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NYS Comptroller


Taxpayers' Guide to State and Local Audits

Department of Health
Improper Medicaid Payments for Misclassified Patient Discharges (Follow-Up)

Issued: September 19, 2012
Link to full audit report 2012-F-10

To determine the extent of implementation of the five recommendations included in our initial audit report, Improper Medicaid Payments for Misclassified Patient Discharges (2009-S-26).

Our initial audit report, which was issued on December 22, 2009, examined whether the Department of Health (Department) ensured that Medicaid diagnosis related group claims were billed correctly when a patient was discharged from a hospital or was transferred from one hospital to another. During the audit period, January 1, 2004 through March 31, 2009, our audit identified 211 claims that were incorrectly coded as a discharge (instead of a transfer) and resulted in Medicare overpayments totaling $5.4 million. We also identified 3,000 other high risk claims that required further review. We recommended the Department recover the overpayments we identified in the report and investigate the other high risk claims we identified. We also recommended the Department issue formal guidance to hospital providers on the appropriate uses of discharge and transfer codes and that the Department provides guidance to IPRO for improving its review of hospital claims.

Key Findings

  • Department officials have made some progress in correcting the problems we identified in the initial report. As such, improvements are still needed. Of the five prior audit recommendations, four were partially implemented and the remaining recommendation was not implemented.

Key Recommendations

  • Officials are given 30 days after the issuance of the follow-up review to provide information on any actions that are planned to address the unresolved issues discussed in this review.

Other Related Audits/Reports of Interest
Department of Health: Improper Medicaid Payments for Misclassified Patient Discharges Report 2009-S-26

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