Special Education

N.Y. State Settles Suit Over School Medicaid Claims

By Christina A. Samuels — July 31, 2009 4 min read
  • Save to favorites
  • Print

Includes updates and/or revisions.

School districts in New York state must temporarily stop submitting reimbursement claims to Medicaid in the wake of a record-setting settlement between the state and the U.S. Department of Justice, which claimed over a billion dollars in claims were false.

Districts nationwide are allowed to request reimbursement from Medicaid, the main federal health-insurance program for the poor, for certain therapies provided to students. The Justice Department claimed that New York billed the federal government for services that are not covered by Medicaid or that were not properly documented.

As part of the July 20 settlement, the state and New York City will repay some $540 million to the federal government, partly in cash and partly by releasing claims to reimbursements that had been withheld.

In a press release announcing the settlement, New York Gov. David A. Paterson said that the state has tightened up its procedures for submitting Medicaid-reimbursement claims.

The state estimated that its ultimate liability for questionable claims might have approached $1.5 billion.

“While it is unfortunate that state and city funds have to be repaid to the federal government, 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. Paterson, a Democrat, said in a statement.

Under the settlement, New York state’s share amounts to $331 million paid out over five years, and the release of about $108 million in Medicaid claims. New York City will pay $100 million, also over time.

Until the state enters into a new agreement that will provide oversight of the program, school districts will not be able to submit claims for any services that were provided after July 1, the state department said in a memo.

State Response

Jane Briggs, a spokeswoman for the state education department, said that the state health department would submit a “state plan amendment” to the federal government. That amendment would govern future management of the Medicaid-reimbursement program for school-based health services and help prevent fraud.

If the new plan is approved by the government, the billing process can be reopened and may be retroactive to July 1st, Ms. Briggs said.

In 1988, the adoption of the federal Medical Catastrophic Coverage Act allowed schools to receive payment for certain health services provided to Medicaid-eligible children, such as speech, physical, and occupational therapies provided to students in special education as part of their individualized education programs. Districts are also able to seek reimbursement for transportation of children to school if they receive therapy there.

But reports from government-watchdog agencies have suggested that the school-reimbursement process nationwide has been poorly overseen by the Centers for Medicare and Medicaid Services, which is a part of the U.S. Department of Health and Human Services.

In December 2007, the Bush administration attempted to eliminate reimbursement for school-based administrative services, and for transportation to and from school. (“U.S. Proposes to Trim School Medicaid Funding,” Sept. 12, 2007.) However, that rule was rescinded by the Obama administration in June, allowing such payments to continue.

New York has been one of the most aggressive states in seeking reimbursements from Medicaid. In 2000, a report by the Government Accountability Office, the investigative arm of Congress, noted that three states—Illinois, Michigan, and New York—accounted for more than 60 percent of the school-based claims filed that year. New York accounted for 44 percent of the health-services payments made under the program that year.The New York investigation began as a whistleblower lawsuit filed in 1998 by speech therapist Hedy Cirrincione, said her lawyer, David A. Koenigsberg. Ms. Cirrincione was providing speech education to young students in Watertown, N.Y., at the time, but her services were not Medicaid-eligible.

Billing Disputed

Ms. Cirrincione told school and local officials repeatedly that they were incorrectly billing the government for her work, but did not see any changes, Mr. Koenigsberg said in an interview.

Ms. Cirrincione sued on behalf of the federal government under provisions of the False Claims Act, which allows private citizens with knowledge of fraud to help the federal government recover money.

In 2001, the federal Justice Department, as well as the inspector general of the federal health department, started an investigation of three upstate New York school districts and a preschool program, according to a history of the case provided by the state.

The findings prompted a complete audit, particularly focused on claims originating from New York City schools.

Among some of the findings made in various reports in 2004 and 2005: In New York state, 88 percent of the transportation claims presented for payment did not comply with federal and state requirements, 56 percent of speech-services payments claimed were not allowable, and 86 percent of speech claims made specifically by New York City schools were out of compliance.

Eventually, the audits grew to include the years 1990 to 2001, and recommended that Medicaid disallow $1.078 billion in claims, not including interest. The False Claims Act would have allowed the government to collect up to three times the amount of which it was defrauded, as well as civil penalties.

Under the False Claims Act, whistleblowers can receive a share of the settlement. Ms. Cirrincione was awarded $10 million for her actions.

A version of this article appeared in the August 12, 2009 edition of Education Week

Events

Jobs Virtual Career Fair for Teachers and K-12 Staff
Find teaching jobs and other jobs in K-12 education at the EdWeek Top School Jobs virtual career fair.
Ed-Tech Policy Webinar Artificial Intelligence in Practice: Building a Roadmap for AI Use in Schools
AI in education: game-changer or classroom chaos? Join our webinar & learn how to navigate this evolving tech responsibly.
Education Webinar Developing and Executing Impactful Research Campaigns to Fuel Your Ed Marketing Strategy 
Develop impactful research campaigns to fuel your marketing. Join the EdWeek Research Center for a webinar with actionable take-aways for companies who sell to K-12 districts.

EdWeek Top School Jobs

Teacher Jobs
Search over ten thousand teaching jobs nationwide — elementary, middle, high school and more.
View Jobs
Principal Jobs
Find hundreds of jobs for principals, assistant principals, and other school leadership roles.
View Jobs
Administrator Jobs
Over a thousand district-level jobs: superintendents, directors, more.
View Jobs
Support Staff Jobs
Search thousands of jobs, from paraprofessionals to counselors and more.
View Jobs

Read Next

This content is provided by our sponsor. It is not written by and does not necessarily reflect the views of Education Week's editorial staff.
Sponsor
Special Education Whitepaper
Inside IEP: Actionable Insights and Innovations for Student Support
Explore virtual solutions, educator burnout, parental support, and ways to create an inclusive learning environment.
Content provided by DotCom Therapy
Special Education What the Research Says One Group of Teachers Is Less Likely to Identify Black Students for Special Ed. Why That Matters
Researchers say their findings argue for diversifying the teacher workforce.
4 min read
Full length side view of Black female instructor in mid 40s with hand on shoulder of a Black elementary boy as they stand in corridor and talk.
E+/Getty
Special Education Video Inside an Inclusive Classroom: How Two Teachers Work Together
This model for inclusive education benefits students of all abilities, and the teachers instructing them.
1 min read
Special Education Using Technology for Students in Special Education: What the Feds Want Schools to Know
Assistive technology can improve outcomes for students in special education, according to the U.S. Department of Education.
4 min read
Black students using laptop in the lab with white female teacher- including a female student with special needs.
E+/Getty