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					                                      STATE OF NEW YORK
THOMAS P. DiNAPOLI                                                                 STEVEN J. HANCOX
                           OFFICE OF THE STATE COMPTROLLER                       DEPUTY COMPTROLLER
   COMPTROLLER                         110 STATE STREET                    DIVISION OF LOCAL GOVERNMENT
                                    ALBANY, NEW YORK 12236                   AND SCHOOL ACCOUNTABILITY
                                                                          Tel: (518) 474-4037 Fax: (518) 486-6479



                                             April 25, 2008


Mr. Edward Diana, County Executive
Members of the County Legislature
Orange County
255 Main Street
Goshen, NY 10924

Report Number: P6-7-19

Dear Mr. Diana and Members of the County Legislature:

A top priority of the Office of the State Comptroller is to help local government officials manage
government resources efficiently and effectively and, by so doing, provide accountability for tax
dollars spent to support government operations. The Comptroller oversees the fiscal affairs of
local governments statewide, as well as compliance with relevant statutes and observance of
good business practices. This fiscal oversight is accomplished, in part, through our audits, which
identify opportunities for improving operations and County governance. Audits also can identify
strategies to reduce costs and to strengthen controls intended to safeguard local government
assets.

In accordance with these goals, we conducted an audit of five counties within the Hudson Valley
region to determine if counties can achieve cost savings by better managing their Medicaid non-
emergency medical transportation (NEMT) operations. We included Orange County (County) in
our audit. Within the scope of the audit, we reviewed the County’s procedures and processes for
ensuring that transportation services are authorized prior to transport, only provided to eligible
recipients for Medicaid covered services, and the mode of transportation is the most appropriate
and least costly. The audit covered the period January 1, 2005 through December 31, 2005.

Following is a report of our audit of Orange County. This audit was conducted pursuant to
Article V, Section 1 of the State Constitution, and the State Comptroller’s authority as set forth
in Article 3 of the General Municipal Law.

This report of examination letter contains our findings and recommendations specific to Orange
County. We discussed the findings and recommendations with County officials and considered
their comments in preparing this report. The County’s response is attached to this report in
Appendix A. OSC comments on the County’s response are included in Appendix B. At the
completion of our audit of the other counties, we will prepare a global report that summarizes the
significant issues we identified at all of the counties audited.

Summary of Findings

The County could improve the procedures and controls that are in place to ensure recipients are
transported only to Medicaid-covered services and to ensure that recipients are transported using
the lowest cost mode of transportation. We identified $104,222 in potential cost-savings to the
County if transportation provided by ambulette, without valid medical necessity forms in place,
was provided at the next lower level of transportation. We found $9,889 in payments for
transportation to medical services that were identified as non-covered services under Department
of Health (DOH) and County guidelines. Also, we identified $38,776 in duplicate payments
made to vendors during September 2005, which the County could recover.

Background and Methodology

Non-emergency medical transportation is a ride, or reimbursement for a ride, provided so that a
Medicaid recipient with no other transportation resources can receive medical services from a
health care provider/facility. If a Medicaid eligible recipient is in need of medical services, but
cannot get to those services, transportation must be provided to the recipient. Transportation is
generally from the recipient’s residence to a medical facility or from a medical facility to another
medical facility. NEMT services include ambulance, ambulette, taxi, and public transportation
and may also include mileage reimbursement to the recipient or someone on behalf of the
recipient for use of a personal vehicle.

The County Department of Social Services (DSS) is responsible for authorizing recipient
eligibility for Medicaid and determining if the Medicaid recipient qualifies to receive NEMT
services; providing authorization prior to the transportation services being rendered; and
determining the appropriate and least costly mode of transportation suitable to the Medicaid
recipient’s needs. Although counties have flexibility in establishing the methods of
transportation, the County DSS is required to provide the least expensive mode of transportation
suitable for the Medicaid recipient’s needs.

In August 2004, seeking to address its rising annual expenses, the County issued a Request for
Proposals (RFP) for transportation brokerage services and also filed an application (through the
NYS DOH) with the Secretary of Health and Human Services for inclusion in the Federal “full
brokerage” waiver. 1 The County anticipated approval of the full brokerage waiver to be in place
by July 1, 2005 and, therefore, included in its RFP the provision for a six month “administrative
brokerage” arrangement to begin on January 1, 2005, anticipating the transition to a full

1
  The Federal waiver allowed the County to contract with a transportation broker and permitted the broker to
coordinate all types of transportation within the County, determine recipient eligibility, decide the mode and the
vendor for the recipient transport, negotiate the rates for service and pay the transportation providers directly. The
purpose of the waiver was to offer alternative methods of arranging transportation for Medicaid-eligible recipients
which would result in the most efficient and cost-effective management of medical transportation services. The
DOH encouraged counties to consider applying for a Non-Emergency Transportation Waiver as a best practice to
reduce transportation costs and to improve the delivery of transportation services for Medicaid recipients. The
State’s waiver expired on December 31, 2005.


