From December 2009 through September 2012, New York's Medicaid program overpaid state hospitals as much as $31.1 million for services provided to patients who died within one day of admission, according to a report from the New York Office of the State Comptroller.
State Comptroller Thomas DiNapoli and his staff conducted the audit of 1,833 claims to see if the state was correctly applying its new payment system for Medicaid services. In December 2009, New York changed Medicaid reimbursement for hospital inpatient services to focus more on patient severity of illness and risk of mortality instead of length of stay.
Since New York switched to the new methodology, also known as the "all patient refined diagnosis related groups" or APR DRG, Medicaid grossly overpaid beyond the hospitals' charges for patients who died quickly. For example, one hospital claim for a Medicaid patient who died within the first inpatient day charged $9,685, but Medicaid doled out $153,329 in total reimbursement.
The audit showed this was a common recurrence for the state Medicaid program, as patient days within a day of admission typically involved severe illnesses, which carried higher reimbursement weight. Total overpayments reached $28.2 million, and officials said New York may have overpaid as much as $31.1 million based on other calculations. "In these instances, we question why Medicaid paid the hospitals so much more than the amounts the hospitals actually charged on their claims," the audit read.
Mr. DiNapoli said the state Department of Health must assess the current APR DRG system so hospitals are more appropriately compensated for care involving Medicaid patients who die within a day of admission. He did not recommend the hospitals refund the overpayments.
"A new payment process that was supposed to be fairer to hospitals is instead being unfair to taxpayers," Mr. DiNapoli said in a news release. "DOH officials have allowed hospitals to receive significantly more money than they billed for, sometimes amounting to hundreds of thousands of dollars for a single claim. Given the financial challenges facing New York, and the magnitude of the potentially excessive payments we identified, DOH should immediately review its payment methods and correct the problem."
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