ALBANY, N.Y. (AP) — New York's residential centers for the developmentally disabled cost Medicaid about $1.9 million a year for each patient, and federal overpayments that total $15 billion since 1990 should end immediately, according to a congressional oversight committee.
In a report this week, the House Committee on Oversight and Government Reform said the overpayments represent "massive waste," are likely illegal and should stop immediately. The report also faulted lax oversight.
"Overwhelming evidence suggests that the federal government has failed to question New York State's excessive developmental center payment rates adequately," the report said. "Given the extraordinarily dire federal budget situation, the Center for Medicare and Medicaid Services' failure to prevent the massive Medicaid overpayments flowing to New York State's developmental centers needs to be corrected immediately."
It followed a May report by the inspector general of the U.S. Department of Health and Human Services that said if New York had used actual costs in calculating its Medicaid rate for that residential care, the reimbursement rate would have been $858 million, half paid by the federal government in 2009. That would have made a difference of $1.41 billion, including the $701 million federal share that might have been saved.
New York officials on Friday called the subcommittee report misleading and called the $15 billion total "misleading," but said the decades-old reimbursement rates should have changed several years ago and have been the subject to talks for months.
Based on formulas designed to help deinstitutionalize patients — down to 1,169 now at five institutions across New York from about 17,000 — they said the money also funds community-based programs for many of the state's 100,000 developmentally disabled. The state is closing two other residential centers.
The Cuomo administration inherited the situation in 2011 and has begun overhauling the state's system for caring for the developmentally disabled, while also reviewing Medicaid and restructuring methods for paying for services, spokesman Josh Vlasto said.
"There is money to be saved. This is really part of the governor's overall Medicaid reform," said James Introne, Gov. Andrew Cuomo's deputy secretary for health. "We agree this system is higher cost than it needs to be. But it's also a very sensitive area. Many of this population are totally dependent on the state. We can't move precipitously without having dire consequences."
At a hearing Thursday, CMS Deputy Director Penny Thompson told lawmakers they could expect to see a reimbursement rate that's about one-fifth of the current level. She did not specify when. CMS officials had told the panel earlier they were negotiating with New York's health officials.
"For decades, New York has received a windfall from federal taxpayers through Medicaid overpayments that are so large I needed to double- and triple-check with my staff that the information was accurate," said Rep. Darrell Issa, a California Republican who chairs the committee. "In Arizona, skilled nursing facilities, which provide services comparable to New York's developmental centers, receive about $200 per patient per day to treat patients. Last year, New York's developmental centers received over $5,000 per patient per day — a rate nearly 25 times greater than a comparable rate in Arizona."
Federal reimbursements account for half of New York's $54 billion Medicaid program.
The New York comptroller's office said federal action could have a significant impact on the state's current budget and future years, depending on timing, noting volatility already in state tax revenues. "The likelihood of unexpected cuts in federal Medicaid funding makes our near- and long-term challenges all the more pressing," spokesman Mark Johnson said.