Attorney General Letitia James is cracking down on what she says is widespread fraud in the Medicaid transportation industry.
James put New York’s entire Medicaid transportation sector on notice Wednesday after state investigators alleged that 54 transportation companies stole taxpayer dollars. State prosecutors issued cease-and-desist orders to the companies, five of which are located in New York City, ordering them to stop falsely billing the Medicaid program. Fifteen of the companies were ordered to repay stolen funds.
Dozens of taxi companies in New York bill the Medicaid program to cart patients to and from non-emergency medical appointments, but a lack of oversight has led to a flurry of false billing schemes, James said. Many of the companies knowingly submitted receipts for rides that never happened, added fake tolls to their bills to inflate reimbursements or employed unlicensed drivers that put patients in harm’s way, prosecutors alleged.
The attorney general’s warning to companies intends to curtail what she described as “a major source” of fraud within the state’s ballooning Medicaid budget.
“Stealing from Medicaid is wrong, and you will be caught,” James said in a press briefing Wednesday.
In addition to the larger industry crackdown, the attorney general announced nearly $850,000 in new settlements with four taxi companies located upstate.
The warning comes after a string of investigations into medical transportation companies within the past year. The attorney general’s office shut down an Orange County-based transit company called DYD Universe last October after its owners pleaded guilty to stealing more than $2 million from Medicaid by adding fake toll charges ranging from $15 to $50 per ride. State investigators shut down companies involved in similar schemes in Saratoga and Rensselaer counties.
Investigations against transportation companies have thus far resulted in $10 million in settlements and 11 convictions, the attorney general said.
Although the attorney general alleged rampant fraud within the Medicaid transportation sector, it’s impossible to know exactly how much health care billing fraud is tied to the industry because the state does not report it, said John Kaehny, executive director of the government watchdog group Reinvent Albany.
The federal government estimates that over 5% of Medicaid payments are improper, implying that as much as $5.4 billion of Medicaid claims in New York are inaccurate or fraudulent, Kaehny said. The state, however, may reclaim a fraction of those payments; New York recovered $73 million in improper Medicaid payments in the 2023 fiscal year, according to data from the federal Office of the Inspector General.
A spokesperson from the attorney general’s office did not answer a question from Crain’s about the total estimated value of Medicaid transportation fraud in New York.
Kaehny said that the state should invest in more investigators within the Office of the Medicaid Inspector General – positions that are partially funded by the federal government – to eliminate a larger portion of fraud and illuminate which sectors are most at risk.
It’s good that the attorney general has exposed Medicaid fraud within the transportation industry, Kaehny said. “But compared to what is the big question.”
The warning also comes as the state prepares to make more types of transportation – including non-medical rides – eligible for Medicaid reimbursement. New York has commenced a $7.5 billion pilot project, known as the 1115 waiver, that will reimburse nonprofit providers of social services such as food, housing and transportation. It’s not clear whether the companies that have been targeted by the attorney general are trying to access to waiver funds, but many of the allegations occurred before the state kicked off its demonstration program.
