Audit criticizes charges for transporting evacuees

[Guest guest]

FYI...Interesting article on the Star Telegram's website.

D. Stone

http://www.star-telegram.com/news/story/290996.html

Audit criticizes charges for transporting evacuees

By DANNY ROBBINS

drobbins@...

CareFlite billed the federal government about $2 million more than it

should have to transport evacuees from Hurricanes Katrina and Rita,

according to a government audit.

The report by the inspector general for the U.S. Department of Health

and Human Services, which awarded the contract, contends that the

Grand Prairie-based air-medical service sometimes used its own

aircraft to transport sick or injured evacuees when the company

should have sought the most economical means instead.

But CareFlite and the agency defended the expenditures. If there is a

problem, wrote the HHS official who responded to the audit, it rests

with the contract, which did not require CareFlite to seek

subcontractors whose rates were lower than its own.

" Based on our experience with this contract, we should consider

whether future contracts for similar services should require a formal

consideration of comparative costs before determining the best

alternative, " wrote J. Brown, HHS deputy assistant secretary

for acquisition management and policy.

Responsibility for transporting evacuees requiring medical assistance

was assigned to HHS as part of the relief plan coordinated by FEMA

after the hurricanes struck in 2005. CareFlite established a call

center within three days of being awarded the contract and has since

returned more than 1,100 evacuees to their homes.

The HHS inspector general's audit questioned $2 million of the $5.7

million that CareFlite billed the agency for transporting 810

patients in the contract's first six months.

The biggest area of concern, according to the audit report, was

CareFlite using its own resources to transport 145 evacuees without

seeking price quotes from subcontractors.

" Because it did not obtain subcontractor quotes, CareFlite did not

determine whether it was providing the most economical

transportation, " the report states.

The contract, which remains in effect, requires that CareFlite

arrange transportation " in the most economical fashion, using

subcontractors if necessary. " The nonprofit service receives payment

for each transport it provides directly and a management fee for each

patient transported.

CareFlite billed the government $1.97 million for the 145 patients it

transported, according to the report, while subcontractor billings

for 665 patients cost $2.9 million.

The report notes that the average cost of a patient transport when

CareFlite used its own plane was $18,200. The average cost of such

transports by subcontractors was $7,783, the report said.

In addition, the report takes CareFlite to task for transporting 11

patients by air ambulance when their medical forms indicated they

could travel by commercial air.

The report, made public in June, recommends that CareFlite refund

$68,841 for the excess cost required to transport the 11 patients and

work with HHS to determine the " allowability " of the $1.97 million in

costs billed without seeking subcontractors.

Brown, responding in August, said his agency will explore whether the

$68,841 should be refunded, but he indicated that it saw no reason to

challenge the $1.97 million.

" The current contract does not require CareFlite to compete or

subcontract each movement, " he wrote.

Dauphinais, CareFlite's vice president for flight operations,

wrote in a response to the audit that his service was " encouraged " to

use subcontractors but not contractually required to do so. He also

noted that CareFlite's rates were disclosed to the government when

the contract was awarded.

In an interview, Dauphinais said subcontractors were hired when

CareFlite's own resources weren't available or when patients were

located outside the 1,000-mile range of the aircraft then in use.

CareFlite's billings were based on its standard commercial rates at

the time, he said. That meant if a patient was transported by fixed-

wing aircraft, the charge was a $4,000 " liftoff fee " plus $40 for

every mile in which the patient was on board, he said.

Dauphinais said the average subcontractor's cost was substantially

less because he was able to negotiate rates based on volume,

including one instance in which 137 patients were transported in a

single plane at a cost of $3,000 per patient.

CareFlite's contract was one of many cost-plus-fixed-fee contracts

handed out by the government after the hurricanes.

Unlike fixed-price contracts, which pay contractors a set amount,

cost-plus-fixed-fee contracts are essentially open-ended, allowing

contractors to bill for all of their costs. The CareFlite contract is

capped at $21 million.

Frequently used after natural disasters, when it is difficult to

calculate costs upfront, such contracts have long come under fire for

promoting excessive billing.

" We've always considered these cost-plus contracts to be fairly

risky, because they don't provide a real incentive to keep costs

low, " said Amey, general counsel for the Project on Government

Oversight, an independent, nonpartisan watchdog group.

[Guest guest]

Great...no one thought about these folks getting home after they were evacuated

(these are both Katrina and Rita medical special needs evacuees) and after a TON

of upset hospitals, NH's, patients and families, FEMA finally got HHS to award a

contract to coordinate and handle the repatriation of these folks.? This is a

nightmare for a number of reasons including repatriation is not covered by FEMA

public assistance reimbursement; it takes many more resources because during

repatriation, the bended rules of evacuation no longer apply because it is no

longer an emergency...so it takes many more resources and with no guaranteed

payment, those resources are much harder to come by.?

