Feds Sue New York City For Overbilling Medicaid

Saying it’s caught New York City’s hand in the Medicaid cookie jar, the federal government has sued the city, claiming it billed Medicaid for “at least tens of millions of dollars” more than it was legally allowed.

The New York Times reports the point of contention is that the city approved of round-the-clock care for unqualified patients. The feds say the city ignored recommendations of medical professionals and steered patients into 24-hour care, even when they may have been better off in nursing homes. The Times says NYC would have had to contribute to the cost of the latter, but not the former.

“It goes without saying that ultimate medical decisions about patient care should be made by doctors and nurses, not government bureaucrats, and they should be based first and foremost on the best interests of the patient,” the United States attorney in Manhattan said in a statement.

U.S. Says New York City Overbilled Medicaid [The New York Times]


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  1. Mighty914 says:

    Where’s the O RLY owl when you need him?

  2. ChuckECheese says:

    One of the biggest problems we’ll have getting a handle on medical expenses is that doctors lean on their reputation as unquestionable demigods and refuse all outside scrutiny of their decisions, and people who claim that they aren’t being spendy, they’re being compassionate, providing the best and most necessary care to their patients. This situation is easily and fairly frequently exploited by doctors for their financial gain.

    Some solutions to this problem would be disinterested boards that make educated recommendations about medical care, and a public that shouts doctors (or the lawyers defending them) down whenever they start sounding like arrogant oracles instead of human beings. For instance the insulting comments about “government bureaucrats” above conveniently ignores that some people who work in gov’t monitoring Medicaid expenses actually have medical training and can make informed decisions about what’s proper and necessary and the best use of resources.

    • Megalomania says:

      The government bureaucrats remark was made by an attorney working with the federal government, not some uppity doctor. If you think that doctors are arrogant, and should be second guessed by people who never see the patient, you are more than welcome to stop seeking help from doctors and stick to WebMD.

      Also, EMTs have “some medical training”. So do lifeguards. That does not make any of them qualified to second guess an MD on what is best for a patient they have never even seen.

      • ChuckECheese says:

        If you read my comments carefully, you will notice that I said doctors or the lawyers defending them. The best way to deflect criticism, by the way, is to find others willing to take the heat for you – and you seem to have fallen for the ruse. No lawyers would be involved had the docs followed procedure in the first place. The lawyers are speaking for the doctors. See how that works?

        • Megalomania says:

          The doctors did follow procedure; the issue is that the people working for the city ignored the recommendations of doctors for what was in the financial interest of the city. It should be noted in this situation that the outcome was always better for the patient, but unnecessary (unless some poor sap ended up with MRSA from being stuck in a hospital they didn’t need to be at)

    • Tim says:

      This isn’t just the doctors’ fault. Some fault also lies with patients not questioning decisions, because more often than not, they have insurance to cover it, so they don’t care about the cost.

      Also, any time you bring up the idea of the government making ANY medical decisions, you’re dead. Including Medicare, Medicaid, Tricare, VA, Indian Health Service, National Institutes of Health hospitals, etc.

    • not-gonna-tell-ya says:

      There is already a process for that. It’s called getting a second (or third) opinion. I don’t understand why people always insist on more layers or regulation when it is redundant to existing options.

      • Loias supports harsher punishments against corporations says:

        That costs patient’s a lot of money to go seek a second opinion or third for every condition.

        • not-gonna-tell-ya says:

          You are correct if some moron wants to get multiple opinions on every visit to the doctor. Doc: “You have a hang nail”, moron: “I’d like a second opinion”, Doc 2: “yup, you have a hang nail”, moron: “I’d like a third opinion”, and on and on.

          One would have thought it obvious that I was speaking to major medical decisions.

          Please don’t make stupid comments just to justify your point

          • kujospam says:

            lol, speaking of this. I almost had to have my toe cut off because of a hang nail. I’m glad that is not a major decision to make. The beauty if a hang nail, getting infected. Of course, I knew to go to the doctor once it started hurting a lot more. LOL you really are a moron.

