Audit Report On The Billing And Recording Of Ambulance Transport Fees By The Fire Department

AUDIT REPORT IN BRIEF

We conducted an audit of the billing and recording of ambulance transport fees by the Fire Department of the City of New York (FDNY). The FDNY is the primary provider of pre-hospital emergency care and ambulance transport of patients in New York City. Each year, the FDNY Emergency Medical Service (EMS) Command responds to approximately one million calls for medical assistance, resulting in 600,000 or more ambulance transports to hospitals.

On August 1, 2002, the FDNY contracted with Accordis, Inc. (Accordis), a division of HMS Holding Corporation, to provide medical billing, insurance determination, and collection services in regard to medical claims for ambulance transports. The goal of the contract was to create greater effectiveness in the billing and collection of transport fees and their related processes.

Audit Findings and Conclusions

A New York State Comptroller’s audit issued in 2000 noted many deficiencies in the FDNY billing and collection process of ambulance transport fees. The FDNY has made progress in addressing many of these deficiencies and has made improvements in the billing and collection processes. Specifically, the billing process has been made more efficient, backlogs in the processing and billing of transports have been reduced, revenues from transport-fee billings have increased, and collection procedures have been implemented. However, in an effort to optimize its revenue management and to further enhance efficiency in the billing of EMS transport fees, the FDNY should address certain weaknesses that we uncovered.

The FDNY lacks adequate controls over its accounts receivable to ensure that the total amount of outstanding ambulance transports fees are accurately reported. Consequently, the FDNY cannot be assured that its total accounts receivable are reported fairly, that collection efforts are correctly allocated, and that there is no further pursuit of account balances deemed uncollectible.

In addition, the FDNY and Accordis have not complied with or applied existing policies and procedures as they pertain to account adjustments and write-offs of delinquent debt deemed uncollectible. Also, the FDNY lacks adequate procedures to ensure the proper resolution of unapplied payments and to ensure the reconciliation, investigation, and resolution of differences resulting between reported bank cash receipts and payment postings. Further, the FDNY lacks adequate reports and measures to determine the accurate amount and age of its outstanding ambulance transport fees receivable, such as procedures to estimate uncollectible accounts and to state receivables at their net realizable value.

We also identified weaknesses in the pre-billing process of ambulance transports. The FDNY does not monitor or reconcile Ambulance Call Report (ACR) numbers to ensure that all such reports are accounted for and are subsequently processed and billed. We also noted that the FDNY does not have adequate procedures for monitoring Accordis’s performance.

Finally, we had concerns regarding Accordis’s information-processing controls. Accordis did not provide sufficient evidence to demonstrate that adequate disaster recovery plans were in place and that independent monitoring of its information-processing controls is conducted using such instruments as periodic audits, reviews, or surveys.

Audit Recommendations

To address these issues, we recommend that the FDNY should:

• Establish proper monitoring and controls over the receipt, return, and processing of the ACRs at all stages of the processing. Proper accounting should be given for ACRs that have not appeared in the billing system after a reasonable period.
• Develop and implement formal, written policies and procedures for monitoring and controlling ACRs throughout all stages, from distribution through to their final processing.
• Work with Accordis to develop a program to reconcile and identify missing ACRs.
• Ensure that ACRs are submitted to and processed by the Revenue Unit in a timely manner.

We also recommend that the FDNY, in conjunction with its vendor Accordis, should establish and implement formal, written procedures to ensure that:

• Closed accounts are appropriately adjusted in compliance with FDNY Business Rules so that account balances are accurately reported.
• The FDNY write-off policy and Business Rules are appropriately implemented with respect to account write-offs.
• All entries for unidentified payment remittances that remain on the unapplied report and that are not applied to patient accounts are appropriately resolved, controlled, documented, and reconciled on a periodic basis.

Further, we recommend that the FDNY should:

• Require monthly, aged accounts-receivable trial balances from Accordis. In addition to serving as a management tool to monitor and report total receivables, the report should also be used to monitor Accordis’s performance.
• Determine a reasonable estimate of uncollectible accounts in order to calculate the net realizable value of accounts receivable for reporting and management purposes. This estimate should be reviewed and updated periodically, based on historical data.
• Ensure that differences resulting between cash receipts reported by the bank and payment postings reported by Accordis are appropriately reconciled, investigated, and resolved.
• Implement formal, written procedures that clearly establish the FDNY Revenue Unit’s roles and responsibilities and set forth expectations (benchmarks), controls, and practices for monitoring vendor performance to ensure that Accordis’s activities are carried out efficiently and in a timely manner. These procedures should include ongoing monitoring and reporting on Accordis’s adherence to specified benchmarks.
• Implement a continuous measurement and monitoring system to continuously monitor and assess its own, as well as Accordis’s, operational effectiveness and performance under the contract. The system should incorporate measurable goals in terms of the FDNY-Accordis contract, and allow the FDNY to track, manage, and measure strategic and operational performance and provide feedback. It should also provide for ongoing examination and monitoring of compliance with contractual requirements.
• Require that Accordis develop a formal disaster recovery plan to ensure that FDNY data is adequately protected in the event of a disaster or unplanned disruption in operating capabilities.
• Require that Accordis provide annual verification of the review or testing of its disaster recovery plan.
• Require that Accordis provide verification of an annual independent review or audit of its information-processing controls.

FDNY Response

The matters covered in this report were discussed with FDNY officials during and at the conclusion of this audit. A preliminary draft report was sent to FDNY officials and discussed at an exit conference held on May 13, 2005. On May 27, 2005, we submitted a draft report to FDNY officials with a request for comments. We received a written response from FDNY officials on June 13, 2005. In their response, FDNY officials generally agreed with 12 of the 15 recommendations made in this audit and disagreed with the other three that were associated with the lack of controls over ACRs, the failure to enforce the FDNY write-off policy, and the implementation of formal written procedures that clearly establish the FDNY Revenue Unit’s roles and responsibilities.