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

DiNapoli: State Medicaid Needs to Stop Paying Bills That Federally Funded Plans Should Cover

Audits Find Medicaid Paid Up To $388 Million That Should Have Been Paid By Federally Funded Plans
Stronger Enrollment and Payment Oversight Needed

September 14, 2023

The state Department of Health (DOH) can save hundreds of millions of dollars in costs if it strengthens its oversight of enrollment in Medicaid and other public health plans, according to two audits released today by State Comptroller Thomas P. DiNapoli.

“Far too often the Department of Health has let the state’s Medicaid program pay for services that federally-funded health care programs should have covered,” DiNapoli said. “As the DOH continues its efforts to ensure everyone gets the health coverage they’re entitled to, it has a chance to save hundreds of millions of dollars by improving its oversight.”

The audits DiNapoli released today examined whether DOH was doing enough to control Medicaid costs for New Yorkers’ health care. The audits found tens of thousands of instances in which state Medicaid paid costs that another, federally-funded health care plan, such as the Essential Plan or Medicare, should have paid. These shortcomings are particularly important to address as New York, like other states, “unwinds” pandemic requirements to maintain enrollment by recertifying eligibility for Medicaid, which may result in enrollees transferring to other public plans.

Medicaid Paying Costs That Should Be Covered By Medicare

Most individuals receiving Medicaid are required to apply for federally-funded Medicare at age 65. Under DOH’s supervision, local departments of Social Services are supposed to identify those who appear eligible for Medicare and have them apply. DiNapoli’s audit, which covered the period from July 2016 to June 2021, found that DOH gave guidance to local departments of Social Services, but it did not make sure they complied with this guidance. The audit found state Medicaid could have saved up to $294.4 million in payments on medical services if 13,318 individuals who appeared qualified for Medicare had enrolled over a six-year period ending June 2021.

Included in that group are those who were eligible, but were not required to enroll in Medicare because the rules were suspended during the pandemic. The requirement was reinstated in June 2023. Among the 13,318 individuals, there were 3,780 who appeared to become eligible during the pandemic in a period from January 2020 through June 2021. The audit calculated that Medicaid could have saved $37.3 million (part of the $294.4 million) if they had been enrolled in Medicare. Although local departments of Social Services were not required to ensure people applied for Medicare during the public health crisis, they were not prohibited from offering people the opportunity to enroll. The 3,780 individuals will need to first renew their Medicaid coverage as part of the state’s unwinding process before they can apply for Medicare, if they are eligible. State Medicaid will continue to pay their health care costs until then.

Medicaid Paying Costs That Essential Plan Should Cover

The 2010 Affordable Care Act let states create a Basic Health Plan to provide health insurance to lower income individuals who are not eligible for Medicaid. New York’s Basic Health Plan, known as the Essential Plan, became available in January 2016. As of March 31, 2022, the state’s Essential Plan had enrolled approximately 971,000 individuals with program costs of $5.5 billion that are 100% covered by federal funds. DOH administers both Medicaid and the Essential Plan.

Because the qualifications for Medicaid and the Essential Plan are similar, individuals can transition from one plan to the other as their income, household and other factors change.

Because Medicaid is always the payer of last resort, the Essential Plan is supposed to be the primary payer during any overlap and Medicaid should only pay any remaining costs such as deductibles.

DiNapoli’s second audit, which covered the period from Jan. 2017 to Nov. 2022, found the DOH, despite having enrollment information for both plans, never treated the Essential Plan as the primary insurer during overlap periods since its inception in 2016. As a result, Medicaid has improperly paid the full amount for services during overlaps for a total of $93.7 million.

During the first two months of DOH’s Medicaid unwind, June and July of 2023, approximately 69,819 individuals moved from Medicaid to the Essential Plan and approximately 21,946 transitioned to Medicaid from the Essential Plan. Based on the audit’s findings, DOH should be able to achieve significant savings as individuals move from one program to the other.

The audits recommended the DOH ensure Medicare-eligible members are identified and enrolled and that it recover as much of the $93.7 million that should have been billed to the Essential Plan as it can.

In its response, DOH said that, as part of its unwind process, it has sent renewal guidance to local departments of Social Services and was working with them to identify Medicare eligible members and have them enroll in it. Officials also said they were reviewing improperly billed costs for potential recovery. DOH’s complete responses are available in the audits.

Department of Health: Medicaid Program: Reducing Medicaid Costs for Recipients Who are Eligible for Medicare
Department of Health: Medicaid Program: Improper Medicaid Payments During Permissible Overlapping Medicaid and Essential Plan Coverage