On October 30, 2013, the New York State Office of the Medicaid Inspector General (“OMIG”) issued a press release that New York recovered $211 million from the federal government out of an identified $496 million in Medicaid erroneous payments related to home care recipients who are dually eligible for both Medicare and Medicaid funds.  On October 1, 2013, the New York State Department of Health’s Fiscal Group received the $211 million payment through the action of OMIG, which was the largest single monetary recovery in OMIG’s history.

These payments were recovered by New York State as part of a federal project, the Third-Party Liability Home Health Care Demonstration Project, which is reviewing home health care involving dual eligible recipients, and is being conducted in conjunction with the University of Massachusetts Medical School.  Specifically, “dual eligibles” are people who are enrolled in both Medicare and Medicaid, a common occurrence for Medicare/Medicaid recipients.  Since Medicare is the primary insurer and Medicaid is the secondary insurer, the patients’ bills should first be sent to Medicare, with the remaining portion of the bill that Medicare does not pay then billed to Medicaid.  OMIG found that the above referenced overpayments were not processed correctly and instead bills for home health care patients were inadvertently sent to Medicaid prior to being sent to Medicare.  Medicaid was therefore overcharged, and is now able to recover the money from the federal government.

The director of the New York Medicaid program, Jason Helgerson, noted the overpayment finding as a further validation for the Medicaid Redesign Team to “move all services and populations into high-quality managed care.”  Specifically, on August 26, 2013, the Centers for Medicare & Medicaid Services (“CMS”) announced that the State of New York would partner with CMS to test a new model for providing Medicare-Medicaid enrollees with a more coordinated, person-centered care experience.  The demonstration is known as “Fully Integrated Duals Advantage” (“FIDA”).  Under FIDA, New York and CMS will contract with Medicare-Medicaid Plans to coordinate the delivery of covered Medicare and Medicaid services for participating Medicare-Medicaid enrollees. The FIDA managed care plans will cover not only Medicaid long-term care services, as Managed Long Term Care (“MLTC”) plans do, but also cover all other medical care covered by Medicare and Medicaid.  The demonstration program will target a smaller group of dual eligibles who live in NYC, Long Island, and Westchester, were required to enroll in MLTC plans, need community-based long term care services and have Medicare and Medicaid.

OMIG’s enforcement of regulations that dictate that Medicaid is the payer of last resort in dual-eligibility cases, along with the state’s move towards managed care plans for both Medicaid and Medicare is a reflection of the government’s attempts to cut down on the state’s soaring costs of healthcare.