    • qwickone says:

      Hmm, sounds like a case for evidence-based medicine. Too bad people in general have resoundingly rejected that by calling it “health care rationing”. People in general have been shouting about the rising cost of health care in general, but they typically choose the more expensive options when they are actual at the doctor. /generalizing and my source is NPR’s recent coverage of the insurance industry and health care

      • ChuckECheese says:

        By ‘the city’ they mean the people who work for the city’s hospitals who make decisions about who goes to SNFs (nursing facilities) and who stays in the hospital. These people making these decisions are medical professionals. The argument is that the city made the decision to keep people in the hospital instead of discharging to SNF because (a) the city gets more $$ if a patient stays in the hospital; (b) the city must pay a portion of SNF care, but not of hospital care. There were two opposing sets of medical professionals here: One was the people running the city hospitals, the other was the bureaucrats/administrators who said these people need to go to SNFs. The hospital people won the battle, but now they’re being sued for abusing the system. If this doesn’t clarify, ask again.

      • ChuckECheese says:

        Hate to break the news to everybody but your health care is already rationed. Those things called co-pays? That’s rationing lite. And exclusions? And preferred providers? And caps? All rationing. And you don’t know it, but your doc makes decisions about treatment based on whether it will be paid for as much as whether its the best treatment. Other countries that have ‘socialized’ medicine are able to provide good medical care to all their citizens, and do it for less money than is currently spent in the U.S. People in other countries are healthier and live longer too. So actually there would probably be broader availability of the things people need most in a universal system.

    • Bsamm09 says:

      It seems you are advocating universal healthcare and agree with Sarah Palin about her “death panels”.

      • ChuckECheese says:

        Yes, I fully agree with Sarah Palin’s ‘lock and load’ solution to the high cost of medical care. Bullets are cheaper than pills.

        See how I did that? I twisted an argument, and somebody’s words, and added my own meaning. Beautiful.

        • Bsamm09 says:

          “disinterested boards that make educated recommendations about medical care”

        • stormbird says:

          And you put in a cheap slam on Palin, too. I think they NYT wants to offer you a job. If you can shout LOUD, MSNBC might be interested, too.

    • ARP says:

      Private insurance already does this and those people often have little to no medical training (pay for the cheapest employee who will do the job and all) until you get to upper levels. Government bureaucrats don’t have an incentive to deny paying unless there’s something wrong, private insurance does.

    • kc2idf says:

      From the summary: “The feds say the city ignored recommendations of medical professionals and steered patients into 24-hour care, even when they may have been better off in nursing homes.”

      Reconcile, please.

  3. incident man stole my avatar says:

    Socialized medicine – Good or Bad…. Start now

    • ChuckECheese says:

      Socialized medicine would be good if science based evidence for proper treatments were used, and if doctors couldn’t write their own paychecks by billing by the patient and procedure. I think doctors should have salaries like most other professionals. Take the greed factor out; after all, docs are in it for the humanity, amirite? And for those of you who whine about the cost of education, okay, then subsidize it. The biggest challenge to universal health care is going to be all these currently mostly silent partners like medical education, medical equipment companies, finance companies, not to mention pharmaceutical companies – all of whom have fat fists in the pie, and won’t tolerate any attempts at restricting their incomes.

      • not-gonna-tell-ya says:

        I think you are right and wrong. It’s not just the cost of education that justifies a higher salary for doctors. It’s also the fact that they are actually smarter (on average) than other people. Why shouldn’t someone get paid for their intellectual capabilities? You can’t have anyone be doctors or computer programmers by paying for their school and then pay them little. Bottom line is that there are smart people, and dumb people. You can’t subsidize an idiot into being a low paid doctor.

        I do think you are right that the business side of medicine has perverted care in many arenas. I would have little issue with that

        • kc2idf says:

          Nobody said underpay them, the suggestion was to pay them a salary. This takes the greed out by causing there to be no incentive to, for instance, have a patient make an appointment so that they can tell you something that could have been done with far less of the patient’s time and insurer’s money in five minutes over the phone.

          They’ve done this to my wife repeatedly.

          • UCLAri: Allergy Sufferer says:

            And who will determine those salaries?

            The same bureaucrats who we won’t trust to file our auto registration? Hospital admins who we all know and hate? Other doctors?

            Furthermore, if a doctor is salaried, what motivation will he have to see more patients beyond a certain load? The fact is, most doctors want to see fewer patients because it is in fact better for both parties, but then we have the problem of figuring out how to ration visits even more.

        • c!tizen says:

          but that’s where the education comes in. An idiot isn’t going to make it through med school, at least I really hope they wouldn’t.

