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NYS Comptroller


Taxpayers' Guide to State and Local Audits

Department of Health
Medicaid Program: Improper Payments for Ancillary Services Provided During Hospital Inpatient Admissions

Issued: April 03, 2014
Link to full audit report 2012-S-160
Link to 90-day response

To determine whether the Department of Health's eMedNY system processes Medicaid claims for ancillary services in accordance with Medicaid reimbursement policies. The audit covers the period April 1, 2012 through September 30, 2013.

Ancillary services refer to health care services provided in the home, medical offices, clinics, and other freestanding sites. They can be classified into three general categories: diagnostic, therapeutic, and custodial. For example, laboratory, physical therapy, and home health care are typical ancillary services. Medicaid claims for ancillary services are processed by eMedNY, the Department's automated claims processing and management information system. Claims are subject to various edits - automated controls within eMedNY designed to pay Medicaid claims in accordance with the Department's Medicaid reimbursement policies. Some edits check various Department files to verify recipient eligibility, provider credentials, and medical necessity. Other edits compare claims to each other to detect improper claims, including duplicate claims for the same service. Improper Medicaid claims detected by eMedNY are either denied or paid and reported to Department officials for review.

Medicaid reimbursement rates for inpatient hospital claims include the costs of most medical care provided during a hospital admission. As such, claims for ancillary services provided during a hospital admission are generally not reimbursable. In 2007, the Department implemented several eMedNY edits to detect improper Medicaid claims for ancillary services for hospitalized recipients.

Key Findings

  • eMedNY identified 9,821 improper ancillary service claims totaling about $1 million that were paid and reported to Department officials. However, at the time of our audit fieldwork, Department officials had not taken actions to recover these improper payments.
  • In addition, Medicaid paid $368,000 for about 6,600 improper ancillary service claims for recipients who were also covered by Medicare.

Key Recommendations

  • Recover the $1 million in improper Medicaid payments for ancillary services that were detected by eMedNY and reported to the Department.
  • Recover the $368,000 in improper Medicaid payments for claims for ancillary services provided to recipients also covered by Medicare. • Enhance existing eMedNY edits or implement new edits to detect any improper claim for ancillary services. Such edit enhancements should also provide for the prevention or recovery of related payments.

Other Related Audits/Reports of Interest

Department of Health: Overpayments of Ambulatory Patient Group Claims (2011-S-43)
Department of Health: Medicaid Claims Processing Activity October 1, 2011 Through March 31, 2012 (2011-S-39)

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