Feds Accuse NYC of Coding Medicaid Fraud

MANHATTAN (CN) - The United States joined a whistle-blower suit alleging that New York City and a contractor submitted tens of thousands of false Medicaid claims to reap of millions through three separate schemes.

Whistle-blower Vincent Forcier filed the suit under seal more than two years ago against the Falls Church, Va.-based Computer Sciences Corp. and New York City.

Manhattan U.S. Attorney Preet Bharara joined the case on Monday.

"As alleged, CSC and the city created computer programs that systematically, and fraudulently, altered billing data in order to get paid by Medicaid as quickly as possible and as much as possible," Bharara said in a statement. "Billing frauds like those alleged undermine the integrity of public healthcare programs like Medicaid. All public healthcare program participants, whether they are healthcare providers, localities like the city, or contractors like CSC, should understand that they must comply with the applicable billing rules."

In separate statements, spokesmen from the New York City Law Department and CSC vigorously denied the allegations and emphasized their cooperation with the federal investigation.

The allegations center on New York state's early intervention program (EIP), a program for infants and toddlers with development disabilities.

Under the more-than-20-year-old program, the city foots the bill for service providers' claims. The state then reimburses the city its 49 percent share of costs that are not covered by private insurance or Medicaid.

Forcier says two of the three schemes involve computer programs that the city and the firm created to sidestep a private-insurance exhaustion requirement before turning to Medicaid.

To ensure private-coverage denials, one program automatically applied a default policy number "999-999-999" for children with missing or incomplete policy IDs, according to the 43-page complaint.

Another defaulted a field of private claims pending adjudication with the code "0Fill," signifying that the insurers did not cover or pay for the services, the complaint states.

The final program replaced diagnoses known to be rejected by Medicaid with "315.9," a "generic diagnosis" that would be accepted, prosecutors say.

A spokesman for the city law department chalked up the alleged discrepancies to "technical billing issues, not fraud."

"The Health Department acted appropriately and all services billed were authorized and provided," the spokesman said.

CSC spokesman Richard Adamonis meanwhile said in a statement that the company would "vigorously defend itself."

Insisting that Medicaid would have paid the same amounts "irrespective of any claims processing issues, Adamonis said there is "no factual or legal basis to support virtually all the allegations of which we have been made aware during the course of the inquiry."

The United States alleges three violations of the False Claims Act, a count of unjust enrichment and a fifth claim for payment by mistake of fact. It seeks unspecified triple damages plus a $11,000 penalty for each false claim submitted.

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