Collection of Third-Party Payments for Medical Services Provided to Model Neighborhood Residents

Published by the Government Accountability Office on 1971-08-25.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

.L                      I
‘--                                        UMTEDSTATESGENERAL                 ACCO~JNTING        OFFiCE
                                                        WASHINGTON.          D C    20548

 ’ r’.‘lL   DlVlSlON

                 Dear       Mr.   Hyde

                       During      our review        of the Model Cltles      Program   at selected     locations,
                 we noted     certain      weaknesses      In the practices      of City Demonstration         Agen-
                 cles (CDAs) relative            to the colLectLon       of payments    from State     agencies
                 and private       organlzatlons        (generally   referred      to as third-party      payments)
                 for services        provided      to residents    of model neighborhoods.

                          We noted       that,      in many cases,          residents        of the model neighborhoods,
                 who were provided              medical        care under       the Model Cltles           Program,       were also
                 ellglble       beneflclarles             of this     type of care under State                 and federally-
                 aided     programs        and under programs             &.dmlnlstered         by private        organlzatlons.
                 Our review        showed that although                 CDAs, in some cases,              were aware that pay-
                 ments should          be made by State             agencies       and private         organlzatlons          for care
                 provided       to model nelghborhood                residents,         they did not take the necessary
                 steps     to collect          such payments.            On the other         hand, we found           that CDA of-
                 flclals      in certain          cities      were not aware that State                  agencies     and private
                 organlzatlons           should        reimburse      the CDA or its           operating       agencies       for ser-
                 vices     they provided             to model neighborhood              residents.

                          City Demonstration       Agencies,         under    the Demonstration       Cltles    and Met-
                 ropolltan     Development      Act of 1966, are expected                 to make use of all       avail-
                 able sources      of flnanclal        assistance.          In carrying       out comprehensive       dem-
                 onstratlon     programs,      Federal,       State,     and local      resources   are, according
                  to HUD, to be effectively             coordznated        by the CDAs In order        to help improve
                  the quality     of life    for the residents             of the model neighborhoods.

                         Detazls   of our review,     which was performed       at the central  office    of
                 the Department       of Housing   and Urban Development        (HUD) and at HUD reglonal
                 offices     in Boston,   Massachusetts,      and Fort Worth,      Texas and at the Boston,
                 Massachusetts,       and San Antonlo,     Texas,  CDA offlces,      follow.

                 %iI-IAr CDAs RECFIVE
                              -il     THTRD-PARTY PAYMENrS

                         In our cevlew          In Boston,   Massachusetts,         we noted    that     the CDA, in
                 planning      model cltles        projects,     Included       a comprehensive      health    care pro-
                 gram under which medica+               care and services         were to be provided        to model
                 neighborhood         residents     at three     health      caze facllltles.        These facllltles,
                 com;lonly     referred       to as family    ilie      centers,    were lo;ate8     . In the model

                                         ---        50Tti    ANNIVERSARY

     6    Y


                          The CDA indicated,           In the HUD-approved            budget,     that during     Its sec-
                  ond year of program            opera tlons , 1 t wou Id receive             from State    agencies       and
                  private     organlzatlons         about     $200,000     in third-party         payments    for medical
                  services      that were to be provided               at the three       health     care centers       to
                  model neighborhood           residents       who were also ellglbfe             for services      under
                  other    programs.         CDA offlclals        stated     that   the Federal/State         supported
                  MedIcaId      program      was the primary         source     of these payments.          These offs-
                  clals    added that about          70 percent        of the model nelghborhood            residents        re-
                  ceiving     health      care under       the Model Cl’cles       Program       were also ellglble          to
                  receive     assistance       under     other    programs.

                          Although      In April     1970 the CDA estimated       that It would receive            about
                  $200,000       In reimbursement        from State    agencies   and private       organlzatlons,
                  prlmarl     ly for medlcal       servLces   provided     to beneflclarles       of the MedIcaId
                  program,      as of April       1, 1971, It had not collected             any of these funds.

                         CDA offzclals     advised       us that under existing         State    laws the fam-Lly
                  life   canters    are not eligable          to re’celve     such payments    unless   they are
                  ( 11 licensed     as medical     clinics      by the State       of Massachusetts,      or (2)
                  become outpatlent      cllnlcs        through    an affLllatlon      with an accredlted        hos-

                          We discussed           this     matter     with   HUD regional        offlce     offlclals         in Bos-
                   ton in April          1971, and these offlclals               agreed    with       our posltLon         that
                  third-party           payments      should      be collected      by the CDA.           These offlclals           then
                  informed         CDA representatives              to take action       to collect        such funds.            CDA of-
                  flclaLs        stated     that     actlon      to have the family        life      centers       licensed       as med-
                  ical     cllnlcs       or to have the cllnlcs              affl llated     w1 th accredlted            hospitals
                  would be taken,

                            In May 1971 the CDA had one of the three                          centers       af fl lla ted w1 th an
                  accredl      ted hospl ta l-- the Peter           Bent Brlgham          Hospital.          In July          1971 CDA
                  offlclals         advised      us that    they took action            to begin        collecting           funds     from
                  State       agencies      for medical       services       provided       to the model nalghborhood
                  resxdents         at this      center.      As of July 30, 1971, we noted                       that health          care
                  was also being            provided     to model neighborhood                residents         at one of the two
                  rcmalnlng         health     care centers        but the CDA was not collecting                         payments       from
                  State       agencies      and private       organlzatlons          for such care because                    the center
                  was not licensed             as a c 1lnl.c     or affl llated         with     an accredl         ted hospital.
                  We were advlsed             by CDA offlclals          that    the remalnlng           family        life      center     was
                  not yet provldlng              medlcal    services       which were ellglble                for reimbursement.

