CONTRACT MONITORING Jennifer Berrios, Luke Madonna, Stephan - PDF document

10/17/2019 CONTRACT MONITORING Jennifer Berrios, Luke Madonna, Stephan Ramcharran, & Mike Wood 1 1 Why are we here? We are here because we have a duty and mission to carry out. Today’s duty and mission: – Learn about monitoring 2 Roadmap • Monitoring necessity • Challenges and concerns • Impact • Seven‐step process • Fraud • Field visits 3 1

10/17/2019 Monitoring Necessity 4 Why Monitoring is Necessary • Agency missions • Billions in State spending • Risks – Health & Safety – Goal Achievement – Dollars – Reputation • Fraud • Errors 5 Challenges and Concerns 6 2

10/17/2019 Brainstorming Session Agency Concerns When Trying to Monitor 7 Common Concerns • Lack of resources (time, funding, staff) • Staff turnover/Lack of training • Lack of communication between program and fiscal departments • Vendor compliance (Reports, timeliness of filings) 8 Impact 9 3

10/17/2019 Impact 10 7 Step Process 11 11 7-Step Process 1. Identify risky contracts 2. Understand requirements 3. Identify risks 4. Prioritize risks 5. Determine risk response 6. Design/execute monitoring activities 7. Follow up 12 4

10/17/2019 Step 1: Identify Risky Contracts 13 13 Step 1. Identify Risky Contracts • What data do you have available? • How can it help you identify risky contracts? 14 Risks • Health & Safety • Goal Achievement • Dollars • Reputation 15 5

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10/17/2019 19 19 Identify Risky Contracts Sort contracts by: • Contract Types • Contract Amount • Vendor Name & Contract Count • Vendor Name & Spending to Date 20 Identify Risky Contracts (cont.) Sort contracts by: • Contract Start Date • Contract Description & Contract Count • Contract Description & Contract Amount • % Expended ‐ % Life of the contract 21 7

10/17/2019 Common Concerns • Risk basis • Other factors – Quality of products and services – Problems with vendors – Current events – Locations – Etc. 22 Filter By ‘Contract End Filter By ‘Contract End Date” to Eliminate Date” to Eliminate Expired Contracts Expired Contracts 23 23 Consider Eliminating Consider Eliminating Fully Expended Fully Expended Contracts Contracts 24 24 8

10/17/2019 Common Concerns Contract Type Sum of Current Contract Amount Sum of Spending to Date Count of Contract Type Commodity $ 555,001,257.01 $ 172,310,150.97 99 Community Projects Fund (Member Initiative) $ 13,156,897.00 $ 10,662,947.32 509 Consultant $ 7,305,957,655.67 $ 5,043,101,076.48 534 Contracts Not Subject to OSC Pre‐Audit $ 505,364,519.96 $ 405,947,165.41 1,767 Equipment $ 46,320,955.22 $ 40,967,498.77 38 Grant $ 14,225,068,221.14 $ 9,538,591,439.48 7,412 Inter‐government ‐ Other $ 71,797,233.54 $ 33,596,984.98 4 Land Purchase $ 30,000.00 $ 30,000.00 1 Lease $ 438,011,159.03 $ 305,212,152.89 80 Printing $ 273,464,215.00 $ 219,468,473.12 9 Repayment to State $ 990,969,897.00 $ ‐ 5 Revenue Generating $ 1,263,254,569.75 $ ‐ 898 Service $ 309,972,036,478.61 $ 12,791,498,708.82 521 Grand Total $ 335,660,433,058.93 $ 28,561,386,598.24 11,877 25 Filter on Risky Contract Filter on Risky Contract Type and Current Type and Current Contract Amount Contract Amount 26 26 27 27 9

