Corporate Compliance

OIG: New York must repay $43.3 million

Healthcare Auditing Weekly, November 15, 2005

The OIG has recommended that the state of New York refund the federal government $43.3 million in overpayments made to non-state government nursing homes for state fiscal years (SFY) 2003, 2004, and 2005.

The OIG found that New York based its SFY 2003 transition period excess payment, totaling $674.3 million (of which $337.2 million was the federal share), on estimated-rather than actual-Medicaid payment data from the base year.

The OIG's audit objective was to determine whether New York calculated the category-specific upper payment limit (UPL) for non-state government inpatient hospitals in accordance with federal and state laws in SFY 2003. The OIG also wanted to know whether New York calculated the category-specific UPL and the transition period excess payment for non-state government nursing homes in accordance with the law.

New York did correctly calculate the SFY 2003 category-specific UPL for both hospitals and nursing homes and included hospital payments in the disproportionate share hospital limits. However, contrary to federal regulations, New York based its SFY 2003 transition period excess payment on estimated, rather than actual, Medicaid payment data.

To accomplish their objectives, the OIG

  • compared federal regulatory requirements with the methodology for calculating UPLs established in state regulations

  • examined directories of inpatient hospitals and nursing homes to verify that the state included only non-state government facilities in UPL calculations

  • tested underlying Medicaid and Medicare data for one hospital and one nursing home to gain an understanding of the methodology that New York used to calculate inpatient hospital and nursing home UPLs

  • traced the UPL payments calculated pursuant to state regulations to the CMS-64 quarterly expenditure reports to determine whether the state claimed the payments for federal reimbursement

  • reviewed New York's supporting records to verify that the state included UPL payments in the calculation of hospital-specific disproportionate share hospital limits

  • traced disproportionate share hospital payments per New York's records to the CMS quarterly expenditure reports to determine whether the state claimed the payments for federal reimbursement and whether the payments were within the calculated disproportionate share hospital limits

      Click here to read the audit report, "Audit of New York State's Medicaid Upper Payment Limits for Non-State Government Inpatient Hospitals and Nursing Homes," (A-02-03-01021) issued October 19, 2005.

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