New York’s Medicaid program wasted $874M due to errors

From January 2011 through February 2015, New York’s Medicaid program lost $513 million in improper payments or potential revenue, and an additional $361 million in questionable transactions might be recoverable through agency action. The Office of the State Comptroller (OSC) released a report based on 73 audits of the Medicaid program. These audits found multiple deficiencies in eMedNY, New York’s Medicaid management information system (MMIS) that caused at least $190 million of the loss due to improper payments.


The report indicated that the most money lost was through questionable transactions totaling over $360 million. Close behind was failure to obtain drug rebates and discounts from manufacturers, which cost the program over $171 million, and dual eligible claims, costing over $168 million. Nursing home claims took $46.7 million, while provider errors, low birth weight babies, multiple client identification numbers, managed care organization (MCO) and fee-for-service (FFS) payments, and hospital billings were each responsible for between $14 million and $18 million in excessive costs and lost revenue.

eMedNY and drug rebates

Much of this money was lost due to issues with eMedNY. The system made incorrect errors interpreting claim codes, maintaining limits, and properly identifying providers. The OSC cited the Department of Health’s (DOH) delays in implementing modifications based on audit findings as the reason for many of these issues. Additionally, the DOH did not make proper changes to eMedNY to ensure that drug rebates were collected according to the 340B Drug Pricing Program, which requires drug manufacturers to discount prices for certain providers. Nearly $50 million was lost due to improper payments and billing, failure to collect available rebates, and failing to apply more than two out of 15 claim categories.

Patient Protection and Affordable Care Act (ACA) (P.L. 111-148) Section 2501(c) expanded the Medicaid Drug Rebate Program, which allows states to recover some prescription drug costs through similar rebates. The expansion covered managed care organization (MCO) members, but eMedNY did not appropriately collect $119.3 million in newly available rebates.

Dual eligible enrollees

Over 800,000 New Yorkers are enrolled in both Medicare and Medicaid, known as dual eligibles. Over $111 million was improperly paid for many dual eligibles who were not entitled to Medicaid managed care. Due to difficulties in implementing a new payment system, eMedNY incorrectly interpreted claim codes and overpaid $26 million.

Other claims

A flaw in the previous MMIS passed down to eMedNY meant that contributions from nursing home residents, who must share care costs with Medicaid, were not collected. New York also paid multiple premiums for the same person, and some people were issued multiple identification numbers resulting in millions of unnecessary expenses. Incorrect hospital billing, improper payments for newborns with low birth weight, provider errors on claims and other mistakes accounted for the rest of the expenses. The OSC provided several recommendations regarding strengthening of system standards to enhance the state’s oversight of MCOs in Medicaid, including implementing previous recommendations that have not been addressed.