Comptroller Stringer Audit Finds the City Lost $179 Million Due to Mismanagement of DOE Medicaid Reimbursement Claims for Special Education Services

(New York, NY) – Today, New York City Comptroller Scott M. Stringer released an audit of the New York City Department of Education’s (DOE) management of Medicaid reimbursement claims for special education services that provide students with special needs with occupational, physical, and speech therapy services. The audit found that the DOE’s failure to perform the due diligence necessary to meet State and federal requirements to receive Medicaid reimbursement for claims on services performed resulted in the agency losing an estimated $179 million in the 2018-2019 school year alone. The findings concluded that the DOE did not perform the necessary steps to receive reimbursement from the federal government for claims submitted to the DOE including obtaining written orders or referrals for services, verifying provider credentials, recording session notes, and obtaining parental consent to bill Medicaid. In response to this mismanagement, Comptroller Stringer recommended steps the DOE should undertake to ensure the agency receives all the federal Medicaid reimbursement funding that it is entitled to enshrined in the Individuals with Disabilities Act (IDEA).

“New York City’s students with disabilities deserve the best quality education and every opportunity to succeed. Our audit found the DOE’s mismanagement of Medicaid claims for special education services resulted in the City losing out on hundreds of millions of dollars from a lack of accountability. This is money that could be in our classrooms supporting our children when they need it most,” said New York City Comptroller Scott M. Stringer. “This mismanagement is unacceptable, and the DOE must improve its process to capture every last dollar eligible for reimbursement. The stakes couldn’t be higher and our children deserve nothing less.”

The DOE is entitled to submit Medicaid reimbursement claims for covered services provided to Medicaid eligible students with disabilities who are between the ages of 3 and 21. The New York State Department of Health (NYSDOH) and the New York State Department of Education (NYSED) jointly developed the Preschool/School Supportive Health Services Program (SSHSP) to help school districts obtain Medicaid reimbursement. The DOE Office of Medicaid Operations (OMO) is responsible for the coordination of programmatic and administrative efforts to maximize Medicaid reimbursement claims for related services including Physical Therapy (PT), Occupational Therapy (OT), and Speech Therapy. OMO is charged with ensuring that Medicaid reimbursement claims submitted by DOE meet federal and State requirements, and with finding efficiencies to increase claims.

Comptroller Stringer’s audit found the following lack of controls with regard to the DOE’s management of maximizing Medicaid reimbursement claims for special education services:

• DOE did not have adequate controls in place to ensure that student occupational therapy (OT), physical therapy (PT), and Speech Therapy service encounters met all of the federal and State Medicaid reimbursement documentation requirements including obtaining written orders or referrals for services, verifying provider credentials, recording session notes to document that diagnostic and/or treatment services were provided to students, and obtaining parental consent to bill Medicaid. As a result, DOE could not submit Medicaid reimbursement claims for those services.
• For the 2018-2019 School Year, DOE did not realize gross Medicaid reimbursements totaling as much as $179,688,706, for OT, PT, and speech therapy services.
• DOE does not submit any Medicaid reimbursement claims for the following covered services including valuations and reevaluations, Psychological Counseling, certain speech services, Special Transportation, and Skilled Nursing provided to public and non-public school students; and covered services provided to pre-school students who attend public schools and private schools other than NYSED-approved pre-school special education programs, and pre-school students who receive instruction at home.
• For the 2018-2019 School Year, DOE did not realize gross Medicaid reimbursements totaling as much as $9,966,540 for Psychological Counseling, certain Speech Therapy services, and covered services provided to pre-school public and non-public school students.
• DOE did not maintain evaluation and re-evaluation data, and did not provide the Comptroller’s audit team with students’ Individualized Education Program (IEP) data including service start and end dates, frequency, or duration of recommended services for Special Transportation and Skilled Nursing.

In response to these findings, Comptroller Stringer recommended the following:

• Perform a systematic analysis of those OT, PT, and Speech Therapy service encounters that do not pass the claim validation process to determine why those encounters did not meet Medicaid claiming requirements and to identify and prioritize corrective actions to maximize future Medicaid reimbursement revenues;
• Submit Medicaid reimbursement claims for Psychological Counseling service encounters which meet State and federal requirements;
• Ensure that evaluations are conducted and documented in a way that allows DOE to claim for covered services and submit Medicaid reimbursement claims for those services where appropriate;
• Reconsider the feasibility of submitting Medicaid reimbursement claims for Speech Therapy services provided under the supervision of a licensed provider and provided to students in all public and non-public schools, including but not limited to, running a pilot with adequate staffing levels and compliance with timely and complete session note;
• Ensure that contracted providers maintain electronic transportation logs which include Medicaid required elements for each trip and submit Medicaid reimbursement claims for Special Transportation services where appropriate;
• Immediately start claiming for Skilled Nursing services which meet federal and State requirements; and
• Take all necessary steps to ensure that Medicaid documentation claiming requirements are met for covered services provided to preschool-age students and submit Medicaid reimbursement claims for those services where appropriate.

To read Comptroller Stringer’s audit of the DOE’s Medicaid reimbursement program for special education services, click here.

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