        • ChuckECheese says:

          There are plenty of smart people in this country who aren’t working as physicians, thank G*d. And so far as I know, there is no universal wage scale based on IQ or education level. For instance I’m smart enough and chose not to do it – I’ve taken the organic chem and the biology courses and the anatomy phys, but I decided to do other stuff, like study cooking in France and hand out cigs to people in homeless shelters and translate for the Navy and edit legal docs and investigate fraud and abuse for insurance companies. You are playing into the docs-as-gods mentality by claiming they have some sort of esoteric knowledge that the rest of society can’t possibly begin to understand. And that isn’t true. There are plenty of smart people out there who can and do scrutinize the decisions that other medical professionals make – it’s called accountability. And it’s the way things should be. When there is so much at stake, there must be other people and agencies available to oversee medical care.

          • UCLAri: Allergy Sufferer says:

            Yes, but work ethic is a huge deal. The willingness to put in those kinds of hours and work is rare.

            Not many people are willing to put themselves through the med school slog.

          • 47ka says:

            I’m going to have to disagree with this portion of your statement:

            “There are plenty of smart people out there who can and do scrutinize the decisions that other medical professionals make – it’s called accountability. ”

            You are correct, and as a med student I will be the first to say that not all smart people are doctors. As alluded to earlier, however, medical training is a grueling business, involving thousands of hours of supervised learning. One cannot just read a textbook and understand the nature of a disease – often times it is critical to see it. I am currently a medical student and I work 12-13 hours a day in an inner-city hospital as part of my training. I not only am required to assist in whichever capacity I am instructed to or am able to (which I am not complaining about, as I love it) but I also interview patients, interpret labs, and read up on the pathology that I see every day when I get home in order to better understand what I am expected to know. Keep in mind that this is as a medical student, not even as an intern or resident whose responsibilities far greatly exceed my own.

            I agree that there should be accountability, but only if those who are holding me accountable are, at the very least, equal in training. I would much rather have a panel of physicians who understand standard of care, differential diagnosis, and pathology judging me than someone who was assigned by a government bureaucracy because they can read a textbook. If the powers that be would like to create a medical specialty focused upon judging other physicans’ actions, then so be it, but it seems ridiculous to me to have someone who may not even have a scientific background (i.e., insurance bureaucrat) tell me that what I did or am doing is wrong.

      • UCLAri: Allergy Sufferer says:

        Spoken like someone who truly knows nothing about how medical training works!

        Let’s look at both the time and financial cost of medical school:

        TIME COST
        4 years of undergraduate education requiring fairly rigorous science-based classwork that will frankly be too difficult for even most college students.

        4 years of medical education requiring intense coursework– 2 years class-based, 2 years practical.

        3-5 years of residency where the doctor will work 80+ hours a week for a pittance salary (maybe $50K)

        Possibly 2 or more years of fellowship education with slightly less pittance salary.

        This is average, and many will do even more training.

        MONEY COST
        Undergraduate: Depends, but let’s say free for lulz.

        Medical school: Average indebtedness of an MD graduate is around $100K.

        Let’s say that the average doctor instead decided to become an office drone, starting at $50K, debt free. Let’s assume 5% raises every year from year one, with salary plateauing around $125K in year 11. I assume a salary this high because, frankly, most doctors are well above average intelligence and work ethic.

        After a 30 year career, the office drone will make an unweighted career return of about $3.3m

        Assume the same person goes into medicine instead. Four years of medical school are completely zero income. Residency is four years of $50K, and let’s assume a two year fellowship at a whopping $60K. Our theoretical doctor goes into GI, and lands a salary of around $225K.

        In the end, the office drone comes out with a lifetime income of around $3.3m, and the doctor comes out with $4.7m. Oh wow! $1.4 million more? WOWZERS!!

        But hang on. Your average doctor is working a higher stress job with longer hours and higher stakes, and had to give up their entire 20s and part of their 30s to get there. Your office drone, on the other hand, was more worried about golf with the boss in his 20s, and more worried about his BMW payment in his 30s.

        Never mind that the doctor had to, I dunno, go through medical school? Work hard enough to get in?

        Whenever I see people whine about how doctors are soooooo overpaid, I think to myself, “would you rather get less talented doctors, then?”

      • UCLAri: Allergy Sufferer says:

        I realize that you weren’t making an overpaid argument, but a salary argument.

        Mea culpa extremis.

      • Nigerian prince looking for business partner says:

        “Take the greed factor out”

        When it comes to even accepting patients with Medicaid, it typically has more to do with a doctor’s sense of obligation than it does with greed. It’s exceedingly difficult to make money, let alone not lose any when billing Medicaid.

        Our family doctor (who’s also a very close friend) accepts Medicaid. He used to leave four schedule slots per day available for Medicaid patients. It was such a financial drain on his practice that he currently only allows two per day but will likely phase it out completely or reduce the slots to one or two days a week.

