Purpose

To determine the extent of implementation of the five recommendations made in our audit report, Unnecessary Medicaid Payments for Children at Voluntary Agencies (2010-S-47).

Background

Our initial audit report, which was issued on September 19, 2012, examined whether the Department of Health (Department) had adequate policies and procedures in place to ensure proper Medicaid payments for foster care children placed in voluntary agencies. The Department administers the New York State Medicaid program. Many foster care children who are placed in private welfare agencies (known as voluntary agencies) are enrolled in Medicaid. For these children, the State establishes a “Daily Child Care Rate” (Daily Rate), which is the basis for Medicaid funding that the Department provides to the voluntary agencies to pay for medical services provided to the children in their custody. For services not covered by the Daily Rate, health care providers bill Medicaid directly and are reimbursed on a fee-for-service basis.

For the five years ended June 30, 2010, Medicaid paid about $990 million on behalf of about 70,000 children placed in voluntary agencies - $640 million of which was paid under the Daily Rate, and the remaining $350 million was paid directly to providers on a fee-for-service basis. Our initial audit concluded that the Department could save millions of Medicaid dollars annually by assessing and modifying certain policies and practices that drive the costs of medical care provided to children placed at voluntary agencies.

Key Finding

• Department officials made progress in implementing the recommendations we made in our initial audit report. Of the report’s five audit recommendations, three were implemented, one was partially implemented and one was not implemented. The Department has taken steps to address the cost-effectiveness of the Daily Rate reimbursement method. However, they still need to take steps to ensure the Medicaid claims processing system contains the necessary controls to ensure proper payment of claims.

Key Recommendation

• Officials are given 30 days after the issuance of the follow-up report to provide information on any actions that are planned to address the unresolved issues discussed in this report.

Other Related Audit/Report of Interest

Department of Health: Unnecessary Medicaid Payments for Children at Voluntary Agencies (2010-S-47)