TCM Audit Appeals - Part III

12/11/2019 By Nancy Leidelmeijer

In this final part, Part III, to our TCM audits blog, we will address the TCM program audits as conducted by the TCM program at the Department of Health Care Services (DHCS). As written in our previous blogs on this topic, the Targeted Case Management (TCM) program cost reports are audited in California every year. For the program audit (or non-financial), DHCS strives to be on a 3-year. That means that your program may be audited once every 3 years.  



 The unit within DHCS is responsible for oversight of TCM program in the State of California. That means, they are the body which oversees the TCM program and ensures compliance among participating local governmental agencies. DHCS works as the liaison between local governmental agency (LGA) representatives and the Centers for Medicaid and Medicare Services (CMS). They are responsible for issuing the applicable program policies to participating TCM agencies in California. This unit is responsible for conducting program audits of local TCM programs.


Program audits – the process

 TCM program audits are conducted by DHCS program staff. Typically, an LGA will receive a letter from a DHCS staff analyst that they have been selected to have their program audited on a specified date. To prepare for the audit, DHCS will provide a list of items it plans to review. This will include the following:

  1. TCM time survey including payroll time cards
  2. Organizational chart showing the relationship to all employees in the organization to TCM and/or its participants
  3. TCM training materials related to time survey and case management services
  4. TCM encounter logs
  5. Individual client case records
  6. Staff interview questions

The DHCS staff analysts will scrutinize the documentation to ensure TCM is being provided. Essentially, the documentation must provide the evidence that a TCM service was provided. Typically, DHCS will audit 5 to 10 percent of all case records in a given fiscal year.


Preparing for a program audit

Most of the items on the “items to be reviewed” checklist are fairly straightforward, however most of the scrutiny is focused on the individual client case notes. This is where most audits will fail. To ensure your case managers’ case records are compliant with TCM protocols, it is important to be well-prepared.

 Preparation is a process rather than an event. That is, preparing for an audit begins by ensuring staff is well-trained from the onset. While most professional case managers such as nurses and social workers are trained to provide case management and to document their clients’ information, TCM has very specific rules for what makes up a good case management note.

 First, in order for an encounter to qualify as billable TCM, it must be a face-to-face encounter with a client which can be conducted in a client’s home, in the case manager’s office, or elsewhere in the field. It cannot be conducted over the phone or it is not considered a TCM billable encounter.

The encounter must be with a client who fits one of the TCM target groups, which are:

  1. Children under the Age of 21
  2. Medically Fragile Individuals (18 or older) with Multiple Diagnoses
  3. Individuals at Risk of Institutionalization
  4. Individuals in Jeopardy of Negative Health or Psycho/Social Outcomes
  5. Individuals with a Communicable Disease

Additionally, one of the TCM service components must be rendered. These service components are:

  1. Prepare a comprehensive needs assessment
  2. Develop an individualized service/care plan
  3. Referral and related activities (to help client obtain needed services)
  4. Monitoring and follow-up activities.

The case notes must contain sufficient information to reflect that all of the above is true and was performed.

Post audit information

Approximately 90 days after the audit has taken place, the LGA will receive a program audit report from DHCS. The report will list all of the encounters for which case notes were reviewed. Details will be provided about information that is either missing or insufficient.  While the main focus is on client case records, other items that are included in the audit and subsequent audit report relate to time surveys and staffing issues. Time surveys must be prepared on a daily basis by all TCM participants. Time is required to mirror time on the employee’s payroll time card. Additionally, DHCS will review the organizational structure of the TCM budget unit to ensure it includes all staff participating in TCM as well as Admin and non-TCM staff.

If there are findings, DHCS will expect agencies to submit a corrective action plan. The corrective action plan must contain all of the actions and strategies the LGA plans to take to ensure compliance in the future. LGAs will have 30 days from the date of receipt of the audit letter to respond with the corrective action plan.