New York State Oce of the State Comptroller

Thomas P. DiNapoli
Division of State Government Accountability
Report 2011-S-39 July 2013
Medicaid Claims Processing
Acvity October 1, 2011 Through
March 31, 2012
Medicaid Program
Department of Health
2011-S-39
Division of State Government Accountability 1
Execuve Summary
Purpose
To determine whether the Department of Health’s eMedNY system reasonably ensured that
Medlcald clalms were submlued by approved provlders, were processed ln accordance wlLh
Medlcald requlremenLs, and resulLed ln correcL paymenLs Lo Lhe provlders. 1he audlL covered
the period CcLober 1, 2011 Lhrough March 31, 2012.
Background
1he ueparLmenL of PealLh (ueparLmenL) admlnlsLers Lhe SLaLe’s Medlcald program. 1he
ueparLmenL’s eMedn? compuLer sysLem processes Medlcald clalms submlued by provlders for
servlces rendered Lo Medlcald ellglble reclplenLs, and lL generaLes paymenLs Lo relmburse Lhe
provlders for Lhelr clalms. uurlng Lhe slx-monLh perlod ended March 31, 2012, eMedn? processed
approxlmaLely 233 mllllon clalms resulung ln paymenLs Lo provlders of abouL $23 bllllon. 1he
clalms are processed and pald ln weekly cycles whlch averaged abouL 9 mllllon clalms and $974
million in payments to providers.
Key Findings
• AudlLors ldenuñed abouL $4.1 mllllon ln overpaymenLs resulung from:
• lncorrecL reLroacuve raLe changes LhaL caused overpaymenLs LoLallng $2.4 mllllon,
• Clalms bllled wlLh lnformauon from oLher healLh lnsurance plans LhaL was lnaccuraLe,
whlch caused $330,710 ln overpaymenLs,
• lnpauenL clalms bllled wlLh hlgh (lnLenslve) levels of care LhaL should have been based on
less cosLly “alLernaLe” levels of care, whlch caused overpaymenLs of $412,737,
• Clalms for chlldcare servlces whlle Lhe reclplenL was hosplLallzed, whlch caused
overpaymenLs of $236,310, and
• Clalms wlLh lmproper paymenLs for physlclan-admlnlsLered drugs, lnpauenL servlces,
dupllcaLe procedures, medlcal equlpmenL, LransporLauon servlces and nurslng home
services.
• AL Lhe ume Lhe audlL’s ñeldwork was compleLed, Lhe audlLors recovered abouL $3.8 mllllon of
Lhe overpaymenLs ldenuñed.
• AudlLors also found provlders ln Lhe Medlcald program who were charged wlLh or found
gullLy of crlmes LhaL vlolaLe Medlcald program laws or regulauons. 1he ueparLmenL prompLly
LermlnaLed 17 of Lhe provlders we ldenuñed, buL Lhe sLaLus of anoLher 19 provlders was sull
under review.
Key Recommendaons
• We made 17 recommendauons Lo Lhe ueparLmenL Lo recover Lhe lnapproprlaLe Medlcald
payments and to improve clalms processlng conLrols.
Other Related Audits/Reports of Interest
ueparLmenL of PealLh: Medlcald Clalms Þrocesslng AcuvlLy CcLober 1, 2010 Lhrough March 31,
2011 (2010-S-63)
2011-S-39
Division of State Government Accountability 2
State of New York
Oce of the State Comptroller
Division of State Government Accountability
!uly 9, 2013
nlrav Shah, M.u., M.Þ.P.
Commissioner
Department of Health
Cornlng Cmce 8ulldlng
Empire State Plaza
Albany, n? 12237
uear ur. Shah:
1he Cmce of Lhe SLaLe CompLroller ls commlued Lo helplng SLaLe agencles, publlc auLhorlues
and local governmenL agencles manage governmenL resources emclenLly and eñecuvely and, by
so dolng, provldlng accounLablllLy for Lax dollars spenL Lo supporL governmenL operauons. 1he
CompLroller oversees Lhe ñscal añalrs of SLaLe agencles, publlc auLhorlues and local governmenL
agencles, as well as Lhelr compllance wlLh relevanL sLaLuLes and Lhelr observance of good buslness
pracuces. 1hls ñscal overslghL ls accompllshed, ln parL, Lhrough our audlLs, whlch ldenufy
opporLunlues for lmprovlng operauons. AudlLs can also ldenufy sLraLegles for reduclng cosLs and
sLrengLhenlng conLrols LhaL are lnLended Lo safeguard asseLs.
lollowlng ls a reporL of our audlL of Lhe Medlcald Þrogram enuLled Medicaid Claims Processing
Ac vity October 1, 2011 through March 31, 2012. This audit was performed pursuant to the State
CompLroller’s auLhorlLy under Arucle v, Secuon 1 of Lhe SLaLe ConsuLuuon and Arucle ll, Secuon
8 of Lhe SLaLe llnance Law.
1hls audlL’s resulLs and recommendauons are resources for you Lo use ln eñecuvely managlng
your operauons and ln meeung Lhe expecLauons of Laxpayers. lf you have any quesuons abouL
Lhls reporL, please feel free Lo conLacL us.
