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Department of Health and Human Services

Office of Inspector General -- AUDIT

"Operation Restore Trust Referral to the Internal Auditors of the New York State Department of Social Services for Outpatient Clinic Services Claimed by Seven United Cerebral Palsy Providers for Residents of Nursing Homes for the Period March 1993 to February 1995" (A-02-96-01010)

September 5, 1996

Complete Text of Report is available in PDF format (908 KB). Copies can also be obtained by contacting the Office of Public Affairs at 202-619-1343.


This report provides the results of our limited scope review to determine whether outpatient clinic claims submitted by seven United Cerebral Palsy (UCP) providers for beneficiaries of nursing homes were duplicative to what the nursing homes should have been providing and those for which the nursing homes had received reimbursement via their all inclusive Medicaid per diem rates. We performed our review as part of the New York Operation Restore Trust (ORT) Management Plan, Project Number 15, entitled Nursing Home Match and Targeting Project.

Our computer analysis and limited scope audit work has identified inappropriate claims to Medicaid by seven UCP providers for physical therapy (PT), occupational therapy (OT), and speech therapy (ST) services rendered to nursing home residents. We believe these billings are inappropriate because the nursing homes were already reimbursed for these type services as part of their all inclusive Medicaid per diem rates. Accordingly, there was no need for the UCPs to be rendering these therapy services and separately billing them to the Medicaid program. In addition, we believe the claims made by the UCPs using clinic specialty code 304, which is defined as medical rehabilitation (MR), warrant further review by New York State (NYS) officials. The potential exists that certain services billed as MR may be duplicative of services that should be rendered by the nursing homes as part of their per diem rate or are not eligible for Medicaid reimbursement.

Our computer applications indicate a potential inappropriate payment of $865,020 to the seven UCPs for PT, OT, and ST services during the period March 1993 to February 1995. It is very likely that additional claims were submitted by the UCPs both before and after this period. Our applications also identified $599,395 in MR services that warrant further review. The decision to refer this information to the internal auditors of the Department of Social Services (DSS) was made at a meeting held on March 11, 1996 with various key State officials. These officials believed that our findings warranted additional follow-up work by the State to fully identify and recover the inappropriate payments and to establish edits to preclude reimbursement of these types of claims by Medicaid in the future. As one of our ORT partners, we recommend that the New York State Department of Social Services utilize the results of our limited scope audit work and take all necessary action, including supplemental audit work, to: (1) ensure that DSS officials immediately notify the UCP providers to discontinue billing Medicaid for therapy services rendered to nursing home residents; (2) ensure that DSS officials develop Medicaid Management Information System (MMIS) edits to deny any such claims in the future; (3) recover the inappropriate payments to the UCPs identified by our review as well as additional inappropriate payments made for periods both before and after our audit period; and (4) obtain supplemental information from the UCPs to determine the nature of services included within the MR clinic specialty code 304 and work with program officials to determine whether additional financial recoveries are warranted.

The Office of Audit Services will make available the information we have accumulated and will provide technical assistance, as requested. We request that the State keep us informed of all actions taken as a result of this referral and advise us of the amount of the recoupment made.