HomeMy WebLinkAbout10/25/2022 - Regular Minutes - City Council - Audit Committee
TY ELLIOTT CITY INTERNAL AUDIT OFFICE AUDIT COMMITTEE
City Internal Auditor 1101 Texas Ave. Mayor Karl Mooney
telliott@cstx.gov College Station, TX 77840 Councilmember Linda Harvell
TEL: (979) 764-6269 Councilmember Elizabeth Cunha
Michelle McMillin
Richard Price
TO: Association of Local Government Auditors Peer Review Team
April Jordan, CIA, CFE Owen Clark, CPA
Supervising Senior Auditor Deputy City Auditor
Shreveport, LA Howard County, MD
FROM: Ty Elliott, City Internal Auditor
DATE: October 13, 2022
SUBJECT: City of College Station Internal Audit Office External Quality Control Review
Thank you for performing the City of College Station Internal Audit Office’s external quality control
review for the period January 1, 2019, through December 31, 2021. We appreciate your opinion that our
audit quality control system complied with Government Auditing Standards. We also value the
suggestions that you provided to help us excel and improve the quality of our audit process. Our
response to the recommendation contained in the management letter is as follows:
Recommendation: “Standard 4.42 provides that auditors hired or assigned to a GAGAS engagement
after the beginning of an audit organization’s 2-year CPE period may complete a prorated number of
CPE hours. An audit organization may define a prorated number of hours based on the number of full 6-
month intervals remaining in the CPE period. In reviewing the Office’s CPE record, we observed that one
of the employees who terminated during the first six months of the CPE period did not obtain enough
prorated CPE hours.
We recommend that CPE be required as part of the onboarding process for new hires and that at least
every six months a review of all staff CPE hours be conducted.”
Response: We concur and will ensure that all audit staff who participate on GAGAS audit projects be
required as part of the onboarding process for new hires and that at least every six months a review of
all staff CPE hours be conducted. Our policies and procedures will be updated to reflect this change.
It was a pleasure working with a knowledgeable and skilled review team during this external quality
review.
Respectfully,
CIA, CFE, CGAP
City Internal Auditor
City of College Station, TX
TY ELLIOTT CITY INTERNAL AUDIT OFFICE AUDIT COMMITTEE
City Internal Auditor 1101 Texas Ave. Mayor Karl Mooney
telliott@cstx.gov College Station, TX 77840 Councilmember Elizabeth Cunha
TEL: (979) 764‐6269 Councilmember Linda Harvell
Michelle McMillin
Richard Price
TO: Audit Committee Members
FROM: Ty Elliott, City Internal Auditor
DATE: October 25, 2022
SUBJECT: EMS Billing and Collections Audit Follow Up Report
A follow up audit of EMS billing and collections was conducted per direction of the Audit Committee as part
of the fiscal year 2022 audit plan and pursuant to Article II Section 30 of the College Station City Charter. We
conducted this follow up audit in accordance with generally accepted government auditing standards. Those
standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a
reasonable basis for our findings and conclusions based on our audit objectives. We believe that the evidence
obtained provides a reasonable basis for our findings and conclusions based on our audit objectives.
This report summarizes the audit’s recommendations and our audit follow up findings, which describe to
what degree city management has implemented the Audit Office’s recommendations since publication of the
original report in March of 2021.
The methodology used to complete the audit objectives included:
Interviewing pertinent Fire Department and Fiscal Services staff members.
Reviewing documentation regarding policy, procedure, and operational changes.
Engaging auditing experts in the field of medical billing to reconcile patient care reports to the City’s
EMS billing vendor’s records. On February 15, 2022, a contract was executed with FORVIS, LLP.
Their work was completed on June 7, 2022 (see Appendix A).
Researching relevant Medicare and Medicaid rules and regulations.
Examining audit reports performed by an independent CPA firm evaluating the City’s EMS billing
vendor’s organization control functionality.
Analyzing data from (1) billing records and reports, (2) EMS expense data, and (3) EMS transport
revenue history from fiscal years 2021 and 2022 to compare to analyses performed on the same data
from fiscal years 2018, 2019, and 2020.
We appreciate the cooperation from the Fire Department, Fiscal Services, and the City Manager’s Office on
this follow-up audit work and look forward to their continued involvement in striving to make positive
changes in how EMS billing and collection efforts are managed in the City.
Respectfully,
Ty L Elliott
CIA, CFE, CGAP, COSO
City Internal Auditor
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Audit Recommendation Follow-up Results
The EMS Billing and Revenue Collection audit included six audit recommendations. Fieldwork to determine
the extent these recommendations were implemented was conducted from August 2022 through September
2022. Our findings related to each recommendation are as follows:
1. Audit Recommendation: Management could develop additional processes and controls to ensure
compliance with future EMS billing and collections contracts and monitor the performance of these
contracts in providing accurate billings and effective collections.
Auditor’s Comments: College Station staff have worked with the City’s current EMS billing provider
(Emergicon) to improve the City’s monitoring efforts. Enhanced reporting tools are specified in the
City’s contract. In addition, Emergicon has launched an analytics dashboard that provides clients with
operational and performance data. The dashboard gives the City up-to-date information, based on the
last closed month, in customizable tabular formats for ease of analysis and comprehension. As a result of
these improvements, city staff will better be able to monitor the performance of billing and collection
efforts.
Auditor’s Opinion: The recommendation has been implemented.
2. Audit Recommendation: The Fire Department should consider requiring EMS personnel record (1) the
miles transported and (2) the care they provided (i.e., indicate the service type and if supplies or oxygen
were used) in the Fire Department’s information system database. This would facilitate periodic
reconciliations to third-party billing data to verify that customers are appropriately charged according to
the City’s approved EMS fee schedule. The purpose of requiring EMS personnel record this data would
be to efficiently facilitate monitoring efforts – not to determine the amount customers should be billed.