8especuully submlued,
O ce of the State Comptroller
Division of State Government Accountability
2011-S-39
Division of State Government Accountability 3
State Government Accountability Contact Informaon:
Audit Director: 8rlan Mason
Phone: (318) 474-3271
Email: StateGovernmentAccountability@osc.state.ny.us
Address:
Cmce of Lhe SLaLe CompLroller
Division of State Government Accountability
110 SLaLe SLreeL, 11Lh lloor
Albany, n? 12236
1hls reporL ls also avallable on our webslLe aL: www.osc.state.ny.us
Table of Contents
8ackground 3
AudlL llndlngs and 8ecommendauons 6
lncorrecL 8eLroacuve 8aLe Changes 6
8ecommendauon 7
CLher lnsurance on Medlcald Clalms 7
8ecommendauon 8
AlLernaLe Level of Care 8
8ecommendauon 8
Cverlapplng Clalms uurlng lnpauenL SLays 8
8ecommendauons 9
Þhyslclan-AdmlnlsLered urugs 9
8ecommendauons 10
lnaccuraLe ÞauenL SLaLus Codes 10
8ecommendauon 10
lncorrecL Clalm for CuL-of-SLaLe lnpauenL Servlces 11
8ecommendauon 11
2011-S-39
Division of State Government Accountability 4
uupllcaLe 8llllngs 11
8ecommendauon 11
Incorrect Claims for Medical Equipment 11
8ecommendauons 12
lncorrecL Clalms for 1ransporLauon Servlces 12
8ecommendauon 12
lncorrecL Clalms for nurslng Pome Servlces 12
8ecommendauons 13
SLaLus of Þrovlders Who Abuse Lhe Þrogram 13
8ecommendauons 14
AudlL Scope and MeLhodology 14
AuLhorlLy 13
8eporung 8equlremenLs 13
ConLrlbuLors Lo 1hls 8eporL 16
Agency CommenLs 17
2011-S-39
Division of State Government Accountability 5
Background
1he new ?ork SLaLe Medlcald program ls a federal, sLaLe, and locally funded program LhaL
provldes a wlde range of medlcal servlces Lo Lhose who are economlcally dlsadvanLaged and/or
have speclal healLh care needs. 1he federal governmenL funds abouL 49 percenL of new ?ork’s
Medlcald cosLs, Lhe SLaLe funds abouL 34 percenL, and Lhe locallues (Lhe ClLy of new ?ork and
counues) fund Lhe remalnlng 17 percenL.
1he ueparLmenL of PealLh’s (ueparLmenL’s) Cmce of PealLh lnsurance Þrograms admlnlsLers Lhe
SLaLe’s Medlcald program. 1he ueparLmenL’s eMedn? compuLer sysLem processes Medlcald
clalms submlued by provlders for servlces rendered Lo Medlcald ellglble reclplenLs and generaLes
paymenLs Lo relmburse Lhe provlders for Lhelr clalms. uurlng Lhe slx-monLh perlod ended March
31, 2012, eMedn? processed approxlmaLely 233 mllllon clalms resulung ln paymenLs Lo provlders
of abouL $23 bllllon. 1he clalms are processed and pald ln weekly cycles whlch averaged abouL 9
mllllon clalms and $974 mllllon ln Medlcald paymenLs Lo Lhe provlders.
When Medlcald clalms are processed by eMedn?, Lhey are sub[ecL Lo varlous auLomaLed edlLs.
1he purpose of Lhe edlLs ls Lo deLermlne wheLher Lhe clalms are ellglble for relmbursemenL and
Lhe amounLs clalmed for relmbursemenL are approprlaLe. lor example, some edlLs verlfy Lhe
ellglblllLy of Lhe Medlcald reclplenL, oLher edlLs verlfy Lhe ellglblllLy of Lhe medlcal servlce, and
oLher edlLs verlfy Lhe approprlaLeness of Lhe amounL bllled for Lhe servlce. ln addluon, some
edits compare the claim to other related claims to determine whether any of the claims duplicate
one another.
1he Cmce of Lhe SLaLe CompLroller performs audlL sLeps durlng each weekly cycle of eMedn?
processlng Lo deLermlne wheLher eMedn? has reasonably ensured Lhe Medlcald clalms were
processed ln accordance wlLh requlremenLs, Lhe provlders submlmng Lhe clalms were approved
for paruclpauon ln Lhe Medlcald program, and Lhe amounLs pald Lo Lhe provlders were correcL.
As audlL excepuons are ldenuñed durlng Lhe weekly cycle, our audlLors work wlLh ueparLmenL
sLañ Lo resolve Lhe excepuons ln a umely manner so paymenLs can be made Lo provlders. lf
necessary, paymenLs Lo provlders can be suspended unul sausfacLory resoluuon of Lhe excepuons
has been achieved.
ln addluon, Lhe audlL work performed durlng Lhe weekly cycle may ldenufy pauerns and Lrends
in claims and payment data that warrant follow-up and analysis as part of the Comptroller’s
audlL responslblllues. Such follow-up and analyucal audlL procedures are deslgned Lo meeL Lhe
CompLroller’s consuLuuonal and sLaLuLory requlremenLs Lo audlL all SLaLe expendlLures.
2011-S-39
Division of State Government Accountability 6
Audit Findings and Recommendaons
8ased on Lhe resulLs of our audlL work for Lhe weekly cycles of Medlcald paymenLs made durlng
Lhe slx monLhs ended March 31, 2012, we concluded eMedn? reasonably ensured Medlcald
clalms were submlued by approved provlders, were processed ln accordance wlLh requlremenLs,
and resulLed ln correcL paymenLs Lo Lhe provlders. ln addluon, we ldenuñed Lhe need for
lmprovemenLs ln Lhe processlng of cerLaln Lypes of clalms. lor example, we found overpaymenLs
perLalnlng Lo: lncorrecL reLroacuve raLe changes, clalms lnvolvlng oLher lnsurance lnformauon
LhaL was lnaccuraLe, hosplLal clalms for servlces LhaL should have been bllled aL lower relmburslng
alLernaLe levels of care, clalms for chlldcare servlces whlle Lhe reclplenL was hosplLallzed, and
clalms wlLh lncorrecL charges for physlclan-admlnlsLered drugs. ln LoLal, we ldenuñed acLual and
poLenual overpaymenLs of approxlmaLely $4.1 mllllon. AL Lhe ume our audlL ñeldwork concluded,
abouL $3.8 mllllon of Lhese overpaymenLs had been recovered.
