- Associated Press - Wednesday, March 12, 2014

ALBANY, N.Y. (AP) - Federal oversight officials reported Wednesday that Medicaid payments for disabled New Yorkers getting services at state-operated residences have been “excessive,” with the federal share $320 million higher than actual costs in 2010.

In a report, the inspector general of the U.S. Department of Health and Human Services said those Medicaid reimbursement rates for providing help with everyday activities and training were more than double the rates at privately operated residences offering the same services.

The federal government pays half of New York’s Medicaid costs.

“The Medicaid payments were too high,” said Jennifer Webb, federal audit manager. “The payment rates did not meet the federal requirement that payments be consistent with efficiency and economy.”

The report noted that state health officials took aggressive actions intended to address the overpayment issues, including a new payment method expected to be retroactive to April 1, 2013.

State Health Department spokesman Bill Schwarz said Wednesday that the period covered by the audit report predates the Cuomo administration, which has made reforms. The department and state Office for People With Developmental Disabilities have submitted rate adjustments and are working with federal officials for final approval, he said.

The HHS inspector general issued a report two years ago concluding the federal overpayment for taking care of developmentally disabled New Yorkers at state institutions was $701 million in 2009. A congressional subcommittee followed a few months later with a report that New York’s institutions for the developmentally disabled had cost Medicaid about $1.9 million a year for each patient based on a decades-old formula.

The state has closed 14 of its 20 institutions during the past 25 years, reducing the number of residents from nearly 27,000 to fewer than 1,000.

State officials last summer announced plans to close four more over the next few years in the ongoing shift to group homes and community settings.

The Office for People With Developmental Disabilities, responsible for about 126,000 New Yorkers with disabilities, said next would be the O.D. Heck Developmental Center in suburban Schenectady, slated to shut by March 31, 2015. That’s to be followed by the Brooklyn Developmental Center by Dec. 31, 2015; Broome Developmental Center in Binghamton by March 31, 2016; and the Fineson Developmental Center in Queens a year later.

Webb said the next federal review will focus on New York’s Medicaid reimbursement for community services provided by state contractors.

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