                                                          2
brokerage system on July 1, 2005. The contract was awarded to a professional transportation
management company (Transportation Management Company) in October 2004.

In August 2005, the County learned that the Federal waiver would not be renewed for New York
State and decided to proceed with the transportation services contract under the administrative
brokerage system only. Under this arrangement, the Transportation Management Company
schedules all transportation through its call center, and transportation providers are paid directly
through the NYS Medicaid billing system (referred to as eMedNY). 2 The Transportation
Management Company performs a medical review of each transportation service request, screens
the caller to determine eligibility, and determines the most appropriate mode of transportation to
be used. The Transportation Management Company invoices the County for its administrative
costs, public transportation used by recipients, mileage reimbursements made to individuals for
use of their personal vehicles to transport eligible recipients, and monthly installment payments
for certain transportation vendors that have fixed-price contracts with the County. The County’s
Director of Program Integrity (Director) is responsible for the overall day-to-day operations of
the NEMT Program.

During our audit period, the Transportation Management Company arranged for all of the
County’s NEMT services including non-emergency ambulance, ambulette, multi-passenger van,
taxi, public transportation, approved transportation provided by private individuals for use of
their automobile, and transportation provided by extraordinary means, such as rail and
intra/inter-state bus. In addition, the Transportation Management Company arranged for
transportation outside of the common medical marketing area (CMMA) 3 and transportation for
non-medical transport of Medicaid traumatic brain injury (TBI) clients. According to data
obtained from the County DSS, Transportation Management Company and DOH, in 2005 the
County paid the Transportation Management Company an annual contract amount of $460,873,
for an estimated 232,613 NEMT transports at a total cost of $5,729,781.

Expense information for 2005 was compiled from the eMedNY payment records obtained from
DOH and from a summary of payments to the Transportation Management Company. Trip count
activity was compiled using DOH, Transportation Management Company and County
information. A breakdown of estimated total trips, associated costs by mode of transportation,
and average cost per trip follows.




2
  With the exception of payments for two fixed-price contracts with vendors for transportation services to the
Westchester Medical Center and to four dialysis centers that are paid by the County through the Transportation
Management Company
3
  The geographic area from which a community customarily obtains its medical care and services.


                                                      3
                                             Percentage                 Percentage     Average
                                                            Number
   Mode of Transport             Cost         of Total                   of Total      Cost per
                                                            of Trips
                                                Cost                      Trips         Trip
 Ambulance                       $287,350         5            3,139         1           $91.54
 Ambulette                     $1,726,474        30           39,946        17           $43.22
 Taxi                          $3,626,199        63         168,809         73           $21.48
 Van                              $49,541         1            4,782         2           $10.36
 Public Transportation             $6,427    Less than 1       5,204         2            $1.24
 Personal Reimbursement           $33,790         1          10,733          5            $3.15
 Totals                        $5,729,781                   232,613

We assessed internal controls relevant to our audit objective through interviews with DSS
officials and employees and staff of appropriate third parties. We reviewed policies and
procedures, and examined relevant documents and records. We also reviewed the County’s
system to process, record and report NEMT-related activities and costs, and examined payments
for NEMT to ensure that only legitimate, actual and necessary claims were paid. In addition, we
sent a survey to the County requesting the total cost for providing Medicaid NEMT services and
the total number of trips provided to Medicaid recipients, broken down by mode of
transportation. We attempted to verify the total cost and number of trips provided by the County
and to calculate the average cost per trip. However, as the result of deficient reporting systems,
we did not rely on trips and costs by mode of transportation that was self-reported on the survey.
Our audit relied on cost and trip count data provided not only by the County, but also data
supplied by the Transportation Management Company and DOH from the eMedNY payment
records.

We also evaluated the quality assurance mechanisms in place that ensure that only essential,
medically necessary transportation is provided. When we determined that the mode of
transportation was not the most cost-effective, and/or a recipient did not need the service, and/or
the recipient could have been transported by a less costly means, we calculated the reduction in
expenditures if the transportation was provided at the next lower level of service using the
average cost.

