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DiNapoli says Medicaid billing errors cost state more than $1.5 billion

The state Health Department has allowed more than $1.5 billion in improper Medicaid payments over the course of several years due to errors in its billing system and may have exposed patients to unqualified and uncredentialed health care providers, according to three reports released recently by state Comptroller Thomas P. DiNapoli.

“Troubling errors like the ones routinely identified by my auditors are extremely costly. They can also put patients at risk,” DiNapoli said. “By not fixing problems with the Department of Health’s eMedNY system and other issues, hundreds of millions of dollars more in taxpayer dollars could be misspent and unqualified providers could continue to treat Medicaid patients. The department must act on our recommendations and address these shortfalls, so Medicaid recipients receive the level of care they deserve, and taxpayers’ dollars are spent effectively.”

For the state fiscal year that ended March 31, 2020, New York’s Medicaid program had 7.3 million recipients and Medicaid claim costs totaled $69.8 billion.

The Affordable Care Act and federal regulations mandate that state Medicaid agencies require all ordering and referring physicians and other professionals providing services through the Medicaid fee-for-service program to be enrolled as participating providers and their National Provider Identifiers (NPIs) to be included on Medicaid claims. This screening and provider enrollment process improves the efficiency of the health care system and helps to reduce fraud and abuse. It also helps to ensure the quality of services and protects public health by validating that providers have the appropriate credentials to provide services and are not prohibited from participating in the Medicaid program by the federal government.

In the first report, DiNapoli’s auditors found that a significant number of claims were paid even though they did not have a proper NPI to ensure the ordering, prescribing, referring, or attending provider was properly qualified or credentialed, creating a risk for patients. Processing weaknesses in eMedNY, the Medicaid claims processing and payment system, allowed $1.5 billion in payments for Medicaid clinic and professional claims without an appropriate NPI.

For example, some claims contained NPIs of providers who were not enrolled in Medicaid, while other claims did not contain an NPI at all.

Auditors also found $57.3 million in payments for pharmacy claims that did not contain an appropriate prescriber NPI and $19.4 million in payments for claims that contained an NPI but, according to regulations, should not be included on Medicaid claims or that should be further reviewed by DOH due to past misconduct.

Auditors recommended the Health Department:

¯ Review the Medicaid payments for claims not containing an appropriate NPI identified by the audit and determine an appropriate course of action.

¯ Enhance system controls to prevent improper Medicaid payments for claims not containing an appropriate NPI.

¯ The department’s full response to the findings and recommendations is included in the audit.

A second report found that from Jan. 1, 2015 through Dec. 31, 2019, claims totaling $28.5 million were paid for Medicaid recipients who were reported as discharged from a hospital, but then admitted to a different hospital less than 24 hours later. These claims raise the possibility that the first hospital wrongly recorded a patient’s transfer as a discharge, which is a red flag that the claims are at a high risk of overpayment.

Auditors found nearly half of the claims that they sampled (15 of 31) were incorrectly coded as discharges in the eMedNY system. The result of those errors was overpayment of $252,107, or 55% of the total value of the 31 sampled claims. This high error rate raised concerns about the extent of overpayment in the $28 million of high-risk claims. Auditors also found that DOH has no process to identify and recover such improper Medicaid payments.

Auditors recommended the Health Department:

¯ Develop a process to identify and recover Medicaid overpayments for fee-for-service inpatient claims that have a high risk of incorrect patient status codes such as those identified by the audit.

¯ Review the $252,107 in overpayments and recover as appropriate.

¯ Review the remaining 2,017 high-risk claims totaling $28 million and recover overpayments as appropriate. Ensure prompt attention is paid to those providers that received the highest amounts of payments.

¯ In their response, department officials agreed with the audit recommendations and said actions will and have been taken. Their response is included in the report.

An audit released in July 2019 identified more than $102.1 million in improper managed care premium payments on behalf of 65,961 recipients who had multiple identification numbers in the eMedNY system. In a follow-up report released today, auditors found the Health Department made progress addressing the problems identified in the initial audit report and the Office of the Medicaid Inspector General recovered $50.8 million of the $102.1 million identified. Another $51.3 million still needs to be recovered.

Since the 2019 audit, auditors identified another $14.3 million in managed care premium payments for 14,293 potentially inappropriate identification numbers for the period July 1, 2018, to Aug. 31, 2020. According to department officials, many of these cases have been resolved or are currently being reviewed.

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