The state paid $14.5 billion for Medicaid home care services in the last two years that the state Health Department failed to verify took place, according to a recent state comptroller audit, showing the state must take more responsibility to restrain inflated Medicaid spending in the next budget.

This comes as state leaders look to rein in Medicaid spending, or one of the largest parts of the state's $237 billion budget.

"You have to improve the controls over the program so that you decrease fraud, waste and abuse and improve the quality of services going forward," Tina Kim, deputy comptroller for state accountability with state Comptroller Tom DiNapoli's office, told Spectrum News 1.

Medicaid home care services allow disabled and aging New Yorkers to remain in their homes. Those expenses have skyrocketed billions of dollars in recent years, including increased rates of fraud. Gov. Kathy Hochul has blamed dishonest service providers for that, but the audit shows insufficient Health Department oversight is also largely to blame.

Home care workers across the state have had to electronically submit data to the state using a special verification system since 2021, including when and where they provide services. Congress passed the 21st Century Cures Act to mandate all states implement the Electronic Visit Verification system to manage Medicaid programs in 2016.

Kim, who led the audit, said the state Health Department's lack of oversight left 44% of claims unverified. The state paid millions it shouldn't have for care that was under eight minutes, or occurred while recipients were in the hospital, according to the audit.

“The state Department of Health is working closely with the Office of the Medicaid Inspector General to further evaluate and update the Electronic Visit Verification requirements, as appropriate, to improve service delivery, oversight of Medicaid payments and, importantly, the implementation of these requirements by the provider community," according to a statement from the department. "It’s also important to note that the absence of Electronic Visit Verification as outlined in the Office of the State Comptroller report does not necessarily indicate that the corresponding claim was inappropriate and that a recovery should be made.”

Leaving claims unverified increases the risk of fraud, but does not mean money was spent inappropriately. The comptroller's office cannot distinguish how much of the unverified funds should not have been paid.

"This is a requirement," Kim said. "I think people want the accountability that their payments are actually being made for the services that they're paying for, and without verification, it's difficult to do that."

The department agreed to improve oversight and training to better identify and fix program waste, Kim added. The comptroller's office will check on the department's progress in one year.

The audit will guide state budget decisions next session as leaders look to reduce Medicaid spending ahead of ballooning future budget gaps. The budget is expected to include additional details of the state's timeline to consolidate the $9 billion Medicaid program, which more than 250,000 New Yorkers rely on for home care, to one company.

About 43% of the unverified claims in the latest audit fall under the Consumer Directed Personal Assistance Program — a program Hochul has targeted for reports of fraud.

Advocates with the Alliance to Protect Homecare rallied against the changes in Albany last week, and say they won't back down. The group, led by home care providers to be impacted by the change, has pushed back on the governor's insistence to remove 600 fiscal intermediaries that handle the program's payroll to cut back on program waste after CDPAP grew over 1,200% over the last eight years.

"This isn't a failure of FIs, this is a failure of the Department of Health to do their own internal compliance," Alliance to Protect Homecare Executive Director Bryan O'Malley said.

A spokesperson with Gov. Hochul's office said the department's issue complying with the electronic visit verification system is exactly why the state is improving oversight of CDPAP. The state Health Department continues to finalize a five-year contract with Public Partnerships LLC to oversee the program starting April 1.

“In the past it was virtually impossible for the state to effectively enforce Electronic Visit Verification (EVV) to confirm that services were delivered and reduce improper charges," the governor's spokesperson said in a statement. "Now, our statewide CDPAP partnership will have EVV directly integrated into its operations and billing system. By working with a statewide fiscal intermediary alongside dozens of community-based partners, the state can now use its contractual oversight to ensure CDPAP operates in compliance with EVV. That means better oversight of Medicaid spending without harming services or eligibility for the consumers who rely on CDPAP for home care.”

The state comptroller's office has identified $12 billion of issues related to the state's Medicaid spending over the last five years. 

Bill Hammond, the senior fellow for health policy at the Empire Center for Public Policy, pointed to last month's state's budget update, which shows Medicaid spending is expected to increase 5% — or more than double the estimated 2.5%.

"Already, there's signs that some of the steps [Hochul] took to rein in Medicaid spending are not working the way she wanted through the first six months of the year," Hammond said.

New York faces uncertain support from Washington under President-elect Donald Trump's next administration, but legislative leaders remain at odds about how to get Medicaid spending under control.

"There's all kinds of reasons for concern," Hammond said. "It will be tough given her own track record of allowing spending to increase so rapidly and also given the general attitude of the Legislature ... It's going to be a hard sell for her to enforce fiscal discipline on this program."