Relying on old data, New York wasted $150 million in Medicaid overpayments, audit shows

Relying on out-of-date reimbursement information, New York's Department of Health shelled out $150 million in "excessive and unnecessary" overpayments, including $21.4 million to out-of-state hospitals for non-emergency services, according to audits released this week by Thomas DiNapoli, New York's comptroller. 

In many of the out-of-state incidences, prior approval was not sought before conducting the non-emergency procedures, leading to some particularly hefty overpayments. Examples of such overpayments included: 

  • $1.5 million paid to an Ohio hospital for a bone marrow transplant. The hospital should only have been paid $117,000, according to DiNapoli.
  • $102,021 paid to another Ohio hospital for a lymphoma treatment. A New York hospital in a similar situation would have been paid $21,563.
  • A Michigan hospital receiving $65,916 to treat a patient's eye disorder. A New York hospital would have been paid only $7,065. 

"There is no Free Parking jackpot to bail this program out," DiNapoli said. "The waste and abuse in this program is costing taxpayers too much money." 

The audits also determined that in-state hospitals were overpaid nearly $75 million for patients discharged and readmitted to the same hospital for treatment of the same illness or a related illness. In one instance, a patient who was discharged after being treated for kidney and urinary tract infections, only to be readmitted five hours later for the same issues, cost the Medicaid system roughly $22,000 because his visits were not combined into a single claim by the hospital. The hospital should have been reimbursed only half that amount ($11,000). 

To remedy the situation, auditors recommended that the department of health make an effort to recover the money it overpaid, require prior approval for New Yorkers on Medicaid receiving out-of-state treatments, and toughen up reimbursement policies for readmission cases. Auditors also want to see the department update its eMedNY system to reflect "correct reimbursement amounts." 

The DOH fired back, calling $53 million of the overpayments cited "hypothetical," according to the Albany Times Union

"If there were different rules, not as much money would be spent," said Claudia Hutton, DOH spokeswoman. "That's true for everything." 

For more information:
- here's the report on overpayments for hospital readmissions
- here's the report on out-of-state overpayments for non-emergency services
- read this Albany Times Union article
- read this press release from DiNapoli's office

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