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July 24, 2012


DiNapoli: Excess Medicaid Payments Cost State $33 Million

Audits Also Reveal Problems With Drug Rebate Collections

The State Department of Health (DOH) made $32.9 million in Medicaid overpayments during a five-year period due mainly to the issuance of multiple identification numbers to Medicaid recipients, according to two audits released today by New York State Comptroller Thomas P. DiNapoli. A third audit found $24 million in missed savings for physician-administered drugs.

“Due to a lack of basic oversight, overpayments such as these continue to plague the system,” said DiNapoli. “Previous audits have identified nearly $100 million in Medicaid overpayments resulting from people with multiple identification numbers and missed savings opportunities. There is no reason these problems should persist.”

DiNapoli’s office has issued numerous audits identifying problems with eMedNY – the DOH claims processing system. Through eMedNY, Medicaid claims are subject to various automated checks or edits that determine whether the claims are eligible for reimbursement. Auditors continue to find cases where these essential filters are not working properly or have not been implemented.

The first audit found that, between 2005 and 2010, DOH made $15.6 million in improper managed care payments on behalf of 14,899 foster and long-term care recipients who, by state law, were precluded from enrollment in managed care programs.

A second audit found that DOH overpaid Medicaid providers $17.3 million from 2007 through 2010 because local social services districts improperly assigned multiple identification numbers to nearly 10,000 enrollees.

New York has 58 local social services districts which cover residents in the counties throughout the state, except New York City - where the five boroughs comprise one local district. These districts determine Medicaid eligibility requirements and enroll recipients in fee-for service or managed care programs. Auditors found these districts provided 9,848 recipients more than one identification number -- nearly 90 percent of these instances stemmed from the New York City Human Resources Administration.

In the third report, DiNapoli’s auditors examined DOH records between 2008 and 2011 to determine if DOH maximized rebate collections through the physician-administered drug rebate program and was properly billed by providers through the federal discount prescription drug program.

The review found delays in the department’s implementation of necessary automated Medicaid system controls that enforce compliance with the rebate program.

Because of the delays, the automated system stopped nearly $8.5 million in rebate collections for physician-administered drugs. Also, flaws in the department’s collection process prevented additional rebates of over $13.5 million. The audit also found DOH missed an estimated $2.3 million in savings on 33,000 claims for physician-administered drugs because medical providers billed Medicaid more than the discounted acquisition costs of the drugs.

The Comptroller’s audits recommend that DOH move to recover funds where possible and take immediate steps to prevent the issuance of multiple identification numbers to Medicaid recipients.

Additional recommendations include:

  • Improve oversight and monitoring of Medicaid managed care enrollments;
  • Obtain rebates on all physician-administered drug claims, regardless of claim type; and
  • Develop and implement Medicaid exception reports which detail payments for a recipient with multiple identification numbers.

The Department of Health has reviewed the audit findings and has indicated it has begun to implement a number of the Comptroller’s recommendations. Its full response is included in the audit.

For a PDF copy of the reports visit:


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