Section 13: Audits and Program Integrity
The CLTS Program is a Medicaid-funded waiver program and subject to oversight. Audits and reviews are tools that help ensure the CLTS Program operates as intended and Medicaid funds are used correctly. Audits and reviews protect participants, providers, counties, and the state by promoting accountability and program integrity.
Purpose of audits
Federal and state audits are effective Medicaid program integrity tools to help providers comply with rules and regulations, identify overpayments, decrease the potential for inappropriate claims, and prevent waste and abuse. Audits are a normal part of participating in a Medicaid-funded program and do not necessarily indicate there is a concern or problem with a provider.
Provider responsibilities
Providers are responsible for the truthfulness, accuracy, timeliness, and completeness of claims as described in Wisconsin Administrative Code § DHS 106.02 (9)(e). The responsibilities outlined in the Administrative Code protect against waste, fraud, and abuse. Reviewing the code can increase providers' understanding of their responsibilities.
Audits and self-audits
Audits and self-audits are effective tools to help providers prevent waste and abuse.
Waste
Services or practices are overused and directly or indirectly result in unnecessary program costs.
Abuse
Practices are inconsistent with sound fiscal, business, or medical practices and result in unnecessary program costs.
Self-audits are conducted by providers to ensure that their CLTS program documentation complies with program requirements and that claims are properly paid.
Some Medicaid audits are conducted by the Wisconsin Office of the Inspector General (OIG). The OIG may investigate CLTS claims if they receive a report of suspected fraud. One of OIG’s functions is to verify that services claimed were provided and that the service claims billed were appropriate and accurate. Under 42 CFR § 455.15, OIG is required to report all credible allegations of fraud, waste and abuse to the Department of Justice (DOJ) for investigation and possible civil or criminal action.
The OIG also sends notices to DOJ when guardians and workers of CLTS members are suspected of fraud, waste, or abuse and additional investigation is needed.
Examples of billing concerns
Potential billing concerns identified through audits and self-audits could include:
- Lack of documentation to support claims.
- Billing more than what timesheets/service documentation supports.
- Billing for a staff member who has more credentials and higher Medicaid reimbursement rates, than the person who actually provided the service.
- Billing for sessions that did not occur.
- Billing for a service that is different than what is documented in the treatment notes.
- Submitting false personal information to bill under another person’s identity to avoid background check requirements.
- Balance billing to participants.
If provider claims are improperly reimbursed, OIG is authorized to recoup overpayments when:
- The service was not provided.
- The claim is not accurate.
- The claim was not appropriate.
For general information on OIG audits, visit the OIG Office of Audit Services.
For more information on OIG audits in the CLTS Program, see Worker Fraud in the Children's Long-Term Support (CLTS) Waiver Program, P-03150.
Payment Error Rate Measurement (PERM) Program
Every three years, the Centers for Medicare & Medicaid Services (CMS) conducts the federally required Payment Error Rate Measurement (PERM) review of federally funded Medicaid programs, which includes Wisconsin Medicaid programs and the Children’s Long-Term Support (CLTS) Program.
The PERM program measures the accuracy of Medicaid payments by reviewing randomly selected claims. Results are reported nationally and used to calculate improper payment rates for Medicaid programs.
Improper payments are payments that do not meet statutory, regulatory, or administrative requirements.
Examples of improper payments include:
- Payments made on behalf of an ineligible participant.
- Payments for an ineligible service.
- Duplicate payments.
- Payments for services not received.
- Payments made in an incorrect amount.
- Payments for services where there is a lack of supporting documentation necessary to verify the accuracy of a payment.
- Payments for services not medically necessary.
What happens when a CLTS Program claim is selected for a PERM audit?
