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Office of the New York State Comptroller

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Department of Health
Overpayments to Cabrini Medical Center


Issued: April 3, 2012
Link to full audit report 2011-S-8

Purpose
To identify Medicaid overpayments made to the Cabrini Medical Center because of incorrect adjustments made to previously paid claims and to identify the eMedNY claims processing control weaknesses that allowed the overpayments to occur.

Background
Medicaid providers submit claims to the Department of Health's eMedNY claims processing system for payment of their services. For various reasons, Medicaid providers sometimes need to adjust a previously paid claim and resubmit it to eMedNY for additional processing. Cabrini Medical Center (Cabrini), a hospital in New York City, was a Medicaid provider of inpatient care until it closed in June 2008. In July 2009, Cabrini filed for Chapter 11 bankruptcy. In August 2009, Cabrini hired The Gaeta Company, Inc. (Gaeta) to review Cabrini's previously paid Medicaid claims and determine if additional revenues could be obtained through claim adjustments. In this regard, Gaeta was a service bureau (billing agent) for Cabrini. Since August 2009, Gaeta adjusted and resubmitted over 360 claims for Cabrini. Medicaid originally paid Cabrini $2.2 million on those claims. However, after adjustment, the claims totaled $5.4 million - an increase of $3.2 million over their original amounts.

Key Findings

  • Gaeta caused $1.9 million in Medicaid overpayments to Cabrini by incorrectly altering information on prior claims and resubmitting them to Medicaid. In these instances, the original claim was correct and should not have been adjusted and resubmitted.  Auditors also referred $618,000 in potential overpayments to the Department of Health for further review.
  • In some cases, the adjustment claim was significantly more than the original claim. On one particular claim, for example, Medicaid originally paid Cabrini $6,656.  Gaeta, however, improperly adjusted the claim by omitting the amount Medicare already paid on it.  As a result, Medicaid overpaid the adjusted claim by $355,859.
  • The eMedNY system did not have the controls necessary to identify unreasonable or suspicious adjustment claims.

Key Recommendations

  • Recover the Medicaid overpayments made to the Cabrini Medical Center.
  • Investigate The Gaeta Company, Inc.
  • Implement controls within eMedNY to identify questionable adjustment claims.

Other Related Audits/Reports of Interest

Department of Health: Medicaid Claims Processing Activity April 1, 2010 through September 30, 2010 Report 2010-S-15


State Government Accountability Contact Information:
Audit Director: Brian Mason
Phone:(518) 474-3271; Email: StateGovernmentAccountability@osc.state.ny.us
Address: Office of the State Comptroller; Division of State Government Accountability; 110 State Street, 11th Floor; Albany, NY 12236