Department of Health Care Services Opioid Response Media

DEPARTMENT OF HEALTH CARE SERVICES Final Review Report OPIOID RESPONSE MEDIA CAMPAIGN May 1, 2017, through December 31, 2023 M ALIA M. C OHEN C S C ALIFORNIA TATE ONTROLLER September 2025 S24-SAB-9001 STATE CONTROLLER’S OFFICE | DIVISION OF AUDITS Post Office Box 942850 | Sacramento, CA 94250 Sacramento Office: 3301 C Street, Suite 700 | Sacramento, CA 95816 | 916-324-8907 Monterey Park Office: 901 Corporate Center Drive, Suite 200 | Monterey Park, CA 91754 | 323-981-6802 www.sco.ca.gov MALIA M. COHEN CALIFORNIA STATE CONTROLLER September 11, 2025 Ms. Michelle Baass, Director Department of Health Care Services P.O. Box 997413 Sacramento, CA 95899 Dear Director Baass: The State Controller’s Office reviewed the Department of Health Care Services’ (DHCS) contracts with M&M Media Solutions (MMM) for DHCS’ Opioid Response media campaign. The review period was May 1, 2017, through December 31, 2023. Our review found the following issues: • DHCS did not adequately monitor MMM to ensure that it complied with contract requirements. In addition, contract deliverables were not clearly described such that DHCS could measure performance or ensure that services were sufficiently completed. • DHCS did not maintain adequate controls over the review and approval of MMM payments, resulting in $80,166 in improper payments. • The contract scope and deliverables were in compliance with the Substance Abuse and Mental Health Services Administration’s State Opioid Response grant objectives. However, DHCS expended State Targeted Response funds on the Opioid Response media campaign; this expenditure of funds was not specified in the approved State Targeted Response grant application’s project or budget narrative. DHCS did not request prior approval for the change in project scope or objective. MAILING ADDRESS P.O. Box 942850, Sacramento, CA 94250 SACRAMENTO 3301 C Street, Suite 700, Sacramento, CA 95816 | 916.324.8907 LOS ANGELES 901 Corporate Center Drive, Suite 200, Monterey Park, CA 91754 | 323.981.6802 Ms. Michelle Baass September 11, 2025 Page 2 of 2 If you have any questions regarding this report, please contact Ella Finau, Chief, Special Audits Bureau, by telephone at 916-322-7699. Thank you. Sincerely, Original signed by Kimberly A. Tarvin, CPA Chief, Division of Audits Copy: Waheeda Sabah, Chief Federal Grants Branch Community Services Division California Department of Health Care Services Justin Whitcomb, Contracts and Fiscal Section Chief Federal Grants Branch Community Services Division California Department of Health Care Services Stephanie Williams, Program and Policy Section Chief Federal Grants Branch Community Services Division California Department of Health Care Services Wendy Griffe, Chief Internal Audits California Department of Health Care Services Office of the State Controller | Department of Health Care Services Opioid Response Media Campaign Final Review Report September 2025 CONTENTS SUMMARY 1 BACKGROUND 1 REVIEW AUTHORITY 3 OBJECTIVES, SCOPE, AND METHODOLOGY 3 CONCLUSION 5 VIEWS OF RESPONSIBLE OFFICIALS 6 RESTRICTED USE 6 FINDINGS AND RECOMMENDATIONS 7 APPENDIX—SOR II CONTRACT, EXHIBIT B, ATTACHMENTS I THROUGH III 27 ATTACHMENT—DEPARTMENT OF HEALTH CARE SERVICES’ RESPONSE TO DRAFT REPORT 41 Office of the State Controller | Department of Health Care Services Opioid Response Media Campaign Final Review Report September 2025 SUMMARY The State Controller’s Office (SCO) reviewed the Department of Health Care Services’ (DHCS) contracts with M&M Media Solutions (MMM) for DHCS’ Opioid Response media campaign for the period of May 1, 2017, through December 31, 2023. Our review found the following issues: • DHCS did not adequately monitor MMM to ensure that it complied with contract requirements. In addition, contract deliverables were not clearly described such that DHCS could measure performance or ensure that deliverables were sufficiently completed. • DHCS did not maintain adequate controls over the review and approval of MMM payments, resulting in $80,166 in improper payments. • The contract scope and deliverables were in compliance with the Substance Abuse and Mental Health Services Administration’s (SAMHSA) State Opioid Response (SOR) grant objectives. However, DHCS expended State Targeted Response (STR) funds on the Opioid Response media campaign; this expenditure of funds was not specified in the approved STR grant application’s project or budget narrative. DHCS did not request prior approval for the change in project scope or objective. BACKGROUND To address the ongoing opioid crisis, DHCS created the California Medication-Assisted Treatment Expansion project in 2017, which was later renamed DHCS Opioid Response. Several projects under DHCS Opioid Response have received funding from the SOR grant program under the SAMHSA to address the opioid overdose crisis and help reduce unmet treatment needs and opioid-related overdose deaths. -1- Office of the State Controller | Department of Health Care Services Opioid Response Media Campaign Final Review Report September 2025 During the review period, DHCS received the following federally funded opioid response grants: • STR Grant of $89,499,542 for the project period of May 1, 2017, through April 30, 2020; • SOR I Grant of $176,140,210 for the project period of September 30, 2018, through September 29, 2020; • SOR II Grant of $211,729,156 for the project period of September 30, 2020, through September 29, 2023; and • SOR III Grant of $217,861,311 for the project period of September 30, 2022, through September 29, 2024. To implement prevention and education services, DHCS budgeted grant funds for a media campaign to raise public awareness of how to access medication-assisted treatment in California. DHCS awarded the media contract to MMM and continued to use its services for all SOR grants. MMM was awarded the following three contracts: • SOR I Grant – $10,000,000 for the period of January 1, 2019, through September 29, 2019; • SOR II Grant – $10,000,000 for the period of September 30, 2020, through September 29, 2022; and • SOR III Grant – $20,500,000 for the period of September 30, 2022, through June 30, 2024. The Federal Grants Branch of DHCS’s Community Services Division works with MMM to execute the services in the contracts and performs administrative duties related to the media campaign. -2- Office of the State Controller | Department of Health Care Services Opioid Response Media Campaign Final Review Report September 2025 REVIEW AUTHORITY Authority for this review is provided by Government Code (GC) section 12410, which states: The Controller shall superintend the fiscal concerns of the state. The Controller shall audit all claims against the state, and may audit the disbursement of any state money, for correctness, legality, and for sufficient provisions of law for payment. OBJECTIVES, SCOPE, AND METHODOLOGY Our review objectives were to determine whether: • The contracts with MMM were procured in accordance with state procurement rules and policies; • The contract scope and deliverables were in compliance with