CMS requires the Wisconsin Department of Health Services (DHS) to review documentation from providers related to the selected claims. DHS will contact CLTS providers whose claims were chosen for the PERM with the following information:
- A PERM letter(s) stating:
- Your business name
- The participant chosen for the claim
- The date(s) of service under review
The federal procedure code (FPC) being audited - Documentation required to support the billed service
- The due date for submitting records
Provider types subject to PERM audits
The CLTS program includes three provider types:
- Provider agencies: organizations that employ staff to deliver services
- Sole proprietors: individuals who provide services typically do not employ staff
- Financial management services (FMS): organizations that manage payroll and payments for self-directed workers
All provider types are subject to PERM review. If selected for PERM review, providers are required to submit documentation supporting selected claims.
Required documentation
Providers must maintain documentation that supports billed services and be prepared to submit records upon request, per the Children's Long-Term Support (CLTS) Waiver Program Provider Agreement and Acknowledgement of Terms of Participation, F-03344 (PDF). Providers may need to work with the CWA that authorized the claimed service to obtain required records such as the participant’s ISP documentation.
Service delivery records
Documentation verifying services were provided, such as:
- Daily progress notes
- Timesheets
- Attendance logs
These records should include:
- Service date.
- Description of the service provided.
- Start and end times, when applicable.
- Service duration.
- Required signatures and dates.
Individual service plan (ISP)
Providers must obtain access to the participants’ ISP outcome that was in effect during the audited date of service. Documentation should include:
- The applicable ISP.
- ISP signature page or video conference attendee list for the ISP that was in effect for the date of service that corresponds to the PERM.
Case management or supervisory visit notes
Documentation describing activities completed during the service period
Provider agency and FMS background check documentation
Risk-based screening assessments (background checks) for provider agency and self-directed FMS hired workers who deliver waiver-funded services and have regular, direct contact with participants.
ISP information sharing
State and federal regulations require that completed ISPs be shared with providers responsible for implementing services. Essential providers must have sufficient information to understand the participant’s goals, outcomes, and authorized services.
Federal regulations require that once an ISP is completed and agreed to, it must be signed by and distributed to providers who are responsible for its implementation (42 CFR § 441.301(c)(2)(ix-x)). Sharing relevant information with key providers may serve to promote their sense of belonging to a larger team that is supporting the participant. This information can be helpful in expanding providers’ perspective from the narrower focus of delivering a specific service to seeing their individual contribution as part of a bigger picture for each participant.
During the process of completing the ISP, the Support and Service Coordinator (SSC) will explain to the participant the federal requirement to share information. The SSC will also provide the Individual Service Plan (ISP) Outcomes: Information for Parents, P-02282 to the participant and ensure that they understand the outcomes portion of their ISP (Individual Service Plan: Outcomes, Children’s Long-Term Support Programs, F-20445a) will be shared with essential service providers included on the ISP.
Essential service providers are those who deliver waiver-funded services and have regular, direct contact with participants. “Regular” means contact that is scheduled, planned, expected, or otherwise periodic. “Direct” means face-to-face physical proximity to a participant.
Financial management service (FMS) providers assist the participant and their family to manage the Children’s Long-Term Support (CLTS) Waiver Program services and funding. An FMS serves as an agent for handling employment-related tasks associated with the supports and services in the participant’s authorized individual service plan (ISP). These services function as a safeguard for the participant by ensuring that financial and employment activities meet federal, state, and local rules and regulations and are done in a timely manner.
FMS providers are responsible for ensuring that claims are submitted correctly for authorized services and the service provided through the FMS is in the ISP documentation. This means they are responsible for obtaining and maintaining the participant’s ISP documentation needed to support billing and facilitating documents responsive to PERM, especially for services that fit the essential service provider definition. Providers should have policy and procedures in place for maintaining the ISP information shared by the CWA for claims submitted for rendered services by essential provider(s).
The following services fit the essential service provider definition:
- Adult family home
- Children’s foster care
- Communication assistance for community inclusion*
- Community/competitive integrated employment – individual
- Community/competitive integrated employment – small group
- Community integration services
- Counseling and therapeutic services
- Daily living skills training
- Day services
- Discovery and career planning*
- Grief and bereavement counseling
- Health and wellness*
- Mentoring
- Participant and family-direction broker services
- Personal supports (only supervision services; not routine home care, chore services, or pest control)
- Respite care
- Safety planning and prevention*
*Components of this service may have providers that meet the definition of an essential service provider.
