Healthcare Revenue Cycle Management, ICD-10, Claims Reimbursement, Medicare, Medicaid

Policy & Regulation News

New York Faces $1M in Inappropriate Medicaid Claims

By Stephanie Reardon

Nearly $1 million paid in Medicaid claims for beneficiaries who already had these services paid for through managed care plans.

- The New York State Office of the State Comptroller has released an audit on the Medicaid program department of Health. The audit was focused on the fee-for-service claim payments for pharmacy services. The findings details the inappropriate payment of nearly $1 million for Medicaid beneficiaries who already had these services paid for through managed care plans.

The Department of Medicaid Services in New York has two payment methods to reimburse Medicaid providers: fee-for-service or managed care plans. The fee-for-service method pays the provider for every Medicaid service given to the beneficiary. The managed care plan on the other hand, is a monthly payment made to providers for each enrolled beneficiary.

Originally, pharmacy benefits were reimbursed through the fee for service method because they had been excluded from managed care coverage. However, by October 1, 2011, managed care plans covered most pharmacy benefits eliminating the need for fee-for-service reimbursement. This created confusion.

According to auditor Thomas DiNapoli, the inappropriate Medicaid payments happened because managed care enrollment information was not updated. From October 1, 2011 through December 31, 2013, Medicaid paid $978,251 fee-for-service pharmacy claims for beneficiaries who were already covered by managed care.

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  • “According to Department guidelines, if the mother of a newborn is enrolled in a managed care plan, the newborn child should also be enrolled in the plan, and the managed care plan assumes medical risk for the newborn on the actual date of birth,” the report explains.

    During the audit, it was discovered that the hospital didn’t update information in a time-appropriate way for births as required. Out of the 14,369 late enrollment recipient updates, 13,463 (94 percent) were newborns whose mothers were enrolled in a managed care plan.

    How can providers avoid this?

    State Medicaid programs should work to ensure that all fee-for-service enrollment information is updated in a time-appropriate manner to prevent this type of problem. State Medicaid providers should also continue to work to meet compliance methods.

    Specific to this case, DiNapoli recommends that the State’s Medicaid agency investigate and recover approximately $978,251 in inappropriately distributed payments and report live births within five business days.

    The Department of health agreed with the findings listed in the audit. The Department has researched these overpayments and implemented edits to their process to prevent this problem going forward.

    Medicaid compliance is vital to limiting errors and, as a result, limiting the possible penalties imposed for noncompliance. A recent report on, detailed another audit that took place for New York Medicaid Services. The Department of Health and Human Services (HHS) Office of Inspector General (OIG) discovered that the State Agency claimed $76,817,444 for improper Medicaid reimbursement. The OIG recommended that the State agency refund $79,328 to the Federal Government.



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