We reviewed the County’s bidding and RFP processes for awarding contracts for administration
and management of the NEMT operations. We then determined if the County is adequately
monitoring contractor performance and contract compliance.

We conducted this performance audit in accordance with generally accepted government
auditing standards (GAGAS). Those standards require that we plan and perform the audit to
obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and
conclusions based on our audit objectives. We believe that the evidence obtained provides a
reasonable basis for our findings and conclusions based on our audit objective.




                                                4
Audit Results

Management Oversight

Although the County contracts with a professional transportation management company for the
day-to-day administration of its NEMT operations, County officials are responsible for providing
adequate oversight over the NEMT Program and for monitoring contractor performance. The
Commissioner of Social Services (Commissioner) and officials could improve oversight over
the County’s NEMT operations.

Program Oversight — The Commissioner, through DSS, is responsible for administering the
NEMT Program. The Commissioner’s role generally includes providing policies, procedures and
guidance for the overall NEMT Program. This oversight responsibility also requires monitoring
adherence to rules and regulations governing the provision of Medicaid NEMT services, and
should include monitoring of Program activities and comparing actual results to intended
outcomes.

The Commissioner’s oversight over the County’s NEMT operation could be improved through
the establishment of written policies and procedures, more timely reporting of trip activity, and
implementation of monitoring procedures, such as performing a periodic comparison of
scheduled trip data to billed trips.

There is no evidence that the Commissioner has implemented policies and procedures for the
NEMT Program. The Commissioner informed us that NEMT Program operations are governed
by the State regulations and the County’s Transportation Plan. Although these documents
provide the overall plan and rules for the implementation of the County’s NEMT Program, they
do not provide detailed procedures for the Director and Transportation Management Company
responsible for and involved in administering the day-to-day activities of NEMT operations. For
example, there are no procedures in place by the County or Transportation Management
Company to withdraw or invalidate payment authorizations for trips that are cancelled or not
completed, which increases the risk for fraud and abuse.

Also, we found weaknesses in the reporting processes and internal controls in place with which
to adequately monitor the operations of the Program and ensure Program compliance. For
example, we found that there is no single source of operations data for the County’s NEMT
Program activities. 4 The system in place to report and monitor NEMT-related activities and
associated costs during the fiscal year relies on scheduled trip data, not completed trips. While
the reported cost information is based on actual payments processed, the basis for the trip count
activity is the Transportation Management Company’s monthly report of trips scheduled, not
completed. Consequently, the County’s use of the Transportation Management Company’s
report of scheduled trips (269,258) rather than the estimated number of completed trips
(232,613) resulted in an overstatement of trip activity for 2005, thereby diluting the cost per trip,

4
  NEMT Program cost information used for this audit was compiled from information obtained from eMedNY
payment records and a summary of the monthly payments made to the Transportation Management Company by the
County.


                                                    5
which, in turn, may have affected the evaluation of the NEMT Program. County officials stated
completed trip data is obtained from the DOH and used for the County’s Annual Report.
However, this data is generally not available until six months after the end of the fiscal year.
Also, the County has no procedure in place to reconcile the number of trips scheduled by the
Transportation Management Company to the completed trips billed by the transportation
vendors, which increases the risk for fraud and abuse.

Contract Oversight — Although the Commissioner is involved in the review of proposals and
negotiations of all transportation contract awards, reviews monthly data, and periodically meets
with contractors, we found that the Commissioner could improve his monitoring and evaluation
of contractor performance and compliance. The County contracts with the Transportation
Management Company for NEMT Program administration and with providers for transportation
services. The Transportation Management Company is required to provide the County with
monthly activity reports that list all details of trips scheduled, a summary of the trip activity
including number of completed and uncompleted trips, names of transportation providers and
count by mode of transportation.

The Transportation Management Company is responsible for receiving and scheduling
transportation requests from Medicaid-eligible recipients, determining eligibility, coordinating
transportation services, and providing activity reports to the County. The Transportation
Management Company provides monthly reports to the Director that include detailed trip data,
summaries of trips by mode of transportation, and trip information by provider. The Director
reviews the activity reports each month and randomly checks selected data in the reports to
verify accuracy, obtaining clarifying information from the Transportation Management Company
when needed. The Director in turn submits a monthly report to the Commissioner who provides a
monthly report to the County Legislature. However, this information is based on scheduled trips,
rather than completed trips or a completed trip count, which precludes reconciliation of
scheduled to completed trips.

