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Department of Health and Human Services

Office of Inspector General -- AUDIT

"Review of New York Medicaid Nursing Home Ancillary and Durable Medical Equipment Payments," (A-02-02-01025)

September 15, 2003

Complete Text of Report is available in PDF format (1.06 MB). Copies can also be obtained by contacting the Office of Public Affairs at 202-619-1343.


The objective of this audit was to identify inappropriate Medicaid payments to ancillary service and durable medical equipment (DME) providers for beneficiaries residing in nursing homes whose all-inclusive rate incorporated the costs of such services.  In general, the New York State Department of Health (Health) had sufficient controls in place to ensure that duplicate payments were not made for physical therapy, occupational therapy, speech and language pathology, as well as dental services provided to Medicaid beneficiaries residing in nursing homes.  However, Health did not have sufficient controls to ensure that DME providers did not separately bill Medicaid for DME it provided to nursing home residents.  We estimate that Health made improper payments to DME providers totaling at least $1,212,805 ($606,403 Federal share).  We recommended that Health (1) refund $606,403 to the Federal Government for its share of the identified overpayments; (2) ensure that DME providers bill the nursing home rather than Medicaid for services included in the nursing home rate by requiring the Medicaid reviewer, during their prior approval process, to determine whether Medicaid or the nursing home is responsible for payment; (3) issue guidance to DME providers specifying that augmentative communication devices are not custom-made and therefore, not separately billable to Medicaid for nursing home residents; (4)  instruct DME providers not to refill any prescriptions without the beneficiary’s or their representative’s authorization, and; (5)  prospectively, calculate Medicaid per diem rates to more closely reflect the changes in medical technology and nursing home operating costs.