                            In      another     mode 1 cl ty--San      Antonlo,    Texas--we      found  that the CDA lnz-
                  tlated           two health     care proJec ts for residents              of the model neighborhood
                  Under          these proJec ts , services           are provided      for   the treatment   and rehabll-
                  ltatlon           of narcotic      adcllc ts.      We discussed     the types of services       being    pro-
                  vised          under    these proJects        with    @EflcLals   of the Texas Department         of Public

<a Welfare and were advlsed that costs incurred        by the CDA in provldlng
   certain  services  may, 1n their oplnlon,    be e llglble  for reimbursement
   under the Federal/State   f lnanced Medicaid program,      In dlscusslng      these
   projects  with the CDA dlrec tor and other CDA officials,        we were advised
   that they were not aware that funds could be collected         from responsible
   State agenczes for services     provided  to the model neighborhood      residents,

             We dIscussed the subJect of third-party         payments with HUD central
    office     of flclals    who lnf ormed us that a number of CDAs have not received
    third-party         payments under various    health care projects     which were es-
    tabllshed       under the Model Cltles Program.       HUD officials      stated that
    many CDAs were not aware that the costs of provldlng                medical services
    to model neighborhood          residents   should be paid for by agencies       admln-
    lsterlng      other programs, such as the Medicaid program.

           These offlclals      said that certain         CDAs, which were aware of these
    funding     sources, did not attempt to collect            such funds because of the
    admlnlstratlve       burden involved       in collecting     such funds and because HUD
    supplemental      funds could more readily          be obtaIned to finance      the model
    cities    projects.      These offlclals       added, however,     that HUD regional   of-
_   flee personnel       often Identify      funding sources for the CDAs which are of
    some assistance       In carrying     out the model cities       projects.
            In a HUD internal    audit report,     issued In December 1970 on a review
    of the Eagle Pass, Texas, Model Cltres Program, IC was pointed out that
    the CDA did not utlllze       avaLlable    Federal,   State, and local resources          in
    carrying     out Its program.      The HUD report    stated that under a mrnl-bus
    project    whzch was financed,      In part, by model cltles       supplemental      funds,
    transportation      to obtarn medlcal aid was provided          to elderly    residents
    of the mode 1 neighborhood , Representatives            of the Department of Health,
    Education and Welfare stated that flnanclal             assistance    under the Medl-
    cald program 1s avallable        for transportation      services    to obtain medzcal

           In concluding rts dI.scusslon of this matter,   the HUD Office of
    Aud1.t recommended that the HUD RegIonal Admlnlstrator      require     that the
    CDA make use of all available      Federal, State, and local resources In
    carrying   out Its Model Cltles Program so that supplemental        funds would
    be used as an addltlon    to and not as a substitute   for flnanclal       assist-
    ante from other available     sources.


          We belleve that full       utlllzatlon    of all available    resources--Fed2
    eral, State, and local--1s        a basic requirement      of the model cities      con-
    cept pursuant to achlcvlng        an effective,    coordinated   cl ty demons tratlon

        The results        of our review          efforts       re latlve      to one aspect     of such
coordlnatlon        --the   receipt      of third-party            payments--clearly        show, In our
view,      that    certain    corrective         measures       by HUD are warranted           to help    en-
sure that CDAs ( 11 are aware of thus source                             of flnanclal    assls tance and
(2) adopt         measures    to ensure        that    such funds are collected             from State
agencies        and private      organlzatlons,             as 1s appropriate,        for services        pro-
vided      to model neighborhood             residents        who are also e lrglble          beneflclar-
les    of such assistance           under      other      programs,       such as the Federal/State
financed        Medlcald    program.

        Accordingly       , we recommend       that you gzt.ve conslderatlon         to elamlnlng
into    this    matter     for the purpose        of ascertalnlng         the extent   to which   this
weakness      exists     throughout       the Model Cltles        Program,    and based upon the
results      of your     examination,        we recommend      also    that you take the neces-
sary corrective          action      to help ensure     that

         -4DAs    do not overlook,           In the execution            of their   model cities
            projee ts , third-party          paym@nts which           may represent     a slgnrfl-
            cant source     of flnanclal         assistance;          and

         --CDAs,   with appropriate       follow-up      actlon           by HUD,       actively          pur-
            sue such sources      of flnanclal      assistance.

         We appreciate       the cooperation      given   to our representatives            during
this     review    and we shall      be pleased     to discuss     with you or members           of
your     staff   the matters     dlscussed      In this   report.      A copy of this        re-
port     IS being     forwarded    to the Asslstant       Secretary     for Admlnlstratlon.

         Please    advise   us of any actlons     you          take     or plan        to   ln;Ltlate       with
regard       to the matters    presented   above.

                                                              Sincerely       yours,

                                                              B. E. Blrkle
                                                              Assls tant Director

Honorable   Floyd      H. Hyde
hsslstant    Secretary     for
   Commune ty Development
Department    of Houslng       and
   Urban Development