NY to make $540M payment for false Medicaid bills

ALBANY, N.Y. — The state and city of New York agreed Tuesday to pay a record $540 million to settle allegations they helped overbill the federal government for Medicaid services.

Also, an unidentified speech therapist will receive $10 million from the settlement as the whistleblower who called attention to the state and city billing practices.

Medicaid is a program providing health care to the poor, funded largely by the federal government but partly by state governments.

The Justice Department began an investigation after the whistleblower filed two lawsuits alleging the state submitted false claims for speech therapy services that didn’t qualify for reimbursement.

The department looked into reimbursement claims for services provided to New York schoolchildren from 1990 to 2001.

Under the settlement, New York State will pay about $440 million and New York City will pay $100 million. And the federal government will continue to monitor the state and city programs.

The state has already paid about $108 million, while the rest will be paid in 10 installments of $33.1 million over more than five years.

“We believe that this settlement requires payment of approximately $1 billion less than we could potentially have had to pay if the matter had gone to litigation,” Gov. David Paterson said.

Paterson’s office said the state and city have identified and corrected problems in record keeping.

Federal investigators alleged that New York did not provide proper guidance to local governments on Medicaid rules and what services were appropriate claims. They claimed the state was trying to charge for services that officials knew weren’t covered so that the federal government would pay a larger share of Medicaid costs.

The costs were for Medicaid services provided to children through the public school programs for students and preschoolers with disabilities. The programs help local school districts and governments get Medicaid reimbursement for certain diagnostic and health support services offered to students with disabilities.