Fears From Fraud Settlements in New York

When New York City agreed to pay $70 million this week to settle accusations of Medicaid fraud in a program intended to take care of disabled people at home the rumors began. The New York Times reported that  “it seemed like a victory for the disabled… in a letter sent late Thursday to federal law enforcement and Medicaid officials, dozens of organizations representing disabled people are saying there is a dark side to the settlement.”

This latest Medicaid fraud settlement may be just enough to spread fear to other states regarding far reaching affects high cost settlements. Just this past week, New York City agreed to pay $70 million to settle accusations of Medicaid fraud by improperly approving 24-hour home care for thousands of patients.

According to the complaint, New York City Medicaid recipients were provided around-the-clock aides to help with shopping, cleaning and other non-medical tasks at a cost of $75,000 to $150,000 annually per recipient, which caused the federal government to pay for Medicaid patients’ treatment and care without the underlying documentation needed to establish and authorize medical eligibility.

There were many cases, the government said, where the city enrolled patients who did not actually need the services. In other cases,  the city allegedly approved in-home care for people who actually needed more intensive services, such as nursing home care, but these situations were also ones where the city would have been required to contribute to the cost of the nursing home care. The federal government covered 50 percent of these Medicaid program costs, which is more than any other state. In fact, the complaint alleged that potential damages to the United Stateswere in the, “tens of millions of dollars.”

The Wall Street Journal reported that “the city acknowledged it had re-authorized the services for certain patients without obtaining the required assessment from a physician, nurse or social worker. It also admitted it didn’t get a medical review in some cases.” Michael Cardozo, the City corporation counsel commented that the city had acted in the belief the services provided were appropriate. He said the settlement covered a small percentage of the PCS expenditures over the past decade and was based on technical recording-keeping deficiencies. According to the U.S. Attorney Preet Bharara, however, the judge who denied the city’s motion to dismiss the case had specifically rejected the argument the case was about “paperwork.”

The man responsible for finally bringing these activities to light is Gabriel Ethan Feldman, MD, MPH, MBA, MHA, FACPM, who has been testifying since 1993 about New York City’s fraudulent activities. In the beginning, Dr. Feldman testified publicly before the New York City Council Joint Committee on Community Alternative Systems Agencies (CASA), stating that the city’s PCS program was causing the government to make unjustified payments representing, “…hundreds of millions of dollars in Medicaid waste.” Dr. Feldman also complained to his supervisors at the New York County Health Services Review Organization (“NYCHSRO”) and finally, filed the whistleblower lawsuit in another attempt to correct PCS abuses. The case finally reached a settlement this past week, for $70 million.

Although the New York Times reported that “it seemed like a victory for the disabled… in a letter sent late Thursday to federal law enforcement and Medicaid officials, dozens of organizations representing disabled people are saying there is a dark side to the settlement.”

This “dark side” may just creep beyond state lines. In their letter, the organizations said that, “as a result of the deal, the city is telling elderly clients that it intends to reduce or discontinue 24-hour services like bathing and toileting that have kept them at home and out of a nursing home.”

Robert Doar, the city’s commissioner of human resources, who oversees Medicaid in the city, responded that the city would not cut off services to people who needed them, but he did acknowledge that as a result of the settlement, the city was being more vigilant about the rules. Time will tell whether more programs are cut, but with the crackdown on Medicaid fraud, absolute vigilance will most certainly be required.