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Medicaid Reimbursement Woes Still Plague New York

After a 2009 settlement with the federal government that required New York state and New York City to pay back some $540 million in questionable Medicaid claims for special education services, the New York City Department of Education and the state tightened up the claims process—but now the district is leaving hundreds of millions of dollars on the table, according to the city's comptroller.

In a report released Aug. 22, Comptroller Scott M. Stringer said the city could have been reimbursed an additional between fiscal 2012 and fiscal 2014, but the 1.1-million student district has long-running problems in estimating appropriate reimbursement, meaning that city dollars are being shifted from other educational programs to fill that hole, the report said. For fiscal 2013, for example, the district projected that it would receive $167 million in reimbursements. Instead, the school system only recouped $5.6 million. 

Medicaid, the federal health-insurance program for the poor, allows school districts to be reimbursed for certain services that they provide to students from income-eligible families—services such as physical, occupational or speech therapy; specialized nursing, and psychological counseling. 

Back in 2001, the U.S. Department of Justice started taking a closer look at claims from New York. A series of investigations estimated that New York's ultimate liability in questionable claims could have been as high as $1.5 billion. The $540 million settlement, though record-setting, was considered far better than litigating the matter and losing, said David Paterson, who was the state's  governor at the time, in a 2009 statement announcing the agreement.

Since then, the state has exercised "exceptional caution" in Medicaid claims, Stringer said in his report, but even under a new restrictive reimbursement protocol, the city should still improve its own processes, he said. The district has not identified on its website which personnel are responsible for Medicaid reimbursement and compliance or any progress made in developing a coherent process for recouping funds. 

Stringer said that a task force of city, state, and federal officials should work together to develop a system to reimburse the district appropriately. "Red tape and bureaucracy should not stand in the way of the [New York City Department of Education] being reimbursed for the vast array of services provided," he wrote.

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