State Recovers $269M In Medicaid Fraud, Waste

This article is from the archive of The New York Sun before the launch of its new website in 2022. The Sun has neither altered nor updated such articles but will seek to correct any errors, mis-categorizations or other problems introduced during transfer.

The New York Sun

State auditors recovered more than $269 million in Medicaid fraud and waste between October 2007 and March 2008, officials from the state’s Office of the Medicaid Inspector General told The New York Sun.

The amount exceeds a commitment the state made to the federal government in 2006 to recover $215 million in the fiscal year ending September 30, 2008, and a total of $1.5 billion from the state’s Medicaid program by 2011. Under the agreement, the federal government gave New York State $1.5 billion for health care modernization projects.

But facing increasingly large annual recovery goals — the state will owe $611 million in the fiscal year 2011 — state auditors are pushing forward with an aggressive plan to hire investigators and employ new investigative techniques. Having focused on nursing homes and managed care companies, the agency also will begin to audit hospitals in the next six months.

“The reality is, one of the reasons we’re being successful now is that a lot of these areas have not been touched,” the Medicaid inspector general, James Sheehan, told the Sun in an interview. He said that going forward, his auditors would look at “every sector that gets significant public funds,” including hospitals. He also described a method for rooting out Medicaid billing problems known as “data mining,” in which a computer identifies mistakes or cases of fraud. In describing the current system, he said, “Our computer system is a 2002 Corolla. It runs good, but it’s not exactly a state-of-the-art machine.”

Under the federal agreement, negotiated by the Pataki administration, New York received $1.5 billion in exchange for implementing the recommendations of the Berger Commission, which recommended closure for nine hospitals statewide. The agreement also stipulated that the state enhance its fraud detection and meet annual recovery goals of $215 million in the fiscal year ending September 30, 2008; $322 million in the fiscal year ending September 30, 2009; $429 million in the fiscal year ending September 30, 2010, and $611 million in the fiscal year ending September 30, 2011.

So far, the state has invested tens of millions of dollars to build up its fraud detection operations. The total operating budget for the Office of the Medicaid Inspector General is about $90 million, including a personnel budget of $42 million. Currently, the agency employs 554 staff members around the state, and it is looking to increase that number to 753 by the end of 2009.

But some, including Mr. Sheehan, have voiced concern that the agency may not be able to recover $600 million in the fourth year because by then, the agency will have implemented methods for rooting out errors and fraud.

“In order to get this kind of money, it’s got to go beyond basic fraud and abuse,” the chairman of health policy and management at SUNY Downstate School of Public Health, Howard Berliner, said. “Frankly, a lot of hospital executives are going to be spending time hoping and praying that nobody is auditing them,” he said.

Others echoed his concerns and said that while the state ought to be detecting Medicaid fraud, a more important task is improving the administration of Medicaid to prevent problems in the first place. The president of the United Hospital Fund, James Tallon, said: “You can’t simply have an ever-escalating projection of fraud recoveries when your real goal ought to be that the fraud doesn’t happen in the first place.”

The New York Sun

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