SAMHSA’s SOR grant objectives, as well as the State’s goals of improving access to opioid treatment; reducing unmet treatment needs; and reducing opioid-related overdose deaths through prevention, treatment, and recovery activities; • DHCS adequately monitored MMM to ensure that it complied with contract requirements and that deliverables were completed sufficiently and in a timely manner; and • DHCS had adequate controls in place for the review and approval of payments to MMM, and that payments were adequately supported. The review period was May 1, 2017, through December 31, 2023. To achieve our review objectives, we performed the following procedures: • We gained an understanding of applicable laws, rules, regulations, and DHCS policies and procedures applicable to Opioid Response media campaign expenditures. -3- Office of the State Controller | Department of Health Care Services Opioid Response Media Campaign Final Review Report September 2025 • We conducted walkthroughs and interviewed DHCS staff members to gain an understanding of applicable activities and processes for the Opioid Response media campaign. • We reviewed contracts awarded during the review period and determined whether DHCS had complied with state procurement policies and whether contract deliverables and scope were in compliance with SAMHSA grant objectives. • We reviewed media plans, project reports, and reports on media campaign performance. • Upon gaining an understanding of internal controls over the review and approval of MMM payments, we reviewed all contract expenditures made during the review period to determine whether DHCS funds had been expended in accordance with the approved terms of the contract, applicable laws, rules, regulations, and DHCS policies and procedures. We tested the following: o SOR I Contract – all 10 payments, totaling $10,000,000; o SOR II Contract – all nine payments, totaling $10,000,000; and o SOR III Contract – all six payments, totaling $16,504,534. We did not review DHCS’s financial statements. We limited our review scope to planning and performing review procedures necessary to achieve our review objectives. Our consideration of internal control was limited to gaining an understanding of the transaction flows and financial management system, and determining the review procedures that were appropriate under the circumstances for the purpose of providing a conclusion based on our review objectives. -4- Office of the State Controller | Department of Health Care Services Opioid Response Media Campaign Final Review Report September 2025 CONCLUSION Our review found the following issues: • DHCS did not adequately monitor MMM to ensure that it complied with contract requirements. In addition, contract deliverables were not clearly described such that DHCS could measure performance or ensure that services were sufficiently completed (see Finding 1). We found that: o DHCS did not obtain Media Buy Documentation (MBD) as required by the contracts; o DHCS did not verify that data elements provided by MMM were complete and accurate; and o Contract deliverables for the media campaigns were not clearly described such that DHCS could measure performance or clearly identify the services and products that would be received in exchange for the amount paid. • DHCS did not maintain adequate controls over the review and approval of payments to MMM (see Finding 2). We found that: o DHCS’s inadequate payment review resulted in $80,166 in improper payments; and o DHCS did not request supporting documentation to verify that expenditures were actually incurred and properly billed. • The contract scope and deliverables were in compliance with SAMHSA’s SOR grant objectives. However, DHCS expended STR funds on the Opioid Response media campaign; this expenditure of funds was not specified in the approved STR grant application’s project or budget narrative. DHCS did not request prior approval for the change in project scope or objective (see Finding 3). -5- Office of the State Controller | Department of Health Care Services Opioid Response Media Campaign Final Review Report September 2025 VIEWS OF RESPONSIBLE OFFICIALS We issued a draft review report on June 25, 2025. DHCS’ representative responded by letter dated July 7, 2025, agreeing with the review results. This final review report includes DHCS’ response as an attachment. RESTRICTED USE This report is solely for the information and use of DHCS and the SCO; it is not intended to be, and should not be, used by anyone other than these specified parties. This restriction is not intended to limit distribution of this review report, which is a matter of public record and is available on the SCO website at www.sco.ca.gov. Original signed by Kimberly A. Tarvin, CPA Chief, Division of Audits September 11, 2025 -6- Office of the State Controller | Department of Health Care Services Opioid Response Media Campaign Final Review Report September 2025 FINDINGS AND RECOMMENDATIONS Finding 1—Contract Noncompliance and Lack of Adequate Monitoring and Oversight DHCS did not adequately monitor MMM to ensure that all services were performed sufficiently per the contract’s scope of work (SOW). In addition, contract deliverables were not clearly described such that DHCS could measure performance or clearly identify the services and products that would be received in exchange for the amount paid. Department of Health Care Services did not obtain Media Buy Documentation as required by the contracts The SOW for SOR I and SOR II contracts required MMM to submit monthly MBD. MBD consists of progress reports with which DHCS identifies completed tasks and monthly activities performed, such as specific “media buys” purchased. A media buy is the purchase of advertisement space that includes television, radio, out-of-home, digital, and print media. The contracts require that itemized invoices be accompanied by MBD for payment processing. We requested that DHCS provide all MBD during the review period. DHCS responded that it had not requested any MBD from MMM, and that MMM was to maintain all backup documentation for requested payments. DHCS stated that it requests supporting documentation only when it notes discrepancies or needs additional information. DHCS stated that it received media summary and media plan flowcharts from MMM prior to each executed media phase instead of requesting MBD. After each phase was completed, MMM provided a phase report summarizing the results. DHCS considered such documentation and meetings with MMM sufficient for payment processing. However, the phase reports did not identify the specific media buys purchased or the actual cost of each media buy. Because it did not request and review MBD, DHCS failed to follow contract requirements and could not demonstrate that it had adequately monitored the progress of the work being -7- Office of the State Controller | Department of Health Care Services Opioid Response Media Campaign Final Review Report September 2025 performed. DHCS was not aware of what specific media buys were purchased, their actual costs, or whether purchases corresponded with