MATERNAL AND CHILD SERVICES BLOCK GRANT TO THE STATES U. S. DEPARTMENT OF HEALTH AND HUMAN SERVICES

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1 APRIL MATERNAL AND CHILD SERVICES BLOCK GRANT TO THE STATES State Project/Program: U. S. DEPARTMENT OF HEALTH AND HUMAN SERVICES Federal Authorization: 42 United States Code Section State Authorization: G. S. 130A-124 N. C. Department of Health and Human Services Division of Public Health Agency Contact Person Program Carol Tant (919) Agency Contact Person Financial Frances Dreps Budget Officer (919) N. C. DHHS Confirmation Reports: SFY 2006 audit confirmation reports for payments made to Counties, Area Programs, Councils of Government and District Health Departments will be available by around late August to early September at the following web address: At this site, page down to Letters/reports/forms for ALL Agencies" and click on "Audit Confirmation Reports (State Fiscal Year ). The auditor should not consider the Supplement to be safe harbor for identifying audit procedures to apply in a particular engagement, but the auditor should be prepared to justify departures from the suggested procedures. The auditor can consider the supplement a safe harbor for identification of compliance requirements to be tested if the auditor performs reasonable procedures to ensure that the requirements in the Supplement are current. The grantor agency may elect to review audit working papers to determine that audit tests are adequate. I. PROGRAM OBJECTIVES The purpose of the Children s Special Health Services (CSHS) Program is to provide noncustodial medical and surgical care for individuals below the age of 21 who have a chronic organic disease, defect or condition which may hinder the achievement of normal growth and development. Specific clinic services offered are explained in more detail in the Activities Allowed or Unallowed Section which follows. [G.S. 130A-124] II. PROGRAM PROCEDURES The Children s Special Health Services Program is administered by the North Carolina Department of Health and Human Services Division of Public Health, Women s and Children s Health Section, Children and Youth Branch. Services are provided through a network of contracted specialty clinics, as well as on a fee-for-service basis through the Purchase of Medical Care Services Program component. Areas in need of services were identified to improve access for children with special needs. Contracts are made to local B

2 providers, medical centers, and universities depending on the specialty service being provided. Renewal of funds is based on prior year performance [G.S. 130A-124] The program is managed through the central office staff consisting of a multi-disciplinary clinical team and administrators. Technical assistance and consultation is provided to local agencies by Regional office staff including physical therapists, social workers, nurses and administrative consultants. CSHS is a state-administered program for evaluation and monitoring of children with special health care needs by a team of health care providers that includes pediatric sub-specialists in cardiology, neurology, oral-facial surgery, dentistry, orthopedic and neuromuscular services. Services are provided in hospitals, health departments, and other community-based locations. In addition to providing diagnostic and treatment services through sponsored clinic sites, the program also reimburses limited services for eligible children on a fee-for-service basis. These services include hospitalization, surgery, physicians care, laboratory tests, physical/occupational/speech therapy, medication, durable medical equipment, orthotics and prosthetics medical supplies and other interventions. Funds for this program are from a combination of Maternal and Child Health Block Grant funds and matching State funds. The proportion is four federal dollars and three State dollars for every seven dollars awarded and expended. The subrecipient has no requirement to account separately for federal and State dollars in its budget and expenditures. III. COMPLIANCE REQUIREMENTS The State has the authority to issue rules governing use of the Children s Special Health Services Program funds. These rules are incorporated in this compliance supplement. A copy of the rules may be obtained from the Specialized Services Branch. A. Activities Allowed or Unallowed Children s Special Health Services funds may be used to provide clinical services or to purchase medical supplies or equipment for eligible children. Allowed Medical conditions that qualify for program support include, but shall not be limited to, the following: 1. Certain disabilities requiring orthopedic treatment, e.g., orthopedic birth defects, scoliosis, Perthe s disease, etc.; 2. Certain disabilities requiring plastic surgery, e.g., repair of cleft lip and cleft palate, burns (rehabilitative stage, for grafting and associated care), facial dysostosis restructure; 3. Congenital cardiac defects and rheumatic heart disease requiring medical and surgical treatment; 4. Certain other conditions requiring surgery, e.g., hydrocephalus, bladder tumor, tracheoesophageal fistula, etc.; 5. Cerebral palsy; 6. Orthodontics/prosthodontics if incidental to cleft palate, facial dysotosis restructure or scoliosis; B

