Medicaid Overpaid NYS $700 Million in 2009

A report from the Office of the Inspector General shows that Medicaid overpaid New York State $700 million in 2009 for residents with developmental disabilities.

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New York State pays more to care for its developmentally disabled than California, Florida, Illinois and Texas combined -- an annual total of $10 billion.  At the same time, the state serves half as many patients.  A recent report from the Office of the Inspector General  now says that Medicaid overpaid New York by $701 million dollars in 2009 for the care of the developmentally disabled.

New York’s developmentally disabled are generally cared for in group home environments, rather than institutions.  These residents are typically housed in intermediate care facilities (IFC) that offer 24-hour support.  The audit that made this discovery compared the growth rate of payment for services for 1,688 beneficiaries to the payment rate at all state and privately operated IFCs, the growth rate of Medicaid payments to facilities compared to their location and the number of beneficiaries and services provided at these locations.  
The audit demonstrated that Medicaid reimbursement rate for developmental centers “significantly outpaced those of both State-operated and privately operated IFCs.”  At the same time, the State claimed significantly more for developmental services than its actual costs, and privately-operated IFCs reported much lower reimbursement rates.  Privately operated intermediate care facilities reports a daily cost of $421 to $535 per day while State-operated facilities reported costs $4,116 per beneficiary per day.
In all, New York received $2.27 billion for Medicaid reimbursements in 2009.  The report indicates that if the state had used the prior year’s actual costs to calculate daily costs, its reimbursement would have been only $858 million, or $141 billion less.  
The growth rate for the costs of caring for a beneficiary in an IFC is staggering.  In 1985 the cost was $195 a day.  In 2009, it was $4,116; over 21 times greater than it was 30 years ago.   A further review is still needed to determine how the excess money was spent.
No penalty will be incurred by the state because the funding had been approved by federal regulators.  Instead, the Inspector General’s report suggests that more efficient systems for determining that cost of caring for these patients.  Federal regulations already stipulate that Medicaid reimbursements be “consistent with efficiency and economy.”  An exact plan for ensuring efficiency was not included in the report.
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