Comptroller: New York Automated Medicaid System Wastes Millions

New York State Department of Health's automated Medicaid eligibility system loses millions of dollars from mismanagement and undetected fraudulent claims.

by / December 12, 2008

The New York State Department of Health (DOH) is in hot water for not catching millions of dollars in Medicaid fraud and reimbursements of poorly scrutinized or ineligible claims. On Wednesday, New York State Comptroller Thomas DiNapoli demanded improvements to the state's automated system for processing Medicaid claims, releasing an audit charging bad oversight of the system.

The comptroller also released a second Medicaid audit uncovering $1.8 million in overpayments to providers that incorrectly billed Medicaid for what are called Medicare Part B services. In many instances, the providers either double-billed the services or did not accurately report payment information on their claims. Both audits found that eMedNY -- the automated system used to detect fraud and abuse -- was not used properly.

"Questionable claims keep slipping through," DiNapoli said in a statement.

DiNapoli's auditors assert that the DOH's staff doesn't properly understand the agency's system for managing eMedNY.

The DOH disputes that.

"We'll change, but it's not like our people didn't understand what they were doing. Their process was not what the comptroller thought the ideal process should be," said Claudia Hutton, director of public affairs for the DOH.

"The eMedNY system is a hell of a lot better than it was two years ago," she added, iterating that the DOH's leadership has only been in place since New York Gov. David Paterson took office in January 2007. Paterson's administration discovered a backlog of roughly 200 unfinished eMedNY edits from the previous administration. Eliminating that backlog took nearly two years, but the agency now addresses edits in real time, insisted Hutton.

"It kind of boggles our minds that the comptroller would do this press release and not mention we eliminated this huge backlog of editing processes that were left on our doorstep by the previous administration," Hutton said.

The DOH confirms that it lacks a formal, structured process for prioritizing and approving edit changes -- a key complaint of the comptroller's. Instead, the agency often relies on "who complains the loudest" to determine the most urgent edit request to submit for programming, said the comptroller.

Hutton said a DOH work group has been looking into that charge since October when the agency first learned of the audit's findings months before Wednesday's release.

Another of the comptroller's criticisms is that eMedNY program units don't always properly authorize and monitor edit changes after activating them to ensure that they function as intended. Staff members also fail to terminate edits when no longer needed, according to the comptroller.

The DOH is strategizing a response to those findings as well.

The comptroller's office points out that the eMedNY system has a history of problems. A prior audit for 2007 found $55 million in overpayments or improper payments because the automated edits in eMedNY were not properly set up, not set up at all or not functioning as intended, according to the comptroller. For example, audits found $1.2 million in fraudulent claims from dentists. One dentist billed Medicaid for providing seven patients with 32 fillings each and then later for pulling the same 32 teeth for each patient. The dentist claimed he filled or pulled all 32 teeth in a single office visit. The other dentist billed Medicaid on 97 separate occasions for filling 25 or more teeth for patients in a single day. In one instance, this dentist claimed he provided a patient with 52 fillings, according to the comptroller. Although DOH officials told auditors they considered 24 fillings for a single patient visit excessive, they had not established policies or automated edits to red flag excessive procedures, according to the comptroller.

Home-care providers successfully charged $5.7 million for services that were likely never provided. For example, auditors found eight cases in which Medicaid paid for

home-care services totaling $13,928 after the patients had died. eMedNY failed to detect these inappropriate payments even though one provider billed for services more than a month after an individual's date of death, according to the comptroller.

Improperly set up system edits allowed medical providers to bill taxpayers $1.3 million for HIV tests that exceeded the number of tests allowed. Auditors found one provider billed for 12 tests for one patient in a single year, according to the comptroller.

The comptroller's reference of this older issue in Wednesday's press release frustrated Hutton because the agency has already solved some of those problems. Stunningly the DOH's own evaluation of 2007 revealed a potential of recovering $200 million in fraudulent and improper payments made that year -- far more than the $55 million DiNapoli identified.

"The DOH looked at the whole program, while the comptroller used a scientifically sound, but random sample," Hutton said.

She reports that the agency's inspector general will soon announce how successful he's been at meeting the $200 million goal.

Andy Opsahl

Andy Opsahl is a former writer and features editor for Government Technology magazine.

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