Published Online: May 8, 2002
Published in Print: May 8, 2002, as New York, Meanwhile, May Have to Repay Medicaid Money

New York, Meanwhile, May Have to Repay Medicaid Money

Financially strapped school districts in New York state now have another major worry on the horizon: They may be forced to repay millions of dollars in Medicaid money to the federal government.

But confusion reigns over the Medicaid program that reimburses schools for certain special education services. And in New York no one seems to have a clear view of what may have gone wrong.

Charles E. Schumer

Sen. Charles E. Schumer, D-N.Y., announced last month that federal officials believe some districts overestimated what they should be repaid for providing special-needs students such services as speech and physical therapy. He said the probe could force districts in his state to pay back some of the $2.2 billion they had received in federal Medicaid reimbursements, and millions more in penalties.

Mr. Schumer said the Department of Justice was investigating. Agency officials declined to comment last week. A spokesman for the Department of Health and Human Services, which oversees Medicaid, referred calls to the Justice Department.

The Medicaid repayment program, run through the Centers for Medicare and Medicaid Services at the HHS Department, is so difficult to negotiate that education groups say schools across the country have failed to collect more than a billion dollars a year in reimbursements they're due. But the opposite may have occurred in New York schools, where Mr. Schumer said the confusing rules have led administrators to use formulas that guided them to seek overpayments.

In the Buffalo school district, officials are eyeing the situation warily. Mr. Schumer has estimated that Buffalo, which started next school year's budgeting process with a $42.6 million shortfall, could owe as much as $50 million more to the federal government.

But Andrew Maddigan, a spokesman for the Buffalo schools, said his district followed the guidelines set out by the state education department. Those guidelines told districts how to calculate the reimbursement payments based on the state's interpretation of the federal law.

So far, Mr. Maddigan said, the 43,000-student district does not know whether it actually owes any money and has not been notified of any type of audit.

"A major liability like this would be devastating," he said.

New York state education officials also say they do not know where district calculations may have been off, or whether their guidelines distributed to districts were incorrect.

"At this moment, we don't know details or have hard figures," said Tom Dunn, a spokesman for the New York State Department of Education. "We have no reason to believe that these school districts will have to repay this money, because we believe our guidelines were a correct interpretation."

Senatorial Intervention

But Sen. Schumer clearly believes there's a problem. In a statement released last week, Mr. Schumer said the investigation was triggered by an audit of several New York districts that implied that the state's interpretation of federal rules conflicted with that of the federal government.

The senator has written to Secretary of Health and Human Services Tommy G. Thompson asking that his agency issue clearer guidelines, and that federal officials work with districts to help them comply.

Mr. Schumer has also written to Attorney General John Ashcroft urging the Justice Department not to sue the districts for repayment and penalties. If investigators find there was no fraud, only "an honest misinterpretation of the federal rules," Mr. Schumer wrote, the Justice Department "has a particular obligation to conduct its investigation with the utmost care and with an eye to minimizing its effect on the schoolchildren of New York."

Vol. 21, Issue 34, Page 23

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