the approved media plan. For example, per the SOR I Final Phase report, total net media expenditures were $8,257,119; however, per itemized invoices, the total media expenditure billed and approved was $8,341,351. DHCS could not explain the $84,232 difference. In addition, the MBD requirement language was removed from the SOR III contract. Not requiring MMM to provide supporting documentation for its media buys decreases DHCS’ oversight over the contract. Department of Health Care Services did not ensure that M&M Media Solutions project reports were complete, accurate, and submitted on time in accordance with contract requirements DHCS did not implement a process to ensure that MMM submitted timely, accurate project reports containing the required data elements. We identified missing project reports and variances between data elements presented in project reports and the data elements reported on the University of California, Los Angeles (UCLA) data portal. The contracts between DHCS and MMM required MMM to submit quarterly project reports to DHCS that would include specific data and performance measurements. We requested all quarterly project reports submitted during the review period. We noted that the project reports did not correspond with each quarter during the review period, and we inquired as to the reason. DHCS responded that report submission intervals were based on media phases instead of quarters because media phases did not always coincide with quarterly reporting periods. The project reports included consumer impression data for each media source and website views. We asked DHCS whether the information provided in the project reports had been verified, and DHCS stated that it had not been verified. We selected the SOR II Phase One project report in order to verify the accuracy of the information provided. We obtained supporting documentation from MMM and identified a variance in the reported impressions -8- Office of the State Controller | Department of Health Care Services Opioid Response Media Campaign Final Review Report September 2025 for radio coverage. An “impression” is an instance in which an advertisement could have been seen or heard. Specifically, the SOR II Phase One project report indicated 289,970,781 impressions from Total Traffic & Weather Network (TTWN). However, the supporting documentation provided by MMM indicated only 95,861,480 TTWN impressions, resulting in an overstatement of 194,109,301 TTWN impressions. Overstated impressions could lead DHCS to draw incorrect conclusions about the media buys, mislead DHCS as to the amount of public outreach during the reporting period, and could potentially have a negative impact on DHCS’s future media buy decisions. In addition, we noted that the impressions per media buy did not reconcile with the total impressions presented in the project reports. For example, the SOR III Phase Three project report indicates that 254,510,398 total impressions had been delivered. However, when we totaled the impressions tracked by media type—radio, television, digital display, social media, and over-the-top media—elsewhere in the project report, we reached a total of 274,618,935 impressions; this is a difference of over 20 million impressions. MMM was also required to report data elements to UCLA through a data portal. We noted that MMM reported additional data elements to UCLA that it did not report to DHCS, and that DHCS did not review the data submitted to UCLA for completeness and accuracy. We compared SOR III consumer impressions and website views reported to UCLA and DHCS, and noted variances in both elements. For example, MMM reported 753,477,042 SOR III Phase Four consumer impressions to DHCS, but reported 469,818,631 impressions to UCLA. For the same phase, MMM reported 314,654 website views to DHCS, but reported 314,028 website views to UCLA. We noted that data from Google Analytics for the same period indicated 318,283 views. DHCS could not explain the variance in reported impressions and views. Without adequately monitoring the data and information provided by contractors, DHCS cannot ensure that services and deliverables are being sufficiently completed. -9- Office of the State Controller | Department of Health Care Services Opioid Response Media Campaign Final Review Report September 2025 Lack of metrics and identification of services and products DHCS transitioned to deliverable-based contracts for SOR II and SOR III media campaigns. However, the deliverable description in the contract did not clearly indicate the expected results to be achieved in exchange for the amount paid. Therefore, DHCS could not measure whether the provided services and products had been sufficiently completed. MMM’s labor costs were embedded in the budgeted amount for deliverables in SOR II and SOR III contracts. The contracts did not clearly identify a budget for media expenditures, separate from labor costs, that would ensure that grant expenditures were adequately monitored and deliverables were completed. We asked DHCS how the allocation of labor and media expenditures had been determined, and DHCS stated that budget allocations were agreed to prior to contract execution. However, the budget allocations were not specified in the contract, and DHCS did not adequately document or maintain this information for our review. In addition, SOR III itemized invoices submitted by MMM did not classify the labor and media costs associated with each deliverable. For example, one deliverable—referred to as “Deliverable D2” in Attachment 1, “Budget for Year 1 (9/30/2022 – 6/30/2023)” to Exhibit B of the SOR III contract—with a budgeted amount of $6,471,593 was described as follows: • Outreach via radio, television, digital outdoor, print, and other mediums; • Development of creative elements; • Include messaging targeted to OUD [Opioid Use Disorder] and SUD [Substance Use Disorder] in English, Spanish & Chinese; and • Impression estimates will be included in the Outreach and Marketing Plan. The deliverable description does not provide a clear correlation between what services DHCS was to receive for the amount it paid. We could not determine what the expected media buys were for the deliverable; what MMM’s labor costs were, if any; or how the deliverables would be measured for completeness. Therefore, DHCS could not demonstrate that it had -10- Office of the State Controller | Department of Health Care Services Opioid Response Media Campaign Final Review Report September 2025 adequately monitored the allocation of funds for labor and media expenditures for the media deliverables. Criteria GC sections 13400 through 13407 require state agencies to establish and maintain internal controls, including a system of policies and procedures adequate to ensure compliance with applicable laws and other requirements, and an effective system of internal review. Title 45, Code of Federal Regulations, part 75.342(a), “Monitoring by the Non-Federal Entity,” states, in part: The non-Federal entity is responsible for oversight of the operations of the Federal award supported activities. The non-Federal