Selected Reports issued by the Office of the State Comptroller during the week ending January 16, 2016
Click on text highlighted in color to access the full report
Erie County Community College - Audit Highlights
DiNapoli’s auditors discovered during the period of September 2010 through February 2015, college officials created 10 senior executive positions with annual salaries averaging $75,600 and totaling $756,000 without written authorization from the board of trustees. The college also provided these employees with benefits including health insurance and retirement benefits with an annual cost of more than $200,000.
As noted in the audit, college officials also made questionable compensation payments to two senior executives totaling $77,000 and increased the salaries of all senior executives by 2 percent, totaling $27,000, again without board approval.
According to State University of New York regulations governing community colleges, the ECC board lacked authority to delegate the power to establish salaries and approve raises.
The Comptroller’s audit also revealed:
The leave records of senior executives were inaccurate and, as a result, executives accumulated $25,000 worth of leave time they were not entitled to;
A retired executive cashed out an overstated leave balance upon separation, resulting in a $2,500 overpayment;
The college paid 11 professional service providers a total of $440,000 without using requests for proposals (RFP) or other required competitive processes;
The college did not enter into written contracts with eight professional service providers for services totaling $342,000, as required; and
Financial transactions between the college and the Erie Community College Foundation and the Auxiliary Services Corporation of Erie Community College were not documented properly or conducted in a transparent manner.
The Comptroller made a series of recommendations to ECC to improve oversight, accountability and transparency of college operations.
Recommendations to the board of trustees include:
Ensure significant financial decisions such as the creation and funding of new positions are conducted in an open and transparent manner;
Authorize all salaries, compensation and fringe benefits provided to senior executives;
Adopt comprehensive time and attendance policies for senior executives;
Enter into written contracts with professionals establishing the services to be provided, the time frames for those services and the basis for compensation;
Ensure that written agreements with affiliated entities stipulate how performance will be measured and evaluated; and
Review student activity fee allocations provided to and used by clubs and organizations to determine whether the amount of the fee is appropriate and necessary.
Additional recommendations to college administrators include:
Ensure that all official action taken by the board, including actions pertaining to salaries and benefits, are recorded in the board minutes;
Procure professional services using a competitive method such as an RFP process; and
Review documentation to verify that the college has obtained state contract pricing.
Although ECC officials did not agree with all of the audit findings, it was indicated the board of trustees has already taken action to address a number of recommendations made in the report.
The audit report and the college’s response are posted on the Internet at: http://www.osc.state.ny.us/localgov/audits/colleges/2016/eriecommunity.pdf
State audits released
Dept. of Health - Suspicious and Fraudulent Medicaid Payments to Affiliated Brooklyn Dentists – Follow-Up F-24
An initial audit issued in April 2013, identified about $2.3 million in highly suspicious and possibly fraudulent Medicaid claims that were submitted by the six affiliated dentists. The affiliated dentists created false entries in medical records to support claims, and that it was not possible to perform all of the procedures the dentists billed in relation to the hours their offices were open. In addition, the dentists paid staff to recruit Medicaid recipients to their offices. In a follow-up, auditors determined DOH made progress in addressing the problems identified in the initial audit report. At the time of the follow-up review, the state was paid $681,336 in restitution. Additionally, four dentists were removed from the Medicaid program and the remaining two dentists were prohibited from receiving Medicaid payments.
Dept. of Health – Medicaid Program: Overpayments of Ambulatory Patient Group
An initial audit issued in August 2013, identified flaws in DOH’s eMedNY claims processing system that allowed improper APG payments on 6,615 claims totaling $1,204,186. Auditors also identified $933,399 in duplicate payments that were made to providers for the same services under both the old and the new (APG) payment methodologies. Furthermore, auditors identified 56,241 claims totaling $4,286,603 that were at risk of duplicate payment and needed to be reprocessed using the new APG methodology. In a follow-up, auditors found DOH has made significant progress in implementing the recommendations made in the initial audit, which included recovering nearly $898,000 in overpayments and implementing new claims processing controls to prevent future improper payments.
United HealthCare Insurance Co. of NY – Empire Plan Drug Rebates
In accordance with its contract, United is required to negotiate agreements with drug manufacturers for rebates, discounts, and other considerations and pass 100 percent of the value of the agreements on to the prescription drug program. United subcontracted key functions of the prescription drug program to Medco Health Solutions, which was subsequently bought by Express Scripts Holding Company. Auditors found United did not credit the state $371,635 in rebates because manufacturer agreements utilized to obtain rebates for the Empire Plan’s prescription drug program did not meet or exceed Express Scripts’ best existing rebate agreements for other clients, as required. Express Scripts did not invoice, collect, or allocate $196,845 in rebates due to errors in the rebate process, and Express Scripts retained rebates of $141,804 despite its contractual requirement to remit those funds.
NYS Health Insurance Program – Empire BlueCross BlueShield – Selected Payments for Selected Items Follow-Up F-21
An initial audit issued in December 2013, found that Empire did not have adequate controls to ensure special items were paid according to contract provisions. As a result, from January 1, 2012through June 30, 2012, Empire made a net overpayment of $391,894 on 81 claims for special items. In a follow-up, auditors found Empire made considerable progress in implementing the recommendations made in the initial audit report, which included recovering $368,917 in overpayments.
