Accuracy of Reported Cost Savings

Issued Date
July 11, 2014
Agency/Authority
Medicaid Inspector General, Office of the

Purpose

To assess the accuracy of the Office of the Medicaid Inspector General's reported cost savings for calendar years 2008 through 2012. This audit covers the period January 1, 2008 through December 31, 2012.

Background

The Office of the Medicaid Inspector General's (OMIG) mission is to enhance the integrity of the New York State Medicaid program by preventing and detecting fraudulent, abusive and wasteful practices, and to recover improperly expended Medicaid funds while promoting a high quality of patient care. OMIG conducts and supervises prevention, detection, audit and investigation efforts, and coordinates activities with various State agencies as well as Federal and local law enforcement agencies. These activities result in reported cost savings to the Medicaid program. There are no industry standards or guidelines for calculating cost savings values, so OMIG calculates cost savings as estimates based on historical and current Medicaid claims data. For calendar years 2008 through 2012, OMIG reported cost savings totaling $10.1 billion for 35 initiatives.

Key Findings

  • Although our audit showed the majority of the reported cost savings we examined were reasonable and adequately supported, we also estimate OMIG overstated savings from 27 of 35 activities examined by at least $1.2 billion as a result of flaws and/or inconsistencies in the methodologies used to estimate savings. OMIG officials indicate they have taken corrective action on the methodologies for many of these 27 activities.
  • A lack of communication among the managers responsible for the various activities contributed to these problems.

Key Recommendations

  • Perform a full review of cost savings activities to identify and correct inconsistencies and inaccuracies in methodologies.
  • Routinely take steps to identify changes in the Medicaid program that impact cost savings activities and update cost savings methodologies when needed to ensure consistency among all cost savings methodologies.
  • Improve communication among managers responsible for cost savings calculations and use their collective input to help routinely identify inconsistencies and refine methodologies.

Other Related Audit/Report of Interest

Office of the Medicaid Inspector General: Quality of Internal Control Certification (2012-S-46)

John Buyce

State Government Accountability Contact Information:
Audit Director: John Buyce
Phone: (518) 474-3271; Email: StateGovernment[email protected]
Address: Office of the State Comptroller; Division of State Government Accountability; 110 State Street, 11th Floor; Albany, NY 12236