(WNY News Now) – Albany, NY – The New York State Comptroller’s recent follow-up report on Medicaid Program: Recovering Managed Care Overpayments for Pharmacy Services on Behalf of Recipients With Third-Party Health Insurance (Report 2020-S-39) reveals progress but emphasizes the need for additional actions to address identified issues.
In response to the initial audit report issued on July 13, 2022, the New York State Comptroller’s office has provided a comprehensive follow-up on the recovery of managed care overpayments for pharmacy services. The audit, covering the period from October 2015 through May 2020, identified deficiencies in the Department of Health’s oversight of the third-party liability recovery process.
Background, Scope, and Objective: The Department of Health (Department) utilizes fee-for-service and managed care methods to pay for pharmacy services. The managed care method involves monthly premiums paid to managed care organizations (MCOs), which, in turn, arrange for healthcare services. The audit aimed to assess the recovery of Medicaid overpayments for pharmacy services when recipients had third-party health insurance coverage.
Initial Audit Findings: The audit determined that the Department and the Office of the Medicaid Inspector General (OMIG) lacked adequate oversight of the third-party liability recovery process. Health Management Systems, Inc. (HMS), contracted by OMIG, had not billed third-party health insurance carriers for approximately $292 million in pharmacy encounter claims. Carriers often denied claims, and the follow-up actions to obtain payments were limited. The lack of reviews and reconciliations further resulted in significant amounts potentially going unrecovered.
Follow-Up Assessment: As of December 12, 2023, the follow-up report acknowledges some progress made by the Department in addressing the issues identified. While some recoveries have occurred, most of the managed care pharmacy payments highlighted in the initial report remain unaddressed.
Status of Audit Recommendations: Out of the six audit recommendations, three have been partially implemented, and three have not been implemented.
Agency Action:
Recommendation 1: OMIG and HMS have taken corrective steps to address the exclusion of generic billing provider identification numbers from recovery attempts. However, the recovery related to pharmacy encounter claims has been minimal, likely due to improvements implemented only in 2023 and the statutory limit of 3 years for recovery.
Recommendation 2: Assessing the recoverability of denied pharmacy encounter claims totaling $120.9 million remains unimplemented. There is a need for ongoing follow-up actions to obtain appropriate recoveries.
Recommendation 3: The recovery process for managed care pharmacy services has seen partial implementation, with improvements in addressing deficiencies related to generic billing provider IDs.
Recommendation 4: While the Department and OMIG have started monitoring the recovery process, thorough steps are needed to ensure appropriate third-party recoveries.
Recommendation 5: The Department’s implementation of the NYRx program has shifted responsibility for verifying third-party health insurance coverage from MCOs to pharmacies. However, MCOs need to be made aware of all eMedNY third-party health insurance policies.
Recommendation 6: The feasibility and benefits of increasing the recovery window beyond the current statutory maximum of 3 years are still not implemented, and discussions with stakeholders are urged.
Conclusion:
The State Comptroller’s report recognizes some positive steps taken by the Department and OMIG in addressing the issues identified in the initial audit. However, it emphasizes the need for continued efforts to ensure comprehensive oversight and implementation of all recommendations. Stakeholder engagement and ongoing monitoring are crucial for improving the third-party liability recovery process and maximizing recoveries for the State. The Department is urged to respond within 30 days, outlining planned actions to address the unresolved issues highlighted in the report.
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