A Review of the Non-Emergency Medical Transportation Program of the Department of Health and Human Services
March 2009
REPORT (PDF) SUMMARY (PDF)
Members of the General Assembly asked the Legislative Audit Council to conduct a review of the non-emergency medical transportation (NEMT) program managed by the South Carolina Department of Health and Human Services (DHHS).
DHHS operates this program to give Medicaid clients rides to and from medical facilities for non-emergency reasons, such as physician appointments, dialysis, and physical therapy. The objective of the program is to provide better assurance that clients are receiving the services covered by Medicaid.
Until 2007, the department managed the NEMT program by contracting directly with independent transportation providers throughout South Carolina. Under this in-house system, clients called DHHS staff to arrange trips. In 2007, the department entered into contracts with two private brokers to subcontract with independent transportation providers and to arrange trips for clients.
We summarize our findings below.
NEMT In-House System in Operation Until 2007
• DHHS contracted with local transportation providers without using the competitive procurement methods required by state law.
• Goals and performance measures were not established for the cost of the program.
• Goals and performance measures were not established regarding quality of service.
• Internal controls for deterring fraud and abuse were minimal until 2006.
Procurement of NEMT Broker Services
• Before deciding to purchase the services of transportation brokers, DHHS did not conduct a written analysis of the costs and benefits of its in-house NEMT system versus a broker-based system.
• The department decided to implement the broker-based system statewide without a pilot project and without a phase-in period.
• DHHS did not document the reasons for selecting the companies to which it awarded broker contracts.
• Due to an error in the procurement process, DHHS awarded rate increases to the NEMT transportation brokers after the contract period began. The contracts, however, did not specify the circumstances under which broker rates could be adjusted nor did they indicate the methodology for calculating rate adjustments.
• The department has made payments to the NEMT brokers at the beginning of each month. However, the process established in the contracts require payment at the end of each month. Assuming an interest rate of 3%, this improper timing of payments will cost the federal government and South Carolina just over $365,000 for a three-year period.
NEMT Broker-Based System Beginning in 2007
• We found no evidence indicating whether an in-house system or a broker-based system is inherently better for minimizing cost and maximizing quality of service. Performance under either system can be affected by factors such as the quality of personnel, training, internal controls, and a process for making ongoing improvements.
• A broker-based transportation system provides incentive to operate efficiently, assuming DHHS has an effective system of purchasing and monitoring the brokers’ services.
• Through the procurement process, DHHS has the authority to switch brokers, periodically, if it determines that other brokers could provide higher-quality service and/or lower prices. Over time, this system is designed to give brokers incentive to ensure quality and submit competitive price proposals.
• There is evidence that expenditures during the first year of the broker-based system increased less than they would have if no changes had been made to the in-house system, based on data from an independent actuary. However, efficiency measures implemented under the broker-based system could also have been implemented under an in-house system.
• The department does not have adequate performance measures or goals for the cost of the NEMT program.
• Because DHHS did not calculate quality of service data under its in-house system, we could not determine whether the quality of service has changed under the broker-based system. Monitoring quality of service is important and can be implemented under either management system.
• The department does not report performance data regarding the punctuality and length of trips provided to Medicaid clients.
• DHHS has begun onsite reviews of the work processes of the NEMT brokers and transportation providers and has developed detailed plans to begin onsite audits of the accuracy of performance data. Without onsite audits of the performance data submitted by brokers, there is reduced assurance that the data is accurate. Also, the department has not conducted audits to ensure that, when the brokers deny transportation to individuals, the denials are for reasons authorized by federal law, state law, and the broker contracts.
• Long-term savings can be realized by using a less expensive mode of transportation for clients who need to be moved while lying down, but who do not need an ambulance.
• The Medicaid Transportation Advisory Committee, established by the General Assembly, is not adequately independent of DHHS. Although no DHHS employee is a member of the committee, the committee’s meetings have been presided over by DHHS staff and take place in a conference room at DHHS.
• DHHS could enter into improved broker contracts by re-soliciting proposals from vendors for the service period beginning in 2010, when the current contracts may be terminated.