Objective

To determine whether Medicaid managed care organizations violated federal and State regulations by making payments to unenrolled providers. The audit covered the period from January 2018 through June 2022.

About the Program

Medicaid managed care organizations (MCOs) establish provider networks by contracting with physicians, hospitals, and other providers to provide medical care to their members. The 21st Century Cures Act (Act) and additional federal guidance mandated that managed care in-network providers enroll as participating providers in the state Medicaid program by January 1, 2018 (with the exception of certain provider types). Through the screening and provider enrollment process, the Department of Health (DOH) gains a level of assurance over the provider’s validity to provide Medicaid services. Additionally, DOH must verify that the federal government has not prohibited providers from participating in Medicaid. DOH’s Provider Network Data System (PNDS) maintains information about providers and service networks contracting with MCOs operating in New York. On a quarterly basis, MCOs are required to submit their contracted provider information to the PNDS. MCOs also, separately, submit encounter claims to DOH, which detail member health care services and payments to providers.

Key Findings

Our audit found DOH does not monitor encounter claims to identify inappropriate managed care payments to providers who are not enrolled in Medicaid. Additionally, although DOH developed PNDS controls and error reports to assist MCOs in their compliance with the Act (such as notification of providers who are not enrolled), our audit found weaknesses in these controls. These problems led to over $1.5 billion in improper and questionable payments, as follows:

• We obtained PNDS submissions and encounter claims for a sample of five of the highest paid MCOs, which showed the MCOs made $916 million in payments to in-network providers whose identification numbers did not correspond to an identification number of a Medicaid-enrolled provider, according to DOH data.
• We identified $832.5 million in total MCO payments to providers (in-network and out-of-network) who had a Medicaid enrollment application that was either denied by the Office of the Medicaid Inspector General, withdrawn by DOH for not meeting Medicaid program standards, or automatically withdrawn by DOH’s claims processing and payment system due to missing information. (Note: $212 million of this was included in the $916 million in payments made by the five MCOs.)
• We identified $9.6 million in improper MCO payments to providers (in-network and out-of-network) who were excluded from or otherwise ineligible for the Medicaid program. (Note: $548,184 of this was included in the $916 million in payments made by the five MCOs.)

Key Recommendations

• Review the $1.5 billion in Medicaid MCO payments to unenrolled in-network providers and providers who were denied Medicaid enrollment, and take appropriate corrective steps.
• Enhance monitoring over MCO compliance with the Act.
• Review the $9.6 million in Medicaid MCO payments to unenrolled providers who were excluded from receiving Medicaid payments or who should be further reviewed by DOH due to past misconduct, and recover payments where appropriate.