New York made $7.6 million in improper Medicaid payments to incarcerated people, audit reveals

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A federal audit found that New York made about $7.6 million in Medicaid managed care payments on behalf of people who were incarcerated in state prisons.

The U.S. Department of Health and Human Services Office of Inspector General uncovered the payments and revealed that the money went to 1,375 Medicaid enrollees who were incarcerated between January 2021 and December 2024.

The new report specified that the money was paid to managed care organizations, not directly to incarcerated people. The federal share was $6.1 million.

The Inspector General is recommending New York return that money to the federal government.

The audit found that New York did not always remove people from Medicaid managed care after they entered prison.

“We determined that the State agency did not always disenroll individuals from Medicaid managed care after receiving notification that an enrollee was incarcerated,” read the report.

In one example, an individual remained enrolled in managed care for 23 months while incarcerated and monthly payments were made on the person’s behalf.

Auditors said New York has systems designed to identify Medicaid recipients who entered prison, but those systems did not consistently match incarceration and Medicaid records.

The state told investigators that system limitations and overrides during the COVID-19 pandemic contributed to some of the payments.

Auditors also revealed that discrepancies in personal information, such as names and dates of birth, could prevent the state from matching records and making an incarcerated person ineligible for payments in the system. 

The Inspector General noted that its review focused on managed care payments and did not determine whether the individuals received inpatient medical treatment.

New York officials told auditors that the state’s Office of Medicaid Inspector General was reviewing the payments and would eventually recover any outstanding overpayments. 

The audit concluded that New York needed to improve its process for identifying incarcerated Medicaid recipients and halting managed care payments that should no longer continue.

The state told investigators that it planned to improve its process for cross-referencing New York Department of Corrections and Community Supervision (DOCCS) and Medicaid records.

"The State agency clarified that it would continue its systematic data-matching process to match DOCCS records with Medicaid enrollment data, but it is exploring development of an enhanced report to identify mismatches using lower-probability matching criteria and identifying individuals with minor demographic discrepancies through manual review," read the report.