Auditor’s Comments: With the enhanced reporting that Emergicon currently provides, the Fire
Department now has the detail information required to be able to efficiently perform reconciliations to
patient care reports.
Auditor’s Opinion: The recommendation was too specific. The Fire Department found an alternative
method to mitigating the risk identified in the audit.
3. Audit Recommendation: The City should consider requiring future EMS billing and collection
companies provide SSAE 18 audits conducted by an independent CPA firm. These audits, which were
required in previous EMS billing and collection contracts, offer assurance that the company’s system of
organization controls is functioning appropriately.
Auditor’s Comments: In June 2021, the City submitted a request for proposal for ambulance billing,
accounts receivable, and delinquent account collections. Five vendors submitted a bid proposal. An
evaluation committee of eight city employees independently reviewed each proposal and scored them
according to (1) qualifications & experience, (2) rates & expenses, (3) methodology, (4) project timeline,
and (5) references. Upon final evaluation and scoring of all proposals received, Emergicon, LLC was
determined to be the highest-ranking firm offering services at the best value. In October 2021, the City
Council approved the contract with Emergicon.
Within the scope of services of this contract, there is a requirement for Emergicon to provide the City
with Service Organization Control (SOC) audit reports conducted by an independent CPA firm.
Emergicon provided the City with two reports and a bridge letter:
SOC 1 Type II report for the year ended July 31, 2019
SOC 1 Type II report for the three months ended September 30, 2021
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Bridge letter from Emergicon’s Technology Leader dated May 13, 2021, asserting that the only
material change to internal controls was the contracting with a managed service provider
Auditor’s Opinion: The recommendation has been implemented.
4. Audit Recommendation: To ensure timely updates of posted fees on the City’s webpages, a procedure
should be developed to ensure the Fire Department’s web authors are timely notified of necessary
changes with verification from Public Communications that the appropriate changes were made.
Auditor’s Comments: The City’s webpage is up to date with the current fee information. The current
process for updating EMS fees is efficient and simple. Compared to the previous method for updating
fees, this process provides more internal controls to ensure accuracy of information.
Auditor’s Opinion: The recommendation has been implemented.
5. Audit Recommendation: Because delinquent accounts are not turned over to an independent collection
agency, most of these bills are eventually written off – which not only reduces potential revenue but also
increases the risk of fraud. Therefore, the City should consider engaging an independent collection
agency in conjunction with the contracted billing agency.
Auditor’s Comments: Management disagreed with the recommendation to consider the use of an
independent collection agency because it would require additional vendor contracts and the transfer of
billing data between multiple agencies. Management also reasoned that for delinquent collections, the
contract with Emergicon is based on a soft collection practice. Unless the City Manager’s Office decides
to implement hard collection – services which can affect someone’s credit – the City may not have
significant control over how much is collected.
Advocates of having one vendor provide both EMS billing and delinquent collection services contend
that this approach provides more efficient service, which could increase total collectible revenue. In
addition, patients may experience seamless handling of accounts with more knowledgeable,
compassionate collectors. However, some of the leading vendors in the industry will not provide both
billing and delinquent collection services because they view it as a conflict of interest. Therefore, the City
may be limiting its options when attempting to engage a vendor to provide these services.
Auditor’s Opinion: EMS billing & collections has a reasonable level of inherent risk (or built-in risk).1
This risk can be reduced when billing is segregated from delinquent collections. Management can choose
to accept the risk as-is or reduce the risk through preventive action. A best practice for larger entities is
to reduce the risk by engaging separate vendors for billing and delinquent collections.
6. Audit Recommendation: We offer no opinion on whether the City’s EMS fees are too high or too low
– only that the City’s process for setting these fees could be improved. In this regard, the City should
maintain documented support for proposed EMS fee changes to ensure that the process used to set these
fees is reasonable. Due to contractual allowances of insurance providers, large increases in fees that are
substantially above insurance provider allowable amounts will not result in equivalent increases in
revenue. In addition, customers typically take on the burden of these charges in the form of unexpected
bills, not insurance providers. Properly setting EMS fees typically requires a more complex procedure
than other types of municipal fees where benchmarking to other regional or comparable organizations
would be an acceptable approach. Therefore, a comprehensive methodology to setting these fees should
be considered.
1 For potential overbilling, the risk is higher if the service is (1) uncommon, (2) specialized, or (3) has confusing or non-advertised
prices – thereby making it difficult for patients to know if they were misbilled. There are two ways the City’s vendor could potentially
under remit collections – understate amount collected or overstate contractual allowances or write-offs. These two methods have in
common collecting a larger amount from the customer and then recording a smaller amount in the records provided to the City. In
this way, it is very difficult for City officials to detect if the vendor is under remitting – especially considering the amount uncollected
has been approximately 70% since the City changed their fee schedule in September 2019.
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Auditor’s Comments: Management disagreed with the recommendation because they felt that (a) the
EMS fee structure was in alignment with the region and the industry, (b) actual expenses for a specific
transport should be passed on to the end user to cover the cost of the individual response, and (c)
lowering EMS fees to only bill what insurance will cover will drastically reduce revenue resulting in tax
dollars subsidizing a higher percentage of each response.
a. The four largest ambulance providers in the region (CHI St. Joseph Health, College Station Fire
Department, Bryan Fire Department, and Robertson Country EMS) currently have comparable
fee structures.
b. The City’s current base EMS fees are relatively close to estimated cost per transport.
c. In September 2019, the City increased EMS transport fees for BLS, ALS, and ALS2 by 85%,
65%, and 74% respectively.2 Without TASPP payments, these substantial increases in fees have
not led to corresponding increases in revenues – this is evident in examining revenue per
transport from fiscal year 2018 to 2022 (see Table 1 below). However, having fees which
correspond to the actual EMS costs impact the amount received from TASPP.
