Objective

To determine whether Medicaid managed care organizations inappropriately paid for durable medical equipment, prosthetics, orthotics, and supplies while recipients were residing in nursing homes. The audit covered the period from January 2016 to December 2020.

About the Program

The New York State Medicaid program, administered by the Department of Health (Department), provides a wide range of medical services to individuals who are economically disadvantaged and/or have special health care needs. Many of the State’s Medicaid recipients receive their services through managed care, whereby the Department pays managed care organizations (MCOs) a monthly premium for each enrolled recipient and, in turn, the MCOs arrange for the provision of health care services for Medicaid recipients and reimburse providers.

Medicaid recipients, including those enrolled in managed care, generally receive necessary durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS) as a benefit of the program. Durable medical equipment encompasses devices and equipment that can withstand repeated use and that have been ordered by a practitioner in the treatment of a specific medical condition. Examples include walkers and wheelchairs. A prosthetic device replaces a missing body part, while an orthotic device supports a weak or deformed body part. Medical supplies are disposable items for medical use such as gauze and wipes. As part of the Medicaid nursing home reimbursement rates, recipients in nursing homes are to be provided with DMEPOS (the rates do not include items that are custom made for individual use).

Key Finding

For the period January 2016 through December 2020, we identified $9.6 million in potential MCO overpayments for DMEPOS items that likely should have been provided by nursing homes as part of the daily all-inclusive rate paid to those facilities.

Key Recommendations

• Review the $9.6 million in potential overpayments for DMEPOS and recover as appropriate.
• Remind DMEPOS providers to confirm recipients’ locations and, if a recipient is in a nursing home, to ensure the items are not included in the facility’s rate before billing MCOs.
• Advise MCOs to evaluate the feasibility of developing controls to prevent these types of overpayments and take steps to ensure corresponding corrective actions are implemented.
• Monitor DMEPOS claims paid by MCOs to ensure payments are in compliance with policies for DMEPOS provided to individuals residing in nursing homes, and provide guidance as appropriate.