Incorrect Retroacve Rate Changes
Medlcald relmburses cerLaln provlders Lhrough Lhe use of raLe codes. When raLe code
relmbursemenL amounLs are updaLed and enLered lnLo Lhe eMedn? sysLem, eMedn? wlll
auLomaucally re-prlce a provlder’s prevlously pald clalms LhaL are añecLed by a reLroacuve
raLe change. lf Lhe raLe updaLes are lncorrecL, overpaymenLs can occur. uurlng our audlL, Lhe
ueparLmenL made four lncorrecL reLroacuve raLe changes LhaL resulLed ln overpaymenLs LoLallng
$2.4 mllllon Lo 14 provlders.
Speclñcally, we deLermlned LhaL sLañ wlLhln Lhe ueparLmenL’s raLe semng unlLs caused lncorrecL
raLes Lo be enLered lnLo eMedn?. Cne parucular raLe code, for example, ls used by provlders
Lo blll ln quarLer-hour lncremenLs. Powever, when ueparLmenL raLe seuers changed Lhe raLe
amounL, Lhey lncorrecLly enLered Lhe full hourly amounL of $78.66 lnsLead of Lhe quarLer-hour
amounL of $19.67 ($78.66 / 4). 1hls caused overpaymenLs LoLallng $2.3 mllllon Lo 13 provlders.
Also, ueparLmenL raLe seuers lncorrecLly changed a provlder’s raLe for a cerLaln servlce from
$3,009 Lo $6,300. Cver a perlod of a year, Lhls error caused overpaymenLs Lo Lhe provlder LoLallng
$78,980.
1he ueparLmenL also lncorrecLly processed Lwo raLe code changes for seven oLher provlders by
enLerlng raLe amounLs LhaL were aL leasL 10 umes more Lhan Lhe correcL amounLs. Powever,
because Lhe provlders dld noL use Lhe Lwo codes ln quesuon, Lhe errors dld noL resulL ln
overpayments.
We advlsed ueparLmenL omclals of Lhe erranL raLes, and Lhey conñrmed LhaL changes Lo Lhe raLes
were made lncorrecLly. Moreover, Lhe ueparLmenL made Lhe necessary correcuons ln eMedn?
Lo recover Lhe resulung $2.4 mllllon ln overpaymenLs we ldenuñed.
2011-S-39
Division of State Government Accountability 7
Recommendaon
1. Assess rlsks ln Lhe raLe semng unlLs assoclaLed wlLh processlng reLroacuve raLe changes Lo
ensure only auLhorlzed and accuraLe changes are lmplemenLed ln eMedn?.
Other Insurance on Medicaid Claims
Many Medlcald reclplenLs also have oLher healLh lnsurance coverage (mosLly Medlcare). When
submlmng Medlcald clalms, provlders musL verlfy LhaL such reclplenLs have oLher lnsurance
coverage on Lhe daLes of Lhe servlces ln quesuon. lf Lhe lndlvldual has oLher lnsurance coverage,
LhaL lnsurer becomes Lhe “prlmary lnsurer” and musL be bllled ñrsL. ln Lhls case, Medlcald
(as Lhe secondary lnsurer) generally covers Lhe pauenL’s normal ñnanclal obllgauon, lncludlng
colnsurance, copaymenLs and deducubles. If the recipient or the medical service is not covered
by any oLher lnsurer, Medlcald ls Lhe prlmary lnsurer and should be bllled ñrsL.
Lrrors ln clalm amounLs for colnsurance, copaymenLs, deducubles, and/or deslgnauon of Lhe
prlmary payer wlll llkely resulL ln lmproper Medlcald paymenLs. We ldenuñed such errors on
63 clalms LhaL resulLed ln lmproper and quesuonable paymenLs LoLallng $330,709. AL Lhe ume
our ñeldwork concluded, 37 (of Lhe 63) clalms were correcLed, savlng Medlcald $488,144.
Ad[usLmenLs were sull needed for Lhe remalnlng elghL clalms, correspondlng Lo overpaymenLs of
aL leasL $42,363.
Speclñcally, we ldenuñed overpaymenLs LoLallng $372,470 on 36 clalms (whlch orlglnally pald
$322,709) LhaL resulLed from excesslve charges for colnsurance and copaymenLs for reclplenLs
covered by oLher lnsurance (ln addluon Lo Medlcald). We conLacLed Lhe provlders and nouñed
Lhem of Lhe lncorrecL lnformauon on Lhe 36 clalms. AL Lhe ume of our revlew, Lhe provlders
ad[usLed 30 of Lhe clalms, savlng Medlcald $329,903. Ad[usLmenLs were sull needed on slx clalms,
correspondlng Lo overpaymenLs of aL leasL $42,363.

lor Lhe remalnlng nlne (of Lhe 63) clalms, Medlcald was lncorrecLly deslgnaLed as Lhe prlmary
payer, when Lhe prlmary payer was acLually anoLher lnsurer. Cenerally, prlmary payers pay
more than secondary payers. We contacted the providers and advised them that the recipients
had oLher lnsurance coverage when Lhe servlces were provlded, and Lherefore, Medlcald was
lncorrecLly deslgnaLed as Lhe prlmary payer. AL Lhe ume of our revlew, Lhe provlders ad[usLed
seven of Lhe nlne clalms, whlch saved Medlcald $138,239. AL Lhe ume our ñeldwork concluded,
ad[usLmenLs were sull needed for Lhe remalnlng Lwo clalm paymenLs whlch LoLaled $264,411.