Table 1: EMS Revenue Breakdown (FY18 – FY22)
FY Total EMS
Revenue
TASPP3
EMS
Revenue
(less) TASPP
Ambulance
Transports
Revenue per
Transport
w/o TASPP
Revenue
per Trans
Inc. (Dec.)
18 2,040,175 0 2,040,175 4,746 430 NA
19 1,998,137 121,102 1,877,035 4,708 399 (7.2%)
20 2,538,554 398,219 2,140,335 4,640 461 15.5%
21 2,989,969 680,274 2,309,696 5,556 416 (9.8%)
22 2,987,597 474,530 2,513,067 5,517 456 9.6%
Auditor’s Opinion: Although the audit findings and recommendation are valid, management’s position
for maintaining the City’s current EMS fee schedule is reasonable.
2 Fees also increased for supplies, specialty care transport, and services provided to non-residents without transport.
3 The Texas Ambulance Supplemental Payment Program (TASPP) is a state program designed to help government ambulance
providers reduce the gap between the cost of offering EMS services and reimbursement from Medicaid.
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Appendix A: FORVIS Findings and Recommendations
Background: At the time of the audit, the records provided by Emergicon did not detail the fees applied that
made up the charges to patients – which would have facilitated a simple reconciliation of Emergicon billing
records to the City’s approved fee schedule.4 As a result, we were required to use specialized auditing software
to calculate all the potential variables for each patient account between fiscal years 2018 to 2020. Table 2
below describes these results.
Table 2: EMS Charges to City Approved Fee Schedule Reconciliation Results (FY18 to FY20)
Category ALS ALS2 BLS Non-Res5 Totals % of Total
Base Fee, Mileage,
Supplies, Oxygen 309 54 65 0 428 3.0%
Base Fee, Mileage, Supplies 3,077 46 1,239 0 4,362 30.9%
Base Fee, Mileage, Oxygen 4 0 1 0 5 0.0%
Base Fee, Mileage 6,396 190 2,260 0 8,846 62.8%
Base Fee 0 0 130 0 130 0.9%
Non-Resident EMS 0 0 0 209 209 1.5%
Exceptions 77 2 34 1 114 0.8%
Total 9,863 292 3,729 210 14,094 100.0%
% of Total 70%2%26%1%100% NA
College Station EMS providers complete patient reports and submit these reports to Emergicon. Emergicon
determines the service provided based on their evaluation of these reports. Emergicon records appeared to
indicate that no supply or oxygen fees were charged for 65% of BLS transports, 65% of ALS transports, and
66% of ALS2 transports.6 Although the results summarized in Table 2 were contrary to our expectations, we
did not review patient care reports to determine the appropriateness of recorded charges because the audit
team lacked the medical expertise required to determine level of service. Therefore, we listed a scope
limitation in the audit report.
As a result, it was decided to employ a medical billing expert to examine patient care reports and reconcile
them to the records originally provided by Emergicon. Management supported this decision, and on February
15, 2022, a contract was executed with FORVIS, LLP.
Methodology & Results: The FORVIS consultants took a random sample of 359 ambulance trips from a
total population of 4,640 (FY20 ambulance trips). The data source was Trip Ticket Detail reports provided by
Emergicon. From the sample of 359, they found the following exceptions:
1. 5 instances where the type of service indicated in Emergicon’s records were inaccurate when
compared to the service provided described in patient care reports
2. 149 instances where the mileage recorded by Emergicon varied from the mileage the FORVIS
consultants calculated based on the addresses provided in patient care reports and using google maps
to calculate the mileage to the nearest hospital.
3. 217 instances where the supply charges were misapplied in the “charge” field of Emergicon records
when compared to the supplies utilized as documented in patient care reports.
4 The reporting tools Emergicon currently provides to the City now contain the necessary detail to perform efficient reconciliations.
5 Non-Res is the emergency medical service charges for non-residents without transportation.
6 Excludes exceptions and non-resident EMS fees.
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Recommendations: The FORVIS consultants recommended the following:
1. Follow contract guidelines for billing supplies.
2. Establish criteria for billing ground ambulance services outlined in the Medicare Benefit Policy Manual,
Pub 100-02 Transmittal 68 – Ground Ambulance Services, section 30.1.1.
3. Fractional mileage which documents “For all Medicare claims with dates of services on and after
January 1, 2011, ambulance services will be required to report mileage to the nearest tenth of a mile.
The policy will apply to all claims with mileage up to 100 loaded miles.”
Additional Considerations: In addition to the FORVIS results and recommendations, the City Auditor’s
Office believes the following is worthy of consideration:
FORVIS noted that when they conduct this work, discrepancies are typically due to error or
inaccuracies on patient care reports prepared by emergency medical responders. Therefore, the blame
usually does not reside with the billing agency. However, when examining patient care reports
prepared by City College Station employees, the FORVIS consultants noted that they appeared to be
completed with exceptional care – much better than what they are accustomed to seeing.
Although there are 149 exceptions related to mileage, these potential mileage discrepancies—related
to the difference between the amount documented on patient care reports and those independently
verified—did not appear to have any significant impact on billings. A bigger concern is that
Emergicon appears to be misapplying Medicare rules – which is why FORVIS issued the
recommendation in their report.