entity must monitor its activities under Federal awards to assure compliance with applicable Federal requirements and performance expectations are being achieved. Monitoring by the non-Federal entity must cover each program, function or activity. . . . Agreement Number 18-95411 (SOR I Contract), Exhibit A, Section 6.D.1, Item 1, “Monthly Progress Reports (Task 8),” states, in part: Contractor must submit monthly, Media Buy Documentation (MBD), by the 15th of the following month to the DHCS Project Representative. The MBD and itemized invoice shall correspond with the approved media plan. The MBD shall clearly identify completed tasks and provide information related to monthly activities, such as specific media buys purchased. The DHCS Project Representative may request that additional details be included in the MBD. The monthly itemized invoice must accompany the MBD to process for payment. Itemized invoices will not be processed until the MBD has been received and approved by the DHCS Project Representative. -11- Office of the State Controller | Department of Health Care Services Opioid Response Media Campaign Final Review Report September 2025 Agreement Number 20-10324 (SOR II Contract), Exhibit A, Section 6.D.1, Item 1, “Monthly Progress Reports (Task 8),” states, in part: Contractor must submit monthly, Media Buy Documentation (MBD), by the 15th of the following month to the DHCS Project Representative. The MBD and itemized invoice shall correspond with the approved media plan. The MBD shall clearly identify completed tasks and provide information related to monthly activities, such as specific media buys purchased. The DHCS Project Representative may request that additional details be included in the MBD. The monthly itemized invoice must accompany the MBD to process for payment. Itemized invoices will not be processed until the MBD has been received and approved by the DHCS Project Representative. SOR II Contract, Exhibit A, Section 6.C., “Data Collection and Performance Measures,” states, in part: 1. The Contractor shall collect all data elements identified below. These data elements shall be reported by the Contractor to UCLA. Reporting will occur on the dates set forth in Section D Reports and Policies. Data elements will be reported cumulatively and by reporting period. a. Number of ads developed b. Number of impressions from media sources c. Number of resources developed and target audience d. Number of materials distributed e. Number of website views -12- Office of the State Controller | Department of Health Care Services Opioid Response Media Campaign Final Review Report September 2025 SOR II Contract, Exhibit A, Section 6.D., “Reports and Policies,” states, in part: 1. The Contractor shall submit quarterly reports to DHCS. The reports shall consist of data outlined in Section 6[C.1] and performance measures outlined in Section 6[C.2]. . . . Agreement Number 22-20408 (SOR III Contract), Exhibit A, Section 5.G., “Data Collection and Performance Measures,” states, in part: ...4. The Contractor shall submit project data to UCLA based quarterly reporting schedule outlined within this contract and via the UCLA online data portal. The Contractor shall collect all data elements identified below. Reporting will occur on the dates set forth in Section H. Reports and Policies. Data elements will be reported cumulatively and by reporting period. Data elements shall include, but not be limited to: a. Number of ads developed b. Number of impressions from media sources c. Number of resources developed and target audience d. Number of materials distributed e. Number of website views SOR III Contract, Exhibit A, Section 5.H., “Reports and Policies,” states, in part: 1. The Contractor shall submit quarterly reports to DHCS and UCLA. Reports shall include qualitative and quantitative data and performance measures as agreed upon by DHCS, the Contractor, and UCLA. . . . -13- Office of the State Controller | Department of Health Care Services Opioid Response Media Campaign Final Review Report September 2025 Recommendation We recommend that DHCS: • Improve its monitoring of MMM to ensure that all work outlined in the contract is being performed; • Perform verification procedures to ensure that media buys are in accordance with DHCS’s approved media plans, and that data elements provided are accurate and complete; and • Ensure that deliverables in the contract are clearly described and measurable such that a correlation can be made between the amounts paid for and services and products received. Finding 2—Inadequate Controls Over Review and Approval of Payments DHCS lacked a review process adequate to ensure that payments were adequately supported. DHCS approved itemized invoices without reviewing contract terms, deliverables, or supporting documentation to ensure that expenditures were actually incurred and properly billed. The lack of an adequate review process resulted in $80,166 in improper payments. SOR I Contract – Incorrect and inconsistent labor rates Contractor labor rates were inconsistent between Budget Year One and Budget Year Two. In addition, the Budget Year Two labor cost calculation for full-time equivalents (FTE) contained mathematical errors, resulting in incorrect total budgeted amounts. DHCS approved payment for services billed in Budget Year One for services billed in Budget Year Two. The contractor rates for each budget year outlined in the SOR I contract, are displayed in the tables on the next page. -14- Office of the State Controller | Department of Health Care Services Opioid Response Media Campaign Final Review Report September 2025 Budget Year One (January 1, 2019, through June 30, 2019) Monthly Cost (Monthly Salary Monthly FTE × FTE Budget Year Title Salary Percentage Percentage) Cost (6 months) Project Manager $30,933 20% $6,187 $37,120 Media Director 28,675 50% 14,338 86,025 Director of Client Services 27,530 50% 13,765 82,590 Senior Account Executive 20,622 40% 8,249 49,493 Media Buyer 16,497 50% 8,249 49,491 Junior Media Buyer 14,435 50% 7,218 43,305 Accounting Manager 12,954 40% 5,182 31,090 Media Coordinator 11,341 60% 6,805 40,828 Subtotal $69,993 $419,942 Intentionally left blank Intentionally left blank Fringe Benefits 21% 14,699 88,188 Intentionally left blank Intentionally left blank Indirect Costs 8.9% 6,229 37,375 Intentionally left blank Intentionally left blank Total Personnel $90,921 $545,505 Intentionally left blank Intentionally left blank Budget Year Two (July 1, 2019, through September 29, 2019) Monthly Cost (Monthly Salary Monthly FTE × FTE Budget Year Title Salary Percentage Percentage) Cost (6 months) Project Manager $11,600 20% $2,320 $13,920 Media Director 6,767 50% 3,384 20,301 Director of Client Services 6,496 50% 3,248 19,488 Senior Account Executive 7,733 40% 3,093 18,559 Media Buyer 6,187 50% 3,094 18,561 Junior Media Buyer 5,413 50% 2,707 16,239 Accounting Manager 4,060 40% 1,624 9,744 Media Coordinator 4,253 60% 2,552 15,311 Subtotal $22,022 $132,123 Intentionally left blank Intentionally left blank Fringe Benefits 20% 4,404 26,425 Intentionally left blank Intentionally