The state of New York and New York City have agreed to pay $540 million to settle allegations that they knowingly submitted, or caused submission of, false claims for reimbursement for school-based healthcare services provided to Medicaid-eligible children from 1990 to 2001.
According to the Justice Department, the settlement is a record federal recovery for the Medicaid program.
Medicaid, which is administered by the Centers for Medicare and Medicaid Services inside the Department of Health and Human Services, is a matching program in which the government shares with states the cost of medical services for the poor and disabled.
Since the early 1990s, the United States has paid New York billions of dollars as the federal government’s share of healthcare costs for services provided to Medicaid-eligible school children under New York’s School Supportive Health Services Program and Preschool Supportive Health Services Program.
These programs were developed jointly by New York’s education and health departments to assist local school districts, counties and other schools in obtaining Medicaid reimbursement for covered diagnostic and health support services provided to students with disabilities.
The settlement resolves allegations that from 1990 to 2001, the state knowingly failed to provide proper guidance to the districts and counties outlining the requirements for a service to be covered by the Medicaid program, failed to monitor the districts and counties for compliance as required by the program and passed on claims to the federal government for services it knew were not covered or properly documented, all to make the government pay a larger share of New York’s Medicaid costs.
The state will pay $440 million over time, partly in cash and partly by releasing its claim to payments withheld. New York City’s share of the settlement, $100 million, will also be paid over time. The state also entered into a three-year Program Compliance Agreement with CMS to ensure that services are properly delivered and billed in the future.
The allegations sprouted from two lawsuits filed under the qui tam or whistleblower provisions of the False Claims Act, which allow private persons, known as "relators," to file actions on behalf of the United States and share in any recovery. The relator will receive $10 million from this settlement.
The lawsuits triggered a series of statewide audits by the Health and Human Services Office of the Inspector General and CMS. The Department of Justice’s Civil Division, in conjunction with the HHS OIG and CMS, handled the case.