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New York State Comptroller Thomas P. DiNapoli released two audits Monday revealing more than $70 million in questionable Medicaid claims and payments. DiNapoli’s auditors found the state reimbursed providers for excessive services, including 41 dental exams for one patient over three years and identified about a dozen providers that should have been kicked out of the system for wrongdoing.

“New York’s Medicaid billing system is failing to catch waste, fraud, errors and abuse. Millions are pouring out the door for double billings, questionable procedures and to crooked providers,” DiNapoli said. “While the state is attempting to control costs, it needs to take a hard look at the failures of its billing system. State Health Department officials need to address system shortfalls immediately and recover any overpayments as soon as possible.”

In the first audit, the Department of Health (DOH) made as much as $39.6 million in Medicaid overpayments through a reimbursement method intended to more accurately compensate providers for medical procedures. DiNapoli’s auditors determined that the state may have overpaid as much as $32.1 million for services that exceeded Medicaid limits and $7.5 million for duplicate claims.

Instituted in 2008, the ambulatory patient groups (APG) payment methodology uses the diagnosis, procedures performed, and the amount and type of resources used, to calculate the provider payment.

DOH’s computer payment system, eMedNY, suspends processing of claims when services are billed in excess of specific limits or thresholds. DOH will then request additional documentation from the provider to support why it was necessary to exceed the threshold. If providers do not supply the appropriate documentation, their claims are supposed to be denied. DiNapoli’s auditors, however, found that APG payments are not subject to the same checks and balances as other Medicaid payments.

For the period Dec. 1, 2008 through May 29, 2013, auditors identified $13.6 million in APG claims that would have been suspended for review – and potentially denied – if they faced the same controls as other Medicaid claims.

Auditors determined another $18.5 million of the potential overpayments was for excessive services that eMedNY would have automatically denied if they were treated the same as non-APG claims. Most of the payments were for dental procedures totaling $17.5 million.   

Medicaid limits dental cleaning and dental exam services to twice per year, yet in one case, DiNapoli’s auditors found Medicaid reimbursed a clinic for seven dental cleanings for one patient in a single year. Medicaid reimbursed another clinic for 41 dental exams (totaling $2,771) for one patient over three years. Claims such as these would have been automatically denied if they were billed by a dentist instead of a clinic.

Medicaid also overpaid more than $7.5 million in duplicate claims to 2,244 doctors and other medical professionals who separately billed the state for 224,673 services that were also included on claims that clinics and other outpatient facilities submitted. In each case, one payment was made to the practitioner and a second payment was made to the clinic or outpatient facility.

Auditors also found DOH has provided weak guidance to clinic providers, resulting in confusion and misinterpretation of payment rules.

DiNapoli recommended DOH:

• Review the actual and potential overpayments identified and make recoveries, as appropriate;
• Strengthen controls over APG claims processing to prevent improper payments for excessive services; and
• Review the duplicate Medicaid payments identified and recover, as appropriate.

DOH officials generally agreed with most of the recommendations and indicated that certain actions have been and will be taken to address them. DOH took exception to the audit’s conclusions on frequency limits being exceeded.

A separate audit of Medicaid claims processing from April 1, 2014 through Sept. 30, 2014 found another $33 million in actual and potential Medicaid overpayments.

DiNapoli’s auditors identified claim processing problems that led to many of the payments. DOH officials took prompt actions to correct certain controls, including one that will save the Medicaid program an estimated $2.4 million a year.

The audit also identified providers in the Medicaid program who were charged with or found guilty of crimes that violate health care programs’ laws or regulations. DOH terminated eight of the providers identified, but the status of six other providers was still under review at the time audit fieldwork was completed.

About $32.1 million of the improper payments were avoided or recovered as a result of the auditors’ work.

DiNapoli made 14 recommendations to DOH to recover the remaining inappropriate Medicaid payments and improve claim processing controls. DOH officials generally agreed with the recommendations, but indicated that certain findings were outdated because actions have already been taken to address system shortcomings.

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