Department of Health – Medicaid Program: Improper Medicaid Payments to Hospitals for Outpatient Services Billed as Inpatient Services for Recipients Enrolled in Managed Care (Follow-Up) (2026-F-1)

When managed care enrollees receive care at hospitals, managed care organizations (MCOs) reimburse the hospitals, and a recipient’s hospital status—inpatient versus outpatient—affects Medicaid’s reimbursement.  A prior audit, issued in August 2024, examined whether Medicaid made improper payments to hospitals for outpatient services billed as inpatient services for recipients enrolled in managed care with a focus on inpatient claims with patient stays of less than 24 hours (“short-stays”).  The audit found that the Department of Health (DOH) did not review short-stay inpatient encounters or provide guidance to MCOs and hospitals on how to determine whether a short-stay claim should be billed as inpatient or outpatient.  DOH officials made little progress in addressing the problems identified in the original audit report.  Of the initial report’s four audit recommendations, one was implemented and three were not.

Department of Health – Medicaid Program: Improper Payments for Laboratory and Related Services (2023-S-51)

The Department of Health (DOH) and managed care organizations (MCOs) can set limits on laboratory procedures, such as daily, weekly, yearly, or per lifetime.  These limits are enforced in MCOs’ claim processing systems and in eMedNY (the Medicaid claim processing and payment system) through system edits but can be exceeded for medical necessity.  For the period from June 2019 through January 2025, auditors found $21.6 million in payments due to DOH not providing adequate guidance to providers and MCOs and not effectively monitoring claims for certain laboratory procedures, as well as weaknesses in the eMedNY system edits.