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NYS Comptroller


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01/16/15, Contact: Press Office (518) 474-4015

DiNapoli: Audits Find More Than $1 Million of Waste in New York's Medicaid Program

The state Department of Health (DOH) inappropriately paid more than 29,000 pharmacy claims worth nearly $1 million over a 27-month period for thousands of Medicaid recipients whose benefits were already covered by managed care plans, according to an audit released today by State Comptroller Thomas P. DiNapoli. A second audit released today found another $61,711 in overpayments to providers because of incorrect Medicare coinsurance, copayment or deductible amounts.

“The state’s Medicaid program, providing health care for millions of New Yorkers, accounts for a huge share of the state budget each year,” DiNapoli said. “DOH has to do a better job making sure that the money spent on this important program is not being wasted and is being used for necessary and appropriate treatments. Taxpayers have invested heavily in the Medicaid system and have a right to expect that health care dollars are being spent as needed.”

Medicaid is a federal, state and local government program that provides a wide range of medical services to those who are economically disadvantaged and/or have special health care needs. For the fiscal year ended March 31, 2014, New York’s Medicaid program had approximately 6.5 million enrollees and Medicaid claim costs totaled about $50.5 billion.

DOH generally uses two methods to pay Medicaid providers: the fee-for-service method or the managed care plan method. Under the fee-for-service method, Medicaid pays providers directly for services rendered to Medicaid recipients. Under the managed care plan method, Medicaid pays each managed care organization (MCO) a monthly premium for every Medicaid recipient enrolled in the plan, and the MCO arranges for the provision of services its members require. During the audit period of Oct. 1, 2011 through Dec. 31, 2013, Medicaid paid more than $126 million in premiums to MCOs for health services, including pharmacy benefits, for Medicaid recipients.

In one audit, DiNapoli’s auditors found the inappropriate payments, totaling $978,251, occurred primarily because Medicaid eligibility files were not updated with MCO enrollment information in a timely manner, in some cases taking more than 180 days to do so. As a result, eMedNY, the computer system DOH uses to process Medicaid claims and make payments, did not deny improper fee-for-service pharmacy claims.

For example, from August 2012 through April 2013, Medicaid paid 51 fee-for-service pharmacy claims totaling $1,736 on behalf of a recipient who was enrolled in a managed care plan during the entire period. Because the recipient’s pharmacy claims were covered by the MCO, eMedNY should not have made the $1,736 in fee-for-service payments.

DiNapoli recommended DOH:

  • Review the improper fee-for-service claim payments identified and recover funds as appropriate; and
  • Take corrective action to ensure enrollment information is entered and updated in a timely manner.

DOH officials concurred with the recommendations and indicated that actions have been and will be taken to address them. For a copy of the full report, including DOH’s response, visit: Improper Fee-For-Service Payments for Pharmacy Services.

In a separate report, DiNapoli’s auditors examined Medicare Part C claims for services rendered to Medicaid recipients enrolled in UnitedHealthcare Dual Complete over a five-year period ended Aug. 31, 2013 and identified 5,571 claims totaling $657,308 that either had unreasonably high patient cost-sharing amounts or indicated UnitedHealthcare did not cover the service.

From a review of 125 Medicaid claims totaling $151,069, auditors determined Medicaid overpaid 54 (43.2 percent) of those claims by $61,711. Twenty-six providers billed the overpaid claims, and the overpayments represented 40.8 percent of the amounts billed. If the overpayment rates for the 5,446 high risk claims that were not reviewed in detail were consistent with the overpayment rates for the 125 that were tested, the additional overpayments would amount to about $200,000. Auditors found that most of the overpayments occurred because the providers billed claims with incorrect Medicare coinsurance, copayment, or deductible amounts.

At the time of the audit, ten providers had already adjusted their claims through eMedNY, resulting in Medicaid recoveries totaling $23,374. Additional actions are needed to recover the balance of overpayments.  

DiNapoli recommended DOH:

  • Review and recover improper overpayments;
  • Formally instruct providers, including those identified in this report, to bill Medicare Part C claims in accordance with existing requirements to ensure Medicaid claims are accurately billed; and
  • Formally assess all claims that auditors did not examine in detail and determine if overpayments were made that warrant recovery. 

DOH agreed with the findings of this audit. For a copy of the report, including DOH’s response, visit:
Medicaid Overpayments for Certain Medicare Part C Claims.



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