'A drop in the bucket': Experts weigh in on N.Y. comptroller's Medicaid overspending reports

Some experts say the state comptroller was right to probe the Medicaid program, seen as bloated, in a recent series of audits analyzing overspending. But others say there are even bigger examples of overspending than what the audits uncovered.

"They seem to be identifying legitimate issues, but those issues are a drop in the bucket," said Bill Hammond, director of health policy for the Empire Center, a conservative think tank.

The biggest example of overspending found in the audits, issued Sept. 17 by Comptroller Thomas DiNapoli, was $605 million on overly expensive drugs from 2016 to 2019. An additional $29 million was spent on drugs removed from the market, and there were $47.8 million in double payments on behalf of Medicaid policyholders with multiple ID numbers.

But the state's entire Medicaid budget is $80.5 billion, Hammond said, making these examples of overspending a tiny fraction of the behemoth program.

"There are signs of much larger waste problems that go way beyond what these audits identify," he said, pointing out that New York spends more Medicaid dollars per capita than any other state in the country.

Meanwhile, a group seeking to regulate pharmacy benefit managers, or PBMs, which were implicated in the audits as a party responsible for overspending, applauded DiNapoli's analysis.

"This report is further evidence of a prescription drug distribution system so broken that middlemen known as PBMs have ballooned into Fortune 25 companies," said Tom D'Angelo, president of the Pharmacists Society of the State of New York. "This system has made it nearly impossible to implement any changes that protect the vulnerable from the powerful."

Still, the role pharmacy benefit managers play in overspending could be rendered moot as soon as April 1, because the state decided to move back to a fee-for-service program in its most recent budget.

The state slammed DiNapoli's report for not taking those changes to the program into account. "These audits contain a mix of misinformation about Medicaid, suggest potential savings based on past purchases already addressed and recommend that we implement corrective actions that are already underway," said Jonah Bruno, a spokesman for the Health Department.

A spokeswoman for the New York Health Plan Association, which represents providers, seconded those complaints. "Much of the data that makes up the basis of the comptroller's report is old—going back to January 2016—and now outdated," said Leslie Moran, senior vice president at the New York Health Plan Association, adding that to the extent overspending persists, it is a function of Medicaid, not provider, inefficiencies.

But Hammond insisted the overspending, even if relatively small, was worth pointing out. "You could hire a lot of teachers with that," he said. "It's worth doing these audits even if they're finding relatively small issues, because even small issues can add up to a lot of money with a program this big."