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$335 Million In Medicaid Fraud Recovered By NY Attorney General In 2012

$11.7 million worth of prescription pills seized from alleged aggregator (credit: Handout via Juliet Papa/1010 WINS)

$11.7 million worth of prescription pills seized from alleged aggregator (credit: Handout via Juliet Papa/1010 WINS)

ALBANY, N.Y. (CBSNewYork/AP) — The New York State Attorney General’s office reported Wednesday that recovered more than $335 million generated by Medicaid abuse last year.

The total, including $146 million from a multi-state settlement with pharmaceutical giant GlaxoSmithKline, is the second highest annual recovery by the office’s Medicaid Fraud Control Unit.

One of the unit’s most notable victories last year was the shutdown of a scheme to distribute black market prescription HIV drugs through a Long Island-based pharmacy that billed Medicaid more that $155 million.

Instead of using the drugs, Medicaid recipients allegedly sold them to so-called aggregators, working out of bodegas and street corners, in Washington Heights and parts of the Bronx, according to court papers.

The drugs would then be sold to a black market network that would relabel and re-bottle the drugs before selling them to pharmacies and unsuspecting customers, authorities said.

The case is ongoing, and the attorney general’s office expects to recover most of it.

Budget documents show New York spending nearly $54 billion for Medicaid in the 2012-2013 fiscal year. The attorney general’s office said there’s no clear guidance on how much Medicaid billing is typically fraudulent.

The 2012 settlements were up from $143 million in Attorney General Eric Schneiderman’s first year, and exceeded the first-year totals under his two predecessors. The unit recovered $345 million in 2005 under then-Attorney General Eliot Spitzer.

Typical frauds include medical providers billing for services they never gave, double billing Medicaid and private insurers, phantom patient visits and falsifying symptoms or diagnoses to bill for unnecessary services and tests, according to the National Association of Medicaid Fraud Control Units. In New York, most recoveries go to the state Health Department, which administers its Medicaid program.

Schneiderman credited additional prosecutors, investigators and auditors for boosting the fraud unit.

“That initiative has paid off,” he said.

The fraud unit now has 315 staff across the state in Albany, Buffalo, Hauppauge, New York City, Rensselaer, Pearl River, Rochester and Syracuse. That’s up 34 from two years ago, with a $46 million budget for the unit this year.

The Medicaid inspector general, an office established in 2006 within the Health Department, now has a $66 million budget to prevent and detect fraud in public assistance for health, mental health, addiction and disabilities programs. It works with the other agencies, including the attorney general.

Last year’s recoveries included $1.6 million of excess Medicaid payments on claims for dental services provided by Kaleida Health through the Buffalo Women’s & Children’s Hospital Dental Clinic, a $3.1 million settlement with Cayuga Medical Center for billing Medicaid and federal programs for patients referred by physicians who were engaged in a financial relationship with the hospital and the shutdown of a an oxycodone trafficking operation in Staten Island.

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