left blank Indirect Costs 8.8% 1,938 11,627 Intentionally left blank Intentionally left blank Total Personnel $28,364 $170,175 Intentionally left blank Intentionally left blank -15- Office of the State Controller | Department of Health Care Services Opioid Response Media Campaign Final Review Report September 2025 The approved budgeted personnel cost calculation for Budget Year Two did not correspond with the monthly cost for each classification. For example, the total cost for a project manager during the three months of Budget Year Two should have been $6,960 ($2,320 × three months), not $13,920. It appears that DHCS incorrectly used six months (the Budget Year One period) instead of three months (the Budget Year Two period) to calculate the project manager’s costs for Budget Year Two. We inquired with DHCS regarding the salaries and the miscalculation. DHCS stated that the monthly salary and FTE percentages had inadvertently been written incorrectly in the contract. DHCS provided the following corrected salaries and FTE percentages for Budget Year Two: DHCS Revised Personnel Calculation – Budget Year Two Monthly Cost Monthly FTE (Budget Year Budget Year Title Salary Percentage Cost ÷ 3 Months) Cost Project Manager $30,933 15% $4,640 $13,920 Media Director 28,675 24% 6,767 20,301 Director of Client Services 27,530 24% 6,496 19,488 Senior Account Executive 20,622 30% 6,186 18,559 Media Buyer 16,497 38% 6,187 18,561 Junior Media Buyer 14,435 37% 5,413 16,239 Accounting Manager 12,954 25% 3,248 9,744 Media Coordinator 11,341 45% 5,104 15,311 Subtotal $44,041 $132,123 Intentionally left blank Intentionally left blank Fringe Benefits 20% 8,808 26,425 Intentionally left blank Intentionally left blank Indirect Costs 8.8% 3,876 11,627 Intentionally left blank Intentionally left blank Total Personnel $56,725 $170,175 Intentionally left blank Intentionally left blank In the revised data provided by DHCS, monthly salaries remained the same in Budget Year Two as for Budget Year One. However, it appears that DHCS calculated FTE percentages by dividing the budget year cost by three months (Budget Year Two) to obtain the monthly cost, and then divided monthly cost by monthly salary. By this method, FTE percentages would not be whole numbers as presented by DHCS, as using whole percentages would result in -16- Office of the State Controller | Department of Health Care Services Opioid Response Media Campaign Final Review Report September 2025 different monthly costs. For example, using the provided monthly salary and FTE percentage for the Media Director would result in $6,882 instead of $6,767 in monthly costs. Whether it applied revised rates or contract-provided rates, DHCS did not use the personnel costs that were billed for July 2019 (Budget Year Two). DHCS approved $90,921 in personnel costs for July 2019; this is the same amount that DHCS approved for total personnel costs in Budget Year One. However, if contract-provided rates had been used, total personnel costs for July 2019 would have totaled $28,364; and if DHCS’s corrected rates had been used, the costs would have totaled $56,725. DHCS did not detect the mathematical error in the contract or the incorrect billing amounts during its review and approval of itemized invoices. As a result, we could not determine the amount that should have been billed for Budget Year Two. SOR I Contract – Inconsistent billing periods and amounts on approved final invoices We obtained itemized invoices from both DHCS and MMM for the review period. The final itemized invoice provided by MMM for August 2019 totaled $1,053,152. However, in our review of the approved itemized invoices provided by DHCS, we noted that the invoice had been split to charge $1,002,631 for June 2019 and $50,521 for August 2019. The amount reported for June 2019 was the exact amount unspent for SOR I Budget Year One, which ended June 2019. We inquired with DHCS as to the reason for the different billing periods. DHCS did not explain why the August 2019 invoice had been split. We could not verify whether the approved amounts were actual expenditures because DHCS did not have any supporting documentation for our review, and MMM’s record-retention period had ended. Although DHCS did not have records available to provide an explanation, it appeared that the billing period had been split in order to ensure that the maximum budgeted amount was charged to each cost category for each budget period. Expenses reflected on the final billing invoice changed for certain expense categories. We noted that $84,232 in expenses on -17- Office of the State Controller | Department of Health Care Services Opioid Response Media Campaign Final Review Report September 2025 the August 2019 invoice provided by MMM were allocated to different cost categories on DHCS’ approved invoices. For example, the invoice provided by MMM indicated that net media expenditures totaled $920,401. However, the version of the invoice provided to us by DHCS indicated $991,021. Travel, creative, and marketing-supply expenses also increased to the maximum budgeted amount, while expenses for personnel and operating costs were reduced. SOR II Contract – Improper payments for uncompleted project reports The SOR II contract required MMM to submit eight project reports, seven quarterly project reports, and one final comprehensive report. We requested that DHCS provide all project reports for the SOR II contract. DHCS stated that it had received only five of the eight required reports. Because DHCS paid the full amount even though it did not receive all the required reports, it overpaid the contract by $80,166. Exhibit B, Attachments I, II, and III of the SOR II contract delineate the deliverables for each of the three budget years for the contract, as shown in “Attachment – Excerpt from Agreement 20-10324 Between DHCS and MMM” attached to this report. Included in the list of deliverables includes a description of each deliverable, an amount budgeted for each deliverable, and a delivery date. Included in the deliverables are the following: • For Budget Year One, deliverables “D6,” “D7,” and “D9” are for the first, second, and third project reports. All three deliverables have the amount of $23,000 allocated to each of the deliverables, with a differing delivery date (December 2020, March 2021, and June 2021, respectively). • For Budget Year Two, deliverables “D14,” “D15,” “D17,” and “D18” are for the fourth through seventh project reports. All four deliverables have the amount of $23,000 allocated to each of the deliverables, with a differing delivery date (September 2021, December 2021, March 2022, and June 2022, respectively). -18- Office of the State Controller | Department of Health Care Services Opioid Response Media Campaign Final Review Report September 2025 • For Budget Year Three, deliverable “D20” is the final comprehensive report. The amount allocated for the deliverable is $34,166, with a delivery date of August 2022. DHCS acknowledged that MMM had not submitted all eight reports. As the contract required seven quarterly reports and DHCS received and accepted