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After Scathing Oversight Committee Report, HHS Pledges to End Medicaid Overpayments

Press Release

Location: Washington, DC

The Centers for Medicare and Medicaid Services (CMS) had been planning to continue to severely overpay the State of New York for services provided, and in some cases not provided, at its developmental centers for the next five years. The State-operated developmental centers, which house and treat individuals with developmental disabilities, were receiving Medicaid payments in excess of $5,000 per patient per day, a rate ten times greater than similar privately operated facilities.

A House Oversight and Government Reform Committee staff report, released earlier today, estimated a $15 billion aggregate overpayment to the controversial centers over the past two decades. The report was released ahead of a hearing of the House Oversight and Government Reform Subcommittee on Health Care.

At today's hearing Penny Thompson, CMS's Deputy Director of the Center for Medicaid and CHIP Services, told the Subcommittee that CMS intends to reduce the artificially high federal Medicaid payments to New York developmental centers to one-fifth their current level, stating: "We're still finalizing those methodologies and numbers … but I think you can expect to see a rate that's at about one fifth of its current level."

"It's good that CMS changed its mind and finally agreed to take a firm line against egregious federal Medicaid overpayments today, but it's unfortunate that it has taken so many years to start trying to fix the problem" said Rep. Paul Gosar, R-Az. Gosar is a licensed dentist who has worked with Medicaid patients. "The Committee will hold CMS to their pledge and make sure they follow through on the plan of action laid out today."

Ms. Thompson also told the Committee that CMS is going to assess its ability to recover money that was improperly received by the State through the excessive developmental center overpayments.

CMS's decision was a reversal of the plan they outlined to Committee staff during a June 28, 2012 briefing. At that point, CMS's plan was to allow the State to continue receiving billions in federal overpayments over the next five years through continued excessive payment rates.

At today's hearing, Ms. Thompson told the Committee that CMS will instead take immediate action.

"The payments for New York's developmental centers are excessive and unacceptable," Thompson conceded. "Once we have agreed upon a finalized payment methodology with New York, CMS will review past overpayments, and determine if there are additional funds that need to be returned to the U.S. Treasury."

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