Executive Summary

The objective of this audit was to determine whether the Department of Education (DOE or the Department) has adequate controls over payments to independent and contracted related-service providers who serviced school-aged students.

DOE is mandated by the Federal Individuals with Disabilities Education Act and the State Department of Education to provide special education services to students with disabilities from birth to age 21.  Children are referred for special education services through a DOE Committee on Special Education (CSE).  The CSE evaluates children referred to it and develops an Individualized Education Program (IEP) for each child found to need one that specifies the special education services to be provided.  Those services, called “related services,” may include physical therapy, occupational therapy, speech therapy and psychological counseling.

Related services can be provided by DOE staff, a DOE-contracted provider, or a non-contracted (independent) provider.  When a student requires related services, DOE first attempts to identify a DOE employee who can provide them.  If no suitable DOE employee is available, DOE seeks a contracted related-service provider.  It is the responsibility of DOE, either through a Borough Field Support Center or the CSE, to coordinate with a contracted provider to obtain the necessary services for the student[1].   If neither a suitable DOE employee nor a contracted provider is available, DOE issues a Related-Service Authorization to the family, which enables parents or guardians to secure the services set forth in the child’s IEP from an independent provider at DOE’s expense.

According to DOE, the agency paid $84,033,968 in Fiscal Year 2016 to 1,102 independent and contracted providers for related services for school-aged students[2].   The Mayor’s Management Report (MMR) indicates that 251,755 school-aged students were enrolled in special education in Fiscal Year 2016.

Audit Findings and Conclusion

We found that DOE does not have adequate controls over payments to related-service providers.  As a result, DOE was unable to provide reasonable assurance that related services billed to and paid for by the agency were adequately supported and actually provided.  Moreover, DOE’s payment review process, which might have found errors in billing and payments, was not consistently implemented or effectively designed.  In addition, we found that DOE’s process for confirming with parents and guardians that services were rendered was significantly flawed.  Thus, we found DOE’s processes were not an effective means of verifying that billed services were actually performed.  Further, the DOE’s Vendor Portal edit checks, which should have been designed to automatically reject certain billing irregularities did not provide adequate protection against vendors’ billing and receiving payment for duplicate and overlapping billing of related services.  Our review of the related-service billing data for Fiscal Year 2016 identified an estimated $131,913 in erroneous payments made to 597 providers resulting from (1) overlapping sessions billed by the same provider; (2) duplicate sessions billed by different providers; and (3) overlapping sessions billed by different providers.

Audit Recommendations

Based on the audit, we make nine recommendations, including:

  • DOE should ensure that its monthly review of payments for related services is conducted effectively and consistently, and that the process is properly tracked, documented and supervised.
  • DOE should establish time frames within which its monthly payment reviews must be completed, to ensure that reviews are conducted in a timely and effective manner.
  • DOE should consider modifying the parent verification process to facilitate responses, including:
    • sending parent verification letters in the language spoken in the household;
    • providing postage-paid, self-addressed reply envelopes with letters;
    • allowing persons to respond at their child’s school;
    • allowing persons to respond by phone;
    • selecting a sample of letters for follow-up calls by DOE; and
    • tracking returned mail and ascertaining current home addresses.
  • DOE should update the edit checks in the Vendor Portal to include data validation rules, so payments for duplicate and overlapping sessions can be avoided.
  • DOE should review the duplicate and overlapping payments uncovered in this audit and ensure that it recoups payments from providers for all inappropriate billing.
  • DOE should revise the existing validation rules in the Vendor Portal to ensure that they are properly designed and are working as intended. Those revisions should include assurances that students receiving services in school were present on the days that the services were billed.

Agency Response

In its response, DOE generally agreed with five recommendations, but qualified that agreement with regard to three of the recommendations, stating that it agreed “inasmuch as it reflects current practice.”  In addition, DOE disagreed with four recommendations, specifically, that it establish time frames for monthly payment reviews; conduct site visits to providers to request original timesheets; modify the parent verification process to facilitate responses; and review duplicate entries in DOE’s billing data identified during the audit to ensure that the vendors were not incorrectly paid.

[1]  Borough Field Support Centers provide integrated support to schools in instruction, operations and student services.

[2] Contracted providers can have multiple individuals who provide services to students.