We also concluded that the Department could have prevented most of the overpayments we
ldenuñed wlLh beuer eMedn? conLrols. lor example, many clalms we revlewed were sub[ecLed
Lo Lhe eMedn? edlL “Medlcare/MCC Þayer AmounLs noL 8easonable.” Powever, Lhe edlL was
“seL Lo pay” (as opposed Lo pend or deny) a quesuonable clalm. lor example, Lwo of Lhe largesL
overpaymenLs we ldenuñed (whlch accounLed for $123,363 of Lhe overpaymenLs) were Lhe resulL
of unusually hlgh copaymenLs, and were deLecLed by Lhe edlL. lf Lhls edlL was seL Lo pend or deny
paymenL, eMedn? could have prevenLed Lhese overpaymenLs. We have ldenuñed slmllar errors
2011-S-39
Division of State Government Accountability 8
ln prlor audlLs. 1hus, Lhe ueparLmenL needs Lo Lake prompL acuons Lo ensure eMedn? prevenLs
overpaymenLs of Lhls magnlLude ln Lhe fuLure. ln addluon, Lhe ueparLmenL should lmprove
eMedn? processlng Lo prevenL overpaymenLs when lnaccuraLe prlmary lnsurer lnformauon ls
submlued on a clalm.
Recommendaon
2. 8evlew and recover Lhe unresolved overpaymenLs (LoLallng aL leasL $42,363) on Lhe slx
clalms wlLh excesslve charges for colnsurance and copaymenLs and on Lhe Lwo clalms LoLallng
$264,411 where Medlcald was lmproperly deslgnaLed as Lhe prlmary payer.
Alternate Level of Care
Accordlng Lo ueparLmenL Medlcald guldellnes, hosplLals musL lndlcaLe a pauenL’s “level of care”
on clalms Lo ensure accuraLe processlng and paymenL. CerLaln levels of care are more lnLenslve
(and Lherefore more expenslve) Lhan oLhers. PosplLals should noL blll for lnLenslve levels of care
for days when pauenLs are ln an alLernaLe (lower) level of care (ALC) semng.
We ldenuñed overpaymenLs LoLallng $412,737 on 13 lnpauenL clalms because Lwo hosplLals
bllled a more cosLly level of care Lhan whaL was acLually provlded. Cn Lhe clalms, Lhe hosplLals
dld noL lndlcaLe any ALC days durlng long lnpauenL sLays. lnsLead, Lhey bllled Lhe enure lengLh
of Lhe lnpauenL sLay aL hlgher levels of care. AL our requesL, Lhe hosplLals revlewed Lhelr records
and deLermlned LhaL a slgnlñcanL number of Lhe days durlng Lhe sLays were acLually ALC. ln
one case, Medlcald pald $168,318, buL should have only pald $18,318 lf Lhe ALC days had been
properly reporLed. ln LoLal, Medlcald pald $697,316 on Lhe 13 clalms, alLhough lL should have
pald only $284,779. We advlsed Lhe hosplLals of Lhe bllllng errors and hosplLal omclals correcLed
all 13 clalms savlng Medlcald $412,737 ($697,316 - $284,779).
Recommendaon
3. lormally advlse Lhe hosplLals ln quesuon Lo ensure LhaL ALC days are accuraLely reporLed on
claims.
Overlapping Claims During Inpaent Stays
1he ueparLmenL esLabllshes all-lncluslve hosplLal lnpauenL raLes LhaL generally cover Lhe cosLs of
all medlcal servlces provlded Lo Medlcald reclplenLs durlng Lhe hosplLal sLay. under Lhls Lype of
arrangemenL, no addluonal paymenLs should be made for servlces provlded Lo reclplenLs whlle
they are hospitalized. Powever, we ldenuñed 2,143 clalm paymenLs (LoLallng $260,288) for early
lnLervenuon and fosLer care servlces when Lhe reclplenL was already admlued as an lnpauenL ln
a hosplLal. 1hls resulLed ln Medlcald overpaymenLs LoLallng $236,310.
Cne provlder bllled 2,141 of Lhe 2,143 lnapproprlaLe clalms. When conLacLed, Lhe provlder
agreed Lhe clalms (whlch were for early lnLervenuon servlces) were lncorrecL and aurlbuLed Lhe
2011-S-39
Division of State Government Accountability 9
errors Lo subconLracLors lL uses Lo blll clalms. ln response Lo our audlL, Lhe provlder agreed Lo
lssue a remlnder Lo lLs subconLracLors LhaL such bllllngs should noL be made whlle reclplenLs are
hosplLallzed. Powever, aL Lhe ume our ñeldwork concluded, Lhe provlder had noL volded Lhe
2,141 clalms, correspondlng Lo overpaymenLs of $233,963. lurLher, we deLermlned eMedn?
has an edlL Lo ßag cerLaln clalms wlLh daLes of servlce LhaL overlap lnpauenL sLays. 1he clalms
for early lnLervenuon servlces were deLecLed by Lhe edlL, however Lhe edlL ls seL Lo allow Lhese
claims to be paid.
1he remalnlng Lwo (of Lhe 2,143) clalms were submlued by a fosLer care provlder for days of
servlce when Lhe chlld was hosplLallzed. We conLacLed Lhe provlder who agreed Lhe clalms were
lncorrecL and aurlbuLed Lhe errors Lo mlscommunlcauon wlLh lLs bllllng vendor. The provider
ad[usLed one clalm, whlch resulLed ln a savlngs of $1,831. Powever, by Lhe end of our ñeldwork,
Lhe remalnlng clalm (overpald by $716) had noL been correcLed.
