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New York State accused of $15bln fraud involving people with disabilities

Published time: September 21, 2012 15:00
Edited time: September 21, 2012 19:00
New York City (Spencer Platt/Getty Images/AFP)

New York City (Spencer Platt/Getty Images/AFP)

The State of New York has been accused of overbilling Medicaid by billions of dollars by inflating reimbursement payments to its institutions for the mentally disabled.

­Since 1990 New York has overcharged taxpayers by $15 billion, writes the Wall Street Journal citing a report by the Republican-led House Oversight and Government Reform Committee.

The committee said that in 2011, New York charged a per-diem rate of $5,118 for residents of the institutions. These are 11 centers that house about 1,300 people with severe developmental disabilities.

In one year Medicaid paid $1.9 million to care for every resident, with half of that money provided by the federal government. However the real cost to run the institutions was a quarter of that amount.

The report said New York took advantage of a complex formula, keeping federal officials in the dark for years.

"This is intentional fraud," Arizona Rep. Paul Gosar, a Republican committee member told the Wall Street Journal.

Twenty years ago New York State gained permission from the federal government to use a different formula for state-run developmental centers.

They assured officials that the rates would run close to costs, writes the Wall Street Journal. But almost immediately reimbursements began to skyrocket.

The new methodology allowed New York to bill Medicaid for ghost patients: When a patient was discharged from a state-run facility, New York retained nearly two-thirds of the reimbursement amount. The formula also double-billed taxpayers: Many of those patients who left the centers moved into Medicaid-financed group homes.

Between 1990 and 2011, the daily reimbursement rate grew to $5,118 from the initial $348.

Republican lawmakers in Washington are putting pressure on the federal Centers for Medicare & Medicaid Services to crack down on New York's reimbursements.

"CMS is working with the state on the appropriate payment rate and we cannot speak to what the final rate will be at this point," said Alper Ozinal, a CMS spokesman. CMS officials acknowledge they first became aware of the problem in 2007 but waited three years before launching a probe.

The committee's report said the administration of Governor Andrew Cuomo refused to cooperate with the investigation.

The report could pose budget problems for Governor Cuomo. Republican lawmakers in Washington are putting pressure on the federal Centers for Medicare & Medicaid Services to crack down on New York's reimbursements.

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