only five quarterly reports, DHCS overpaid MMM $46,000 for two quarterly reports that it did not receive. In addition, MMM was paid $34,166 for the final comprehensive report that was to summarize the data elements for the entire media campaign; however, this report was not provided. Therefore, DHCS also overpaid MMM $34,166 for a final report that it did not receive. Lack of adequate supporting documentation DHCS required MMM to submit only the DHCS-templated, itemized invoice for review and approval for payment. DHCS did not require or review supporting documentation before approving $36,504,534 in payments made to MMM during the review period. Therefore, DHCS could not demonstrate that the expenditures were incurred or properly billed prior to approval for payment. DHCS did not request supporting documentation to ensure that expenditures were actually incurred and properly billed. The contract required MMM to maintain all financial records, in the event that an audit was deemed necessary. We requested supporting documentation from MMM for invoices that included media expenditures. MMM could not provide source documents for SOR I contract expenses, as its record retention period had ended. We were able to obtain supporting documentation for SOR II and SOR III contract expenses, including MMM’s own templated invoices addressed to DHCS for payment. Although MMM maintained the invoices that provided line-item detail of costs, DHCS did not require MMM to submit them. For SOR II and SOR III contracts, we noted that MMM requested payment prior to completing a majority of the media campaign deliverables. For example, the SOR II Phase Four media campaign ran from June 27, 2022, through August 14, 2022. However, MMM submitted the invoice for SOR II Phase Four payment on December 1, 2021, over six months before the phase began. In addition, MMM’s own templated invoices indicated credited amounts from -19- Office of the State Controller | Department of Health Care Services Opioid Response Media Campaign Final Review Report September 2025 payments already received. Therefore, DHCS did not ensure that costs claimed by MMM were paid on a reimbursement basis as required by the contract. In addition, the SOR III contract itemized invoices approved and retained by DHCS did not distinguish between labor and media costs such that DHCS could identify actual net media expenditures. For example, the first SOR III media campaign deliverable (“Deliverable D2”) with a budgeted amount of $6,471,593, was described only as “Media” in Exhibit B of the SOR III Contract. MMM billed DHCS $6,471,593 for an item described on the invoice only as “Media.” Based on close review of supporting documentation provided by MMM, we were able to identify $1,000,000 of the $6,471,593 as MMM labor costs. DHCS could not demonstrate that it was aware how the $6,471,593 had been allocated between media expenditures and MMM labor costs prior to invoice approval. Criteria GC sections 13400 through 13407 require state agencies to establish and maintain effective systems of internal control to minimize fraud, errors, abuse and waste of government funds, and ensure that state resources are adequately safeguarded, monitored, and administered. SOR I Contract, Exhibit B, Section 1, “Invoicing and Payment,” states, in part: A. For services satisfactorily rendered, and upon receipt and approval of the invoices, DHCS agrees to compensate the Contractor for actual expenditures incurred in accordance with the budget(s) attached hereto. SOR I Contract, Exhibit B, Section 4, “Amounts Payable,” states: A. The amounts payable under this Agreement shall not exceed: 1) $8,058,292 for the budget period of 01/01/19 through 06/30/19 2) $1,941,708 for the budget period of 07/01/19 through 09/29/19 -20- Office of the State Controller | Department of Health Care Services Opioid Response Media Campaign Final Review Report September 2025 B. Reimbursement shall be made for allowable expenses up to the annually encumbered commensurate with the state fiscal year in which services are performed and/or goods are received. C. The Contractor must maintain records reflecting actual expenditures for each state fiscal year covered by the term of this Agreement. SOR II Contract, Exhibit A, Section 6.D., “Reports and Policies,” states, in part: 1. The Contractor shall submit quarterly reports to DHCS. The reports shall consist of data outlined in Section 6[C.1] and performance measures outlined in Section 6[C.2]. The Contractor shall submit quarterly reports via email to DHCS on the following dates: Due Date Quarter Period to DHCS 1st quarter 09/01/2020 – 11/30/2020 12/31/2020 2nd quarter 12/01/2020 – 2/28/2021 3/31/2021 3rd quarter 03/01/2021 – 05/31/2021 6/30/2021 4th quarter 06/01/2021 – 08/31/2021 9/30/2021 5th quarter 09/01/2021 – 11/30/2021 12/31/2021 6th quarter 12/01/2021 – 2/28/2022 3/31/2022 7th quarter 03/01/2022 – 05/31/2022 6/30/2022 8th quarter 06/01/2022 – 08/31/2022 9/30/2022 SOR II Contract, Exhibit A, Section 6.D., “Progress Reports,” states: 1. Monthly Progress Reports (Task 8) a. Contractor must submit monthly, Media Buy Documentation (MBD), by the 15th of the following month to the DHCS Project Representative. The MBD and itemized invoice shall correspond with the approved media plan. The MBD shall clearly identify completed tasks and provide information related to monthly activities, such as specific media buys purchased. The DHCS Project Representative may request additional details be included in the MBD. The monthly itemized invoice -21- Office of the State Controller | Department of Health Care Services Opioid Response Media Campaign Final Review Report September 2025 must accompany the MBD to process for payment itemized invoices will not be processed until the MBD has been received and approved by the DHCS Project Representative. 2. Final Report (Task 8.1) a. By September 30, 2022, the Contractor shall provide a comprehensive final report that includes (but not limited to) the following information: i. Post-buy analysis ii. Number of spots per week per station iii. Target audience demographics iv. Estimated number of impressions per person v. Reach and Frequency (R&F) and Daily Effective Circulation (DEC) vi. Multicultural Media vii. Dollars spent/Dollar Value viii. Bonus Media ix. Examples of placement— tearsheets from print publications x. Added value SOR II Contract, Exhibit B, Section 4, “Amounts Payable,” states, in part: ...B. Reimbursement shall be made for allowable expenses up to the amount annually encumbered commensurate with the state fiscal year in which services are performed and/or goods are received. -22- Office of the State Controller | Department of Health Care Services Opioid Response Media Campaign Final Review Report September 2025 SOR III Contract, Exhibit B, Section 4, “Amounts Payable,” states, in part: ...B. Reimbursement shall be made for allowable expenses up to the amount annually encumbered commensurate with the state fiscal year in which services are performed and/or goods are received. Attachment 1, “Budget for Year 1 (09/30/2022 – 06/30/2023),” to