Feds aim for big cut in NY’s Medicaid dollars

Federal Medicaid reimbursements to New York State could be cut by $1 billion a year to make up for more than two decades of excessive claims that one congressman compared to “fraud.”

The state’s overbilling for Medicaid services to the developmentally disabled was first revealed in a report in May by the Inspector General of the U.S. Department of Health and Human Services, which in turn was prompted to look more closely at the issue by articles in the PoughkeepsieJournal last year. Yesterday, the House Oversight and Government Reform Committee released what the Wall Street Journal described as a “scathing report,” downloadable here, estimating that New York has ripped off the federal government to the tune of $15 billion since 1990.

In committee testimony, a senior official of the HHS Center for Medicaid and Child Health Insurance Program Services agreed that New York’s reimbursements had been “excessive and inappropriate.”

Picking up from the Journal’s story (subscription required for full version):

The committee’s report said Gov. Andrew Cuomo’s administration refused to cooperate with the investigation. Joshua Vlasto, a spokesman for Mr. Cuomo, said the report’s conclusions were “wrong and totally misleading” and that a threatened “precipitous reduction” in funding would jeopardize administration efforts to modernize and restructure its Medicaid program.

The report could pose budget problems for Mr. Cuomo. Republican lawmakers in Washington are putting pressure on the federal Centers for Medicare & Medicaid Services to crack down on New York’s reimbursements. CMS officials had indicated that they favored a gradual reduction in the rates over several years.

But at a Thursday hearing, Penny Thompson, a CMS deputy director, suggested that the agency may take a tougher line. “You can expect to see a rate that’s about one-fifth of its current level,” Ms. Thompson said, without specifying a time frame. Such a reduction would reduce the annual federal reimbursement by about $1 billion, punching a hole in New York’s $54 billion Medicaid program.