$496 Million Identified in Home Health Medicaid Error Payments

New York State identified $496 million in Medicaid erroneous payments and recovered $211 million from the federal government for errors relating to home care recipients who are dually-eligible for both Medicare and Medicaid funds. Through the action of the Office of the Medicaid Inspector General (OMIG), the New York State Department of Health’s Fiscal Group received the $211 million payment, representing the state’s share of the funds, on October 1, 2013, representing the largest single monetary recovery in OMIG’s history. These recoveries are part of the Third-Party Liability Home Health Care Demonstration Project, a federal project looking at home health care involving dual-eligible recipients, conducted in conjunction with the University of Massachusetts Medical School. New York State’s portion of the money reflects project efforts during the years 2007-10 and totals more than $496 million, with $211 million in state share funds. These dollars are a planned part of the Medicaid global cap and will help to ensure that New York contains costs within the Medicaid program.

In the case of dual-eligible recipients, here’s how the billing should work: Home health care providers should first bill Medicare, and then bill Medicaid for whatever portion of the bill Medicare does not pay. Once that process is complete, the dual-eligible recipient’s bill is paid in full. Having dual eligibility in both Medicare and Medicaid is not an unusual circumstance.

“As in most cases, Medicaid is the payer of last resort for dual-eligible recipients,” Medicaid Inspector General James C. Cox explained. “In the cases reflected in these overpayments, bills for these home health care patients were inadvertently sent to Medicaid before first sending them to Medicare and following the correct process. Through the demonstration project, we were able to prove that Medicaid was overcharged and recover the money.”

Jason Helgerson, director of the Medicaid program said, “This finding is further validation of the path set forward by the Medicaid Redesign Team of moving all services and populations into high-quality managed care, which will help to ensure that New York will contain costs within the Medicaid program. We are thankful for the work of the Office of Medicaid Inspector General and the University of Massachusetts to accomplish these savings.”

“We are grateful to have had the opportunity to help the State of New York in its pursuit of payment for these services from the federal government,” said Marc Thibodeau, executive director of the University of Massachusetts Medical School’s Center for Health Care Financing.

This process is an example of government efficiency and process improvement in action. In the project’s initial phases, beginning in 2000, the traditional approach had been to examine each questionable dual-eligible claim on a claim-by-claim basis. This became overwhelmingly cumbersome. The Centers for Medicare and Medicaid Services (CMS) agreed to allow OMIG and UMass to employ a sampling methodology, enabling project staff to use a 200-case sample universe of claims for dual-eligible beneficiaries who received home care services paid by Medicaid for each year audited.

Following the establishment of the sampling methodology, OMIG and University of Massachusetts Medical School staff applied an extrapolation technique to calculate payments that New York State Medicaid had made that should instead have been made by Medicare first. “The administrative burden posed by the claim-by-claim approach had been enormous,” Cox added. “The extrapolation and sampling technique are standard processes used in professional auditing, and it makes sense that we were able to employ this technique to achieve the success of this project.”

“This is tremendous news for New York,” Cox said. “It reflects the tenacity and hard work of the staff within OMIG’s Third-Party Liability Unit to enforce regulations that dictate that Medicaid is the payer of last resort in dual-eligibility cases.” New York was one of three states, along with Massachusetts and Connecticut, to join with the University of Massachusetts Medical School in this project; the total reported here reflects only New York State’s portion of the recoveries.

New Yorkers can assist the Office of the Medicaid Inspector General in fighting fraud, waste, and abuse by reporting potentially suspicious behavior or incidents. OMIG encourages anyone who observes instances of potential Medicaid fraud, waste, or abuse to contact OMIG’s fraud hotline at 1-877-87-FRAUD or visit the Web site at www.omig.ny.gov. Tips can be completely anonymous, and OMIG investigates information from all calls.