Medicaid Program – Recovering Managed Care Payments for Inpatient Services on Behalf of Recipients With Third-Party Health Insurance

Issued Date
September 27, 2023
Health, Department of (Medicaid Program)


To determine whether Medicaid overpayments for inpatient services on behalf of managed care recipients who had third-party health insurance were appropriately recovered. The audit covered the period from January 2017 through August 2021.

About the Program

The Department of Health (Department) administers New York’s Medicaid program. Many of the State’s Medicaid recipients receive their services through managed care, where the Department pays managed care organizations (MCOs) a monthly premium for each enrolled recipient. In turn, the MCOs are required to pay for the services their recipients require, including inpatient services. Many recipients have other third-party health insurance (TPHI) in addition to Medicaid (e.g., employer-based coverage or Medicare Part A). Medicaid is considered the payer of last resort, and, as such, MCOs are required to coordinate benefits with the recipient’s TPHI prior to paying for Medicaid services. The Office of the Medicaid Inspector General (OMIG) contracts with Health Management Systems, Inc. (a Gainwell Technologies company [Gainwell]) to identify and recover payments made for services that should have been paid for by a recipient’s TPHI.

Key Findings

We found that the Department and OMIG lacked adequate oversight of the third-party liability (TPL) recovery process to ensure all available recoveries were made. During the audit period:

  • Gainwell did not bill TPHI carriers or initiate provider reviews for the recovery of $52.2 million in inpatient claims where MCOs paid as the primary insurance despite recipients having TPHI inpatient coverage. This included $8.5 million in claims where recovery was not attempted due to the Department’s improper and/or questionable exclusion rules.
  • Gainwell’s recovery files contained $39.3 million in inpatient claims that were in an unresolved status due to TPHI carrier or provider non-response – of which $15.4 million had been in an unresolved status for over 2 years; as well as an additional $2.1 million in claims that were denied by TPHI carriers for reasons that could potentially be rectified.
  • Neither the Department nor OMIG performed reviews, reconciliations, or other monitoring of Gainwell’s recovery efforts by comparing claims MCOs paid on behalf of recipients with TPHI inpatient coverage with the claims Gainwell recovered.

Key Recommendations

  • Review the $52.2 million in claims for inpatient services on behalf of recipients with TPHI inpatient coverage and ensure overpayments are appropriately recovered.
  • Assess the $41.4 million ($39.3 million + $2.1 million) in claims for inpatient services that were billed to TPHI carriers or were part of provider reviews that did not result in a recovery, and ensure all necessary follow-up actions are taken to obtain appropriate recoveries.
  • Assess the TPL recovery process for managed care inpatient services to identify all factors that led to improper payments not being recovered, and ensure corrective actions are taken where appropriate.

Andrea Inman

State Government Accountability Contact Information:
Audit Director: Andrea Inman
Phone: (518) 474-3271; Email: [email protected]
Address: Office of the State Comptroller; Division of State Government Accountability; 110 State Street, 11th Floor; Albany, NY 12236