The Director also receives copies of customer satisfaction surveys on a quarterly basis and all
recipient and service provider complaints on a monthly basis. However, the customer satisfaction
surveys and accompanying statistics supplied by the Transportation Management Company
revealed that the County is receiving information for only those surveys claimed to be received
by the Transportation Management Company, which were generally all positive in nature.

Other than two fixed-price contracts, the County does not execute written agreements with its
transportation service providers. Thus, County officials have little means with which to measure
contractor performance. The two fixed-price contracts include specified duties and requirements
that may be monitored, such as requiring that all vehicles used in the transportation of Medicaid
recipients comply with the requirements of the NYS Department of Transportation (DOT),
including periodic inspection, a complete list and description of all vehicles to be used, and a
requirement that providers be enrolled as Medicaid providers with the DOH. We believe that the
lack of contracts with transportation vendors is a significant control weakness that should be
addressed.




                                               6
Medical Services

Transportation must be made to and/or from a necessary medical service covered under the
Medicaid Program.

The County does not have procedures in place to ensure that eligible recipients are transported
only to a Medicaid-covered service, and did not ensure that transportation was made to and/or
from a necessary medical service covered under the Medicaid Program.

To determine if transportation was to and/or from a medical destination for a service covered
under the Medicaid Program, we obtained a County list of covered and non-covered services
from the Transportation Management Company and compared the list to the Transportation
Management Company’s year-end report of services rendered. We found that the Transportation
Management Company scheduled, and the County paid for, 145 trips at a cost of $5,290 for eight
types of service listed as “non-covered.” 5 We also found that the County paid $4,599 for 307
trips for Cardiac Rehabilitation which is listed as a covered service according to the County’s
listing, but defined as a non-covered service under DOH guidelines.

These discrepancies occurred as a result of the County’s reliance on the Transportation
Management Company to ensure that NEMT trips are for a medically necessary service. The
Transportation Management Company submitted monthly reports showing a description of the
transportation services scheduled, but it is not evident that the County routinely reviews the
purpose of the trips scheduled. Another reason for these discrepancies is that there is no list of
Medicaid-covered and non-covered transportation services provided to the County by DOH.
According to DOH officials, there is no official list of Medicaid-covered transportation services
that has been produced by the State. The lack of monitoring of the Transportation Management
Company’s activity could result in the County paying for transportation to medical services not
covered under the Medicaid Program.

Least Costly Method of Transport

The County is required to provide transportation services that are the most appropriate for the
recipient’s medical needs, and to ensure that an adequate but less costly means of transportation
cannot be obtained. According to Social Services regulations, if a recipient’s medical condition
necessitates the use of an ambulette, the request for prior authorization for transportation by
ambulette generally must be supported by the order of an ordering practitioner or an authorized
person, and the ordering practitioner must create and retain documentation in accordance with
such regulations. 6 Moreover, if a recipient is transported outside the geographic area of his or her
community, the medical service provider must document why this was necessary. A recipient
may be transported outside of his or her geographic area when the needed medical services are
not available within the geographic area or when it is necessary to continue ongoing treatment
with a specific medical provider. The County should have procedures in place to ensure that the
least expensive mode of transportation that is suitable to the needs of the recipient is used.

5
  Abortion, Alcoholics Anonymous meetings, Chiropractor, Lamaze classes, round-trip transport to a Pharmacy,
Vocational Rehabilitation, Weight Control Programs, and WIC appointments.
6
  See 18 NYCRR 505.10 [b] [15], [c] [2], [c] [4].


                                                     7
The County does not have sufficient controls in place to ensure that transportation services are
the most appropriate for a recipient’s medical needs.

County officials indicate that, with the exception of dialysis patient transports and certain routine
and recurring transports, (e.g. transportation to and from a nursing home, transportation of
traumatic brain injury clients), medical necessity forms are required for all ambulette
transportation. 7 The County relies on the Transportation Management Company to obtain the
necessary documentation to support and justify this level of need. To verify that recipients could
not be transported by a less costly means, we tested 50 ambulette transports scheduled by the
Transportation Management Company in June 2005 and excluding these transports where the
County does not require forms, looked to see whether medical necessity forms were on file to
support the need for this mode of transportation. Where medical necessity forms were not on
file, we calculated the reduction in trip cost if the recipient had been transported by the next
lower level of transportation using the average cost of taxi service. Of the 50 trips scheduled
through the Transportation Management Company for 49 clients, six trips (12 percent) costing
$753 were scheduled without evidence of a valid medical necessity form. While a medical
necessity form documents a recipient’s medical need, the absence of a form does not necessarily
indicate that the higher mode of transportation was not needed. However, without medical
necessity forms as required by the County, it is difficult to determine what the most appropriate
mode of transportation should be. Using the average cost of $21.48 for taxi service as a lower
level of transport, we calculated expenditures totaling $600 that may have been unnecessarily
incurred as the result of the Transportation Management Company providing a higher level of
transportation than may have been needed.

