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July 25, 2013


DiNapoli: State Overpaid $7.8 Million For Hospital Admissions

High Risk of Additional Overpayments for Acute Care

The state Department of Health (DOH) improperly paid hospitals $7.8 million for lengthy acute care admissions because hospitals billed Medicaid for higher levels of care than was actually delivered to patients, according to an audit released today by New York State Comptroller Thomas P. DiNapoli.

“New York State cannot afford to make Medicaid payments for care that was either not provided or unnecessary,” DiNapoli said. “This is a misuse of taxpayer dollars and these types of mistakes should be stopped. The Department of Health must make sure hospitals are being paid only for the services they provide.”

DOH uses a contractor, the Island Peer Review Organization (IPRO), to review paid inpatient claims. In coordination with DOH, DiNapoli’s auditors requested IPRO review a sample of 297 hospital stays that were billed by ten hospitals for patients admitted for 50 or more days for high levels of care, instead of the less costly “alternate level of care,” or ALC.

Based on IPRO’s review, 94 of the claims, costing the state $10.6 million, were improperly billed primarily because the hospitals should have billed for the ALC care that was actually provided. IPRO concluded that the state should have only paid $2.8 million for these claims and that Medicaid had overpaid the claims by $7.8 million. Overpayments identified in the audit ranged from $100,000 to $1.4 million per hospital.

In one case, Medicaid paid $130,432 for 249 days of acute care services for a patient whose stay actually included only one day of acute care resulting in a $62,684 overpayment.

In another instance, one hospital billed Medicaid for nearly five years of acute care when IPRO determined that the patient did not need any acute care services, resulting in a $638,951 overpayment.

Given the relatively high rate (32 percent) of overpayments from the audit sample, auditors determined that there is also a high risk level of overpayment in other Medicaid payments for acute care. During the audit period, Medicaid paid claims for nearly 10,600 inpatient stays per year (on average) of 50 or more days of acute care without any ALC.

DiNapoli recommended DOH:

  • Recover the $7.8 million in inappropriate payments;
  • Formally notify the ten hospitals of the correct way to bill inpatient claims for ALC; and
  • Modify IPRO’s sampling plan to select and review claims at high risk of overpayment due to incorrect charges for high (acute) levels of care.

For a copy of the report visit:

Department officials concurred with the findings and recommendations of the audit and have indicated that corrective actions will be taken to address them.

DiNapoli, as part of his responsibilities to audit state payments, has expanded an ongoing Medicaid audit initiative that has found more than $1.64 billion in waste, fraud and abuse, including about $85 million in 2013. Earlier this month DiNapoli released two Medicaid audits that identified $11.4 million in provider overpayments. Those audits can be found at:



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