New York City, CSC Sued for Tens of Millions in Medicaid Fraud
By New York City and a contracting company are accused of a massive Medicaid fraud scheme relying on automated software.
- Federal prosecutors are suing New York City and Computer Sciences Corporation (CSC) for tens of millions of dollars in alleged Medicaid fraud stemming from a five-year effort to bilk the agency out of reimbursements for young children who benefited from the program. The office of Preet Bharara, the US District Attorney for the region covering the city, has accused CSC and the Department of Health and Mental Hygiene of switching diagnosis codes, falsifying claims, and circumventing reimbursement policies in order to collect unauthorized funds.
“As alleged, CSC and the City created computer programs that systematically, and fraudulently, altered billing data in order to get paid by Medicaid as quickly as possible and as much as possible,” Bharara said in a public statement. “Billing frauds like those alleged undermine the integrity of public healthcare programs like Medicaid. All public healthcare program participants, whether they are healthcare providers, localities like the City, or contractors like CSC, should understand that they must comply with the applicable billing rules.”
The allegations include several different schemes. To minimize the city’s costs related to early intervention program (EIP) services for young children, the city is accused of improperly collected a larger share of funds from Medicaid by offering CSC financial incentives for targeting the public insurance program ahead of private insurers. The city also imposed penalties if CSC did not meet targets for the collection of funds from Medicaid. CSC is accused of authoring computer programs that automated the billing fraud by altering data.
Prosecutors allege that the city circumvented Medicaid’s secondary payer policy, which requires providers to use up available funds from private insurers before tapping Medicaid reimbursements. CSC is accused of developing computer software that assigned default policy numbers to certain cases, which resulted in rejections from private insurers. CSC and the city then knowingly billed Medicaid for services that should have been covered by private institutions.
CSC and the city are also accused of developing workarounds that would allow them to bill Medicaid for services before private insurers had made a determination regarding payments. “CSC developed computer programs that identified all private insurance claims that had been pending for a period of time (initially 90 days, and then 120 days) and then submitted those claims to Medicaid by improperly using a code – 0Fill – to indicate that private insurers either did not cover those services or had adjudicated the claims with zero payment,” Bharara’s office explained.
The city and CSC face additional accusations related to incorrect ICD-9 diagnosis codes. CSC allegedly developed software that would replace ICD-9 codes for non-payable diagnoses with generic codes that Medicaid would be more likely to accept. “As part of this scheme, CSC and the city submitted tens of thousands of claims containing false diagnosis data, including diagnoses that were not accurate, to Medicaid. This enabled the city to obtain millions of dollars from Medicaid improperly,” the statement says.
“The Complaint seeks treble damages and penalties under the False Claims Act for the millions of dollars in reimbursements that Medicaid paid as a result of the false claims that CSC and the CITY submitted in connection with their billing fraud schemes,” Bharara concluded. “In addition, the United States seeks compensatory damages under the common law theories of unjust enrichment and mistake of fact.”
