Letter Report on the Department of Health and Mental Hygiene’s Fiscal Monitoring Practices Over the Prison Health Services

On December 19, 2000, New York City Health and Hospitals Corporation (HHC) awarded a contract to Prison Health Services, Inc. (PHS), to provide health care services to approximately 14,000 inmates held daily in the custody of the New York City Department of Correction (DOC). On April 15, 2003, the existing agreement between HHC and PHS was assigned to the Department of Health and Mental Hygiene (DOHMH) for the term of July 1, 2003, to December 31, 2004. PHS was awarded another contract in 2005, which was renewed in 2008 and further extended in 2010. Our review covered the 2010 agreement, which was in effect from January 1, 2011, through the December 31, 2012, contract extension period. Under the agreements, PHS was, and still is, responsible for providing a variety of health services to New York City inmates such as health examinations during the intake process, care for inmates and follow-up visits, laboratory and pharmacy services, specialty and emergency care, chronic condition care, and substance abuse treatment. PHS was paid $250,801,798 out of the total maximum reimbursable amount of $309,525,039 in accordance with the 2010 agreement for the period January 1, 2011, through December 31, 2012.

This audit determined how effective DOHMH practices are in ensuring that it was billed accurately by PHS for Personal Service (PS) and Other Than Personal Service (OTPS) costs.

Results

We found that DOHMH adequately monitors the fiscal aspect of the PHS contract. In that regard, DOHMH reviews monthly expense reports and performs quarterly adjustments to reconcile semi-monthly fixed payments with the actual expenses incurred. DOHMH reviews the payroll reports, fringe benefit reports, and OTPS invoices for reasonableness and accuracy of the actual expenses reported. Our audit also found that DOHMH ensures PHS only bills the City for goods and services necessary to comply with the agreement, obtains necessary DOHMH approvals, and maintains adequate records to support all the PS and OTPS expenses. However, our audit found that the invoices related to one subcontractor (Urgicare) did not have detailed time records to support hours worked, sales tax was paid by PHS and reimbursed by DOHMH, and PHS was reimbursed for expenses at the end of Fiscal Year 2012 for services that were performed in Fiscal Year 2013.

Audit Recommendations

The audit made the following three recommendations to DOHMH to address these issues:

• Urgicare physicians use Kronos or another professional timekeeping invoice system as required under the contract.
• It obtains legal guidance as to whether PHS is required to pay sales tax. If PHS is required to pay sales tax, determine if it is more cost effective for DOHMH to obtain necessary items directly.
• PHS does not submit expenses at the end of the fiscal year for goods or services that will be received or rendered in the following fiscal year.