If 12 percent of the total number of ambulette trips provided during the 2005 fiscal year did not
have medical necessity forms on file there is a risk that the County incurred unnecessary
expenditures of $104,222, as illustrated below.


         2005 Ambulette trips                                                                      39,946
         Percentage of sample without medical necessity forms                                          12
         Potential number of annual trips not requiring ambulette service                           4,794

         2005 Average cost for ambulette trip                                                      $43.22
         2005 Average cost for taxi trip                                                           $21.48
         Excess cost of ambulette over taxi                                                        $21.74

         Risk of overpayment ($21.74 X 4,794 trips)                                             $104,222
The
County is relying on the Transportation Management Company to obtain the necessary

7
  We note that, pursuant to social service regulation (18 NYCRR 505.10 [d] [4]), it appears that an order supporting
the request for ambulette services is required for all patients, and that the regulation does not, on its face, permit
exceptions for certain groups, such as dialysis patients, nursing home residents or traumatic brain injury clients. We
suggest that the County contact the DOH to ascertain whether their current practice is in accordance with applicable
regulations.


                                                          8
documentation to support and justify this level of need. However, the County does not conduct
any review to ensure that proper documentation is obtained according to applicable regulations
and to ensure that the least costly method of transport is being used.

Failing to have quality assurance mechanisms in place could result in the County paying for
transportation that is not essential, medically necessary, and/or appropriate using the least costly
mode of transportation, which ultimately may result in higher costs to the County. The lack of
monitoring by the County of the Transportation Management Company’s approval of ambulette
use, without the proper documentation to support and justify this mode of transport, could result
in unnecessary and higher transportation costs to the County.

Further, we also noted that the Transportation Management Company’s call center procedures
conflict with County and “scope of services” protocols. The Transportation Management
Company’s call center is used by recipients to arrange transportation services. The Director was
not aware that call center procedures did not initiate the intake process by inquiring about
personal vehicle transportation — the least costly mode of transport. The number of transports
that were scheduled using a more expensive mode of transportation through the use of the
Transportation Management Company’s procedures is indeterminable. The lack of monitoring
contractor performance and the absence of a quality assurance mechanism to ensure no other
transportation service is available for free could result in unnecessary and higher transportation
costs to the County.

Payment of Claims

Payments may only be made for Medicaid-eligible individuals receiving NEMT transportation to
medical services covered under the Medicaid Program. We found deficiencies in payments to
providers that were made outside the eMedNY process and could not verify the accuracy of
mileage computations and rates paid for a sample of out-of-County trips.

Transportation Service Providers — Other than two fixed-price contract holders, transportation
service providers bill to and are paid through the eMedNY system for completed trips, at
authorized rates. NEMT Program transportation service providers are required to submit an
electronic claim form for payment using a prior authorization number assigned for each trip
approved.

During the audit period, there were three instances where transportation service providers were
paid outside of the eMedNY process, resulting from complications with the County’s conversion
to a brokerage system and inherent problems with transitioning to a new electronic payment
system implemented by New York State. To eliminate a backlog of outstanding unpaid service
provider claims, the County approved moneys to be disbursed to the Transportation Management
Company in the amounts of $397,988, $39,908 and $90,177 in May, June and September 2005,
respectively, for the Transportation Management Company to pay the claimants directly.




                                                 9
From the September 2005 remittance to 10 vendors, in the amount of $90,177, we tested 63
claims having an associated cost of $2,514 and found that 27 of the 63 claims (43 percent) were
also paid through eMedNY in the amount of $1,008. This resulted in duplicate payments being
made to providers for the same claims that were paid by the County. If 43 percent of the total
amount paid directly to providers by the County was found to be overpayments, there is a risk
that the County incurred unnecessary expenditures totaling $38,776. The Director advised us that
she reviewed the payment status for each claim in the eMedNY system prior to approving their
disbursement. County officials affirmed to us that at the time the County disbursed these funds,
the eMedNY system reported that no payments had been disbursed by New York State.

Transportation Expenses — NEMT transportation expenses are defined by regulation as the costs
of transportation services and meals and lodging incurred when a recipient is going to and
returning from a provider of medical care and services when distance and travel time require
these costs. 8 Among other things, payment for transportation expenses should be made only
when prior authorization has been obtained and the least cost by mode of transportation is used.
Transportation should take place within the CMMA, as with few exceptions, the County is not
required to provide or pay for transportation for medical care and services outside the CMMA
when the same care and services are available locally.