Recommendaons
4. 8evlew and recover Lhe unresolved overpaymenLs (LoLallng aL leasL $234,679) on Lhe 2,142
clalms ln quesuon.
3. SLrengLhen eMedn? conLrols Lo prevenL paymenL of clalms for chlldcare servlces LhaL are bllled
durlng a chlld’s hosplLal lnpauenL sLay.
Physician-Administered Drugs
Medlcald requlres provlders Lo blll physlclan-admlnlsLered drugs aL Lhelr acqulsluon cosLs,
lncludlng any dlscounLs glven by Lhe drugs’ manufacLurers. 1o pay a clalm for a physlclan-
admlnlsLered drug, eMedn? compares Lhe drug’s acqulsluon cosL (as lndlcaLed by Lhe provlder)
Lo Lhe maxlmum allowable Medlcald fee and pays Lhe lesser of Lhe Lwo amounLs. 1yplcally, a
provlder’s drug acqulsluon cosL ls less Lhan Lhe maxlmum allowable Medlcald fee. 1hus, when a
provlder oversLaLes Lhe acqulsluon cosL of a physlclan-admlnlsLered drug, Lhere ls a conslderable
risk that Medicaid will overpay the claim.
We ldenuñed $206,288 ln overpaymenLs Medlcald made on 100 clalms submlued by 26 provlders
of physlclan-admlnlsLered drugs. Cn Lhese clalms, Lhe provlders bllled amounLs well ln excess of
Lhe drugs’ acLual acqulsluon cosLs, whlch were generally less Lhan Lhe maxlmum Medlcald fee
amounLs. lor example, one provlder submlued a clalm and charged $86,680 for admlnlsLerlng
several drugs Lo a reclplenL. 8ased on Medlcald’s maxlmum allowable fees, eMedn? pald
$9,332 on Lhls clalm. Powever, based on Lhe provlder’s drug lnvolces, we deLermlned Lhe acLual
acqulsluon cosLs for Lhe drugs LoLaled only $867. AL our requesL, Lhe provlder correcLed Lhls
clalm, savlng Medlcald $8,483 ($9,332 - $867).
AL Lhe ume our ñeldwork concluded, provlders correcLed 64 clalms (savlng Medlcald $184,368),
and correcuons on anoLher 32 clalms, whlch would save anoLher $21,920 are expecLed. lurLher
acuons, lncludlng Lhe presenLauon of supporung documenLauon, are sull needed Lo resolve
2011-S-39
Division of State Government Accountability 10
apparenL overpaymenLs on four oLher clalms LoLallng paymenLs of $14,636.
1here were several reasons for Lhe lmproper clalms. lor example, elghL provlders lndlcaLed
Lhey were noL aware LhaL Medlcald requlred provlders Lo blll physlclan-admlnlsLered drugs aL
cosL. nlne oLher provlders lndlcaLed Lhey were aware of Lhls requlremenL, buL clLed problems
wlLh Lhelr bllllng sysLems. ln oLher cases, provlders aurlbuLed overcharges Lo human errors. no
mauer Lhe reason, overpaymenLs occur when provlders oversLaLe Lhelr acLual drug acqulsluon
cosLs on clalms for physlclan-admlnlsLered drugs. We have ldenuñed slmllar errors ln prlor audlLs.
1hus, Lhe ueparLmenL needs Lo prompLly sLrengLhen eMedn? conLrols over clalms for physlclan-
admlnlsLered drugs, parucularly when provlders’ reporLed acqulsluon cosLs exceed Lhe amounLs
of Medlcald’s maxlmum allowable relmbursemenL.
Recommendaons
6. 8evlew and recover Lhe $21,920 ln expecLed correcuons. 8esolve Lhe poLenual overpaymenLs
on Lhe remalnlng four clalms (LoLallng $14,636) and recover funds where approprlaLe.
7. lormally lnsLrucL Lhe 26 provlders ldenuñed by our audlL of Lhe correcL way Lo blll clalms
for physlclan-admlnlsLered drugs. Acuvely monlLor Lhe submlsslons of such clalms by Lhese
providers.
Inaccurate Paent Status Codes
When a hosplLal bllls Medlcald, lL musL lnclude a pauenL sLaLus code (code) whlch lndlcaLes
wheLher Lhe pauenL was dlscharged or Lransferred Lo anoLher healLhcare faclllLy. 1he code ls
lmporLanL because Lhe relmbursemenL meLhod (and amounL) depends on wheLher a pauenL
ls dlscharged or Lransferred. When a pauenL ls dlscharged, lnsuLuuonal medlcal LreaLmenL ls
osLenslbly compleLe. When a pauenL ls Lransferred, medlcal LreaLmenL has noL been compleLed.
Pence, a Lransfer clalm oûen pays less (and someumes slgnlñcanLly less) Lhan a dlscharge clalm.
We ldenuñed Lwo clalms (LoLallng paymenLs of $97,687) wlLh lnaccuraLe sLaLus codes. ln one
case, Lhe hosplLal enLered a dlscharge code lnsLead of a Lransfer code. ln Lhe oLher case, anoLher
hosplLal lncorrecLly lndlcaLed a Lransfer Lo a crlucal access hosplLal raLher Lhan a sLandard Lransfer.
AL our requesL, boLh hosplLals correcLed Lhelr clalms, reduclng Lhelr paymenLs Lo $8,483, whlch
reallzed a Medlcald cosL savlngs of $89,204 ($97,687 - $8,483).
