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Audit finds questionable EMS financial procedures

Wednesday, October 31, 2012 by Michael Kanin

Employees with the Austin/Travis County Emergency Medical Services system would routinely leave bags of cash and checks out in the open as part of their financial services operation.


The office of City Auditor Ken Mory found this and a handful of other major issues as part of an investigation into the department’s bill-collecting and cash-handling procedures. “EMS management cannot provide assurance that the department is depositing all revenue that it receives,” concluded the audit.


EMS Chief of Staff James Shamard came to the City Council’s Audit and Finance Committee on Tuesday to absorb any blows from Council members. Though the interaction was rather tame, Shamard listed a series of steps he and EMS Chief Ernie Rodriguez had taken to correct the situation.


“I want to make sure you understand how serious the chief and I believe this is,” Shamard told Council members.


Austin/Travis EMS bills patients for care delivered by the system. Between 2010 and 2011, the organization collected roughly $33 million in payments.


The audit held three main findings: that “Material weaknesses exist in controls over the process EMS uses to safeguard payments received for services”; that the method it uses for payments made in error –  informally putting aside the check, pending a return to the patient – “increases the risk of lost funds”; and that a practice of deleting and reposting payment notations in the system’s billing program to meet insurance requirements for invoices “increases the risk that irregularities could occur without detection.”


The first count is perhaps the most dramatic. According to the audit, EMS employees stored “undeposited collections in sealed bags which are then placed in an open and unattended plastic storage container.” The report adds that on one walk-through, auditors found “$208,128 undeposited in the open container, including $679 in cash.” They found $801 in the open container another day.


In jest, Council Member Bill Spelman asked where exactly the room was where EMS employees stored the cash. “It was just very shocking to hear $208,000 in a box that was unattended,” said Mayor Pro Tem Sheryl Cole.


The second audit finding runs along similar lines. “(W)hen EMS identifies a check for return,” reports the auditor, “the department sets aside that check for mailing back to the payer.” The set-aside portion of the assessment is literal. “Controls over returned payments are not sufficient to ensure the funds are not lost or misappropriated,” concludes the audit.


The third count appears to result from a gap in EMS’ billing system. The audit reports that EMS issues invoices to insurance companies that do not include notations for payments received from patients. According to EMS officials, their billing software is incapable of producing invoices with notations. As a result, EMS employees manually delete patient payments in order to produce a so-called “clean bill.”


The audit found that all of the deleted payments were eventually reposted. “However,” it adds, “some of the payments were not reposted immediately.”


The report cites one case where a $100 payment was “not reposted until a month after the deletion when the patient contacted EMS to claim a refund.” Auditors also found a $268 deletion that “was not corrected until the auditors brought it to management attention.”


EMS staff agreed with the auditor’s findings. According to a schedule agreed on by the auditor and EMS officials, all corrections will be implemented by Nov. 30.

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