Of the noted 217 exceptions in supply charges, 148 of these exceptions appeared to be patients with
Medicare or Medicaid. For Medicare patients in fiscal year 2020, it appears that Emergicon
representatives were relatively consistently taking out supply fees prior to recording the amount
charged.7 Medicaid, however, is recorded inconsistently. My understanding of Medicare and Medicaid
guidelines is that they do not allow for extra supply fees to be billed. However, the practice of not
recording the items charged reduces transparency and understates the uncollectable amount. For this
reason, it is noted as an exception by the FORVIS consultants. This being said, Emergicon’s current
reporting tools provide the transparency necessary to reconcile charges to the City’s fee schedule.
Of the 217 supply charge exceptions, 69 remain in question which do not appear to be Medicare or
Medicaid – which represents a 19% error rate. These charges were understated by approximately
$22,000; or roughly 4% of total charges in the sample. If this was extrapolated to the population (i.e.,
the total charges for the fiscal year the sample was drawn), it would result in understated charges of
just under $300,000. However, the City’s collection rate for EMS charges for fiscal year 2020 was just
under 30%. Therefore, the estimated lost revenue would be $90,0008 given this collection rate.
7 The charge column in Emergicon’s records calculates the amount that should be charged based on the City’s fee schedule. Next,
Emergicon examines what is allowable to be charged based primarily on Medicare rules. What results is the net charge.
8 This estimate is subject to 95 percent confidence level with an approximate + or – 5% margin of error. Assuming a population
proportion of 50% (i.e., there is an equal chance in the population of their being an error in how charges are applied). Because the
sample size was determined based on this methodology, inferring estimated losses with + or – margin of error would be imperfect.
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Appendix B: Management’s Responses
The EMS Billing and Revenue Collection Audit conducted by the College Station City Internal Auditor from
September through December 2020 with a draft audit report being provided to management on January 26,
2021. An exit conference was held on February 8, 2021, with a revised draft sent to management on
February 12, 2021. This response was completed in conjunction and consultation with Finance Director and
summaries both Fire and Finance responses.
Background
This audit originated from a citizen complaint to the City Auditor on August 16, 2020. The citizen
simultaneously contacted Emergicon to inquire about possible overbilling and the application of TX SB 1264.
Emergicon notified the College Station Fire Department (CSFD) of this citizen inquiry on August 17, 2020.
CSFD instructed Emergicon to place a hold on this account until we could research TX SB 1264 and its
possible implications. Internal research along with consultation with Emergicon indicated that TX SB 1264
did not apply to EMS providers, and thus, the hold on this account was removed on August 31, 2020 to
resume collections. Further, it was learned that this misunderstanding of balance billing originated from a
Blue Cross & Blue Shield notice to customers, dated June 5, 2020, just five days before the patient was
transported on June 10, 2020.
Audit Findings and Discussions
1) Finding – A Few Potential Billing Discrepancies Were Identified
Discussion – As noted in the audit observations, there was a discrepancy between the City’s posted
EMS fee schedule and the department’s webpage that had the pre-September 2019 fee schedule. The
department had an internal administrative staff member trained in July 2020 to update and manage the
department’s webpage and this inaccurate fee schedule was removed in August 2020. The department
assumes full responsibility for this confusion and has rectified this problem by referring all CSFD fee
information to the City’s fee schedule webpage. Finally, an observation noted is that Emergicon
determines the level of billing based on the documented care given by EMS personnel. While the level of
care could be selected by EMS personnel on the patient care report, this has the potential to be
problematic. Definitions in level of care can change with legislation resulting in the need to re-train a
large number of EMS personnel with each change. In addition, the risk of human error in billing
increases with each additional person involved. If patient care records inaccurately were selected as
higher level of care than the current legal definition allowed and subsequently billed, the City could be
liable for reimbursements in an independent audit. For these reasons, we believe it is preferred to have
our personnel accurately document the care and treatment given and allow the billing company to
determine which level of billing schedule that given care falls into based on the current applicable rules.
This is their expertise.
2) Finding – Risk Related to Potential Improper Remittances Were Identified
Discussion – The department defers to Emergicon for its expertise in billing and does not have staff
personnel or expertise to provide detailed oversight of Emergicon and thus relies on the professional
merits of this company. As indicated, Emergicon has been the EMS billing contractor since August
2009. The observations indicate the City has opened the request for proposal process again in 2013 and
2018. Each RFP process has resulted in multiple competing proposals from competing vendors and yet,
Emergicon has been selected each time. While current CSFD administrative staff were not directly
involved with those RFP evaluations, we have no reason to doubt the validity of the CoCS procurement
process to award the contract to the most appropriate vendor. It should also be noted that Emergicon is
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the EMS collection contractor for several regional EMS agencies, including St. Joseph’s EMS and
Robertson County EMS. We believe the utilization of Emergicon by multiple agencies in our region
should serve to enhance the importance of integrity in the billing process by Emergicon to avoid the
potential loss of several regional clients by impropriety.
3) Finding – Emergicon is Not Complying with Some Contractual Stipulations
Discussion – The CSFD has been using Emergicon since the initial contract in August 2009. The
current contract was signed in March 2018. The contracted collection fee of a flat 5% is below industry
standards, and the elimination of the previous contract rate of 16% fee for collections over 120 days old
is beneficial for the City of College Station (CoCS), as it encourages earlier collection efforts by the billing
company. Most billing companies increase fees for late collections due to the additional efforts taken to
collect on those bills.
While we agree the contract does not specifically state Emergicon has the authority to negotiate a
discounted rate with customers, it does allow for collection practices and industry best practices.
Negotiating a discounted one-time payment rather than monitoring and tracking a lengthy payment plan
most likely falls within the scope of these collection practices. As indicated in the observations,
collections were down 12% in 2020. The department also internally noticed this observation early in
2020 and consulted with Emergicon. They were responsive to the department’s request and provided an
explanation which included the impacts of COVID resulting in transitioning to working from home by
their staff as well as claims processing in the insurance industry, decrease in transport volume, and higher
levels of unemployment resulting in a decrease in commercial insured.