Recommendaon
8. lormally remlnd Lhe Lwo hosplLals Lo ensure Lhe pauenL sLaLus codes on Lhelr clalms are
correct.
2011-S-39
Division of State Government Accountability 11
Incorrect Claim for Out-of-State Inpaent Services
When lnpauenL care ls needed ouLslde of new ?ork, prlor auLhorlzauon ls requlred unless Lhe
provlder agrees Lo accepL Lhe new ?ork SLaLe Medlcald relmbursemenL raLes. An ouL-of-sLaLe
provlder submlued a clalm for lnpauenL servlces LhaL pald $101,979. Powever, Lhe provlder dld
noL have a prlor Medlcald auLhorlzauon and, Lherefore, should have submlued Lhe clalm aL new
?ork’s lnpauenL raLe ($23,824). AL our requesL, Lhe provlder ad[usLed Lhe clalm, savlng Medlcald
$78,133 ($101,979 - $23,824).
Recommendaon
9. Formally advise the provider to request prior approval from New York Medicaid unless the
provlder agrees Lo accepL Lhe new ?ork SLaLe Medlcald relmbursemenL raLes.
Duplicate Billings
Medlcald overpald elghL provlders a LoLal of $77,763 on 18 clalms because Lhe provlders bllled for
certain procedures more than once. The duplicate payments occurred under several scenarios.
Speclñcally, we deLermlned Lhe provlders bllled:
• Lhe same procedure code more Lhan once on Lhe same day, resulung ln overpaymenLs on
seven clalms LoLallng $36,303,
• Lhe same procedure on dlñerenL daLes or on dlñerenL clalms, resulung ln overpaymenLs
on slx clalms LoLallng $31,239, and
• anesLhesla servlces muluple umes on lndlvldual clalms when lL can only be bllled once per
clalm. 1hls resulLed ln overpaymenLs on ñve clalms LoLallng $10,203.
1he elghL provlders acknowledged Lhelr errors and correcLed Lhe overpald clalms, savlng Medlcald
$77,763.
Recommendaon
10. lormally lnsLrucL Lhe elghL provlders how Lo properly blll Lhe procedures ln quesuon.
Incorrect Claims for Medical Equipment
We ldenuñed $27,648 ln Medlcald overpaymenLs on four clalms for medlcal equlpmenL (LoLallng
paymenLs of $28,248) because Lhe provlder dld noL blll accordlng Lo Lhe Medlcald guldellnes. 1he
guldellnes sLaLe Lhe medlcal equlpmenL should be bllled once per monLh up Lo a maxlmum of
$100 per monLh. Powever, Lhe provlder bllled for Lhe equlpmenL more frequenLly and over Lhe
amounL allowed. AL Lhe ume our ñeldwork concluded, Lhe provlder made ad[usLmenLs Lo Lhree
of Lhe four clalms, savlng Medlcald $19,186. We esumaLe furLher ad[usLmenLs wlll resulL ln an
addluonal savlngs of 8,462.
2011-S-39
Division of State Government Accountability 12
Recommendaons
11. 8evlew and recover Lhe unresolved overpaymenLs LoLallng $8,462.
12. lormally lnsLrucL Lhe provlder how Lo properly blll Lhe medlcal equlpmenL ln quesuon.
Incorrect Claims for Transportaon Services
We ldenuñed $23,702 ln overpaymenLs on 40 clalms for LransporLauon servlces (LoLallng $37,011).
1he overpaymenLs occurred for varlous reasons. We found, for example, LhaL:
• A Þennsylvanla provlder submlued seven clalms uslng Þennsylvanla’s Medlcald meLhod
Lo calculaLe relmbursable mlleage lnsLead of Lhe meLhod prescrlbed by new ?ork. under
new ?ork’s meLhod, Lhe seven clalms should have LoLaled $24,092. Powever, Lhe provlder
clalmed and was pald $43,372, resulung ln an overpaymenL of $21,280 ($43,372 - $24,092).
AlLhough Lhe provlder agreed Lhe clalms were lncorrecL, Lhe provlder had noL ad[usLed
Lhem Lhrough eMedn? aL Lhe ume our ñeldwork ended,
• A provlder submlued 29 clalms (LoLallng $1,749) LhaL dld noL have adequaLe records Lo
supporL Lhe clalms. As such, Lhe ueparLmenL should recover Lhe paymenLs of $1,749,
• AnoLher provlder’s clalm was processed lncorrecLly due Lo a scannlng error (mlsread
of a procedure code). ln Lhls case, eMedn? pald Lhe provlder $3,420, alLhough Lhe
correcL paymenL amounL was $2,033. We advlsed Lhe ueparLmenL of Lhe error, and Lhe
ueparLmenL correcLed Lhe clalm, savlng Medlcald $1,387 ($3,420 - $2,033), and
• 1wo provlders submlued Lhree clalms (LoLallng $6,470) LhaL lncluded daLes when servlces
were noL provlded due Lo reclplenL cancellauons or absences. 8ecause Lhe clalms should
have LoLaled $3,184, Lhe overpaymenLs amounLed Lo $1,286 ($6,470 - $3,184). AL Lhe
ume of our ñeldwork, one provlder volded Lwo of Lhe lncorrecL clalms, savlng Medlcald
$1,008. Acuons were sull needed on Lhe remalnlng clalm, whlch should save Medlcald
$278.
AL Lhe ume our ñeldwork concluded, ad[usLmenLs were sull needed for 37 clalms, whlch could
save Medlcald $23,307.
Recommendaon
13. 8evlew and recover Lhe unresolved overpaymenLs (LoLallng $23,307) on Lhe 37 clalms.