Thanks to CareFlight for taking this on; unfortunately it is this type of

after-the-fact smacking by FEMA and HHS that will make finding someone to do

this next time much much harder.

Dudley

Audit criticizes charges for transporting evacuees

FYI...Interesting article on the Star Telegram's website.

D. Stone

http://www.star-telegram.com/news/story/290996.html

Audit criticizes charges for transporting evacuees

By DANNY ROBBINS

drobbins@...

CareFlite billed the federal government about $2 million more than it

should have to transport evacuees from Hurricanes Katrina and Rita,

according to a government audit.

The report by the inspector general for the U.S. Department of Health

and Human Services, which awarded the contract, contends that the

Grand Prairie-based air-medical service sometimes used its own

aircraft to transport sick or injured evacuees when the company

should have sought the most economical means instead.

But CareFlite and the agency defended the expenditures. If there is a

problem, wrote the HHS official who responded to the audit, it rests

with the contract, which did not require CareFlite to seek

subcontractors whose rates were lower than its own.

" Based on our experience with this contract, we should consider

whether future contracts for similar services should require a formal

consideration of comparative costs before determining the best

alternative, " wrote J. Brown, HHS deputy assistant secretary

for acquisition management and policy.

Responsibility for transporting evacuees requiring medical assistance

was assigned to HHS as part of the relief plan coordinated by FEMA

after the hurricanes struck in 2005. CareFlite established a call

center within three days of being awarded the contract and has since

returned more than 1,100 evacuees to their homes.

The HHS inspector general's audit questioned $2 million of the $5.7

million that CareFlite billed the agency for transporting 810

patients in the contract's first six months.

The biggest area of concern, according to the audit report, was

CareFlite using its own resources to transport 145 evacuees without

seeking price quotes from subcontractors.

" Because it did not obtain subcontractor quotes, CareFlite did not

determine whether it was providing the most economical

transportation, " the report states.

The contract, which remains in effect, requires that CareFlite

arrange transportation " in the most economical fashion, using

subcontractors if necessary. " The nonprofit service receives payment

for each transport it provides directly and a management fee for each

patient transported.

CareFlite billed the government $1.97 million for the 145 patients it

transported, according to the report, while subcontractor billings

for 665 patients cost $2.9 million.

The report notes that the average cost of a patient transport when

CareFlite used its own plane was $18,200. The average cost of such

transports by subcontractors was $7,783, the report said.

In addition, the report takes CareFlite to task for transporting 11

patients by air ambulance when their medical forms indicated they

could travel by commercial air.

The report, made public in June, recommends that CareFlite refund

$68,841 for the excess cost required to transport the 11 patients and

work with HHS to determine the " allowability " of the $1.97 million in

costs billed without seeking subcontractors.

Brown, responding in August, said his agency will explore whether the

$68,841 should be refunded, but he indicated that it saw no reason to

challenge the $1.97 million.

" The current contract does not require CareFlite to compete or

subcontract each movement, " he wrote.

Dauphinais, CareFlite's vice president for flight operations,

wrote in a response to the audit that his service was " encouraged " to

use subcontractors but not contractually required to do so. He also

noted that CareFlite's rates were disclosed to the government when

the contract was awarded.

In an interview, Dauphinais said subcontractors were hired when

CareFlite's own resources weren't available or when patients were

located outside the 1,000-mile range of the aircraft then in use.

CareFlite's billings were based on its standard commercial rates at

the time, he said. That meant if a patient was transported by fixed-

wing aircraft, the charge was a $4,000 " liftoff fee " plus $40 for

every mile in which the patient was on board, he said.

Dauphinais said the average subcontractor's cost was substantially

less because he was able to negotiate rates based on volume,

including one instance in which 137 patients were transported in a

single plane at a cost of $3,000 per patient.

CareFlite's contract was one of many cost-plus-fixed-fee contracts

handed out by the government after the hurricanes.

Unlike fixed-price contracts, which pay contractors a set amount,

cost-plus-fixed-fee contracts are essentially open-ended, allowing

contractors to bill for all of their costs. The CareFlite contract is

capped at $21 million.

Frequently used after natural disasters, when it is difficult to

calculate costs upfront, such contracts have long come under fire for

promoting excessive billing.

" We've always considered these cost-plus contracts to be fairly

risky, because they don't provide a real incentive to keep costs

low, " said Amey, general counsel for the Project on Government

Oversight, an independent, nonpartisan watchdog group.

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