Medicaid: NY auditors stumble on $60 million in savings

Medicaid auditors in New York discover Medicaid was often being billed incorrectly.

Hans Pennink/Reuters/File
New York Governor Andrew Cuomo (shown here speaking at a cabinet meeting in Albany, New York, earlier this month) says a Medicaid billing error was costing taxpayers $8 million a month.

On a hunch, state auditors Mike Ernst and Joe Gagnon decided to go beyond their usual work of searching out intricate fraud schemes and double check some of the most basic data in the massiveMedicaid bureaucracy: The patient's address.

They found a nearly $60 million mistake.

The auditors in the Medicaid Inspector General's Office discovered that managed care companies often inaccurately billed the government health program based on where patients got care, not where they lived.

That meant some health care providers were getting paid more than the program allowed. Gov. Andrew Cuomo said the error was costing New York taxpayers $8 million per month.

"They found and implemented a way to save taxpayers more than $8 million in Medicaid costs every month without compromising care," Cuomo said. "They showed that ideas for giving New Yorkers the government they deserve can come from any level, especially when staff are encouraged to think aggressively and out of the box."

Medicaid's payments to health care providers vary considerably from county to county, mostly to account for differences in the cost of living between places like Manhattan, and rural upstate towns. Many health care providers are in counties with higher reimbursement rates, but they are still supposed to be paid based on where the patient lives.

State officials chalk it up as a mistake, or "locator code error," not fraud. But the fix has already saved $41.3 million in five months — half of it state dollars. The state has recovered another $16 million.

The fix required the Health Department to rewrite software.

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