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NEW YORK REQUIRING STATE AUTHORIZATION FOR MEDICAL SUPPLIES REIMBURSEMENT

Executive Summary

NEW YORK REQUIRING STATE AUTHORIZATION FOR MEDICAL SUPPLIES REIMBURSEMENT prior to sale, under a proposed state Medicaid regulation designed to eliminate reimbursement for fraudulent sales. According to the state's summary of the proposal, "certain medical supplies" will require authorization by the state Social Services Department before they are dispensed to Medicaid recipients. The state noted that "the current list of 23 items," which are "commonly overprescribed by physicians," includes "specialized heating pads, corsets, elastic stockings, shower heads, and vaporizers." The reg would require MDs "to submit requests to the [Social Services Dept.], describing the necessity for ordering any of these items," the summary notes; "pharmacies or medical equipment suppliers cannot receive payment from Medicaid unless a prior authorization has been issued." The department "will extend the prior authorization requirement to additional medical and orthopedic equipment items and will establish strict limits on the number of times a person can receive certain items," the state added. The prior authorization requirement is one of two state proposals designed to tighten enforcement of Medicaid laws. The state announced the two plans on Aug. 29, when it also announced that the department is taking action to disqualify from the Medicaid program 46 pharmacies and eight physicians, which are located in New York City and had annual Medicaid billings totaling nearly $44 mil. The second proposal would require all providers to apply for re-enrollment in Medicaid on a periodic basis. The department will conduct investigations of new applicants or re-enrollments to verify application information and to review the background of applicants. In announcing the proposed regs and the disqualification actions, State Social Services Commissioner Cesar Perales explained that the department had disqualified, suspended or assessed other penalties to more than 230 Medicaid providers so far this year, but that penalized pharmacies and corporate providers have previously been able to reenter the Medicaid program by selling or reorganizing a business under a different name. "Under the new Medicaid enrollment reg, due to become effective in October, the department may deny a new application or re-enrollment for good cause, including previous convictions, misrepresentation or omission of fact, failure to make restitution for overpayment, or a prior finding that the applicant has engaged in an unacceptable practice in the Medicaid program." Initiation of the disqualification proceedings against the New York City pharmacies and doctors was announced in a Social Services Dept. press release. The 46 pharmacies have been notified of the social services department's "intent to disqualify" them from the Medicaid program, and they have 10 days to appeal the notification. Disqualification can take place anytime after that. Charges leading to the move for disqualification include issuing improper drug prescriptions and improper substitution of prescription drugs and criminal charges. The release describes a typical scenario: "A doctor would write a prescription for drugs or medical supplies for a Medicaid recipient, and then refer the patient to a nearby pharmacy or medical equipment dealer -- sometimes located next door -- to fill prescriptions. The drug store literally would fill shopping bags with prescription drugs, such as Valium, and other medical supplies, including seat canes, shower heads, heating pads and support stockings. Medicaid would be billed for all materials." The commissioner said the actions taken are the result of "extensive investigations by undercover agents of the Department of Social Services and the Deputy Attorney General for Medicaid Fraud Control." He added that the department will send names of sanctioned pharmacists and drug stores to the State Education Department, which licenses both.

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