THE STATE EDUCATION DEPARTMENT / THE UNIVERSITY OF THE STATE OF NEW YORK / ALBANY, NY 12234

May 10, 2002

As we previously informed you, the State Education Department ("SED") has been advised that the federal government will be conducting an audit of the school supportive health services program ("SSHSP") and the preschool supportive health services program ("PSHSP") in New York State in the near future. This memo is intended to provide you with a status report.

The federal government has informed us that the audit of these programs will be based on a sample of approximately 600 claims submitted by 172 providers (school districts and counties) for the period April 1, 1990 to June 30, 2001, approximately half of which were submitted by New York City. Selected school districts and counties will be asked to provide documentation for those claims, which will be evaluated by the federal auditors. The results will then be extrapolated to the State level. The audit will focus mainly on claims for speech therapy and transportation, but may also include claims for physical therapy, occupational therapy and counseling. It is anticipated that the audit will be completed by late fall of this year.

The federal government has the authority under law to conduct such an inquiry, and you must comply with their request. While the small sample size will minimize the burden on school districts, the accuracy and completeness of each response is extremely important, as it will affect the statewide audit results. Please keep this in mind if you are contacted.

By memo dated January 30, 2002, SED’s Chief Operating Officer Richard H. Cate informed you of the necessity of retaining all Medicaid-related documents. Again, it is imperative that you continue to maintain these documents until this audit has been completed, irrespective of retention schedules. It is possible that some of the documents being requested had not been retained as of January 30, in compliance with established retention schedules. We have raised this issue with the federal government. They indicate that they understand this issue, and we await their guidance on how to proceed in such instances.

It appears that the main concerns prompting this audit stem from disagreement between the State and federal government on the interpretation of federal regulations and documentation requirements. Please be assured that we believe that our interpretations and actions are reasonable and justifiable and that there has been a lack of clarity and guidance from the federal government with respect to these programs since their inception. We are working with the federal government and the other appropriate State agencies in an effort to resolve these differences.

As we learn more, we will keep you informed. If you have any questions concerning this matter, please contact my office at medaudit@mail.nysed.gov.