Incorrect Claims for Nursing Home Services
Medlcald overpald Lhree provlders $13,316 on 22 clalms because Lhe provlders elLher used
an lncorrecL raLe code, falled Lo deducL Lhe amounL of Lhe pauenL’s llablllLy from Lhe clalm, or
submlued dupllcaLe clalms for Lhe same reclplenL. AL Lhe ume our ñeldwork concluded, provlders
correcLed 20 of Lhe 22 clalms, savlng Medlcald $14,187.
2011-S-39
Division of State Government Accountability 13
1he ma[orlLy of Lhe overpaymenLs (19 of Lhe 22 clalms) were caused by one provlder bllllng an
lncorrecL raLe code. 1he provlder acknowledged Lhe error and ad[usLed Lhe clalms. 1he clalms
orlglnally pald $231,920, buL were ad[usLed Lo paymenLs LoLallng $239,479, savlng Medlcald
$12,441. Cn anoLher clalm, a provlder falled Lo correcLly accounL for Lhe pauenL’s llablllLy. 1he
clalm orlglnally pald $22,793. AL our requesL Lhe provlder correcLed Lhe clalm, reduclng Lhe
paymenL Lo $21,049, and savlng Medlcald $1,746.

8egardlng Lhe remalnlng Lwo paymenLs, on Lwo occaslons a nurslng home submlued a clalm for
a resldenL for a parucular monLh, and a hosplce provlder submlued a clalm for Lhe same resldenL
for Lhe same servlces for a day ln Lhe same monLh. 1hus, Medlcald pald a LoLal of $1,329 Lo boLh
provlders for Lhe same servlce. lurLher, boLh provlders malnLaln LhaL Lhelr clalms for Lhe daLes ln
quesuon were correcL. noneLheless, Medlcald pald Lwlce for Lhe same servlce, and lL ls unclear
whlch provlder should amend Lhelr clalm. We broughL Lhls mauer Lo Lhe auenuon of ueparLmenL
omclals durlng Lhe course of our audlL ñeldwork. Powever, aL Lhe ume our ñeldwork ended, Lhe
mauer had noL been resolved.
Recommendaons
14. ueLermlne lf Lhe nurslng home or Lhe hosplce provlder should noL have bllled Medlcald for
Lhe servlce daLes ln quesuon. lf elLher enuLy should noL have bllled Medlcald, recover Lhe
paymenLs of $1,329.
13. lormally revlew Medlcald bllllng guldellnes for daLes when reclplenLs recelve servlces from
boLh nurslng homes and hosplce provlders. As necessary, clarlfy Lhe guldellnes Lo prevenL
clalms from nurslng homes and hosplce provlders for Lhe same servlce.
Status of Providers Who Abuse the Program
lf a Medlcald provlder has vlolaLed sLaLuLory or regulaLory requlremenLs relaLed Lo Lhe Medlcald or
Medlcare programs (or has engaged ln oLher unaccepLable lnsurance pracuces), Lhe ueparLmenL
can lmpose sancuons agalnsL Lhe provlder. 1hese sancuons can range from excludlng Lhe provlder
from Lhe Medlcald program Lo lmposlng paruclpauon requlremenLs, such as requlrlng all clalms
Lo be revlewed manually before paymenL. lf no acuon ls Laken, Lhe provlder remalns acuve
Lo LreaL Medlcald pauenLs (elLher as a dlrecL medlcal provlder or as a Medlcald managed care
plan provlder), ulumaLely placlng reclplenLs aL rlsk of poor quallLy care and obLalnlng Medlcald
payments.
We ldenuñed 44 Medlcald provlders who were charged wlLh or found gullLy of crlmes LhaL vlolaLe
Medlcald program laws or regulauons. 1hlrLy-seven of Lhese provlders had an acuve sLaLus ln
Lhe Medlcald program and 7 provlders had an lnacuve sLaLus (l.e., Lwo or more years of no clalms
acuvlLy and, Lherefore, Lhey would be requlred Lo seek re-lnsLaLemenL from Medlcald Lo submlL
new claims). We advlsed ueparLmenL omclals of Lhese provlders, and Lhe ueparLmenL LermlnaLed
17 of Lhem from Lhe Medlcald program. Þrlor Lo program Lermlnauon, Medlcald pald 3 (of Lhe
17) provlders a LoLal of $2,930. Also, Lhe ueparLmenL deLermlned 8 of Lhe 44 provlders should
2011-S-39
Division of State Government Accountability 14
noL be LermlnaLed. AL Lhe ume our audlL ñeldwork ended, Lhe ueparLmenL had noL resolved Lhe
program sLaLus of Lhe remalnlng 19 providers (3 of whom recelved a LoLal of aL leasL $8,809 from
Medlcald aûer Lhey were charged or lndlcLed).
Recommendaons
16. ueLermlne Lhe sLaLus of Lhe remalnlng 19 provlders relaung Lo Lhelr fuLure paruclpauon ln
Lhe Medlcald program.
17. lnvesugaLe Lhe proprleLy of Lhe paymenLs (LoLallng $11,739) made Lo Lhe 6 provlders who
vlolaLed Medlcald laws or regulauons. 8ecover any lmproper paymenLs, as approprlaLe.
Audit Scope and Methodology
We audited selected Medicaid claims processed by the Department to determine whether the
ueparLmenL’s eMedn? sysLem reasonably ensured LhaL Medlcald clalms were submlued by
approved provlders, were processed ln accordance wlLh Medlcald requlremenLs, and resulLed
ln correcL paymenLs Lo Lhe provlders. 1he scope of our audlL was from CcLober 1, 2011 Lhrough
March 31, 2012. Addluonally, clalms and Lransacuons ouLslde of Lhe audlL scope perlod were
examlned ln lnsLances where we observed a pauern of problems and hlgh rlsk of overpaymenL.