Another COVID related decrease in billing was a result of the City accepting $43,076 in CARES Act
Provider Relief Funds on April 10, 2020. As a stipulation to accepting these funds, Emergicon notified
the City that they would not be able to balance bill COVID patients greater than what the patient would
have otherwise been required to pay if an in-network provider had provided the care.
Regarding the tracking of customer complaints, it should be noted there is a difference between a billing
inquiry and a complaint. Emergicon gets many billing inquiries and the department’s administrative
offices also receive routine billing inquiries which are referred to Emergicon. The department was
notified of this complaint by Emergicon the day after it was received. We are unaware of any other
official complaints that have been received by Emergicon that were not reported to the department.
4) Finding – The City is Balance Billing Citizens for Ambulance Service
Discussion – As previously discussed, the initiation of this audit was due to a citizen complaint over a
misunderstanding of the application of TX SB 1264. As the audit report indicates, TX SB 1264 does not
apply to EMS as the CSFD EMS is not considered a “provider” per the definitions of the legislation.
While citizens may receive an unexpected bill for the balance of what was not covered by insurance, the
incident that precipitated the use of emergency medical services is equally unexpected.
5) Finding – The Process for Setting EMS Fees Could be Improved
Discussion – The current EMS fee structure was approved by City Council in September 2019 before
COVID was even discovered. Unknown at that time was the dramatic increase in medical supply costs
that would follow with the impact of COVID. In many respects, College Station is a leader and trend
setter for emergency response agencies in the Brazos Valley Region. It should also be noted that the
City of Bryan Fire Department has moved to align their fees with CSFD, but did not take action until
well into the pandemic. Therefore, Bryan City Council has delayed council action for 90 days to avoid
increasing fees during the pandemic, however, it is anticipated they will be requesting council action in
the near future to align with our EMS fee structure. As noted earlier, it is believed the 12% collection
reduction noted in the audit observations for 2020 is more closely tied to COVID than to the increases in
fee structure.
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Audit Recommendations and Responses
1) Management could develop additional processes and controls to ensure compliance with future EMS
billing and collections contracts and monitor the performance of these contracts in providing accurate
billings and effective collections.
Management Response – EMS billing expertise is a specific skill set that requires continual monitoring
of the changing landscape of rules and regulations, and state and federal laws. The department does not
currently have the internal staff or expertise for detailed oversight and performance monitoring of EMS
billing. This would require one additional staff position to accomplish. The department agrees, if
appropriately staffed with the applicable skill set, this would serve to provide administrative oversight of
this important revenue source and monitor contractual compliance. This will need to be supported by
the City Management Office and budgeted accordingly. The department previously had an administrative
staff member who was dedicated to EMS billing, but this position was lost approximately 20 years ago.
2) The Fire Department should consider requiring EMS personnel record (1) the miles transported and (2)
the care they provided (i.e., indicate the service type and if supplies or oxygen were used) in the Fire
Department’s information system database. This would facilitate periodic reconciliations to third-party
billing data to verify that customers are appropriately charged according to the City’s approved EMS fee
schedule. The purpose of requiring EMS personnel record this data would be to efficiently facilitate
monitoring efforts – not to determine the amount customers should be billed.
Management Response – Management disagrees with EMS personnel selecting the level of billing for
the reasons cited in the discussion. As mentioned above, we believe it is preferred to have our personnel
accurately document the care and treatment given and allow the billing company to determine which level
of billing schedule that given care falls into based on the current applicable rules.
3) The City should consider requiring future EMS billing and collection companies provide SSAE 18 audits
conducted by an independent CPA firm. These audits, which were required in previous EMS billing and
collection contracts, offer assurance that the company’s system of organization controls is functioning
appropriately.
Management Response – We agree that any City contractor should be held to the standards specified
within the contract. If the professional reputation and performance of our EMS contractor needs to be
closely monitored on a continual basis, an administrative position with the necessary skill set will need to
be funded. The department also supports an independent audit by a CPA firm should the City choose to
fund such an audit. Finance agrees that a scope of work can be revisited, and the EMS billing service
contract can be re-bid rather than extended. As the report indicates, this has been done on three separate
occasions with Emergicon emerging as the vendor of choice. There is a risk in the re-bid process,
however, as our current contractor may again be selected as the vendor of choice but may revise the
terms of the contract and collection fees for the new contract period.
4) To ensure timely updates of posted fees on the City’s webpages, a procedure should be developed to
ensure the Fire Department’s web authors are timely notified of necessary changes with verification from
Public Communications that the appropriate changes were made.
Management Response – Management agrees with the recommendation to assure a process is in place
to keep webpages updated with accurate, timely information. These changes have been made and are
now in place.
5) Because delinquent accounts are not turned over to an independent collection agency, most of these bills
are eventually written off – which not only reduces potential revenue but also increases the risk of fraud.
Therefore, the City should consider engaging an independent collection agency in conjunction with the
contracted billing agency.
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Management Response – We agree that any City contractor should be held to the standards specified
within the contract. The City should always be open to other contractors who may be able to provide a
more effective and cost-efficient service. We can only assume these factors were considered each time
the City evaluated multiple vendors and has continually chosen Emergicon as the preferred vendor, as
have several regional EMS agencies. Finance disagrees with the recommendation to consider the use of
standardized independent collection agencies. This requires additional vendor contracts and transfer of
billing data between multiple agencies.
