New York State Comptroller Thomas P. DiNapoli today released four audits of the state Department of Health’s (DOH) oversight of the Medicaid program. The audits identified approximately $790 million in savings from eliminating unnecessary payments and collecting rebates from drug makers.

“New York state faces a projected budget gap of $6 billion for the coming fiscal year, in part because of higher Medicaid spending,” DiNapoli said. “Over the last four years, my auditors have focused on the Medicaid program, uncovering billions of dollars in waste, fraud and abuse. Our role is to help lower Medicaid program costs by identifying significant cost savings, revenue enhancements and waste. That mission will continue in earnest as the state Department of Health can do much more to save taxpayer dollars.”

The New York State Medicaid program is a federal, state and locally funded program that provides a wide range of health care services to individuals who are economically disadvantaged or have special health care needs. For the State Fiscal Year ended March 31, 2019, New York’s Medicaid program had approximately 7.3 million recipients and Medicaid claim costs totaled about $67.4 billion.

Improper Fee-for-Service (FFS) Payments for Services Covered by Managed Long-Term Care (MLTC) Plans (2018-S-65)

Many of the state’s Medicaid recipients are enrolled in MLTC plans. The plans provide long-term care services to people who are chronically ill or disabled. Medicaid pays MLTC plans monthly managed care premiums and, in return, MLTC plans pay for all MLTC covered services. The Medicaid program is not supposed to pay claims on a FFS basis for services covered by MLTC plans. However, auditors identified $16.4 million in improper FFS payments for MLTC covered services. Those included $15.6 million that was paid because the eMedNY computer system did not identify certain MLTC services as the responsibility of the MLTC plan.

Medicare Part D Clawback Payments (2018-S-46)

Under federal law, DOH is required to make a monthly payment (referred to as a “clawback” payment) to the federal government to cover part of the cost of prescription drugs for state residents who are eligible for both Medicare and Medicaid. From Jan. 1, 2017 to Dec. 1, 2018, DiNapoli’s auditors found opportunities for reducing clawback payments totaling $2.9 million. The payments included: $1.65 million in payments on behalf of 2,315 recipients who were receiving Medicaid in another state; $451,348 in payments on behalf of 1,250 recipients who either were only eligible for partial Medicaid benefits or did not have any Medicaid coverage; $269,478 in payments for 645 recipients who appear to have been incarcerated; $259,584 in payments for 929 deceased recipients; and $257,761 in payments on behalf of 714 recipients who no longer had Part D coverage.

Maximizing Drug Rebates for Health and Recovery Plans (HARP) (2019-F-41)

An initial report issued in June 2018 determined DOH failed to collect rebates for HARP-related drugs since the program’s inception. Auditors notified DOH of this and, in response, the department promptly updated its procedures and invoiced $425.9 million in HARP drug rebates. Auditors also identified an additional $1.2 million in rebates that could be collected with further efforts. Since the audit, auditors estimated DOH was able to collect another $570 million in rebates as a result of the initial audit’s findings.

Managed Care Premium Payments for Recipients with Comprehensive Third-Party Health Insurance (TPHI) (2019-F-33)

An audit issued in June 2018 identified $1.28 billion in premiums that were paid erroneously on behalf of recipients who had concurrent comprehensive TPHI from Jan. 1, 2012 through Sept. 1, 2017. In a follow-up review, auditors found DOH made progress in addressing the problems identified in the initial audit report; however, additional action is needed to reduce future improper payments. For instance, for the one-year period ended Sept. 30, 2019, DOH paid another $199 million in Medicaid mainstream managed care premiums for recipients who had comprehensive TPHI.

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