A follow-up audit released this month by New York State Comptroller Thomas P. DiNapoli revealed that the Department of Health failed to recover $93.7 million in improper Medicaid payments tied to overlapping coverage with the Essential Plan—despite warnings issued nearly two years ago.
The findings, published June 4, show that only $2 million of the improper payments have been recovered, and most of that amount was unrelated to the issues flagged in the initial 2023 audit. Roughly $36.6 million is now unrecoverable due to regulatory time limits, with the remaining $55.1 million still unaddressed.
“OMIG needs to promptly take steps to recover the remaining improper payments before any more overpayments become unrecoverable due to lookback limitations,” the report urged, referring to the state’s Office of the Medicaid Inspector General.
The problem stems from how the Department of Health failed to treat the Essential Plan—another public insurance program for lower-income New Yorkers—as the primary payer during periods when beneficiaries were enrolled in both Medicaid and the Essential Plan. Medicaid is supposed to act as the secondary payer in such cases, covering only remaining deductibles or coinsurance.
The audit revealed that between January 2017 and November 2022, Medicaid wrongly paid:
- $69 million for services fully covered by the Essential Plan,
- Up to $14.1 million for services covered under specific limits, and
- $10.6 million in premiums for members who were ineligible for managed Medicaid coverage due to simultaneous enrollment in the Essential Plan.
Although the Department of Health launched a new payment control in its eMedNY system in September 2024 to identify the Essential Plan as a third-party insurer, the fix only applied to terminated plans—not active coverage. This gap has left continued risk of improper payments.
An assessment of 19,997 members whose Essential Plan coverage ended in December 2024 found that eMedNY failed to recognize 30 percent of these cases as having third-party insurance liability. Department officials confirmed the oversight and said they are exploring solutions.
One of the two original audit recommendations has not been implemented; the other was only partially fulfilled. Comptroller DiNapoli’s office urged state health officials to take corrective action before even more taxpayer dollars are lost.
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