Exhibit B of the SOR III Contract states, in part: Deliverable Deliverable Description Amount Delivery D2 Media: $6,471,593 October 2022 • Outreach via radio, television, digital outdoor, print, and other mediums • Development of creative elements • Include messaging targeted to OUD and SUD in English, Spanish, & Chinese • Impression estimates will be included in the Outreach and Marketing Plan Campaign 1: 9/30/22-12/25/22 -23- Office of the State Controller | Department of Health Care Services Opioid Response Media Campaign Final Review Report September 2025 Recommendation We recommend that DHCS: • Implement procedures to enhance contract monitoring processes to ensure that contract deliverables and project reports are complete, accurate, and submitted on time; • Implement internal controls to enhance the contract invoice review and approval processes to ensure that payments are adequately supported, properly recorded, and comply with contract requirements; and • Recover $80,166 from MMM for the project reports that DHCS paid for but did not receive. Finding 3—Lack of Prior Approval for Grant Budget and Scope Revisions DHCS expended State Targeted Response (STR) funds on the Opioid Response media campaign; however, this expenditure was not specified in the approved STR grant application’s project or budget narrative. DHCS did not request prior approval for the change in project scope or objective. Therefore, $5,941,708 of STR funds paid to MMM for the Opioid Response media campaign are unallowable. On September 19, 2018, DHCS received a Notice of Award from SAMHSA approving the SOR I grant, which included a $10 million budget for the Opioid Response media campaign. A $10 million contract with MMM (Agreement Number 18-95411) for the media campaign was executed for the period of January 1, 2019, through September 29, 2019, to be funded by the SOR I grant. While reviewing the payments associated with this contract, we noted that $5,941,708 in costs was funded by the STR grant instead of the SOR I grant. The project and budget narrative of the STR grant application did not indicate that grant funds would be used for a statewide media campaign. We inquired with DHCS whether a budget revision was submitted prior to -24- Office of the State Controller | Department of Health Care Services Opioid Response Media Campaign Final Review Report September 2025 expending STR funds for the media campaign. DHCS stated that an official STR budget revision had not been completed. Therefore, STR grant funds were not expended in accordance with the terms and conditions of the STR grant. Criteria GC sections 13400 through 13407 require state agencies to establish and maintain effective systems of internal control to minimize fraud, errors, abuse and waste of government funds, and ensure that state resources are adequately safeguarded, monitored, and administered. Title 45, Code of Federal Regulations, part 75.308, states, in part: (a) The approved budget for the Federal award summarizes the financial aspects of the project or program as approved during the Federal award process. It may include either the Federal and non-Federal share or only the Federal share, depending upon HHS [U.S. Department of Health and Human Services] awarding agency requirements. It must be related to performance for program evaluation purposes whenever appropriate. (b) Recipients are required to report deviations from budget or project scope or objective, and requires prior approvals from HHS awarding agencies for budget and program plan revisions, in accordance with this section. (c) [The published regulation does not include language in section (c)] (1) For non-construction Federal awards, recipients must request prior approvals from HHS awarding agencies for one or more of the following program or budget-related reasons: (i) Change in the scope or the objective of the project or program (even if there is no associated budget revision requiring prior written approval). . . . -25- Office of the State Controller | Department of Health Care Services Opioid Response Media Campaign Final Review Report September 2025 Recommendation We recommend that DHCS: • Implement internal controls to ensure that grant funds are properly expended in accordance with the terms and conditions of the grant; and • Coordinate with the federal awarding agency on a remedy for the unallowable use of $5,941,708 of STR funds. -26- Office of the State Controller | Department of Health Care Services Opioid Response Media Campaign Final Review Report September 2025 APPENDIX—SOR II CONTRACT, EXHIBIT B, ATTACHMENTS I THROUGH III The following information is cited from Exhibit B, Attachments I through III of the SOR II Contract, and has been reformatted to comply with Web Content Accessibility Guidelines. Exhibit B – Attachment I Budget for Year 1 (09/30/2020 – 06/30/2021) Deliverable Deliverable Description Amount Delivery D1 Outreach and Marketing Plan: Flight 1 $3,096,120 September 2020 • Conduct research on target audience and geographic areas • Develop Outreach and Marketing Plan for DHCS review • Update Outreach and Marketing plan with feedback from DHCS and send for final approval • Outreach and Marketing Plan created • Initiate Outreach and Marketing Campaign Dates: 11/30/20 – 1/17/21 -27- Office of the State Controller | Department of Health Care Services Opioid Response Media Campaign Final Review Report September 2025 Deliverable Deliverable Description Amount Delivery D2 Media: $550,390 September 2020 • Outreach via radio, television, digital outdoor, print, and other mediums • Development of creative elements o Include messaging targeted to OUD and Stimulant abuse in both English and Spanish • Impression estimates will be included in the Outreach and Marketing Plan D3 Website Development: $38,820 September 2020 • Development of additional websites (English and Spanish) where visitors can either learn about Opioid Use Disorder and Medication Assisted Treatment or. D4 Website Updates $29,240 September 2020 • Refresh content on ChooseMAT.org and ElijeTAM.org -28- Office of the State Controller | Department of Health Care Services Opioid Response Media Campaign Final Review Report September 2025 Deliverable Deliverable Description Amount Delivery D5 Website Maintenance $66,200 September 2020 • 10 Months of maintenance for all campaign websites D6 1st Project Report to DHCS (09/01/20 – $23,000 December 2020 11/30/20): • Prepare and Submit to DHCS 1st Project Report o Outreach and Marketing Plan o Media o Website Development • Data collection and performance measure will include all requested information per the SOW -29- Office of the State Controller | Department of Health Care Services Opioid Response Media Campaign Final Review Report September 2025 Deliverable Deliverable Description Amount Delivery D7 2nd Project Report to DHCS (12/01/20 – $23,000 March 2021 2/28/21): • Prepare and Submit to DHCS 2nd Project Report o Outreach and Marketing Plan o Media o Website Development • Data collection and performance measure will include all requested information per the SOW -30- Office of