3 7. Cystic fibrosis; 8. Chronic seizure disorders; 9. Hemophilia; 10. Nephrotic syndrome; 11. Speech-language pathology, chronic orological diseases, and hearing impairment; 12. Malignancies; 13. Diabetes mellitus; 14. Immunodeficiency diseases. Specialty services supported by program funds include: orthopedic, cardiology myelodysplasia, neurology and neuromuscular clinics; head and neck surgery; and treatment of communicative disorders. Unallowed Medical conditions or procedures not supported by Children s Special Health Services include at least the following: 15. Most acute illnesses and accidents, i.e., those which do not usually result in chronic disabilities 16. Appendectomy and inguinal herniorrhaphy; 17. Allergies; 18. Respiratory distress syndrome; 19. Ophthalmological conditions; and 20. Surgery for cosmetic purposes only. B. Allowable Costs/Cost Principles North Carolina DHHS DPH has adopted Circular A-87, Cost Principles for State, Local and Indian Tribal Governments for the determination of allowable costs applicable for this program. C. Cash Management Local Governments and Public Authorities All local governments and public authorities are required to follow cash procedures for State funds outlined in the State s Budget and Fiscal Control Act (General Statute ) and rules, policies, and procedures established by the Local Government Commission. Additionally, the State-awarding agency may specify their own requirements for the management of State funds and these requirements can be found in Part 10 of this Compliance Section. Nonprofit Organizations The specific requirements for the cash management of State funds will be specified by the State-awarding agency. The auditor will find the requirements in the contract and grant agreements, administrative manuals published by the awarding State agency and also cash management requirements can be found in the program specific requirements in Part 10 of this Section. B

4 For any program for which an awarding State agency has established rules, policies and procedures for cash management, recipients should also establish similar procedures for subrecipients. E. Eligibility North Carolina residents up to age 21 who are enrolled in State Medicaid program and have a covered condition are eligible for CSHS services. F. Equipment and Real Property Management The grantee has agreed to reimburse the State for any loss or damage to equipment furnished the grantee for use in connection with the performance of his contract as specified in the contract document. The grantee has also agreed to put into place equipment controls and safeguards for equipment costing in excess of $500 as specified in Paragraph 27 of the contract document. H. Period of Availability of State Funds Compliance Requirements - State awards may specify a time period during which the grantee may use the State funds. Where a funding period is specified, a grantee may charge to the award only costs resulting from obligations incurred during the funding period and any pre-award costs authorized by the State awarding agency. Also, if authorized by the State program, unobligated balances may be carried over and charged for obligations of the subsequent funding period. Obligations mean the amounts of orders placed, contracts and subgrants awarded, goods and services received, and similar transactions during a given period that will require payment by the grantee during the same or a future period. I. Procurement and Suspension and Debarment Compliance Requirements Procurement All grantees that expend federal funds (received either directly from a federal agency or passed through the N. C. Department of Health and Human Services) are required to conform with federal agency codifications of the grants management common rule accessible on the Internet at All grantees that expend State funds (including federal funds passed through the N. C. Department of Health and Human Services) are required to comply with the procurement standards described in the North Carolina General Statutes and the North Carolina Administrative Code, which are identified in the State of North Carolina Agency Purchasing Manual accessible on the Internet at Nongovernmental subrecipients shall maintain written Procurement policies that are followed in procuring the goods and services required to administer the program. Suspension and Debarment Non-federal entities are prohibited from contracting with or making sub awards under covered transactions to parties that are suspended or debarred or whose principals are suspended or debarred. B

5 Suggested Audit Procedures a. Test a sample of contracts and ascertain if the required suspension and debarment certifications were received for sub awards and covered contracts. b. Test a sample of contracts to the List of Parties Excluded From Federal Procurement or Nonprocurement Programs, issued by the General Services Administration and ascertain if contracts were awarded to suspended or debarred parties. J. Program Income Client and third party fees collected by the local provider from the provision of maternal and child health services must be used to expand, maintain or enhance those services in either the year in which they were earned or a subsequent fiscal year. (10A NCAC 43B.0105). L. Reporting Children s Special Health Services Program contractors are required to submit monthly expenditure report within 30 days after the end of the month that the services were provided; and quarterly activity reports expenditure report within 30 days after the end of the quarter. M. Subrecipient Monitoring County health departments frequently contract with other entities/agencies to provide allowable services. Unless services are obtained on other than fee for service contracts, the auditor does not need to audit for this requirement. (reference Section C(1) (c and d) of the Consolidated Agreement between the local health department and the Division of Public Health. N. Special Tests and Provisions Conflicts of Interest and Certification Regarding Overdue Tax Debts All non-state entities (except those entities subject to the audit and other reporting requirements of the Local Government Commission) that receive, use or expend State funds (including federal funds passed through the N. C. Department of Health and Human Services) are subject to the financial reporting requirements of G. S for fiscal years beginning on or after July 1, These requirements include the submission of a Notarized Conflict of Interest Policy (see G. S (b1)) and a written statement (if applicable) that the entity does not have any overdue tax debts as defined by G. S at the federal, State or local level (see G. S (b2)). All non-state entities that provide State funding to a non-state entity (except any non-state entity subject to the audit and other reporting requirements of the Local Government Commission) must hold the subgrantee accountable for the legal and appropriate expenditure of those State grant funds. B