Faulty software cost state $114M

New York State paid $114 million in excessive Medicaid bills largely due to an ineffective claims processing software that failed to detect problems, according to an audit by the New York State comptroller.

The audit found the biggest source of problems from 2005 to 2009 was the failure of the New York State Department of Health’s automated claims system, or eMedNY, to detect incorrect claims information.

The software failed to properly apply a 20 percent coinsurance limit on many charges and lacked controls to detect incorrect claims information, according to the audit.

“We keep ringing the same bell, but DOH just doesn’t hear it,” Comptroller Thomas P. DiNapoli said in a written statement.  “Time and time again, our audits have found overpayments, double payments, and fraudulent payments.”

Although the audit enumerated many examples of overpaid claims, the DOH said it at the end of 2009 implemented a more effective software program. The Comptroller said that additional actions should be taken.

The audit found that Medicaid overpaid providers about $70 million because the Department Of Health failed to “program appropriate preventive controls” into its automated claims processing system.

That included $7.2 million in overpayments when eMedNY approved $9.1 million for 820,000 claims for therapeutic massages, where payments should have been no greater than $1.9 million.

Auditors also found New York made about $14 million in Medicaid overpayments between 2006 and 2007, due to inaccurate Medicare eligibility information for nearly 6,000 Medicaid recipients also enrolled in Medicare.

Medicare wasn’t billed first as is required by regulations, resulting in the Medicaid overpayments, according to the audit.

“Medicaid should be the payer of last resort,” said Bill Reynolds, a comptroller spokesman. “If Medicaid pays before Medicare does, there’s the obvious risk that Medicaid will pay more than it should.”

Medicaid patients who are also eligible for Medicare are reimbursed in New York state at a higher rate than those who only have Medicaid.

But DiNapoli said states including Florida and California reduced or eliminated that dual coverage premium.

He recommended that the Department of Health, the governor and the state legislature review whether that policy should be changed.