U.S. Says New York City Overbilled Medicaid

The federal government has accused New York City of overbilling Medicaid by “at least tens of millions of dollars” by improperly approving 24-hour home care for thousands of patients.

In a lawsuit filed Tuesday, the United States attorney’s office in Manhattan also insinuated that the city had cheated the federal government after a 2006 change in Medicaid rules relieved the city of having to contribute to the cost of the round-the-clock care. In many cases, the government said, the city enrolled patients who did not need such services. And in some cases, the lawsuit alleged, the city approved in-home care for people who needed more intensive services, like nursing home care, but which would have required the city to contribute to the cost.

In one example, the government said a 75-year-old woman with dementia who tried to jump out her window several times a day and who punched her daughter was kept in the home care program when she should have been in an “appropriate facility,” like a psychiatric center.

The lawsuit, which followed a whistle-blower’s complaint, also said the city ignored rules requiring recommendations from doctors, nurses and social workers before patients could be enrolled in the home care program, or sometimes rejected doctors’ findings that the services were not needed. The lawsuit did not say exactly how much overbilling the federal government believed had occurred, but it asked the court to award it triple damages.

“It goes without saying that ultimate medical decisions about patient care should be made by doctors and nurses, not government bureaucrats, and they should be based first and foremost on the best interests of the patient,” Preet Bharara, the United States attorney in Manhattan, said in a statement. “The allegations here are serious and unfortunately reflect a systemic failure to responsibly administer the Medicaid program.”

Connie A. Ress, a spokeswoman for the city’s Human Resources Administration, which administers Medicaid in the city, declined to comment except to say that the agency was reviewing the complaint.

Home care, which provides aides who help with housecleaning, dressing, bathing, shopping and other personal needs, is one of the fastest growing services covered by Medicaid, the joint federal-state health care insurance program for the poor.

High Medicaid costs are threatening the budgets of New York and many other states, and Gov. Andrew M. Cuomo recently appointed a task force to try to bring the state’s Medicaid spending under control.

The federal investigation looked at cases from 2000 to 2010 and found that in some instances, patients received too many services at home, and in other cases, they did not get enough services and should have been placed in an institution.

The suit addressed the roughly 17,500 people who have received Medicaid coverage for 24-hour “personal care services” in the city over the last decade. The cost ranges from $75,000 a year for a single aide to $150,000 a year for several aides who work around the clock, sleeping at clients’ homes.

The United States attorney’s office said the city had improperly authorized coverage for a “substantial percentage” of the clients. The complaint said the city routinely reauthorized the care without getting a required assessment from a doctor working for a private agency hired by the Human Resources Administration. In some cases, it said, city officials overruled the findings of private agency doctors or did not consider assessments from nurses and social workers.

The complaint suggests one possible motive. Before 2006, it says, the 24-hour home care program, called Personal Care Services, program was financed jointly by the federal, state and New York City governments. But since 2006, in New York City, the cost has been equally split between the federal and state governments.

The city enrolled patients in personal care, “even though certain patients were ineligible to receive such services and should have received services through a different program,” the complaint said. It added, “The city has been unjustly enriched by this practice because, since January 1, 2006, the P.C.S. program is not funded by the city, whereas alternative programs are.”

The complaint, which alleged improper enrollments stretching back at least a decade, did not say whether they rose significantly since 2006.

The government cited several cases in which it said patients should have received more intensive care. In the case of an 82-year-old woman with dementia and renal failure, the lawsuit said, a private agency said she could “no longer be safely serviced at home.” But the city overruled the director and kept the woman home, where she died a year later.

The allegations came to the attention of the federal government through Dr. Gabriel Feldman, who worked in a private agency under contract to the city. Under the whistleblower law, Dr. Feldman would receive part of any money the government recovered from the lawsuit. The government often settles Medicaid overbilling cases out of court.

A recent report by the United Hospital Fund, a research group based in New York City, tried to tackle the same issue, noting that the city accounted for about 84 percent of the state’s Medicaid spending on personal care.

It concluded that the city’s different Medicaid neighborhood offices were making widely varying decisions about how much personal care to give to similar patients.

But Michael Birnbaum, director of policy of the United Hospital Fund’s Medicaid Institute, said that despite the United States attorney’s allegation that the city was cheating the federal government, some patients needing intensive services can be cared for at home at less cost than at a nursing home, and clients prefer it.

“In addition to personal care’s lower unit costs, you can make a pretty strong case that staying in the home versus going into an institution is a positive outcome,” Mr. Birnbaum said.