Overpayments for Therapy Services and Prescription Drugs Covered by Medicare (Follow-Up)

Issued Date
November 29, 2021
Health, Department of (Medicaid Program)


To assess the extent of implementation of the three recommendations included in our initial audit report, Overpayments for Therapy Services and Prescription Drugs Covered by Medicare (Report 2016-S-73).

About the Program

The New York State Medicaid program provides a wide range of medical services to those who are economically disadvantaged and/or have special health care needs. Many of the State’s Medicaid recipients are also enrolled in Medicare. Such individuals are referred to as “dual-eligibles.” The Medicare program covers physical, occupational, and speech therapy services as well as prescription drugs. When these services are rendered to dual-eligible recipients, health care providers are required to bill Medicare, which is generally the primary payer, before billing Medicaid.

We issued our initial report on October 30, 2019. The audit objective was to determine if the Department of Health (Department) overpaid health care providers’ Medicaid claims for therapy services and prescription drugs that are covered by Medicare. The audit covered the period January 1, 2012 to December 31, 2016 for prescription drugs and January 1, 2012 to December 31, 2017 for therapy services. The audit concluded that the State’s Medicaid program paid $20.1 million for services that, according to the claims data, were Medicare-covered services that should have been paid by Medicare. The payments included $18.6 million for physical, occupational, and speech therapy services and $1.5 million for prescription drugs. Auditors found many providers were generally unaware that Medicare covers therapy services, particularly maintenance therapy provided by licensed therapists. As a result, the providers often did not bill Medicare for the services or incorrectly reported a modifier code, which caused Medicare to automatically deny the claims. Also, over half of the prescription drug claims were paid for recipients whose Medicare Part D coverage was retroactively updated; therefore, the recipients’ Medicare coverage information was not available to providers on the service dates.

Key Finding

Department officials made some progress in addressing the problems identified in the initial audit report; however, additional action is needed. For instance, since the initial audit, we identified over $17.7 million in new improper payments and further actions are still needed to take corrective steps and recover overpayments. Of the initial report’s three audit recommendations, two were partially implemented and one was not implemented.

Key Recommendation

Officials are given 30 days after the issuance of this follow-up to provide information on any actions that are planned to address the unresolved issues discussed in the report.

Andrea Inman

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