Big Waste: New York Comptroller finds more than $100 million in improper Medicaid payments

Two audits and a follow-up report released Monday by New York State Comptroller Thomas DiNapoli found the state’s Department of Health made more than $100 million in wasteful payments for Medicaid programs.

New York’s Medicaid program is a major health insurance provider in the state. It serves more than a third of the state, with about 7.3 million beneficiaries as of March. Its users were responsible for claims totaling more than $68 billion.

“The Medicaid program provides critical health care services to millions of New Yorkers, but the program is dogged by oversight problems and payment errors,” DiNapoli said in a statement announcing the releases. “Over the years, we’ve uncovered billions of dollars of waste and abuse in the system.”

In one audit, the comptroller’s office found DOH made about $55 million in improper payments to Medicaid managed care organizations (MCOs) related to supplemental maternity payments. MCOs can receive those to cover prenatal and postpartum care for eligible enrollees.

The audit covered payments made between Aug. 1, 2015, through July 31, 2020. In that span, nearly $4.7 billion in payments were made to MCOs as part of the maternity care program.

The state found $29.1 million was disbursed without the MCOs having the necessary data to support the payments. Another $23.4 million was paid for cases that ended in either termination or miscarriage. Neither of which are eligible for payment under the supplemental program. MCOs also received about $2.4 million in program funds when the dates of service preceded a birth by up to six months.

By the time the audit was concluding, the MCOs had reversed nearly $2 million of the payments. DiNapoli’s office recommended the DOH monitor the maternity program and issue formal corrective actions against MCOs that cannot comply with the requirements.

Another audit looked at Medicaid payments for enrollees eligible for the Medicare “buy-in” program. From Jan. 1, 2015, to Dec. 31, 2019, New York’s Medicaid program paid $8 billion in premiums for more than 1 million beneficiaries.

That audit found $31.7 million in improper payments for more than 42,500 individuals who did not have supporting eligibility information listed in the state Medicaid claims processing system. In addition, the state paid more than $370,000 in premiums for 282 individuals who were listed as deceased,

The state might not recover much of that as the audit indicates the Centers for Medicare and Medicaid Services (CMS) will not pay back more than two months’ worth of improper premium payments unless the beneficiary is deceased.

The state also paid $23.6 million in premiums for more than 3,400 people that CMS automatically added to the buy-in program with effective coverage dating back more than two years, even though that goes against federal policy.

DiNapoli’s report said the state may be eligible to recoup its share of the $13 million in payments made for premiums covering more than two years of retroactive premiums. His office also called on the state to increase oversight over local districts that are responsible for determining if area Medicaid beneficiaries are also eligible for Medicare.

In the third release, the comptroller’s office followed up on a report from two years ago that found Medicaid paid for more than $20 million in prescription drug and therapy services that Medicare should have covered.

While the report indicated that Medicaid officials had taken some steps to rectify the situation, auditors found more than $17.7 million in additional services Medicaid paid for that should have been billed to Medicare.

DiNapoli’s office gave three recommendations in that 2019 report. DOH had only partially implemented two of those - determining the providers who received the most payments and ensuring providers understand how to bill dual-eligible patients.

Had DOH taken more prompt action to recoup payments after the initial report was released, the report said the state could have gotten back up to $3.8 million in improper payments dating back to 2014. Instead, the state missed out due to the federal statute of limitations.

A third recommendation to include controls in the Medicaid claims processing system to prevent such overpayments had not been implemented. Medicaid officials claimed enhancements it proposed would address the issue, but auditors later determined that would not cover all specific causes.