Office of the State Comptroller Issues Medicaid Program Integrity Report

The New York State Medicaid program is projected to have a $62 billion-dollar price tag in State Fiscal Year 2016, with $22.4 billion paid out by the State, as explained by the New York State Office of the Comptroller (“OSC”) in its April 2015 report entitled Ensuring Integrity in New York State Medicaid.   As Medicaid continues to transition to a Managed-Care focused program, “maintaining accountability and strengthening program integrity remain[s] critical.”

Over the course of four years and 73 audit reports, OSC identified $874 million in mishandled Medicaid dollars from January 2011 through February 2015.  That amount is attributed to $513 million in incorrect payments and potential revenue, and $361 million in questionable transactions that largely require DOH to take action to realize any financial benefit.

Incorrect Payments and Potential Revenue Amount Amount
Drug Rebates and Discounts $171,492,301
Dual Eligible Claims $168,785,679
Nursing Home Claims $46,792,454
Hospital Billings $18,634,078
Managed-Care Organizations and Fee-for-Service Payments $17,761,852
Multiple Client Identification Numbers $17,344,047
Low Birth Weight Babies $14,586,679
Provider Errors on Claims $14,247,895
Other $43,840,580
Subtotal $513,485,565
Questionable Transactions $360,687,581

Total Findings


$874,173,146

More than 20% of OSC’s findings, or at least $190 million, can be attributed to the New York State Department of Health’s (“DOH”) troubled eMedNY system.  Program errors cross multiple finding categories and include:

  • Incorrect interpretation of crossover claim adjustment codes;
  • Improper payment of claims that should have been denied;
  • Inability to detect provider errors;
  • Improper application of Medicaid reimbursement limits;
  • Malfunctioning system controls that did not reflect DOH regulations;
  • Improper processing of nursing home residents’ Net Available Monthly Income (“NAMI”);
  • Inability to detect claim errors; and
  • DOH’s failure to properly enable the program to collect rebates.

However, “DOH is often slow to implement needed modifications recommended by [OSC] auditors that would have stopped improper payments from continuing.”  The report provides multiple examples where OSC recommendations were largely ignored for years.

  • In September 2009, auditors recommended that DOH develop a test process to identify potentially problematic Medicaid claims for services to newborns and to prevent overpayments on such claims. Allegedly DOH began to develop new eMedNY edits in March 2011.
  • DOH allegedly also largely ignored OSC’s recommendations to expand eMedNY’s rebate capabilities beyond two Medicaid claim categories (out of 15 available categories) for “nearly three years.”
  • After discovering eMedNY’s flawed processing of NAMI in 2010, DOH allegedly had still not implemented changes to correct the problem two years later. “A consultant hired by DOH noted that in 2007, the average time for DOH to complete a modification to eMedNY was 752 days.”

DOH has indicated that it plans to replace eMedNY with a new Medicaid Administrative Services system that will address many of the concerns raised in the OSC report.  OSC, in its recommendations, suggested that DOH implement previously issued OSC recommendations in the new Medicaid Administrative Services system.

 

This article was written by Kathleen Evers.  For more information, please contact David R. Ross, who served as Acting New York State Medicaid Inspector General under Governors Pataki and Spitzer, as well as General Counsel, Deputy Medicaid Inspector General, and Director of Audits and Investigations for the Office of the Medicaid Inspector General.  Prior to his service at the OMIG, David held several positions at the New York State Office of Alcoholism and Substance Abuse Services, including Acting General Counsel, Deputy Counsel, and Associate Counsel.  He can be reached at (518) 462-5601 or via e-mail at dross@oalaw.com.

 


Kathleen Evers

About Kathleen Evers

Kathleen is an associate with our Health Law department. She joined the firm as law clerk in 2014. Before joining O’Connell and Aronowitz, Kathleen was a law clerk in Counsel’s Office at the New York State Office of Medicaid Inspector General, as well as an intern in the Office of Counsel to the New York State Governor. Prior to law school, Kathleen was a Project Coordinator and Administrator for two health care consulting firms located in Washington, D.C. and Clifton Park, N.Y., as well as a Project Administrator with the New York State Department of Health’s Bureau of Early Intervention.