NYS Health Insurance Program – Empire BlueCross BlueShield – Selected Payments for Selected Items Follow-Up F-22
During the six-month period July 1, 2012through December 31, 2012, Empire made a net overpayment of $898,541 on 96 claims from hospitals that had contracts with Empire that limited the amounts that should have been charged for special items. In a follow-up, auditors found Empire officials made considerable progress in implementing the recommendations made in our initial audit report, which included recovering $639,896 in overpayments.
Department of Health – Medicaid Overpayments
Medicaid made $1.6 million in actual overpayments and up to $5.3 million in potential overpayments because separate payments were made for recipients transferred among merged or consolidated facilities. Since the recipients were transferred between merged or consolidated facilities only one payment should have been made. DOH did not enforce their regulations regarding Medicaid reimbursements for hospital transfer claims among merged or consolidate facilities. Further, DOH lacks an automated mechanism to identify merged hospitals and, as a result, it cannot readily detect or prevent inappropriate payments for inpatient transfers among these facilities.
Special Education Services Audits
In 2013, the state enacted legislation requiring the Comptroller to audit the expenses reported to the State Education Department by every program provider of special education services for preschool children with disabilities at least once by March 31, 2018. On January 15, 2016, New York State Comptroller Thomas P. DiNapoli announced that the following audits have been issued:
Mid Island Therapy Associates; Compliance with Reimbursable Cost Manual
For the three fiscal years ended June 30, 2013, auditors identified $655,055 in reported costs that did not comply with SED requirements and recommend such costs be disallowed. These ineligible costs included $621,191 in personal service costs and $33,864 in other than personal service costs.
Kew Gardens SEP Inc.; Compliance with Reimbursable Cost Manual
For the three fiscal years ended June 30, 2013, auditors identified $295,997 in reported costs that did not comply with SED requirements and recommend such costs be disallowed. The ineligible costs included $283,649 in personal service costs and $12,348 in other than personal service costs.
Just Kids Early Childhood Learning Center, Compliance with Reimbursable Cost Manual
For the three fiscal years ended June 30, 2014, auditors identified $417,994 in reported costs that did not comply with SED requirements and recommend such costs be disallowed. These ineligible costs included $229,117 in personal service costs and $188,877 in other than personal service costs.
Words ‘N Motion Special Education Programs, Compliance with Reimbursable Cost Manual
For the three fiscal years ended June 30, 2013, auditors identified $135,174 in reported costs that did not comply with the Manual’s requirements, and we recommend such costs be disallowed. The ineligible costs included $64,790 in personal service costs and $70,384 in other than personal service costs.
For the three fiscal years ended June 30, 2013, auditors identified $135,174 in reported costs that did not comply with the Manual’s requirements, and we recommend such costs be disallowed. The ineligible costs included $64,790 in personal service costs and $70,384 in other than personal service costs.
Kid’s-Centric, Inc., Compliance with Reimbursable Cost Manual
For the three fiscal years ended June 30, 2013, auditors identified $301,601 in reported costs that did not comply with Manual requirements and recommend such costs be disallowed. These ineligible costs included $139,267 in personal services costs and $162,334 in other than personal service costs.
United Community Service, Inc., Compliance with Reimbursable Cost Manual
For the three fiscal years ended June 30, 2014, we identified $207,295 in reported costs that did not comply with the Manual’s requirements and recommend such costs be disallowed. These ineligible costs included $154,991 in personal service costs and $52,304 in other than personal service costs, as follows:
Orange County Cerebral Palsy Association, Compliance with Reimbursable Cost Manual
For the fiscal year ended June 30, 2013, Inspire claimed $226,382 in ineligible costs for its six rate-based preschool special education programs, including $149,768 in personal service costs and $76,614 in other than personal service costs.
Newmeadow, Compliance with Reimbursable Cost Manual
For the fiscal year ended June 30, 2014, auditors identified $12,059 in costs charged to the preschool special education programs that did not comply with SED’s requirements for reimbursement. The non-reimbursable costs included $3,897 in personal service costs and $8,162 in other-than-personal-service costs. Auditors also found unreported less-than-arm’s-length relationships that Newmeadow should have disclosed.
Story Place Preschool, Inc., Compliance with Reimbursable Cost Manual
For the year ended June 30, 2014, auditors determined Story Place reported $5,150 in personal service costs that did not comply with SED’s requirements for reimbursement.
Rivendell School, Compliance with Reimbursable Cost Manual
For the three fiscal years ended June 30, 2014, auditors identified $536,449 in reported costs that did not comply with SED requirements and recommend such costs be disallowed. These ineligible costs included $70,644 in personal service costs and $465,805 in other than personal service costs. http://osc.state.ny.us/audits/allaudits/093016/15s25.pdf
Municipal Audits
Town of Elmira – Financial Condition
Town of Hunter – Cash receipts and Board oversight
Town of Irvington – Selected financial activities
Long Island Workforce Housing – Local Governments compliance with the Act
Syracuse Industrial Development Agency – Project Approval and Monitoring and Administration of the Development Fund
School Audits
Inlet Common School District – Claims auditing
Lockport City School District – Monitoring transportation contracts and costs
Morris Central School District – Financial operations
Putnam Central School District – Budgeting
Springville-Griffith Institute Central School District– Financial Management
Three Village Central School District– Fuel inventories