The Transportation Management Company receives all requests for pre-approvals for
reimbursable transportation claims including claims for mileage reimbursement. The
Transportation Management Company also coordinates out-of-area travel and schedules it
accordingly, subject to its intake procedures and questions. The Transportation Management
Company submits a list to the County of the approved personal mileage reimbursement claims as
part of the Transportation Management Company’s monthly invoice. The Transportation
Management Company pays all claims for reimbursement.

Out-of-county trips represent 7 percent of total fiscal year 2005 trips reported by the
Transportation Management Company to the County. Transportation for out-of-county trips
included ambulance, ambulette, taxi and personal vehicles. Claims for 20 trips with an associated
cost of $1,448.74 were tested to verify the accuracy of mileage computations and rates paid. Of
the 20 claims tested, three (15 percent) could not be reconciled using approved mileage
reimbursement rates. Two of the three claims were for bus trips that did not contain sufficient
data to test, and one claim for taxi transport was overpaid by $54.85. We sought an explanation
for the overpayment and were advised by the Transportation Management Company that the
claim included “unloaded mileage,” which is not a reimbursable expense according to DOH
guidelines. Despite this, the “unloaded mileage” payment was approved by the Transportation
Management Company. The County was not made aware of this deviation until inquiry was
made as part of this audit. Further, there is no County process in place to routinely verify that the
trips actually took place. The Director advised us that recipient and trip data is reviewed and
randomly verified; however, we found no formal procedure in place for routine audit.

Without strong internal controls, transportation claims are more susceptible to fraud, waste, and
abuse. Strengthening controls over the processing and approval of transportation claims could
result in potential cost savings to the County.
8
    See 18 NYCRR 505.10 [b] [20]


                                                 10
Recommendations

1. The Commissioner should improve NEMT Program and contract oversight to ensure the DSS
   is operating within State guidelines and is providing the most cost-effective NEMT services.

2. The Commissioner should establish formal NEMT contract monitoring procedures which
   should include verifying trip data as reported by the Transportation Management Company to
   gain some assurance as to the accuracy of the data reported and used to properly manage
   NEMT operations.

3. The Commissioner should establish procedures to ensure that all transportation is to and/or
   from a necessary medical service paid for under the Medicaid Program. Also, the
   Commissioner should provide the Director and the Transportation Management Company
   with a list of services that are covered under the Medicaid NEMT Program.

4. The Commissioner should establish procedures to ensure that the transportation is the most
   appropriate for the recipient’s medical condition and the least costly mode of transportation
   is being used. Procedures should include requiring the Director to ensure that established
   intake protocols are followed and to periodically test ambulette transportation arranged by
   the Transportation Management Company to verify that adequate documentation is on file to
   support and justify this level of service.

5. The Commissioner should identify and recover overpayments made to providers that were
   paid outside the eMedNY process.

6. The Commissioner should establish procedures to ensure that mileage reimbursements are
   supported and made at approved rates.

The County Board of Legislators has the responsibility to initiate corrective action. Pursuant to
Section 35 of the General Municipal Law, the County Board should prepare a plan of action that
addresses the findings and recommendations in this report, forward the plan to our office within
90 days, and make the plan available for public review in the office of the Clerk of the County
Board of Legislators. For guidance in preparing the plan of action, the Board should refer to
applicable sections in the publication issued by the Office of the State Comptroller entitled Local
Government Management Guide. Our Office is available to assist you upon request. If you have
any questions, please contact our Albany Regional Office at (518) 438-0093

                                             Sincerely,



                                             Steven J. Hancox
                                             Deputy Comptroller
                                             Division of Local Government
                                             and School Accountability




                                                11
                               APPENDIX A

      RESPONSE FROM ORANGE COUNTY OFFICIALS
The County officials’ response to this audit can be found on the following pages.




                                       12
                                        APPENDIX B

         OSC COMMENTS ON THE COUNTY OFFICIALS’ RESPONSE
In response to concerns raised and observations made about our audit in the Commissioner’s
response letters, we provided the following information.

Note 1

These concerns are addressed in Notes 3 and 5.

