New York State overpayment of $700 million for residents with developmental disabilities care | May 18, 2012

Report Details Medicaid Overpayments to New York State

By DANNY HAKIM | The New York Times

ALBANY — The federal government paid New York State $700 million more in 2009 than the state needed to care for residents with developmental disabilities who lived in its institutions, according to the inspector general of the Department of Health and Human Services in Washington.

The finding suggested that billions of dollars earmarked for institutional care in New York had been used for other purposes over the last several years. No penalty is recommended, however, because the payments were approved by federal regulators.

Instead, the report recommends that federal and state officials do what they have already been trying to do for the last several months — negotiate a more accurate system of how Medicaid reimburses the state for care of those with developmental disabilities. The report also recommends that the new reimbursement system comply with federal requirements that “payment for services be consistent with efficiency and economy.”

Most of the people with developmental disabilities in residential care in New York are not in institutional settings, but rather in group homes spread across communities throughout the state. State officials have said that extra Medicaid dollars earmarked for institutions have been redirected to other parts of its system of care, including group homes. But the inspector general’s office is considering a further review of how the excess money was spent.

Concerns about inflated reimbursements to the state for its institutions have been discussed for some time. In 2010, The Poughkeepsie Journal reported that Medicaid was spending more than $4,000 a day on residents of institutions for people with developmental disabilities. The inspector general’s report said the actual cost of care was about $1,500.

The findings help explain one of the reasons New York spends roughly $10 billion a year caring for people with developmental disabilities — more than California, Florida, Illinois and Texas combined — while serving fewer than half as many people. As part of the continuing negotiations, federal officials plan to scale back reimbursements to New York, but over a period of several years.

The report was drafted by the office of Daniel R. Levinson, the inspector general of the federal health department. In comments appended to the report, both New York and federal regulators agreed to work together to address the issues raised in the report.

@ http://www.nytimes.com/2012/05/19/nyregion/us-cites-medicaid-overpayments-to-new-york-state.html