The state’s Medicaid program paid more than $60,000 for sexual and erectile dysfunction (ED) drugs and treatments for 47 sex offenders, according to an audit released today by State Comptroller Thomas P. DiNapoli.

In total, Medicaid made more than $930,000 in payments for ED drugs and treatments for recipients, including sex offenders, that are barred under Medicaid.

“There are clear rules about what conditions Medicaid will cover when it comes to erectile dysfunction drugs. And paying for sex offenders who’ve committed terrible crimes to get these drugs should never be lost in the bureaucratic administration of this program,” DiNapoli said. “Nearly two decades ago this office identified this problem, which led to national and state changes. While the state Department of Health immediately followed up to make corrections during the course of our audit, our auditors found that the problem persisted and needed to be fixed.”

In 2005, a review by the Office of the State Comptroller determined that Medicaid paid for the erectile dysfunction drug Viagra on behalf of 198 recipients who were registered sex offenders classified as level-3 (most likely to reoffend). Given the risk to public safety, the review sparked an overhaul of legislation at the federal and state levels to ensure such drugs are not paid for by Medicaid.

Current federal and state laws prohibit Medicaid from paying for drugs to treat sexual or erectile dysfunction for Medicaid recipients, including registered sex offenders. State law additionally prohibits payment for procedures or supplies to treat ED for registered sex offenders.

In 2011, Medicaid pharmacy benefit management for managed care recipients was transferred from DOH to managed care organizations (MCOs). DOH directed MCOs on how to handle ED drug exclusions and indicated uses. Under managed care, MCOs are expected to police the drugs Medicaid recipients enrolled in their plans can get and to determine their medical necessity.

Auditors found that did not always happen. Since the transition of pharmacy benefit management to MCOs, Medicaid continued, primarily under managed care, to fund drugs, procedures, and supplies that enhance sexual and erectile function for recipients, including registered sex offenders.

DiNapoli’s auditors found that from April 1, 2012 to July 1, 2018, Medicaid made $2.8 million in payments for ED drugs approved to also treat Benign Prostatic Hyperplasia (BPH) or Pulmonary Arterial Hypertension (PAH) on behalf of patients who did not have such diagnoses listed on their medical claims submitted up to six months before receiving the prescriptions. These claims indicate an elevated risk that the drugs may have been abused or sold to others. Among those payments, 411 recipients had a diagnosis of ED (but no BPH or PAH diagnosis) on their claims, totaling $207,256 in Medicaid payments.

Similarly, Medicaid paid $285,641 for ED drugs approved to also treat BPH or PAH for 14 sex offenders (see table 3 in audit), 11 of whom were classified as a level-2 or a level-3 sex offender. Auditors reviewed the medical records of 13 of the 14 sex offenders to determine if the records supported a diagnosis of BPH or PAH and found 31 percent, or four of 13 cases, supported only a diagnosis of ED. One case was indeterminate.

DOH did not monitor the use of ED drugs, procedures, and supplies, including payments by MCOs. The audit and the department’s analyses both indicate a large portion of MCO claims for ED drugs approved to treat other medical conditions lack assurance of medical necessity. MCOs made most of the payments the auditors reported on.

DiNapoli’s auditors found some MCO controls are not designed to effectively prevent sex offenders from obtaining treatment for ED. Specifically, after a recipient obtains ED treatment, if an MCO finds out the recipient is a registered sex offender, the MCO merely does not pay for the services when other steps could be taken to prevent sex offenders from obtaining them.

Auditors further found DOH’s eMedNY computer payment system also incompletely incorporated controls to prevent covering ED procedures and supplies for convicted sex offenders. Consequently, Medicaid fee-for-service inappropriately paid $27,288 for 21 excluded ED procedures and supplies provided to 15 sex offenders (at least 6 of the 15 were classified as level-2 or level-3 sex offenders)

DiNapoli recommended DOH:

• Review the payments identified by auditors and ensure recoveries are made from providers, as appropriate;
• Regularly provide MCOs with detailed lists of all ED drugs, procedures, and supplies that are excluded or have limited Medicaid coverage;
• Periodically monitor coverage, utilization, and payment of ED drugs, procedures, and supplies; and take corrective actions to ensure compliance with laws, policies, and procedures; and
• Improve DOH’s eMedNY computer system controls to apply sex offender status in the processing of certain claims and prevent the processing of incomplete electronic Division of Criminal Justice Services sex offender registry files.

In its response to the audit, DOH indicated the actions it would take to correct the issues found. The department’s complete response is included in the audit.

Read the report, or go to https://www.osc.state.ny.us/audits/allaudits/093019/sga-2019-18s16.pdf

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