However, both Fire and Finance agree there may be opportunities to consider specialized medical
collection agencies that target accessing missing medical data that would allow an outstanding debt to be
processed by commercial insurance. These specialized agencies typically pick-up uncollected debt at a
given point (for example on the 121st day) and use alternate databases and methods to facilitate the
commercial billing payments. These agencies do have a much higher collection rate than currently being
paid to Emergicon but may provide some incentive for earlier collections from Emergicon. As
previously mentioned, additional efforts to provide oversight to the billing process will require additional
staff personnel. In addition, Finance agrees there may be some opportunities to revise balance billing
collections to a specified percentage of outstanding balance not paid by insurance rather than the entire
amount for citizens who reside within College Station.
6) We offer no opinion on whether the City’s EMS fees are too high or too low – only that the City’s
process for setting these fees could be improved. In this regard, the City should maintain documented
support for proposed EMS fee changes to ensure that the process used to set these fees is reasonable.
Due to contractual allowances of insurance providers, large increases in fees that are substantially above
insurance provider allowable amounts will not result in equivalent increases in revenue. In addition,
customers typically take on the burden of these charges in the form of balance bills, not insurance
providers. Properly setting EMS fees typically requires a more complex procedure than other types of
municipal fees where benchmarking to other regional or comparable organizations would be an
acceptable approach. Therefore, a comprehensive methodology to setting these fees should be
considered.
Management Response – We believe our EMS fee structure is in alignment with the region and the
industry and supported by Emergicon as appropriate. We further believe that the process of governance
and approval by City Council requires appropriate communication with Councilmembers and the
opportunity to request additional clarification and justification if they believe it has not been provided in
the request for council action. The department seeks to be as efficient as possible as a General-Funded
department to provide the availability and access of Emergency Medical Services while passing on actual
expenses for a specific transport to the end user through EMS billing. The goal of EMS fee structure
should be to cover the cost of the individual response. Overall tax dollars should be used to provide for
the EMS service system to exist and be available when needed. Lowering EMS fees to only bill what
insurance will cover will drastically reduce revenue resulting in tax dollars subsidizing a higher percentage
of each response. This is a City Council decision in conjunction with CMO and Finance.
Conclusion
The department is appreciative of the work that has gone into creating this audit report. CSFD and Finance
staff has equally spent a great deal of time to formulate valid, meaningful responses to the recommendations
based on our working knowledge. As noted throughout the responses, the department does not have the
internal expertise or staff to handle EMS billing and relies completely on the EMS billing and collection
contractor. We believe these management responses have addressed the key issues that warranted this audit.
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Appendix C: Internal Control Assessment
EMS Billing & Collection Internal Controls
Fire Department conducts periodic trainings on reviewing and correctly completing ESO patient reports.
Incomplete ESO patient reports are considered “unlocked” and are not uploaded to Emergicon until
they are complete and “locked”.
Emergicon verifies that ESO patient reports are complete and accurate before beginning the prebilling
process. Emergicon sends ESO patient reports back to the Fire Department to correct if incomplete.
Emergicon uses guidelines to code the level of care on the patient report.
Emergicon identifies the insurance provider before sending an invoice to the patient.
EMS fees are advertised on Fire Department webpage. Patients can verify the amount they have been
billed. A link is provided to actual EMS fee legislation; therefore, no manual updates of the webpage are
required when fee changes are made.
Emergicon investigates and appeals (if necessary) denied insurance claims.
Insurance providers that do not pay within 30 days are assigned late fees.
Emergicon sends the patient three separate copies of the invoice. Emergicon calls patients with
outstanding balances if sent invoices have not been responded to.
Check payments are deposited into a lockbox. Emergicon and City Fiscal Services authenticates the total
amount before payment is remitted.
EFT and credit card payments are transferred through Automated Clearing House.
Emergicon provides the Fire Department with monthly reports to reconcile and review (e.g., Balance
Summary, Charge Adjustments, Credit Summary, Payor Summary, Payor Aging, etc.). Reporting tools
have been updated to provide detail information required to be able to efficiently perform reconciliations
to patient care reports.
Emergicon provides the Fire Department with their yearly performance audit results.
Emergicon grants the Fire Department access to an analytics dashboard that provides up-to-date
information, based on the last closed month, in customizable tabular formats for ease of analysis and
comprehension.
Within the scope of services of the City’s contract, there is a requirement for Emergicon to provide the
City with Service Organization Control (SOC) audit reports conducted by an independent CPA firm.
Emergicon is now providing the City with these reports for their review.
EMS Billing & Collection Process Narrative
1. The patient calls 911.
2. The EMTs and/or at least one paramedic responds to the 911 call.
3. Is there a patient? No: see step 4a
4. Medics leave. End of process.
a. If there is not patient on the scene, no report is completed, and the call is marked as “Cancelled on
Scene/No Patient Found”.
b. If the patient is evaluated, and the attending paramedic agrees with the patient that no treatment and
no transport is required, the patient is required to sign treatment/transport refusal documentation,
and the call is marked “Patient Evaluated, No Treatment/Transport Required”.
c. If patient is treated but refuses transport, the patient is required to sign treatment/transport refusal
documentation, and the call is marked “Patient Treated, Released (AMA)”.
5. Is treatment needed? No: see step 4b
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6. Yes: Medics treat the patient.
7. Is transportation needed? No: see step 4c
8. Yes: Medics transport the patient to the nearest facility.
9. The EMTs return to the station to complete the ESO patient report and document administered
treatment.
