Objective

To determine whether Medicaid made improper payments for laboratory and related services. The audit covered the period from June 2019 through December 2025 for services exceeding lifetime limits, and June 2019 through January 2025 for services while members were hospitalized.

About the Program

The Department of Health (DOH) administers New York State’s Medicaid program. Laboratory services include medically necessary tests and procedures ordered by a qualified medical professional. DOH and managed care organizations (MCOs) can set service limits on laboratory procedures—such as daily, weekly, monthly, yearly, or per lifetime—that restrict the number of times a member can receive them. These limits are enforced in MCOs’ claim processing systems and in eMedNY (the Medicaid claim processing and payment system) through system edits, but can be exceeded for medical necessity. Per-lifetime service limits (lifetime limits) are established because certain services, such as genetic testing, are generally not medically necessary to receive more than once.

Medicaid all-inclusive hospital inpatient rates cover the costs of most services provided to hospitalized Medicaid members, including laboratory testing. Patients staying in a hospital may also receive diagnostic or therapeutic services from other providers if these services cannot be provided at the hospital where the member is staying. In such instances, neither provider can bill the Medicaid Program separately for services (e.g., laboratory services, ordered ambulatory services) because the Medicaid payment for inpatient care already includes those services, regardless of where they were performed.

Key Findings

Our audit found that DOH did not provide adequate guidance to providers and MCOs, nor did it effectively monitor claims for certain laboratory procedures to ensure Medicaid paid only for necessary services. We also identified weaknesses in the eMedNY system edits designed to prevent certain improper fee-for-service laboratory payments. These issues resulted in $21.6 million in payments, as follows:

• $19.8 million in payments for laboratory procedures that were performed more than once in a lifetime, even though DOH indicated the service is not typically needed more than once.
• $1.8 million in payments for laboratory or related services billed separately from an all‑inclusive inpatient claim.

Key Recommendations

• Develop a risk-based approach to review the $19.8 million for procedures paid more than once in a lifetime—giving particular focus to the highest-paid providers—and determine an appropriate course of action, including determining if any recoveries should be made.
• Evaluate eMedNY controls for laboratory procedure codes to ensure proper lifetime limits are set.
• Review the $1.8 million in payments for laboratory and ordered ambulatory services while members were hospitalized and recover, as appropriate.
• Ensure MCOs establish controls to prevent improper payments for laboratory and ordered ambulatory claims during inpatient stays.