Feds Sue NYC, Health IT Vendor Over Medicaid Fraud Scheme
October 30, 2014 in News
On Monday, the U.S. Department of Justice filed a lawsuit alleging that New York City and a health IT vendor used computer programs to create fraudulent billing schemes, Reuters reports (Stempel/Raymond, Reuters, 10/27).
Federal authorities filed the lawsuit in the U.S. District Court in Manhattan under the False Claims Act (Schencker, Modern Healthcare, 10/28).
The lawsuit alleges that between 2008 and 2012 New York City and Computer Sciences Corporation created computer programs to get around a requirement that the city only bill Medicaid for care after exhausting private health coverage options.
In a statement, U.S. Attorney Preet Bharara said that New York City and CSC “created computer programs that systematically, and fraudulently, altered billing data in order to get paid by Medicaid as quickly as possible and as much as possible” (Reuters, 10/27).
Specifically, the suit alleges that CSC’s computer programs would:
- Manipulate certain patient policy numbers so that private insurers would reject the reimbursement requests (Weiser, New York Times, 10/27); and
- Mark old claims as denied by private insurers, even though the insurers were still requesting additional information (Fischer, New York Business Journal, 10/28).
In addition, the lawsuit contends that a CSC computer program improperly replaced diagnostic codes submitted by providers that might have been rejected with default diagnosis codes that would be approved by Medicaid (New York Times, 10/27).
The suit seeks unspecified damages. Bharara said each of the three schemes cost taxpayer millions of dollars.
Bharara said, “Billing frauds like those alleged undermine the integrity of public health care programs like Medicaid” (New York Business Journal, 10/28).
A New York City Law Department spokesperson said the city “cooperated fully” with the investigation but “strongly disagree[s] with the allegations, which [it] believe[s] involve technical billing issues, not fraud.”
Similarly, CSC said it “believe[s] there is no factual or legal basis to support virtually all the allegations of which we have been made aware during the course of the inquiry, and that the complaint is without merit” (New York Times, 10/27).