Audit Report on the Department of Health and Mental Hygiene’s Monitoring of Early Intervention Contractors

This audit determined the adequacy of the New York City Department of Health and Mental Hygiene’s (DOHMH) monitoring of contracted Early Intervention (EI) provider agencies’ provision of services, fiscal management, and compliance with EI Program regulations.

The New York State EI Program provides rehabilitative and support services to eligible infant and toddler children (aged 0-3 years) with developmental delays or disabilities and their families. EI services include occupational therapy, speech therapy, physical therapy, psychological services, family training, counseling, assistive technology, special instruction, transportation, and respite services.

DOHMH is responsible for the local administration, oversight, and fiscal management of the EI Program for eligible children who reside in New York City. DOHMH contracts with State-approved EI provider agencies to deliver most program services. Provider agencies employ staff and/or sub-contractors that directly service the children either at home or in a facility-based setting (i.e., daycare, hospital, etc.) according to their respective Individualized Family Service Plan. All service providers must be appropriately licensed in their respective field by the New York State Department of Health. DOHMH, through its fiscal agent, CSC Covansys Corporation (CSC), processes and pays provider agency billing claims for services rendered and seeks reimbursement from Medicaid, the State, and private insurance carriers for EI services delivered to eligible children and their families.

In Fiscal Year 2011, DOHMH had contracts with approximately 150 provider agencies to deliver EI services for approximately 34,000 eligible children and their families at a budgeted cost of $440.9 million, funded through a combination of State and City sources, and Medicaid and private insurance reimbursement.

Audit Findings and Conclusions

DOHMH has procedures and mechanisms in place to actively monitor EI provider agencies’ performance, fiscal management, and compliance with regulatory and contract requirements. These include monitoring visits and related follow-up carried out by the Bureau of Early Interventions’ (BEI) monitoring unit and independent audits of provider agencies performed by Certified Public Accountant (CPA) firms under contract with and overseen by the Audit Services Division. DOHMH’s monitoring activities are aligned with New York State EI program requirements and, for the period under review, DOHMH complied with its monitoring procedures. However, DOHMH needs to enhance its monitoring procedures to address certain control weaknesses disclosed by this audit, which may render ineffective some of the agency’s monitoring efforts.

Specifically, the audit found that BEI’s monitoring unit did not have a procedure to ensure that all provider agencies (including those for which risk was assessed as minor) were visited at some point over a period of time (e.g., once every two or three years). BEI’s monitoring unit also lacked evidence detailing the specific criteria that it used to select those provider agencies for which it performed monitoring visits during Fiscal Years 2009 – 2011. Accordingly, the audit was unable to assess the reasonableness of BEI’s selection criteria and determine whether they had been consistently applied, all applicable provider agencies selected, and monitoring visits performed. Further, as a routine practice, DOHMH did not obtain verification of service delivery from parents or caregivers or observe the performance of services during monitoring visits to confirm that the service sessions for which DOHMH was paying were actually provided. This weakness is of particular concern considering that in Fiscal Year 2011, DOHMH paid $437.5 million to provider agencies for services rendered.

Regarding the processing and payment of billing claims, the audit concluded that if all processes and functions work as described and designed, the controls built into CSC’s automated claims adjudication process would likely provide adequate monitoring over EI provider claims and payments in tandem with DOHMH EI Fiscal oversight. These controls and functions are intended to ensure that the submitted claims for services are authorized, complete, and fall within acceptable ranges. However, for the period under review, DOHMH had not required that CSC hire an independent CPA firm to review and attest to its operating environment and general controls. In consideration of these issues, DOHMH officials took action during the audit to address most of the matters discussed above.

Audit Recommendations

To address these weaknesses, the audit made six recommendations, including that DOHMH should:

• Develop a monitoring cycle (e.g., three- or four-year cycle) during which, regardless of risk, each provider agency will be assigned for a monitoring visit at least once each cycle. However, larger programs should continue to be visited more frequently.
• Require program evaluators to obtain verification or confirmation of provider service delivery from parents or caregivers and/or observe the performance of services while at a facility-based provider agency to obtain greater assurance that service sessions for which DOHMH was paying were actually provided.
• Require a Service Organization Control Report 2 level of assurance from CSC given the regulatory requirements concerning privacy and security and the significant volume and dollar value of provider agency claims and payments thereof.

Agency Response

DOHMH agreed with all six of the recommendations made in the audit report.