The Health Law Sidebar
July 25, 2012

OSC Identifies $57 Million in Medicaid Overpayments and Missed Savings

On July 24, 2012, the office of the New York State Comptroller (“OSC”)  released the results of three separate audits which identified  a total of $33 million in Medicaid overpayments made by the New York State Department of Health (“DOH”) and an additional $24 million in missed drug rebate savings.

One audit found that,  between 2005 and 2010, DOH had made $15.6 million in improper payments under the Medicaid managed care program on behalf of over 14,000 foster and long-term care recipients who were ineligible for enrollment in these programs under state law, because Medicaid provides “daily rate” reimbursement programs  for care given to these populations.   The vast majority of these overpayments ($13.4 million)  resulted from “duplicate enrollments, which took place primarily in  New York City. There, local officials used one Medicaid identification number to enroll a child in managed care and a different identification number to enroll the same child for [Medicaid] payments under the [foster care] daily rate program.”

Another audit found that DOH again overpaid Medicaid providers $17.3 million from 2007 through 2010 as a result of  the assignment of multiple Medicaid identification numbers to nearly 10,000 enrollees.  The audit cited a lack of awareness, by local social services personnel, of online tools which could have identified whether individuals were already enrolled in Medicaid.

In the third audit, OSC auditors determined that, between 2008 and 2011, DOH failed to maximize rebate collections through the physician-administered drug rebate program as a result of delays in DOH’s implementation of “necessary automated Medicaid system controls that enforce compliance with the rebate program.”  These delays meant that DOH missed out on $8.5 million in drug rebate collections for physician-administered drugs.  Other flaws in DOH’s collection process “prevented additional rebates of over $13.5 million.”  The audit also found that another $2.3 million in savings on physician-administered drugs was missed because medical providers billed Medicaid more than the discounted acquisition costs of the drugs.

OSC has recommended that DOH, in addition to taking immediate steps to prevent the issuance of multiple Medicaid numbers, moves to to recover these overpayments and missed savings wherever possible.