Washington bureaucrats sent billions in Medicaid overpayments to New York

House Oversight Committee Chairman Darrell Issa (R-CA) released a new report entitled, “The Federal Government’s Failure to Prevent and End Medicaid Overpayments,” which examines outrageous abuses of federal tax dollars within the Medicaid program, specifically regarding payments made to New York State developmental centers.

"New York's residential centers for the developmentally disabled cost Medicaid about $1.9 million a year for each patient, and federal overpayments that total $15 billion since 1990 should end immediately, according to a congressional oversight committee," said Michael Virtanen in a Saturday AP report. The report reveals that for the past 20-years, New York State received billions of dollars in Medicaid reimbursements through mismanaged overpayments, and that the overpayments are continuing. Further, the report documents that as Medicaid payment rates increased, Federal officials failed to question the rising cost or implement measures that would bring the rates in line with actual costs, according to Rep. Issa. The Committee estimates that the state-operated facilities in New York that house and treat individuals with developmental disabilities received federal Medicaid overpayments of at least $15 billion over the past two decades.

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"Penny Thompson, a witness on Thursday and the Deputy Director of the Center for Medicaid and CHIP Services at CMS, has admitted that CMS failed to adequately protect taxpayer dollars in this case. Ms. Thompson addressed three key questions. First, how could daily payment rates grow to exceed $5,000 per patient? Second, how is the federal government going to correct this specific problem? Third, how is the federal government going to prevent this type of wasteful spending in the future?" the report states. Although the federal overpayments to New York began in 1990, the Center for Medicare and Medicaid Services (CMS) officials claimed they weren't "aware of the growing payment rates until they reached $3,715 per patient per day in 2007." "This case should disturb all Americans since taxpayers are expected to fund an even larger health care program, the infamous Obamacare that is an example of verbal gymnastics coupled with a financial shell game," said political consultant and attorney Michael Baker. Even after they learned about the overpayments in 2007, CMS officials delayed any action for three years and only acted after a New York newspaper reported on the high overpayments received by the developmental centers, according to the Oversight Committee report. At a briefing with Committee staff in June 2012, CMS officials informed the Committee that CMS is negotiating on a plan that gradually reduces the overpayments but allows New York to continue to receive billions in federal overpayments over the next five years. "CMS’s failure to question Medicaid’s excessive payments to New York developmental centers is inexcusable given that Medicaid payments to New York State’s developmental centers exceeded the entire Medicaid budgets of 14 states during this time period," Issa said. "In fact, total Medicaid’s payments to New York’s developmental centers that served about 1,700 residents in 2009 was roughly the same as total payments made on behalf of the 372,522 enrollees in Kansas’s Medicaid program," he added.. The overpayments violate Title XIX of the Social Security Act which mandates that state Medicaid payment rates must be consistent with “efficiency, economy and quality of care.” The overpayments also violate Medicaid Upper Payment Limit requirements that Medicaid reimbursements not exceed what Medicare would have otherwise paid for similar services. "Here's a government agency aware of waste and abuse of a health care program, and yet they actually rationalize it and fail to take any legal action against abusers," Baker said.