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December 22, 2009

DiNapoli: New York’s Medicaid System Leaking Millions

Audits Identify $92 Million in Overpayments and Problems
Auditors Prevent $20 Million in Improper Payments

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New York State Comptroller Thomas P. DiNapoli today called on the state Department of Health (DOH) to increase scrutiny of Medicaid payments and recover any improperly made payments after his auditors identified as much as $92 million in overpayments, billing errors and other problems. The findings of the audits were referred to the Office of the Medicaid Inspector General.

DiNapoli released three audits today examining New York’s Medicaid program. One of the audits found DOH made more than $53 million in improper payments for recipients who had multiple Medicaid identification numbers. While DOH agreed that improper payments were made, they are only taking action to recover $2.4 million of the $53 million.

“This is not the time to be wasting tens of millions of taxpayer dollars and doing nothing to recover $50 million,” DiNapoli said. “Our audits keep finding that the safeguards designed to detect waste, fraud and abuse have failed over and over again. Multiple ID numbers, overpayments, payments for unnecessary services ― it just goes on and on. The Department of Health has to start protecting the taxpayers’ money and fix the leaks in the Medicaid system. It’s just costing taxpayers too much.”

The first audit found $53 million in improper payments for 25,950 Medicaid recipients who were assigned more than one identification number from local social services districts. DOH made separate Medicaid payments under each identification number to providers. DOH is taking steps to recover duplicate premium payments to single managed care plans totaling $2.4 million. However, it is DOH’s policy not to investigate or recover premium overpayments when two or more Medicaid providers are paid for the same recipient with multiple identification numbers. DOH officials said they could not readily determine which provider to recover payments from.

The second audit found $21.5 million in claims that were either not correct or not properly processed in DOH’s claims processing system called eMedNY. Auditors identified and prevented $20.3 million in claims from being paid out because of an incorrect reimbursement rate in the system. The rate was changed from $147.74 to $15,151.28 and was not detected by eMedNY.

Another $1.2 million was paid out primarily for incorrect neonatal claims and transportation services that were either not medically necessary or not provided. Auditors also found an instance where a Medicaid recipient living in Poughkeepsie, NY received taxi service at a cost of approximately $300 per day for five days a week to visit her child living in a long-term care facility in Albany, NY.

While there was no medical reason for these trips, the Dutchess County Local Department of Social Services approved the trips totaling nearly $196,000.

The final audit found $17.4 million in improper and potentially inappropriate payments, including $5.4 million in overpayments to ten hospitals for incorrectly billing a patient that had been discharged from the hospital rather than transferred to another hospital. Hospitals receive higher payments from the Medicaid program if a patient is discharged.

In one example found, a patient was admitted to a hospital for 18 days for injuries sustained in an accident and was later transferred to another hospital. However, the hospital claimed he was discharged and was paid $253,000 for his treatment rather than the $92,000 it should have been paid. By conducting a broader review of these claims, auditors believe DOH would identify an additional $12 million in improper payments due to these types of errors and abuse.

The audits recommend DOH:

  • recover the overpayments and investigate other potential overpayments identified by auditors;
  • advise the New York City Human Resources Administration and local county social service agencies of how to avoid the common situations when multiple identification numbers are assigned to patients. In addition, auditors recommend that local officials be better informed of the controls built into the Medicaid system to determine if an applicant already has a number;
  • issue guidance to hospitals on the appropriate use of discharge and transfer codes;
  • develop appropriate safeguards in eMedNY to prevent providers from improperly billing for transportation services; and
  • inform providers of the proper way to bill for transportation services and perform reviews of providers to ensure that only appropriate transportation services are reimbursed.

The State Comptroller’s office has issued numerous audits identifying problems with eMedNY. When claims are processed by eMedNY, they are subject to various automated checks or edits that determine whether the claims are eligible for reimbursement. For example, eMedNY can verify the eligibility of recipients and detect unwarranted procedures or duplicate bills. In addition, eMedNY can deny or suspend a claim or take other actions if certain criteria are not met. However, auditors have identified several situations when edits were not working properly or had not been implemented. For example, when auditors recommended DOH created a new edit to deny payment to third party insurance for claims determined to be invalid, DOH saved $13.8 million in an eight-month period.

DOH officials generally agreed with the audits’ recommendations.

About the State Comptroller’s Medicaid Audits
The Office of the State Comptroller conducts regular audits of the state’s $45 billion Medicaid program. In 2009, auditors have identified $169 million in overpayments and savings. Auditors review Medicaid claims that have been submitted by service providers and identify billing patterns and other circumstances that warrant an examination to determine whether claims are valid and appropriate.

Click here for a copy of the first audit.

Click here for a copy of the second audit.

Click here for a copy of the final audit.

Comptroller audio available.

Click here for a copy of Press Conference Photo.



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