NYS audit: $1.5 billion 'questionable' Medicaid payments went to unenrolled providers

More than $1.5 billion in “improper and questionable” payments under New York's Medicaid program in a roughly four-year period went to providers who were not enrolled in the government-funded program that offers care to underprivileged residents and those with certain health needs, a state audit said.

Medicaid-managed care organizations, which contract with clinicians and other providers so members can get medical services, made the payments between January 2018 and June 2022, according to the audit released Tuesday from the Office of the New York State Comptroller. However, the federal 21st Century Cures Act, signed into law in 2016, generally mandates that the organizations' in-network providers be enrolled in Medicaid by 2018, meaning at least some of the providers who received those payments were not enrolled in the program, the audit said.

The payments to unenrolled providers, the audit said, are due to several reasons, including a lack of oversight from the Department of Health, which administers the state’s Medicaid program and pays managed care organizations' monthly premiums.

“The deadline for managed care organizations and their providers to comply with enrollment requirements was over five years ago, yet our audit shows payments to providers that are still not enrolled in Medicaid or have been denied,” New York State Comptroller Thomas DiNapoli said in a statement.

“Medicaid is vital to millions of New Yorkers in need of quality health care, and the Department of Health must do a better job ensuring the program's integrity,” DiNapoli said.

Ensuring a provider who is giving care is enrolled in the Medicaid program, as the audit outlines, can offer a level of confidence that they are credentialed and can provide appropriate services. In the absence of that, it opens the possibility of Medicaid patients getting care from providers without Medicaid authorization, some of whom might have been denied Medicaid eligibility due to safety concerns, the audit noted.

For instance, the report noted a pharmacy provider still received managed care organization payments despite being denied Medicaid enrollment because of expired medications on shelves, unclean conditions and other issues.

Yet the full extent of the issue, the office said in the statement, is not yet known and may “have larger implications.” The office reviewed claims for only five managed care organizations.

The five paid roughly $915 million in claims to providers with identification numbers that didn’t pair with a provider enrolled in Medicaid on the service date, the report said.

The audit found that roughly $830 million in claims were paid by managed care organizations to providers with a Medicaid application that the Department of Health denied or withdrew due to missing information or not meeting the program’s standards, state officials said.

The audit cited the coronavirus pandemic as causing the health department to divert its enrollment efforts to other matters. It also said the Department of Health did not tell the managed care organizations when a provider had enrollment denials or withdrawals. Managed care organizations are tasked with taking providers off their networks if they are not part of the Medicaid program in New York.

In a statement included in the audit, the Department of Health said several of its systems used to process Medicaid claims were designed before the 2018 enrollment requirements were put in place and are compatible with systemic reviews.

Before the act took effect, the department said it gave managed care organizations guidance to find and register providers that were in their networks. The department also said it posted on its website a list of providers whose enrollments were pending and those enrolled.

The audit made several recommendations, including reviewing payments and developing a procedure to tell managed care organizations which providers have been refused Medicaid enrollment or withdrawn from the program.

The New York Health Plan Association, which includes 26 managed care health plans, said it agrees that the health department and the comptroller's office have systemic issues in determining provider enrollment status and hopes to address them.

Plans “welcome the opportunity to work with [the Department of Health] to develop a better process to communicate the status of providers who have been denied or withdrawn enrollment in Medicaid,” Eric Linzer, president and CEO of the association, said in a statement.

But the amount identified as problematic over roughly four years is not that high compared with how much the state's Medicaid program spends overall, said Bill Hammond, senior fellow of health policy with the Empire Center for Public Policy, an Albany-based think tank.

New York's Medicaid program claims cost about $80 billion for the 2023 fiscal year, with $50 billion of that for premium payments for managed care, the audit said.

With that large amount of money and the type of record-keeping that goes along with keeping up with enrollments, he said, there would likely be typographical or other errors associated with the mandate that went into affect in 2018, Hammond said.

“It seems like you would expect some growing pains,” Hammond said.

Still, he thinks the number of problems will decrease as people learn the process and it becomes more routine.

“They're going to all get their acts together, gradually — and … this issue will get smaller,” he said.