Stringer: N.Y. City Schools Let $356M in Medicaid Reimbursement Sit

New York City's Department of Education failed to recoup a cumulative $356 million in federal Medicaid dollars for eligible special education services between fiscal 2012 and 2014, said city Comptroller Scott Stringer.

That forced redirected city funds to cover the shortfall, according to an analysis Stringer released Friday.

"By way of comparison, $356 million in lost revenues is more than the entire universal pre-kindergarten budget for FY2015," Stringer said in a statement.

Compared with earlier financial plan projections, said Stringer, the current fiscal 2015 budget reflects downward Medicaid adjustments for fiscal 2015-2018 of a cumulative $310 million, for a total of $666 million in "unrealized federal dollars left on the table" over a seven-year span.

Stringer called on the department to convene a joint city, state and federal task force to explore how to maximize its return on Medicaid spending.

The city's school district is the nation's largest with more than 1.1 million students. The federal government mandates school districts to provide therapy and services to special-needs students, then reimburses if the district meets.

At a City Council hearing two years ago, DOE attributed its reimbursement difficulties to state-level regulations imposed after a 2005 federal audit revealed abnormal billing and other practices. Under a settlement with the U.S. Department of Justice in 2009, the state paid $540 million and the city $100 million.

"We are confident that our state and federal-approved corrective action plan along with additional actions the DOE has taken since last December will result in increased Medicaid revenue this fiscal year and in the future," said DOE spokeswoman Devora Kaye.

A DOE official, speaking on condition of anonymity, said the department has sought to maximize Medicaid revenue collections since it began submitting new claims eight months ago. The department was barred from submitting any new Medicaid claims from Jan. 1, 2012, until late 2013, and had to prepare and implement a corrective plan forcing a delay in submitting new claims.

"We could only submit older claims, which is why there wasn't any Medicaid revenue in 2012-13," the official said, adding that a service provided in January 2014 could be billed to Medicaid as late as January 2015, with Medicaid revenue not paid for months thereafter.

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