Mayor Michael R. Bloomberg Governor George E. Pataki today announced that New York City is now an active partner with the State of New York in the state's pilot Medicaid Fraud, Waste and Abuse Demonstration Project, designed to empower localities, primarily counties, to join with the State to increase vigilance over the Medicaid program.

"Medicaid is projected to cost the City nearly $5 billion in 2007, and this innovative program allows us to play a key role in rooting out fraud and waste committed by certain unscrupulous Medicaid providers," Mayor Bloomberg said.  "We expect that the City's efforts could eventually generate millions of dollars in fraud recoveries and will contribute to restoring the integrity of the Medicaid program.  I would like to thank Deputy Mayors Edward Skyler and Linda Gibbs for working with the state to secure the City's participation in this Demonstration Project."

"We welcome and applaud New York City's participation in this ground-breaking fraud-fighting program," Governor Pataki said. "The Demonstration Project will help protect the vital interests of taxpayers and Medicaid patients alike. There is simply no room in the Medicaid program for fraud, waste, and abuse. That is why we have established the Demonstration Project and the nation's most comprehensive anti-Medicaid fraud, waste, and abuse entity, New York State's Office of the Medicaid Inspector General."

The City's Human Resources Administration (HRA ) already has extensive experience detecting client-related Medicaid fraud and has combined annual recoveries and cost avoidance attributable to investigations of prescription drug fraud of approximately $2.5 to $3 million.  HRA will move quickly to establish an office of Medicaid Provider Fraud Investigation that will work with New York State Office of the Medicaid Inspector General (OMIG) to review and audit New York City Medicaid providers suspected of fraud, waste and abuse.  The City is eligible to receive up to 25% of any recoveries made as a result of the audits it conducts and at a minimum, will be reimbursed for the costs of running this new program.

"The Demonstration Project allows New York State to synchronize efforts with participating counties to chart a new course to combat Medicaid fraud, waste and abuse," Acting Medicaid Inspector General David R. Ross said. "Local governments such as New York City have much to add to our collective efforts throughout the State. New York City's participation in the Demonstration Project significantly alters and augments the scope of the project and promises to return significant taxpayer savings and efficiencies."

The County Fraud and Abuse Demonstration Project was enabled through Chapter 58 of the Laws of 2005. In the same legislation, the financial contribution of counties to the Medicaid program was capped to a set yearly increase. The Demonstration Project creates a structural incentive for counties to continue to contribute to the efficiencies of the program. As the agent of the OMIG, participating counties are able to pursue provider fraud, waste and abuse via audits and/or investigations.

Prior to New York City's participation, twelve local districts (out of fifty-eight) participated in the demonstration project. These counties are now empowered to investigate and audit providers under the OMIG's supervision.  In addition to New York City, participating counties include: Albany, Broome, Chautauqua, Dutchess, Monroe, Erie, Nassau, Orange, Rensselaer, Rockland, Suffolk, and Westchester.

Savings resulting from the Demonstration Project will help enable New York State to meet the goals established by the October 2006 agreement with the federal Health and Human Services Administration, the Federal State Health Reform Partnership (F-SHRP), which provided New York with up to $300 million annually to invest in rightsizing and restructuring reforms. Failure to meet the fraud and abuse recovery targets will result in penalties for the State and failure to reach other milestones will result in termination of the waiver.

Suspicions of possible Medicaid fraud, waste, and abuse can be reported online at www.omig.state.ny.us or to the New York State OMIG Fraud Hotline 1-877-87FRAUD.