Provider responsibilities
All CLTS providers are responsible for:
- Verifying that the CLTS participant is eligible to receive CLTS services for the date of service as indicated on the participant’s Individual Service Plan (ISP).
- Maintaining complete and thorough documentation for services provided.
- Submitting requested records to DHS within the required timeframe.
- Providing all relevant documentation listed on the Request for Records Cover Sheet included with the records request.
- Respond in a timely manner to outreach from the CLTS PERM representative regarding medical record requests and documentation.
- Providers must maintain clear, complete, and accurate records that support the services they deliver and bill through the CLTS program. Documentation must be available upon request for reviews and audits, including PERM. Records should be organized and accessible to ensure they can be provided promptly when requested.
Failure to provide or maintain proper documentation will result in corrective action and claim recoupment and may impact provider enrollment in the CLTS Program.
A strong PERM record supports your organization’s compliance standing and can influence future CMS PERM reviews. Successful PERM responses rely on prevention, accurate documentation, and timely responses. By maintaining accurate claims, complete records, and strong compliance practices, providers can minimize errors, avoid overpayments, and maintain a positive PERM history.
Authority
Providers are required to provide the Department of Health Services (DHS) information pertaining to services delivered to the CLTS Waiver Program participants, upon request per section 1.b of the Children's Long-Term Support (CLTS) Waiver Program Provider Agreement and Acknowledgement of Terms of Participation, F-03344 (PDF).
Failure to respond to the request for documentation may result in DHS imposing sanctions as described in section 2.f of the Children's Long-Term Support (CLTS) Waiver Program Provider Agreement and Acknowledgement of Terms of Participation, F-03344 (PDF).
Address audit findings promptly
When responding to a PERM, ensure all claims are complete, accurate, and supported by timely documentation. If errors or missing information are identified, DHS will work with providers to resolve issues before the PERM review period closes. Submit corrections and supporting documentation as quickly as possible.
Avoid overpayments
The PERM program requires states to repay the federal share of overpayments and implement corrective action plans (CAPs). Providers should ensure billing and compliance practices align with CLTS program requirements and CMS standards.
Corrective Action Plan (CAP)
CMS reviews all PERM documentation to confirm that all required records have been submitted and support the billed date(s) of service.
The CAP process includes reviewing PERM findings, identifying root causes of errors, and developing corrective actions designed to reduce recurring errors, trends, and other vulnerabilities that may contribute to improper payments.
Providers may receive a CAP if CMS identifies issues in submitted documentation, including:
- Missing or incomplete records.
- Documentation errors.
- Coding or billing errors.
- Provider risk-based screening (RBS) errors.
If a CAP is issued, CMS will identify the root cause of the error (for example, “No ISP submitted”) and require corrective actions to address the issue and prevent future occurrences. DHS will contact all providers who receive a PERM CAP from CMS to respond to the CAP by developing a written plan to reduce the likelihood that the error will occur in the future.
Providers who receive a CAP are also responsible for gathering and submitting the missing documentation that caused the CAP to DHS.
PERM CAP questions may include:
- What needs to be done to correct and/or mitigate the root cause of the error?
- Who can implement the corrective action?
- How long will it take to implement the corrective action?
- Who is responsible for monitoring the corrective action’s implementation to ensure it is implemented?
- How can you evaluate to see if the corrective action is doing its job?
PERM CAP review and acceptance process
CMS reviews CAPs submitted by providers to determine whether sufficient information has been provided to identify:
- The cause of the errors.
- How the errors will be corrected.
If CMS has additional questions about how future errors will be prevented, they may request additional CAP information from the state. If no additional information is needed, CMS accepts the state-submitted CAPs.
All CLTS provider types, including FMS providers, are expected to maintain documentation that supports services rendered. This includes retaining the participant’s ISP that was in effect on each date of service billed. Documentation should demonstrate that the service provided aligned with the participant’s identified goals and outcomes in the ISP if the claim is selected for PERM.