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Transcript for audio podcast: Medicaid Rates for Residential Habilitation Services Provided at New York State-Operated Residences

From the Office of Inspector General of Department of Health and Human Services

[James Edert] Hello, I'm James Edert, Regional Inspector General for Audit Services in New York. I'm speaking with Jennifer Webb, an audit manager from our New York office about a report titled Medicaid Rates for Residential Habilitation Services Provided at New York State-Operated Residences Are Excessive. Jennifer, can you tell us a little bit about Medicaid residential habilitation services in New York?

[Jennifer Webb] Sure, Jim. New York's Medicaid program provides services to people with developmental disabilities, so these individuals can live in the community, instead of being institutionalized. These services are available to people living in privately or State-operated residences.

[James Edert] What kind of services do these residences provide?

[Jennifer Webb] Staff members help beneficiaries with everyday activities, like eating, bathing, and getting dressed. They also provide training on topics like taking public transportation and interacting with others.

[James Edert] How does New York charge Medicaid for these services?

[Jennifer Webb] New York develops payment rates for these services using a methodology approved by the Centers for Medicare & Medicaid Services, or CMS.

[James Edert] And you reviewed the payment rates for these services?

[Jennifer Webb] Yes. We compared payment rates at State-operated residences to the State's actual costs for providing the services. We also compared these rates to what privately operated residences would charge.

[James Edert] So Jennifer, what did you find when you compared Medicaid payments to New York's actual costs?

[Jennifer Webb] The Medicaid payments were too high. The payment rates did not meet the Federal requirement that payments be consistent with efficiency and economy. Federal Medicaid payments exceeded actual costs by $320 million dollars or 57 percent more than the services actually cost.

[James Edert] How do payments for services at State-operated residences compare to those for services at privately operated residences?

[Jennifer Webb] The payment rate for services at State-operated residences was more than double the average rate compared to privately operated residences offering the same services.

[James Edert] How did these New York State rates affect Federal Medicaid payments?

[Jennifer Webb] They caused the Federal Government to pay too much. If CMS had ensured that New York's payment rates were based on actual costs and were consistent with efficiency and economy, the Federal Government would have saved $346 million dollars in 2011.

[James Edert] This is the second report that we've issued about New York's rate-setting methodology for certain Medicaid services.

[Jennifer Webb] Yes. Last year, the Inspector General issued a report on how New York calculated payments rates for services at State institutions for people with developmental disabilities. According to that report, if the State had used actual costs in calculating the rates, the Federal Medicaid program could have saved $701 million dollars in 2009.

[James Edert] What are you recommending in this report?

[Jennifer Webb] We recommended that CMS work with New York so that the State's payment rates more accurately reflect the State's actual costs for providing services.

[James Edert] Did CMS agree to do this?

[Jennifer Webb] Yes. CMS agreed with our recommendation and stated that it's actively working with New York to update its rate methodology. And, New York stated that it has submitted a new methodology for CMS to consider.

[James Edert] Give us a look ahead. What additional work have you planned in this area?

[Jennifer Webb] In our next review, we plan to look at how New York is reimbursed for Medicaid residential habilitation services provided at the residences operated by State-contracted providers.

[James Edert] Thank you, Jennifer, for sharing this important work. We look forward to your future audits.

[Jennifer Webb] Thank you, Jim.


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