Objective

To assess the extent of implementation of the four recommendations included in our initial audit report, Improper Medicaid Managed Care Payments for Durable Medical Equipment, Prosthetics, Orthotics, and Supplies on Behalf of Recipients in Nursing Homes (Report 2020-S-61).

About the Program

The Department of Health (Department) administers New York’s Medicaid program. 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, including necessary durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS). Durable medical equipment encompasses devices and equipment that can withstand repeated use (e.g., wheelchairs) for the treatment of a specific medical condition. 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. Medicaid nursing home reimbursement rates generally include the cost of most DMEPOS, and separate payments are not to be made for DMEPOS when the cost of these items is included in the rate. Moreover, it is the dispensing provider’s responsibility to verify with the recipient’s nursing home whether the DMEPOS is included in the facility’s Medicaid rate.

The objective of our initial audit report, issued April 19, 2022, was to determine whether Medicaid MCOs inappropriately paid for DMEPOS while recipients were residing in nursing homes. The audit covered the period from January 2016 to December 2020. The audit found the Department had not established sufficient controls to ensure Medicaid did not make payments for DMEPOS items that were already covered under the daily all-inclusive rate paid to nursing homes. The audit 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 rates.

Key Findings

Department officials have made some progress in addressing the problems we identified in the initial audit report; however, additional actions are needed. In particular, the Office of the Medicaid Inspector General needs to review and recover, as appropriate, the $9.6 million in DMEPOS claims identified. Additionally, the Department should take steps to monitor DMEPOS claims and ensure MCOs implement controls to prevent improper payments. Of the initial report’s four audit recommendations, one has been implemented, one has been partially implemented, and two have not yet been implemented.

Key Recommendation

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