had been properly authorized and accounted for; that they were not duplicative or excessive; and that the contractor had actually provided the LUSA services billed.”

The Auditor questioned the full $473,133 tested because the same payments often had more than one problem.

“The unduplicated amount of questioned funding is $473,133.”

Oversight agencies were asked to review the issues, and HMEA was told to strengthen controls so LUSA services are properly done, documented, billed, and recorded.

“In accordance with the recommendations of the overall report and the testing results specific to HMEA, HMEA should implement appropriate control measures to ensure that all LUSA services are performed, documented, billed, and accounted for in compliance with applicable requirements.”

A LUSA is a flexible DDS contract tool for buying short-term, as-needed services from preapproved providers when a client’s needs are not already covered by another contract.

“LUSAs are a form of a master contract agreement that can be used by DDS to purchase services from a preapproved contractor on an intermittent, limited-time basis for clients who are not already covered through an existing contract.”