Note 2

The system in place to report and monitor NEMT-related activities and associated costs during
the fiscal year relies on scheduled trip data, not completed trips. County officials stated that
completed trip data is obtained from the DOH and used for the County’s Annual Report;
however, this information is generally not available to the County until six months after the fiscal
year has ended. We believe that the County should be accessing and reviewing completed trip
data throughout the year in order to more closely monitor the NEMT Program as well as to
ensure that the data they are using is accurate and up-to-date. We requested and the County
completed a survey document reporting the number of NEMT trips and associated costs for the
fiscal year 2005. We also requested and were provided with the County’s reconciliation
worksheet used to develop the year-end reporting for NEMT trips provided during the fiscal year
2005. We found that the survey information self-reported by the County was incomplete and
inconsistent (e.g., “emergency” ambulance transport costs were included and trip count was
excluded). To conduct our audit, we subsequently requested pertinent information from the
DOH, and the Commissioner (in late fiscal year 2007) ultimately recommended that we use the
information obtained from the DOH for audit purposes as the County’s access to payment data is
not always up-to-date and accurate, demonstrating that there is no single source of operations
data for the County’s NEMT Program activities and associated costs. Furthermore, we disagree
with the County’s assertion that using scheduled trip data does not dilute the average cost per
trip. While the County asserts that “data for no shows, cancellations and other not completed trip
information” is included in the final analysis of the average cost per trip and is used to measure
contractor performance, we were provided no evidence to support this.

Also, we disagree with the assertion that “costs, work flow and performance of the County is
based on their ability to schedule trips not complete trips, as completing trips becomes the
obligation of the Medicaid provider and the Department of Health.” According to the NYS
Medicaid Program Transportation Manual Policy Guidelines, the prior authorization official
accepts conditional liability for payment of the recipient’s transportation costs.

Note 3

We disagree with the assertion that “activities that regulate fraud, waste and abuse are not
permitted by counties…”. The County does not cite to, and we were unable to locate, any statute
or regulation that prohibits them from regulating such activities. Rather, under section 365-h of


                                                 24
the Social Services Law, one of the responsibilities of the local social services official is to
“maintain quality assurance mechanisms”. Furthermore, pursuant to Section 365-b of the Social
Services Law, “… each professional director shall be responsible for monitoring the professional
activities…of providers practicing in his social services district, and shall take all steps required
or authorized by law or regulation to ensure that such activities are in compliance with
[applicable laws].” Since County officials entrusted with public resources, they are responsible
for complying with laws and regulations, meeting goals and objectives, and safeguarding assets.
Implementing internal control activities (both preventive and detective internal controls) can help
ensure that this is done effectively. Detective controls include periodic reconciliations and
reviews of performance. Failing to reconcile actual trips to scheduled trips increases the risk that
the County may pay for services that have not been rendered.

Note 4

We have amended our report based on the information submitted.

Note 5

We disagree with the assertion that the County is prohibited from entering into contracts with
transportation providers. Pursuant to regulation 18 NYCRR 505.10 [e] [6], transportation…
providers who participate in the Medicaid Program must meet certain “basic” criteria. For
example, taxicab and livery services must comply with all requirements of the municipality in
which they operate and with all requirements of the Department of Motor Vehicles, such as the
possession of a valid driver’s license, an operating certificate and/or a current vehicle
registration. As previously noted, County officials entrusted with public resources are
responsible for complying with laws and regulations, meeting goals and objectives, and
safeguarding assets. A contract explicitly denotes the terms and conditions agreed upon for
services to be rendered. The absence of a written agreement with transportation service providers
hinders the County’s ability to articulate performance standards with which to monitor contractor
performance and enforce compliance, which increases the risk that service providers may not
meet the County’s performance expectations. The existence of such contracts with certain
transportation vendors would not prevent vendors without such contracts from participating in
the NEMT Program. Rather, the County would be able to continue scheduling trips with all
transportation vendors willing to participate in the Program.

Note 6

We have amended our report based on the information submitted.

Note 7

We disagree with the County’s assertion. Pursuant to State law, Counties are required to provide
transportation services to Medicaid recipients where “such transportation is essential, medically
necessary and appropriate to obtain medical care….” In determining whether to authorize
payment of transportation expenses, the prior authorization official must consider, among other
criteria, whether the recipient can be transported by use of a private vehicle or by means of mass



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transportation, in which case prior authorization for such transportation expenses may be denied
(18 NYCRR 505.10 [d] [7] [i]). In order to properly determine the least costly mode of
transportation that a recipient can use, we believe that the County or Transportation Management
Company should inquire about personal vehicle transportation and/or mass transportation during
the intake process. Furthermore, with respect to non-emergency ambulance transportation,
ambulette or invalid coach, the request for prior authorization “must be supported by the order of
an ordering practitioner” or someone who is authorized to submit an order on behalf of the
ordering practitioner (18 NYCRR 505.10 [d] [4]). With respect to the County’s assertion that,
pursuant to regulation, they are only required to reassess mode of transportation on an annual
basis with established clients, we note that we were unable to locate such a regulation. We
suggest that the County contact the DOH to ascertain whether their current practice is
appropriate.