10. The patient report is uploaded to Emergicon through the ESO suite.
11. Emergicon validates the information on the report.
12. Is the patient report correct and complete? Yes: step 15.
13. No: Emergicon returns the report to the Fire Department.
14. The Business Services Specialist corrects and completes the report. See step 10.
15. Is the patient a city employee?
16. No: Emergicon codes the level of care and verifies the insurance information.
17. Yes: the patient is not billed. End of process.
18. Does the patient have insurance? No: see step 24.
19. Yes: Emergicon sends an invoice to the insurance company.
20. Does the insurance company deny the claim?
21. Yes: Emergicon’s Accounts Receivable Department investigates the denial, calls the insurance provider,
and appeals if necessary. End of process (as we know it).
22. No: Does the insurance company pay the full amount?
23. Yes: the patient’s account balance is settled. See step 32.
24. No: Emergicon sends an invoice to the patient.
25. Does the patient pay the invoice in full?
26. Yes: the patient’s account balance is settled. See step 32.
27. No: Emergicon’s Patient Accounts Department sends the patient three additional statements every 30
days.
28. Does the patient pay the invoice in full? Yes: the patient’s account balance is settled. See step 26.
29. No: Emergicon’s Patient Accounts Department makes phone calls to the patient.
30. Does the patient pay the invoice? Yes: the patient receives a 20% discount for settling their balance over
the phone. See step 26.
31. No: the account is eventually written off. See step 39.
32. Emergicon remits patient and insurance provider payment to the City.
33. Is the payment in the form of check, credit card, or EFT? Check: see step 36.
34. Credit card or EFT: Fiscal Services receives an Automated Clearing House payment from Emergicon
through Frost Bank.
35. The ACH payment is deposited into the City’s EMS Revenue.
36. Fiscal Services receives a weekly lockbox summary of the check totals from Emergicon.
37. The Accounting Department logs into Frost Bank and requests a payment from Emergicon in the
amount on the lockbox summary.
38. Emergicon authenticates the payment and the payment is remitted to the City. End of process.
39. Fiscal Services receives a Payor Aging report from Emergicon every annually on 9/30.
40. Is the account more than 120 days overdue?
41. No: The City does nothing. End of process.
42. Yes: The City writes the account balance off as Bad Debt Expense.
43. The City credits the total written off balance to Allowance for Uncollectible Accounts during the end-of-
year adjustment period.
Ambulance Billing and Collections ProcessFire DepartmentEmergicon BillingEmergicon Patient AccountsFiscal Services DepartmentPatient calls 911EMTs respond to 911 call1Is there a patient?EMTs leaveEMTs transport patientEMTs complete patient reportReport uploaded to EmergiconReport is returned to FD to correctBusiness Services SpecialistEmergicon validates informationEmergicon codes level of careReport correct & completeNoIs patient aCity employee?YesPatient is not billedYesNoPatient has insurance?Invoice sent to insuranceDoes insurance deny the claim?Does insurance pay the full amount?YesInvoice sent to patientNoA/R Dept. InvestigatesYesBalancesettledYesNoNoBalancesettledThree additional statements sentDoes patient pay in full?NoDoes patient pay in full?Emergicon calls patientDoes patient pay in full?YesAccountwritten offNoYesNoEmergicon remits paymentsCheck, credit card, or EFT?Daily ACH payment recievedWeekly lockbox summaryCC/EFTCheckAging ReportAre accounts more than 120 days overdue?City doesnothingCity credits ADAin year-end adjustmentsAccountwritten off23457914111213161715211819202322242527 2628293031323336YesNoAccounting requests payment34Payment depositedEmergicon authenticates & remits payment3537384342414039Treatment?Transport?Yes6EMTs treatpatientYesNoNoNoYes810
Emergency Medical Services
Billing and Collections Follow-up Audit
October 25, 2022
Audit Committee Meeting
Audit Recommendations Opinion
1.Improve oversight of the EMS billing and collections contract to increase performance and
contract compliance.
2.Develop a method to facilitate efficient reconciliations to third-party billing data to verify that
customers are appropriately charged according to the City’s approved EMS fee schedule.
3.Require the EMS billing and collection vendor be audited by an independent CPA firm, and
require the vendor provide those audits to the City for their review.
4.Develop a process to ensure timely updates of posted fees on the City’s webpage.
5.Consider engaging a vendor to provide delinquent collection services independent of the
vendor who provides EMS billing services.
6.Examine the process for how EMS fess are determined.
EMS Billing and Collections Provided by Single Vendor
Advocates
•Segregating functions require multiple
vendor contracts.
•May p rovide more efficient service,
which could increase total collectible
revenue.
•Patients may experience seamless
handling of accounts with more
knowledgeable, compassionate
collectors.
Detractors
•Viewed as a conflict of interest.
•Some of the leading vendors in the
industry will not do both.
•Inherent risks are relatively high for
larger EMS providers.
EMS Charges to Fee Schedule Reconciliation (FY18 –FY20)
Category ALS ALS2 BLS
Non-
Res Totals % of Total
Base Fee, Mileage,
Supplies, Oxygen 309 54 65 0 428 3.0%
Base Fee, Mileage, Supplies 3,077 46 1,239 0 4,362 30.9%
Base Fee, Mileage, Oxygen 4 0 1 0 5 0.0%
Base Fee, Mileage 6,396 190 2,260 0 8,846 62.8%
Base Fee 0 0 130 0 130 0.9%
Non-Resident EMS 0 0 0 209 209 1.5%
Exceptions 77 2 34 1 114 0.8%
Total 9,863 292 3,729 210 14,094 100.0%
% of Total 70%2%26%1%100%NA
Results from the FORVIS Review
Findings
5 instances where the type of service indicated
in Emergicon’s records were inaccurate when
compared to the service provided described in
patient care reports
149 instances where the mileage recorded by
Emergicon varied from the mileage the
auditor’s calculated based on the addresses
provided in patient care reports and using
google maps to calculate the mileage to the
nearest hospital.
