New York's Medicaid woes

Published: February 14, 2013


On February 5, the U.S. House of Representatives’ Committee on Oversight and Government Reform released a report detailing billions of federal tax dollars wasted annually by New York’s Medicaid program. While the report acknowledges that the Centers for Medicare and Medicaid Services (CMS) has not done enough to protect federal tax dollars from being misspent, the committee found that the worst abuser of the Medicaid program continues to occur in New York; its program is estimated to lose 10 percent of its Medicaid spending on fraudulent claims, and another 20 to 30 percent on unnecessary services. New York spent $54 billion in 2012 alone on Medicaid – the highest of any state in the country.


The report lists several contributing factors to high Medicaid costs in the state, including:

  • Poor program oversight at the state and federal level
  • Rampant waste, fraud, and abuse
  • An antiquated, complicated payment methodology
  • Medicaid funding-driven special interest groups
  • Corruption and cronyism

A growing legal industry in New York is Medicaid estate planning, which involves transferring financial assets to trust funds or dependents to qualify for Medicaid. Another form of abuse includes “spousal refusal” – a sick person can transfer his or her assets to a healthy spouse, who can then invoke “spousal refusal” to decline financial support, qualifying the sick for Medicaid services. While other states do not openly acknowledge this practice, the state of New York provides a form letter for citizens.

With federal reimbursement for Medicaid spending open-ended, what incentives are in place for states like New York to hold themselves accountable to taxpayer dollars? The committee talked about New York’s attitude of “If it moves, Medicaid it,” which explains the $15 billion in development center payments alone over the past two decades, five times greater than the actual cost of providing services. The report calls for a full independent audit of the state’s Medicaid program; audit and budget expert oversight; adhering to eligibility thresholds; reducing excessive federal payments; estate recovery; and limiting executive compensation. With New York leaning toward participating in Medicaid expansion, cost control measures must be taken now before an even larger chunk of taxpayer dollars goes to a corrupted, bloated system.

More information on New York’s Medicaid program can be found here. Non-subscribers can gain access with a GovWin IQ free trial.