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NEWS from the Office of the New York State Comptroller
Contact: Press Office 518-474-4015

DiNapoli: Audit Finds More Than $16 Million in Medicaid Cost Savings

July 25, 2017

New York state's Medicaid system could have saved up to $13.6 million it spent on patients with severe kidney disease whose expenses could have been covered by the federal Medicare program, according to an audit released today by State Comptroller Thomas P. DiNapoli. Auditors also found another $3 million in cost savings. About $1.8 million of the overpayments were recovered before the close of the audit as a result of actions taken by DiNapoli's auditors.

"Every public dollar spent on New York's Medicaid program counts," DiNapoli said. "Our audits routinely catch millions of dollars in overpayments and our latest audit is no exception. The Department of Health should continue its efforts to recoup questionable payments and adjust its systems to prevent these problems from happening in the future."

New York's Medicaid program, administered by the state Department of Health (DOH), is a federal, state, and locally funded program that provides a wide range of medical services to those who are economically disadvantaged or have special health care needs.

DOH's eMedNY computer system processes Medicaid claims submitted by providers for services rendered to Medicaid-eligible recipients and generates payments to reimburse the providers for their claims. During the six-month period ended Sept. 30, 2016, eMedNY processed roughly 202 million claims, and reasonably ensured most Medicaid payments were correct. However, the audit identified opportunities for improved claims processing.

End stage renal disease (ESRD) is a medical condition in which a person has permanent kidney failure and requires dialysis or a kidney transplant to stay alive. Medicaid recipients with ESRD are eligible for Medicare coverage if they receive regular dialysis treatments or a kidney transplant, and meet certain requirements. When Medicaid recipients with ESRD are also enrolled in Medicare, Medicare becomes the primary insurer. As a secondary payer, Medicaid may pay a recipient's Medicare premiums, deductibles, and coinsurance amounts, which allows for a significant cost savings for the Medicaid program.

A previous audit found that DOH did not identify Medicaid recipients with ESRD, notify the recipients of their entitlement to Medicare or take actions to help them enroll in Medicare. In response to the audit findings, DOH initiated a project to identify recipients with an ESRD diagnosis and help get them enrolled in Medicare. Auditors estimated immediate corrective actions by DOH could save the state tens of millions of dollars.

When fieldwork concluded for the audit released today, DOH had not completed the project. For the period of Jan. 1, 2016 through Sept. 30, 2016, auditors identified an additional $13.6 million in total net payments for 781 recipients eligible for Medicare identified in the previous audit report. Social Security Administration policies allow for retroactive ESRD Medicare enrollment for up to 12 months to cover medical services already provided. Therefore, DOH can obtain claim recoveries by tracking when Medicaid recipients diagnosed with ESRD are retroactively enrolled in Medicare.

DiNapoli's auditors also found:

  • $1.1 million in improper payments to home health care providers;
  • $845,824 in overpayments for newborn claims that were submitted with incorrect birth weights;
  • $471,321 in overpayments for claims billed with incorrect information pertaining to recipients' other health insurance coverage;
  • $357,498 in improper payments for inpatient, durable medical equipment, clinic, child care, and transportation services;
  • $160,759 in overpayments for an inpatient claim that was billed at a higher level of care than what was actually provided; and
  • $25,354 in improper payments for duplicate billings.

DiNapoli recommended DOH recover the inappropriate payments.

Auditors also identified 15 Medicaid providers who were charged with or found guilty of crimes that violated the laws or regulations of a health care program. In addition, auditors identified three providers who were involved in civil settlements that involved health care-related matters. DOH terminated 15 of them from the Medicaid program. Prior to termination, Medicaid paid nine of the 15 a total of $99,038 from the date they were charged with a crime to their termination date. DOH should reexamine whether these payments were appropriate.

DOH officials generally agreed with the audit recommendations and indicated that certain actions have been and will be taken to address them. DOH's full response is included in the complete audit.

Read the report, or go to:

DiNapoli's office audits Medicaid payments on a routine basis to make sure claims are being paid appropriately and to determine if improvements are needed and whether money should be recovered because of errors, abuse or fraud. Since January 2016, DiNapoli's auditors identified problems or irregularities with more than $700 million in payments.

For access to state and local government spending, public authority financial data and information on 130,000 state contracts, visit Open Book New York. The easy-to-use website was created to promote transparency in government and provide taxpayers with better access to financial data.