10/17/2019 28 28 Payment Size Payee/Vendor Total Amount Payments Average Payment CENTERS FOR MEDICARE & MEDICAID SERVICES $ 264,471,731.40 2 $ 132,235,865.70 EXCELLUS ‐ DSH‐ BLUE CROSS BLUE SHIELD $ 86,947,204.78 1 $ 86,947,204.78 NEW YORK QUALITY HEALTHCARE CORPORATION $ 23,704,473.69 1 $ 23,704,473.69 DS600 OFFICE OF MENTAL HEALTH $ 45,237,119.08 3 $ 15,079,039.69 NEW YORK EHEALTH COLLABORATIVE INC $ 12,515,947.64 1 $ 12,515,947.64 MONTEFIORE HEALTH SYSTEM INC $ 23,887,296.00 2 $ 11,943,648.00 MAXIMUS INC $ 21,212,748.10 2 $ 10,606,374.05 HEALTHPLUS HP LLC $ 10,123,589.20 1 $ 10,123,589.20 ONE BROOKLYN HEALTH SYSTEM INC $ 10,000,000.00 1 $ 10,000,000.00 UNITEDHEALTHCARE OF NEW YORK INC $ 9,871,323.37 1 $ 9,871,323.37 HEALTH FIRST PHSP INC $ 16,997,203.77 2 $ 8,498,601.89 EXCELLUS ‐PGP‐ BLUE CROSS BLUE SHIELD $ 30,177,188.27 4 $ 7,544,297.07 ROSWELL PARK CANCER INSTITUTE $ 88,856,488.69 17 $ 5,226,852.28 LONG ISLAND JEWISH MEDICAL CENTER $ 7,358,670.59 2 $ 3,679,335.30 MVP HEALTH PLAN $ 5,024,512.42 2 $ 2,512,256.21 EXCELLUS HEALTH PLAN INC $ 7,370,331.88 3 $ 2,456,777.29 ST JOSEPHS HOSPITAL $ 4,616,442.00 2 $ 2,308,221.00 NEW YORK CITY SCHOOL DISTRICT $ 5,570,959.47 3 $ 1,856,986.49 ST JAMES MERCY HOSPITAL $ 3,406,746.12 2 $ 1,703,373.06 CENTERS PLAN FOR HEALTHY LIVING LLC $ 1,608,694.46 1 $ 1,608,694.46 HEALTH INSURANCE PLAN OF GREATER NEW $ 3,108,638.32 2 $ 1,554,319.16 MAXIMUS HEALTH SERVICES INC $ 9,226,155.40 6 $ 1,537,692.57 29 Monitoring • You’ve selected a contract, now what? • MONITOR! • (Yeah, but what is that, really?!) 30 10

10/17/2019 Monitoring Ongoing activities, special evaluations or a combination of both used to ensure that controls are operating as intended. 31 Controls Purpose • C ompliance with laws, rules, and regulations • A ccomplish goals and objectives • R elevant and reliable data • E fficient and effective operations • S afeguarding assets 32 Internal Controls Pyramid Monitoring Control Activities Risk Assessment Control Environment 33 11

10/17/2019 Monitoring Ongoing activities, special evaluations or a combination of both used to ensure that contractors are operating as intended. 34 Operating as Intended How do agency employees and contractors know what’s intended? 35 Step 2: Understand Contract Terms 36 36 12

10/17/2019 Step 2. Understand Contract Terms • Intuition • Conversation • Purchase order details • Contract specifications • Laws, rules & regulations • Guidelines 37 Requirements • Understand • Assess quality • Ask this: – How can I verify whether something has occurred, based on how the contract specification is written? 38 Specifications • S pecific • M easurable • A chievable • R elevant • T ime‐Bound 39 13

10/17/2019 Specific • Clear, detailed, easily understood • Deliverables – Description – Benchmarks • Location 40 Measurable Performance measures • Quantities • Timing • Expertise – Licenses – Degrees – Certifications 41 Achievable Payment provisions • Payment triggers • Invoice formats – Description of deliverables – Services • Names of workers • Hours for each worker • Client names (SSN and/or address) • Dates of service 42 14

10/17/2019 Relevant • Requirements – Is the vendor able to meet specific terms set forth? • Reasonableness – Producing Records – Reports – Electronic/Paper 43 Time Bound • Set forth time frames • Right to audit – Specify monitoring in contract language – Consequences for non‐compliance 44 Specification Example The vendor shall submit a properly executed application for payment, together with appropriate backup supporting the amount billed. 45 15

10/17/2019 Specification Example The vendor shall submit a properly executed application for payment, together with appropriate backup supporting the amount billed. 46 Specification Example The vendor shall submit a properly executed application for payment, together with appropriate backup supporting the amount billed. Improved Specification???? 47 Specification Administer the pre‐tax transportation program for eligible employees. Auto‐answer customer service calls within 7 seconds (99% annual compliance), with a representative on the line within 2 minutes (90% annual compliance). Fares mailed to recipients to use by the first of the month. Monthly billing rate on a sliding scale based on the number of enrollees. 48 48 16

10/17/2019 Step 3: Identify Risks 49 49 Step 3. Identify Risks: What can go wrong? • Programmatic – What can prevent the goal accomplishment? • Fiscal – How can the contractor get money they didn’t earn? 50 What is Fraud? • Misstatement – Mistake vs. Fraud • Knowledge of falsehood/intent • Reliance by victim • Damage 51 17

10/17/2019 What is Fraud? Fraud is any intentional act or omission designed to deceive others, resulting in the victim suffering a loss and/or the perpetrator achieving a gain . 52 Source: “Managing the Business Risk of Fraud: A Practical Guide” ‐ IIA, AICPA, ACFE What is Occupational Fraud? The use of one’s occupation for personal enrichment through the deliberate misuse or misapplication of the employing organization’s resources or assets. 53 Source: 2018 Report to the Nation on Occupational Fraud & Abuse How Much Is Lost? • 5% of annual revenues • Median loss of $130,000 – $200,000 for small businesses – $75,000 for not for profit – $118,000 for government • 22% had losses of at least $1 million 54 Source: 2018 Report to the Nation on Occupational Fraud & Abuse 18