  4. dolemite says:

    I dunno, I think the ultimate decision about the medical care of the patient should be made by the patient!

  5. Nigerian prince looking for business partner says:

    Fundamentally, the problem with Medicaid is that the reimbursement rates are exceedingly low. Until this is fixed, there will be a perverse incentive for providers to give unneeded and unnecessary care in order to break even on their patients. Providers are stuck between a rock and a hard place when it comes to Medicaid patients — either provide unnecessary care or lose money on the patient and then increase rates on self pay or privately insured patients. It’s either that or just not see Medicaid patients any more.

    The entire system is fundamentally broken. Part of the reason why the rest of us have to spend so much on insurance (in my case, $1,100 month for my family) is that providers overcharge to make up for losing money on patients with Medicaid or those who don’t pay at all.

    • ARP says:

      It’s also that insurers have negotiated very low rates with doctors. Some raise their retail rates to offset that (e.g. make a $1k procedure, $5k to make up for the discounted rates paid by insurers). So when a insurer doesn’t pay at all, you’re stuck with an absurd bill.

      • Nigerian prince looking for business partner says:

        Private insurers absolutely do that too but it’s not to the same extent. I wish I could find the article but if I recall, BC/BS typically pays in the ballpark of 60% of a billed rate and Medicaid around 30%, with Medicare somewhere in the middle. It’s incredibly hard to not lose money on Medicaid patients unless a provider works with extreme volume or offsets the cost by charging those with private insurance more.

        For my wife’s recent prenatal care, the billed cost was around $3,900 and we wound up paying the negotiated rate of (we have a high deductible through BC/BS) $2,300.

    • th3v6cann3val0s3 says:

      This is exactly right.

      It seems that everyone forgot business administration 101. Ever heard of a group buy?

  6. arachne says:

    Looks like the doctors were doing nothing wrong– the city administrator was at times over ruling the doctors who in at least one case had reported that a 64 year old patient was alert, recovered and had good judgment therefore didn’t need the 24 hour care, but it was continued any way.

  7. Straspey says:

    This is New York City…

    where the foxes are in charge of running the hen house.

    • DorsalRootGanglion says:

      As opposed to where, exactly? I didn’t know that any large city has anything resembling fiscal morals anymore!

    • Nigerian prince looking for business partner says:

      I think you’d be hard pressed to find a medical provider in the nation that accepts Medicaid and doesn’t play these sorts of games.

  8. ChuckECheese says:

    Excuse me, I have to go now to my job as a health care quality manager, making decisions about whether seniors in AZ’s Medicaid system are getting the best and most appropriate treatments. And I’m not an MD – bwa ha ha ha ha!

  9. MaxH42 thinks RecordStoreToughGuy got a raw deal says:

    Hmm, FTA, “The cost ranges from $75,000 a year for a single aide to $150,000 a year for several aides who work around the clock, sleeping at clients’ homes.”

    Yet according to the Feds, the average cost of a year in a nursing home is 128-136K/year. Studies have also shown that it’s better for patients to stay at home when feasible, in addition to sometimes being cheaper in the long run.

    Oh, and the current administration supposedly supports keeping people at home when feasible instead of institutionalizing them, even though it’s unfortunately not law yet.

    • MaxH42 thinks RecordStoreToughGuy got a raw deal says:

      EDIT: “the average cost of a year in a nursing home **in NYC** is 128-136K/year.”

  10. jefeloco says:

    This is kind of off topic but I love how the caduceus is only used as a medical symbol in the US and the rest of the world laughs at us for it :) Everywhere else, the staff of Asclepius is used as a universal sign of healing (single oak staff, single snake entwined around it), whereas the caduceus (staff, twin snakes and a set of wings up top) is an international (and ancient) sign of commerce.

    I guess it is not only fitting that Americans got it wrong but that we use a symbol of commerce to denote medicine…

  11. moderndemagogue says:

    Screw this.

    New York has the only functioning economy in the entire country. Without us the country would look something like Haiti, before the earthquake and the federal government is going to go and get all pissy about less than 100 million?

    Please, thats like one hedge fund manager’s 1st quarter bonus.

    • blakek says:

      Bwhaha, how true, if it wasn’t for the New York Fed, and the big investment banks, we’d be wandering around all lost, acting like producing goods and services would save the economy. Thank god for all that federal money trickling down from NYC. Might as well ask though, you guys planning on monetizing the municipal and state debt along with the federal and bank debt?