the State Controller | Department of Health Care Services Opioid Response Media Campaign Final Review Report September 2025 Deliverable Deliverable Description Amount Delivery D8 Outreach and Marketing Plan: Flight 2 $1,150,230 March 2021 • Conduct research on target audience and geographic areas • Develop Outreach and Marketing Plan for DHCS review • Update Outreach and Marketing plan with feedback from DHCS and send for final approval • Outreach and Marketing Plan created • Initiate Outreach and Marketing Campaign Dates: 3/29/21 – 5/30/21 -31- Office of the State Controller | Department of Health Care Services Opioid Response Media Campaign Final Review Report September 2025 Deliverable Deliverable Description Amount Delivery D9 3rd Project Report to DHCS (03/01/21 – $23,000 June 2021 05/31/21): • Prepare and Submit to DHCS 3rd Project Report o Outreach and Marketing Plan o Media o Website Development • Data collection and performance measure will include all requested information per the SOW Total Year 1 Intentionally left blank $5,000,000 Intentionally left blank -32- Office of the State Controller | Department of Health Care Services Opioid Response Media Campaign Final Review Report September 2025 Exhibit B – Attachment II Budget for Year 2 (07/01/2021 – 06/30/2022) Deliverable Deliverable Description Amount Delivery D10 Outreach and Marketing Plan: Flight 3 $3,094,680 August 2021 • Conduct research on target audience and geographic areas • Develop Outreach and Marketing Plan for DHCS review • Update Outreach and Marketing plan with feedback from DHCS and send for final approval • Outreach and Marketing Plan created • Initiate Outreach and Marketing Campaign Dates: 8/9/21 – 9/26/21 -33- Office of the State Controller | Department of Health Care Services Opioid Response Media Campaign Final Review Report September 2025 Deliverable Deliverable Description Amount Delivery D11 Media: $519,930 August 2021 • Outreach via radio, television, digital outdoor, print, and other mediums • Development of creative elements o Include messaging targeted to OUD and Stimulant abuse in both English and Spanish Impression estimates will be included in the Outreach and Marketing Plan D12 Website Updates: $43,480 September 2021 • Refresh content all campaign websites D13 Website Maintenance: $80,440 September 2021 • 12 Months of maintenance for all campaign websites -34- Office of the State Controller | Department of Health Care Services Opioid Response Media Campaign Final Review Report September 2025 Deliverable Deliverable Description Amount Delivery D14 4th Project Report to DHCS (06/01/21 – $23,000 September 2021 08/31/21): • Prepare and Submit to DHCS 4th Project Report o Outreach and Marketing Plan o Media o Website Development • Data collection and performance measure will include all requested information per the SOW -35- Office of the State Controller | Department of Health Care Services Opioid Response Media Campaign Final Review Report September 2025 Deliverable Deliverable Description Amount Delivery D15 5th Project Report to DHCS (09/01/21 – $23,000 December 2021 11/30/21): • Prepare and Submit to DHCS 5th Project Report o Outreach and Marketing Plan o Media o Website Development • Data collection and performance measure will include all requested information per the SOW -36- Office of the State Controller | Department of Health Care Services Opioid Response Media Campaign Final Review Report September 2025 Deliverable Deliverable Description Amount Delivery D16 Outreach and Marketing Plan: Flight 4 $1,120,230 December 2021 • Conduct research on target audience and geographic areas • Develop Outreach and Marketing Plan for DHCS review • Update Outreach and Marketing plan with feedback from DHCS and send for final approval • Outreach and Marketing Plan created • Initiate Outreach and Marketing Campaign Dates: 11/29/21 – 1/30/22 -37- Office of the State Controller | Department of Health Care Services Opioid Response Media Campaign Final Review Report September 2025 Deliverable Deliverable Description Amount Delivery D17 6th Project Report to DHCS (12/01/22 – $23,000 March 2022 02/28/22): • Prepare and Submit to DHCS 6th Project Report o Outreach and Marketing Plan o Media o Website Development • Data collection and performance measure will include all requested information per the SOW -38- Office of the State Controller | Department of Health Care Services Opioid Response Media Campaign Final Review Report September 2025 Deliverable Deliverable Description Amount Delivery D18 7th Project Report to DHCS (03/01/22 – $23,000 June 2022 05/31/22): • Prepare and Submit to DHCS 7th Project Report o Outreach and Marketing Plan o Media o Website Development • Data collection and performance measure will include all requested information per the SOW Total Year 2 Intentionally left blank $4,950,760 Intentionally left blank -39- Office of the State Controller | Department of Health Care Services Opioid Response Media Campaign Final Review Report September 2025 Exhibit B – Attachment III Budget for Year 3 (07/01/2022 – 09/29/2022) Deliverable Deliverable Description Amount Delivery D19 Website Maintenance $15,074 August 2022 2 Months of maintenance for all campaign websites D20 Final Report to DHCS (06/01/22 – 08/31/22): $34,166 August 2022 • Prepare and Submit to DHCS Final Project Report o Outreach and Marketing Plan o Media o Website Development • Data collection and performance measures will include all requested information per the SOW. Total Year 3 Intentionally left blank $49,240 Intentionally left blank Grand Total Intentionally left blank $10,000,000 Intentionally left blank -40- Office of the State Controller | Department of Health Care Services Opioid Response Media Campaign Final Review Report September 2025 ATTACHMENT—DEPARTMENT OF HEALTH CARE SERVICES’ RESPONSE TO DRAFT REPORT -41- Office of the State Controller | Department of Health Care Services Opioid Response Media Campaign Final Review Report September 2025 -42- Office of the State Controller | Department of Health Care Services Opioid Response Media Campaign Final Review Report September 2025 -43- Office of the State Controller | Department of Health Care Services Opioid Response Media Campaign Final Review Report September 2025 -44- Office of the State Controller | Department of Health Care Services Opioid Response Media Campaign Final Review Report September 2025 -45- Office of the State Controller | Department of Health Care Services Opioid Response Media Campaign Final Review Report September 2025 -46- Office of the State Controller | Department of Health Care Services Opioid Response Media Campaign Final Review Report September 2025 -47- Office of the State Controller | Department of Health Care Services Opioid Response Media Campaign Final Review Report September 2025 -48- Office of the State Controller | Department of Health Care Services Opioid Response Media Campaign Final Review Report September 2025 -49- Office of the State Controller | Department of Health Care Services Opioid Response Media Campaign Final Review Report September 2025 End of report -50-