217 instances where the supply charges were
misapplied in “charge” field of Emergicon
records when compared to the supplies utilized
as documented in patient care reports.
Recommendations
1.Follow contract guidelines for billing
supplies.
2.Establish criteria for billing ground
ambulance services outlined in the Medicare
Benefit Policy Manual, Pub 100-02 Transmittal 68
–Ground Ambulance Services, section 30.1.1
3.Fractional Mileage which documents “For all
Medicare claims with dates of services on
and after Jan 1, 2011, ambulance services will
be required to report mileage to the nearest
tenth of a mile. The policy will apply to all
claims with mileage up to 100 loaded miles”
FORVIS –Additional Considerations
•CSFD patient care reports are well documented
•Mileage exceptions do not have substantive impact
•Of the 217 supply exceptions, 148 appear to be Medicare or Medicaid
–which do not allow billing customers for extra supply fees.
•Of the 217 supply charge exceptions, 69 do not appear to Medicare
or Medicaid –or 19% error rate. Extrapolated to the population
would result in an estimated lost revenue of $90,000.
TY ELLIOTT
City Internal Auditor
telliott@cstx.gov
TEL: (979) 764‐6269
CITY INTERNAL AUDITOR’S OFFICE
1101 Texas Ave.
College Station, TX 77840
AUDIT COMMITTEE
Mayor Karl Mooney
Councilmember Linda Harvell
Councilmember Elizabeth Cunha
Richard Price
Michelle McMillin
TO: The City of College Station Audit Committee
FROM: Ty Elliott, City Internal Auditor
DATE: October 24, 2022
SUBJECT: Fiscal Year 2023 Audit Plan Considerations
Over the course of the 2022 fiscal year, we completed three audit reports. These audits are as follows: (1)
Payroll, (2) Information Technology Asset Management, and (3) EMS Billing & Collections Follow-up. We
also completed the survey and risk assessment phase of the Developer Constructed Streets audit. Finally, we
coordinated and prepared for a peer review to examine period January 1, 2019, to December 31, 2021, to be
conducted by an Association of Local Government Auditor’s (ALGA) peer review team.
Considerations for the fiscal year 2023 audit plan are as follows:
Auditor Recruitment: The City Internal Auditor’s Office is currently budgeted for two fulltime positions.
Having one position vacant not only impacts the amount of audit work that can complete in a fiscal year but
can also impact the audit quality control process. We have been actively recruiting for an open position for
almost seven months.
Audit Follow-up: In our recent peer review, audit follow-up was discussed with the peer review team as an
area of potential improvement. Follow-up is a process by which internal auditors evaluate the adequacy,
effectiveness, and timeliness of actions taken by management on reported audit observations
and recommendations. We periodically reach out to departments to receive their responses as to how they
have implemented audit recommendations, however, several audit projects have not received a full follow-up
audit. To adequately verify whether previous audits have been sufficiently mitigated, follow-up audits for the
following reports may be warranted:
2022 IT Asset Management (6 recommendations)
2021 Payroll Audit (1 recommendations)
2020 Streets Division Procurement Process (3 recommendations)
2020 Fire Operations Audit – Relationship with TAMU (4 recommendations)
2019 Sanitation Exempt Employees’ Purchasing Activity & Processes (4 recommendations)
2019 Parkland Dedication (7 recommendations)
2017 Fire Prevention (2 recommendations)
2015 Street Maintenance (8 recommendations)
2015 Delinquent Accounts (3 recommendations)
2014 Ringer Library (13 recommendations)
Developer Constructed Streets: The scope and objectives of this audit was to (1) examine the city
regulations developers must follow in designing these streets and (2) evaluate the adequacy of internal
controls to ensure that developers are constructing streets according to these regulations. We completed the
City of College Station City Internal Auditor’s Office
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survey and risk assessment phase of this audit which revealed that adequate data may not be sufficiently
available at this time to achieve the attended scope and objectives. Three choices are available (1) terminate
the engagement, (2) delay the engagement for several years until data collection methods are improved, or (3)
change the scope and objectives of the audit with the understanding that the findings and conclusions will fall
short of the original aims of the audit.
Continuous Monitoring: Continuous monitoring is the automated collection of indicators from the City’s
information systems on a frequent or continuous basis. The purpose of implementing continuous monitoring
systems is to (1) help ensure compliance with policies, procedures, and regulations, (2) ensure that the systems
and controls have been operating as designed and transactions are processed appropriately, (3) serve as a risk
assessment tool to facilitate timelier, focused audits of areas of the highest risk. There are three approaches
which could be used to implement continuous monitoring (1) use staff time to develop the program in-house
using pre-existing tools, (2) hire a consultant to develop the program using pre-existing tools, (3) purchase
software with annual maintenance agreement with a pre-built program.
Interlocal Agreements with the City of Bryan: Well-designed interlocal agreements benefit the citizens of
both municipalities. The City of College Station has several interlocal agreements with the City of Bryan. The
most notable agreements are as follows:
Larry Ringer Library ILA
ETJ Boundaries ILA
Fire & EMS Automatic Mutual Aid ILA
Unity Plaza Landscape, Maintenance & Utility Agreement
Biocorridor ILA
Law Enforcement Mutual Aid ILA with TAMU, Blinn, Brazos County, City of Bryan
Multiple water interconnection ILAs
BVWACS ILA with City of Bryan, Brazos County, Brenham, Washington County
An audit of any of these agreements would include an examination of the effectiveness of the agreement in
achieving its given aim and evaluate the fairness of the agreement in ensuring that costs are born equitably
between the two cities.
Sincerely,
Ty L Elliott
CIA, CFE, CGAP, COSO
City Internal Auditor