Audit finds New York state overpaid $11.4M for health costs

ALBANY, New York — New audits from the state comptroller’s office find that the state Department of Health is consistently misdiagnosing how much it should pay for Medicaid services, resulting in millions of dollars in annual overpayments to doctors and others who send in the wrong bills.

“Year after year, my auditors identify the same types of Medicaid errors due to weak controls,” Comptroller Tom DiNapoli said in a statement accompanying audits that found some $11.4 million in overpayments.

The findings, released Tuesday, reached back to 2009 and focus on Medicaid and Medicare.

Medicaid is the insurance program for the poor, while Medicare pays for seniors and the disabled. Some New Yorkers receive both. In those cases, Medicare pays most of a charge and Medicaid pays the balance.

Auditors looked at more than 201,000 claims and found that care providers had incorrectly reported the charges — posting their own stated rates rather than the lower rate Medicare allows. That added up to more than $7 million in overpayments in 2009.

The health department responded that it refined its billing system at the end of 2009, just as the audit period was ending.

But in a six-month audit looking at a period that ended on March 31, 2012, the comptroller’s office found $4.1 million in overpayments.

The findings included billings for duplicative procedures, bills for “high (intensive) levels of care” when less costly treatments would have sufficed, and improper payments for physician administered drugs.

In one case, a Pennsylvania provider charged that state’s higher rates for transportation. In another case, a nursing home and hospice both charged for services given to the same patient.

Of the $4.1 million, $3.8 million was recovered, the audit said.

Assemblyman Richard Gottfried, D-Manhattan, who heads the chamber’s health committee, said he wasn’t surprised by the findings given the size and complexity of the Medicaid system.

“Running a $50 billion system and trying to make corrections while it’s running 24-7 is tough,” he said.

Gottfried also suggested that the health department could use more people to track Medicaid.

“Nobody ever marched on Albany demanding that there be more clerks in the health department,” he said, “although when you squeeze those budgets down, inaccuracies happen.”

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