1o accompllsh our audlL ob[ecuves, we performed varlous analyses of clalms from Medlcald
paymenL ñles, verlñed Lhe accuracy of cerLaln paymenLs and LesLed Lhe operauon of cerLaln
sysLem conLrols. We lnLervlewed omclals from Lhe ueparLmenL, CompuLer Sclences Corporauon
(Lhe ueparLmenL’s Medlcald ñscal agenL), and Lhe Cmce of Lhe Medlcald lnspecLor Ceneral.
We revlewed appllcable secuons of federal and SLaLe laws and regulauons, examlned Lhe
ueparLmenL’s Medlcald paymenL pollcles and procedures, and LesLed medlcal records supporung
provlder clalms for relmbursemenL. Cur audlL sLeps reßecL a rlsk-based approach Laklng lnLo
conslderauon Lhe ume consLralnLs of Lhe weekly cycle and Lhe maLerlallLy of paymenLs.
We conducLed our performance audlL ln accordance wlLh generally accepLed governmenL audlung
sLandards. 1hose sLandards requlre LhaL we plan and perform Lhe audlL Lo obLaln sumclenL,
approprlaLe evldence Lo provlde a reasonable basls for our ñndlngs and concluslons based on
our audlL ob[ecuves. We belleve LhaL Lhe evldence obLalned provldes a reasonable basls for our
ñndlngs and concluslons based on our audlL ob[ecuves.
ln addluon Lo belng Lhe SLaLe AudlLor, Lhe CompLroller performs cerLaln oLher consuLuuonally and
sLaLuLorlly mandaLed duues as Lhe chlef ñscal omcer of new ?ork SLaLe. 1hese lnclude operaung
Lhe SLaLe’s accounung sysLem, preparlng Lhe SLaLe’s ñnanclal sLaLemenLs, and approvlng SLaLe
conLracLs, refunds, and oLher paymenLs. ln addluon, Lhe CompLroller appolnLs members (some
of whom have mlnorlLy voung rlghLs) Lo cerLaln boards, commlsslons and publlc auLhorlues.
1hese duues may be consldered managemenL funcuons for purposes of evaluaung organlzauonal
lndependence under generally accepLed governmenL audlung sLandards. ln our oplnlon, Lhese
2011-S-39
Division of State Government Accountability 15
funcuons do noL añecL our ablllLy Lo conducL lndependenL audlLs of program performance.
Authority
1he audlL was performed pursuanL Lo Lhe SLaLe CompLroller’s auLhorlLy as seL forLh ln Arucle v,
Secuon 1 of Lhe SLaLe ConsuLuuon and Arucle ll, Secuon 8 of Lhe SLaLe llnance Law.
Reporng Requirements
We provlded a draû copy of Lhls reporL Lo ueparLmenL omclals for Lhelr revlew and formal
commenL. We consldered Lhe ueparLmenL’s commenLs ln preparlng Lhls reporL and have lncluded
Lhem ln Lhelr enureLy aL Lhe end of lL. ln Lhelr response, ueparLmenL omclals generally concurred
wlLh our recommendauons and lndlcaLed LhaL cerLaln acuons have been and wlll be Laken Lo
address Lhem. Also, cerLaln oLher mauers were consldered Lo be of lesser slgnlñcance, and Lhese
were provlded Lo Lhe ueparLmenL ln a separaLe leuer for furLher acuon.
WlLhln 90 days of Lhe ñnal release of Lhls reporL, as requlred by Secuon 170 of Lhe Lxecuuve
Law, Lhe Commlssloner of PealLh shall reporL Lo Lhe Covernor, Lhe SLaLe CompLroller, and Lhe
leaders of Lhe LeglslaLure and ñscal commluees, advlslng whaL sLeps were Laken Lo lmplemenL
Lhe recommendauons conLalned hereln, and where recommendauons were noL lmplemenLed,
the reasons why.
2011-S-39
Division of State Government Accountability 16
Division of State Government Accountability
Andrew A. Sanllllppo, Lxecuuve uepuLy CompLroller
318-474-4393, asanñllppo[osc.sLaLe.ny.us
LllloL Þagllacclo, uepuLy CompLroller
318-473-3396, epagllacclo[osc.sLaLe.ny.us
!erry 8arber, AsslsLanL CompLroller
318-473-0334, [barber[osc.sLaLe.ny.us
Vision
A Leam of accounLablllLy experLs respecLed for provldlng lnformauon LhaL declslon makers value.
Mission
1o lmprove governmenL operauons by conducung lndependenL audlLs, revlews and evaluauons
of new ?ork SLaLe and new ?ork ClLy Laxpayer ñnanced programs.
Contributors to This Report
Brian Mason, AudlL ulrecLor
Andrea Inman, AudlL Manager
Gail Gorski, AudlL Supervlsor
Brian Krawiecki, Lxamlner-ln-Charge
Theresa Podagrosi, Lxamlner-ln-Charge
Earl Vincent, Lxamlner-ln-Charge
Judith McEleney, Supervlslng Medlcal Care 8epresenLauve
Mark Breunig, SLañ Lxamlner
Jacqueline Keeys-Holston, SLañ Lxamlner
Kate Merrill, SLañ Lxamlner
Emily Proulx, SLañ Lxamlner
Rebecca Tuczynski, SLañ Lxamlner
Suzanne Loudis, Medlcal Care 8epresenLauve
2011-S-39
Division of State Government Accountability 17
Agency Comments
2011-S-39
Division of State Government Accountability 18
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Division of State Government Accountability 19
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Division of State Government Accountability 22

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