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July 9, 2013


DiNapoli Finds Millions in Medicaid Overpayments

New York State's Medicaid program overpaid providers $11.4 million, largely because providers overstated the amounts of Medicare coinsurance charges and incorrect rate changes, according to two audits of the Department of Health (DOH) released today by State Comptroller Thomas P. DiNapoli. The state has recovered $3.8 million of these overpayments.

"New York's Medicaid system continues to be rife with waste," DiNapoli said. "Year after year my auditors identify the same types of Medicaid errors due to weak controls. As a result, New York taxpayers pay millions more than they should. DOH needs to greatly improve its supervision of the program to protect taxpayer dollars."

Medicare Coinsurance
Many of the state's Medicaid recipients are also eligible for Medicare. Generally, Medicare is the primary payer of claims for services provided to dual eligible recipients. After Medicare processes a claim, Medicaid pays the balance that is not covered by Medicare.

Auditors obtained Medicare Part B payment data and compared that data to the Medicare amounts providers reported to DOH's eMedNY computer system for Medicaid claims processed in 2009, which was the most current Medicare data available at the time.

DiNapoli's auditors determined that Medicaid overpaid more than 210,000 claims by more than $7 million, primarily because providers incorrectly reported the amounts of Medicare coinsurance charges. Providers reported their own charges for Part B services to Medicaid instead of the Medicare-approved amounts, therefore inflating the amount they were reimbursed by Medicaid.

Medicaid made the overpayments to 8,727 providers, of which 24 received overpayments of more than $41,000. Three providers each received overpayments of more than $114,000, with one receiving overpayments of more than $192,000.

In one case, a provider reported a charge of $250 to Medicaid for a session of psychotherapy instead of the Medicare-approved amount of $102. As a result, Medicaid overpaid the provider $148, or 145 percent more than it should have. On balance, the 210,000 claims were overpaid by about 50 percent.

In addition, auditors found almost $239,000 in additional overcharges because Medicaid incorrectly designated certain providers as eligible for enhanced payments under federal law. In one instance, a provider submitted a claim for $216 to cover a Part B coinsurance charge. However, because DOH incorrectly designated the provider for enhanced payments, Medicaid paid $745 on the claim.

DiNapoli recommended DOH:

  • Review and recover Medicaid overpayments (totaling about $7.1 million) from providers that improperly reported Part B coinsurance data; and
  • Review and recover Medicaid overpayments (totaling $238,842) made to providers who were incorrectly designated to receive higher payments.

Full report, including DOH's response

Erroneous Rates and Other Errors
In another audit released today, auditors examined a six-month period that ended March 31, 2012 during which DOH's eMedNY computer system processed 233 million claims resulting in payments to providers of about $25 billion. The claims are processed and paid in weekly cycles.

DiNapoli's auditors identified about $4.1 million in overpayments resulting from:

  • Incorrect retroactive rate changes that caused overpayments totaling $2.4 million;
  • Claims billed with information from other health insurance plans that was inaccurate,
  • Inpatient claims billed with high (intensive) levels of care that should have been based on less costly "alternate" levels of care;
  • Claims with improper payments for physician-administered drugs, inpatient services, duplicate procedures, medical equipment, transportation services and nursing home services.

At the time the audit fieldwork concluded, about $3.8 million of these overpayments had been recovered.

Full report, including DOH's response

DiNapoli, as part of his responsibilities to audit state payments, has expanded an ongoing Medicaid audit initiative that has found more than $1.63 billion in waste, fraud and abuse, including $77.6 million in 2013.

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