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July 26, 2013

 

DiNapoli: OPWDD Overpaid Contractor $1.1 Million

Millions More in Other Payments at Risk

The state Office for People with Developmental Disabilities (OPWDD) overpaid a contractor by more than $1.1 million because it based payments on budgeted, rather than actual expenses, according to an audit released today by New York State Comptroller Thomas P. DiNapoli. DiNapoli’s auditors raised concerns that if OPWDD continues to pay contractors based on budgeted rather than actual cost, millions of dollars in additional overpayments could be made to contractors.

“State agencies have a responsibility to taxpayers to ensure necessary safeguards are in place to protect public money and spend it wisely,” DiNapoli said. “OPWDD’s use of budgeted figures for reimbursement instead of actual expenses led to this overpayment. OPWDD should examine reimbursements closely and develop a better payment method or millions of dollars in more overpayments could occur.”

Auditors examined an OPWDD contract with the Association for the Advancement of Blind and Retarded (AABR), through the Options for People Through Services Program (OPTS), to provide prevocational job-based training to help prepare individuals for future employment and integration into their communities. AABR’s five-year $46.9 million contract with OPWDD covered the period July 1, 2006 through June 30, 2011. The contract was subsequently extended through June 30, 2016 for an additional $65.8 million. Payments to AABR are based on rates set by OPWDD for full-day and half-day units of service.

As of August 2011, AABR was serving 200 individuals and had received $46.3 million on the initial contract.

AABR submits its claims for reimbursement through an OPWDD database listing all individuals approved for services. AABR is required to submit an annual consolidated fiscal report (CFR) summarizing its major expenses by category. As a practice, state agencies use the actual costs reported on CFRs when developing their respective reimbursement rates.

However, DiNapoli’s auditors found that when developing the original reimbursement rates, OPWDD used AABR’s budgeted expenses for 2006. Rates were to be adjusted thereafter based on program needs and changes in the consumer price index. After 2006, OPWDD had the benefit of reviewing actual program expenses, but continued to use AABR budgets to set rates, which exceeded actual cost.

For example, based on budgeted figures, AABR reported $2.5 million for transportation costs during 2010. Documented actual transportation costs for this period totaled $1.8 million, $700,000 less than budgeted.

OPWDD officials are working to develop a more accurate methodology to develop reimbursement rates. However, most OPTS contracts provide services over several years and aggregate over $2 billion in overall funding. If the overpayment calculated for AABR is indicative of those at other providers, millions of dollars in additional overpayments may have been made.

DiNapoli recommended OPWDD:

  • Recalculate reimbursement rates using actual expenses for future OPTS contractor billings; and
  • Periodically verify the program services reportedly provided by AABR as well as those of other program service providers.

OPWDD officials generally agreed with audit’s recommendations. A copy of the full report can be seen at: http://www.osc.state.ny.us/audits/allaudits/093013/11s11.pdf


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