Thanks to a lack of oversight, the state Health Department doled out $1.3 billion in six years in Medicaid premiums for people who were already enrolled in other comprehensive health plans, according to a new report from state Comptroller Thomas DiNapoli.
The report found that the state Health Department is not quick enough to disenroll people when they sign up for coverage with another insurer. The overwhelming majority of those funds—about $1.2 billion—are not recoverable.
“Glitches in the state Department of Health’s payment system and other problems led to over a billion dollars in unnecessary spending,” DiNapoli said. “The department needs to improve its procedures and stop this waste of taxpayer money.”
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The waste in question, while considerable, accounts for a fraction of the annual Medicaid budget. New York’s Medicaid program, which is funded by federal, state and local governments, spent $58 billion for services for some 7.4 million members in fiscal 2017 alone.
The majority of Medicaid members in New York are enrolled in mainstream Medicaid managed-care plans, which are run by private companies or nonprofit organizations that receive monthly payments for each member from the government. The state Health Department is responsible for disenrolling members from those Medicaid plans as soon as it learns they have enrolled in another comprehensive health plan.
The state Office of the Medicaid Inspector General contracts with a company called Health Management Systems to obtain that information and enter it into the system the state uses to process Medicaid claims. The New York State of Health online insurance marketplace and local social services departments also collect enrollment information.
Yet, according to the audit, the Health Department too often learns about Medicaid members’ enrollment in third-party plans well after the fact.
In some of the cases the comptroller’s office examined, a person enrolled in a Medicaid plan was also enrolled in another plan run by the same entity. In those cases, the state can easily recover any Medicaid premiums paid while the coverage overlapped. Those cases account for about $26.9 million of the excess funds paid during the audit period, which extended from January 2012 to September of last year.
In other cases, Medicaid recipients were enrolled in a plan from a company that owned or was related in some other way to the one that operated their Medicaid plan. In those cases, which account for $70.6 million of the excess funds paid during the audit period, the state will have to review the relationships between the companies to determine whether it can recover the money.
But the state has no recourse to recover the $1.2 billion from Medicaid members enrolled in plans operated by third-party insurers with no relation to the company operating the Medicaid plan, the comptroller said.
The comptroller offered several recommendations to the state Health Department to help prevent such losses in the future, only some of which the Health Department said it would consider. One suggestion was for the state to work out agreements with third-party insurers to get them to provide more frequent enrollment updates. The Health Department said in its response to the audit that while it would “explore the opportunity,” there’s no law in place specifying how frequently third-party insurers have to provide such information.
The state is working with Health Management Systems to review the excess payments identified in the audit and has so far recovered at least $34.7 million, according to the report.
“The Department is committed to protecting taxpayer dollars and ensuring that every New Yorker has access to high quality health care,” the Health Department said in a statement Wednesday. “We are already conducting comprehensive reviews of our Medicaid programs, to make sure that payments to Medicaid managed care plans are not made inappropriately, and are working diligently with the Office of the Medicaid Inspector General to prevent such payments in the future and to recoup excess funding.”