Note 8

OSC provided County officials with the information requested.

Note 9

We have amended our report based on the information submitted.

Note 10

OSC provided County officials with the information requested.

Note 11

At the onset of our audit, County officials informed us that, with the exception of dialysis patient
transports, medical necessity forms were required for all ambulette transportation, and that the
County relies on the Transportation Management Company to obtain the necessary
documentation to support and justify this level of need. Our testing, therefore, sought to find
evidence of a medical necessity form for all recipient transports, excepting recipients who had
received dialysis transport. During our testing, auditors provided officials from both the County
and Transportation Management Company with a list of the test sample recipient transports
requesting medical necessity forms for same. Through the Transportation Management
Company, we were provided with 18 of the 50 requested forms, however, forms for the
remaining 32 transports were not provided. Neither County nor Transportation Management
officials informed auditors of the existence of any circumstance which may have exempted the
County from complying with their own procedures in requiring medical necessity forms to be on
file. Thus, we based our conclusions on the representation of a County official that, excepting
transports for dialysis patients, all ambulette transportation should be supported with the
appropriate documentation.




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In their response, the County indicated that for certain routine and recurring transports (e.g.,
transportation to and from a nursing home, or transportation of TBI clients), the County does not
believe it must obtain medical necessity forms for transportation by ambulette. 9 We reexamined
our audit conclusions assuming no medical necessity form was required in these instances and
ultimately concluded that six of the 50 transports tested lacked the necessary documentation to
support and justify the level of need for ambulette transportation. While the County asserts that a
disability code in the eMedNY system verifies the recipient’s disability” and therefore, “allows
for ambulette transportation,”… during the audit period, we were not provided with and did not
review any information relating to these disability codes. As such, we are unable to determine
whether a disability code, in and of itself, is sufficient to support a request for ambulette services.
For example, if the disability code merely identifies the recipient’s medical disability without
also taking into account other relevant information, such as the functional ability and
independence of the particular recipient, the disability code may be insufficient to support a
request for ambulette services since the degree of incapacitation caused by a particular disability
can vary from person to person with the same disability, (e.g., a disabled blind/vision-impaired
recipient may be very capable of using public transportation).

We have amended our report based on the information submitted and re-evaluation of the test
findings and audit conclusion.

Note 12

We do not completely agree with the County’s assertion that the findings noted in the audit
report are incorrect because the process by which the mileage was calculated was incorrect.

Of the 20 claims tested (for 11 Orange County and nine out-of-county residents), six could not
be reconciled using approved mileage reimbursement rates:

    •    Two claims were for bus trips (for one County and one out-of-county resident) that did
         not contain sufficient data to test. Consequently, we were unable to perform any
         calculation at all to verify the accuracy of the charges.

    •    Two claims for taxi transportation were overpaid by a total of $56.34. In both cases, the
         recipients who were transported were Orange County residents, and both were
         transported from an out-of-county location. We were advised by the Transportation
         Management Company that one of the claims included $54.85 for “unloaded mileage,”
         which is not a reimbursable expense according to DOH guidelines. We have amended our
         reported based on the information submitted.




9
 As previously noted, pursuant to Social Service regulation (18 NYCRR 505.10 [d] [4]), it appears that an order
supporting the request for ambulette services is required for all patients, and that the regulation does not, on its face,
permit exceptions for certain groups, such as dialysis patients, nursing home residents or traumatic brain injury
clients. We suggest that the County contact the DOH to ascertain whether their current practice is in accordance with
applicable regulations.


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   •   Two claims were underpaid by a total of $29.40. In both cases, the recipients who were
       transported (one by ambulance and one by para-lift) lived in out-of-county nursing
       homes. We have amended our report based on the information submitted.

Note 13

In their original response, County officials “agree with the draft report in regards to the apparent
duplication of payments for specific claims that the County paid through a Schedule E payment.”
County officials only asked that we clarify in the report that these payments were made with
permission from the DOH, which we did (see Note 9). Nowhere in the initial response letter does
the County “include a series of objections to process used to determine the County’s liability as
well as an objection to the dollar amounts noted.” County officials provided us with no
additional information to substantiate their claim that less than $15,000 needs to be reviewed
more carefully.




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