2014 Report on Conflicts of Interest in the Waiver System

In 2014, the Legislative Division of Post Audit, a part of the Kansas Legislature, examined conflicts of interest (COIs) within the waiver system in Kansas. Their report identified COIs in the system that undermine public trust.

Background on the 2014 Report

In March 2014, the Legislative Division of Post Audit (LDPA) issued a performance audit report on Community Developmental Disability Organizations (CDDOs) in Kansas.

Legislators requested the audit because they were concerned about the structure of Kansas’s developmental disabilities system. They were worried that allowing CDDOs to act as the gatekeeper to services and provide direct services created an inherent conflict of interest. Audits in 1999 and 2003 had already identified similar conflicts of interest.

So, the performance audit answered a key question: Do substantial conflicts of interest remain for CDDOs that have their own service providers, and how could those conflicts be resolved?

The LDPA did extensive research to try to answer this question, including:

  • Reviewing KDADS policies, proposed legislation, state statutes, regulations, and previous audits

  • Interviewing officials from KDADS, CDDOs, and service providers

  • Examining service data from CDDO reports for people receiving services

  • Surveying about 1,000 guardians of people with development disabilities, about 300 case managers, all 27 CDDOs, and 240 officials from service providers

What is the Legislative Division of Post Audit (LDPA)?

The Legislative Division of Post Audit (LDPA) was created in 1971 to provide the Kansas Legislature with accurate and unbiased information. It looks at government agencies and programs to see if they are effective, efficient, and follow laws and regulations.

The Legislative Post Audit Committee, a bipartisan group of 10 legislators, determines what the LDPA will audit. Then, professionals from the LDPA independently conduct the audit and publish the results without any input from legislators.

Want to read the full report?

Click below to read the full report from the LDPA:
CDDOs: Reviewing Issues Related to Community Services Provided for Individuals with Developmental Disabilities.

Key Findings in the Report

Among other things, the audit found that the structure of Kansas’s waiver system created an inherent conflict of interest.

The audit found no direct evidence that CDDOs acted unfairly. Still, they heard from several stakeholders with doubts about the waiver system because of these conflicts.

Here are some of the report’s key findings.

  • CDDOs decide on eligibility for waiver services and make referrals to service providers. That puts them in a position to steer individuals to or away from the CDDO’s own service providers. CDDOs also oversee the complaint process, so they could ignore complaints against their own service provider.

  • While the LDPA did find the system created COIs, there was no evidence that CDDOs were actually taking advantage of these conflicts. CDDOs have implemented some controls to address COIs, and people were mostly satisfied with their case management.

  • Even without direct evidence that CDDOs are taking advantage of COIs, independent service providers still think CDDOs have an unfair advantage:

    • About 60% said it was a problem if CDDOs assess individuals and provide services

    • About 75% said a CDDO with its own service provider has an unfair advantage over other service providers

    • About 52% said CDDO officials have not taken appropriate action to mitigate COIs

    • About 65% think KDADS has not done enough to mitigate COIs

  • The LDPA did not find direct evidence of unfair practices. But certain stakeholders distrust the system just because these COIs exist. That includes doubts around requests for extraordinary funding and the complaint process.

  • The auditors made it clear that the COIs will continue so long as CDDOs can also establish service providers. While Kansas can put safeguards in place, only separating gatekeeping and service functions would completely eliminate conflicts of interest.