NYC Schools Miss Out on $350M in Medicaid Reimbursements

New York City public schools have lost $356 million in the past three years because state and city officials have not properly applied for reimbursement from federal Medicaid based on special education services, writes Juan Gonzalez for The New York Daily News.

“Red tape and bureaucracy should not stand in the way of (the city) being reimbursed for the vast array of services provided,” City Controller Scott Stringer said in a report obtained by The News.

Because of this, the Department of Education moved funds from accounts to be used for books, supplies, and general costs, to accounts to fund special education services.  If officials do not begin to conform to the proper practices, the school system stands to lose $310 million more in the next four years, bringing the total to $666 million.

“That’s just unacceptable,” Stringer said. “There’s no excuse for leaving so much money on the table.”

The reimbursement plan requires that state and local schools pay for special education needs such as speech therapy, occupational or physical therapy, counseling, evaluations for students, and pupil transportation, which are covered by Medicaid.

School systems are supposed to  pay for the service at the time it is needed, then provide Medicaid the documentation of these expenditures so that the funds can be reimbursed back to the city and state school systems. Once the money is approved, the cities and state may split the payments between them.

United Federation of Teachers (UFT) President Michael Mulgrew has been warning that the city was not doing a good job of documenting their special education spending.

“Think of what that can pay for. More affordable housing. More dollars to help our kids in the classroom. There’s a whole range of services we need in this city. And this is a lot of money to not get back,” Stringer said.

Stringer has also recommended that state and federal governments need to simplify the system for getting reimbursed from Medicaid, according to the Associated Press.  A Department of Education spokesperson has been quoted as saying that the agency in charge of reimbursement has implemented new policies to address the issue of red tape in the process.

Eliza Shapiro of Capital quotes a Department of Education spokesperson, Devora Kaye, who said:

“We are confident our state and federal approved corrective action plan along with additional actions the D.O.E. has taken since last December will result in increased Medicaid revenue this fiscal year and in the future.”

Part of the problem, says The Daily Caller, appears to be the federal audit of the city’s reimbursement claims which took place in the 1990s.

During that audit, it was discovered that there had been overbilling and some other unacceptable practices by the city.  The result of this report was that the city and the state agreed to pay back several hundred million dollars and, at the same time, implemented new processes to cut down on fraud.

Controller Stringer said that the city then became too cautious in submitting reimbursement papers, even when they were obviously billable.