Audit faults New York for lack of Medicaid oversight

(The Center Square) — New York state health officials allowed millions of dollars in "improper" Medicaid payments to flow to providers due to a lack of oversight, according to a new audit by the state's fiscal watchdog.

The report by state Comptroller Tom DiNapoli said the New York Department of Health, which administers the state and federally funded Medicaid program, failed to "adequately monitor" the benefits process and allowed medical providers to overbill the state by more than $10.2 million for charges that should have been covered by third-party insurers.

The overbilling, which spanned from December 2020 to May 2024, included 17 claims of $1,775,326, caused by an internal processing error at one Medicare Advantage plan, and 41 claims $3,220 for Medicaid claims that were not supported by documentation, according to the audit.

"We found that DOH has not established adequate controls over the coordination of benefits process to identify claims with such errors and prevent overpayments to providers," state auditors wrote in the report.

Auditors pointed out that the overpayments represented only a sliver of the $93 billion in annual Medicaid payments to the states 8.4 million recipients. But they recommended a series of improvements in reviewing Medicaid claims and strengthening internal controls to ensure the claims are accurately submitted by providers.

In response to the audit, state health officials said they didn't know how Medicaid should pay claims containing the billing code error and said they were reviewing their policies to prevent similar errors in the future.

State officials said they are in the process of recovering overpayments and have so far have voided or adjusted 17 of the erroneous claims resulting in $861,296 in Medicaid savings and are working to resolve the remaining claims.

The report comes as New York braces for cuts to Medicaid funding from President Donald Trump's One Big Beautiful Bill Act, which also sets new restrictions and work requirements for some recipients.

Gov. Kathy Hochul said the new law will cut $6 billion in federal funding from the state’s Medicaid program, resulting in more than 1.5 million New Yorkers losing health care coverage under those programs and increased costs for everyone.

The cuts would include about $2.5 billion in lost federal funding and $500 million in new state administrative costs, according to the Hochul administration. They also say it would result in more than $3 billion in losses for hospitals across the state.