Gov. Kathy Hochul is standing by a contractor — tied to more than $100,000 in donations to her campaign — that federal probers say botched the Medicaid transportation program in New York City, potentially costing taxpayers as much as $195 million in paybacks to the US government.
The recent US Department of Health and Human Services inspector general report ordered the state to reimburse the federal government for at least $84.3 million in state Medicaid payments because of a lack of record keeping to justify billing for transport services for Medicaid patients during the calendar years 2018 and 2019.
Medical Answering Services was the chief contractor that served as the state Health Department’s “transportation manager” to supervise and arrange transportation services with providers — such as taxi rides and ambulette services — during the period and its contract with the state for the Big Apple region was extended through November 2023.
As The Post previously reported, the firm’s owner, Russ Maxwell and his spouse, Morgan McDole, have dropped more than $300,000 combined into the campaign coffers of Hochul, of former Gov. Andrew Cuomo and the Hochul-controlled state Democratic Party.
The couple has also dumped more than $100,000 combined into the campaign coffers of Hochul, as governor and before that lieutenant governor under Cuomo — and the Hochul-controlled state Democratic Committee. They have dropped another $236,000 into Cuomo’s coffers over the years.
The firm has been awarded more than $400 million in state contracts since 2011.
The HHS IG also estimated that New York claimed an additional $112,028,279 in federal Medicaid reimbursement from providers managed by Medical Answering Services “that may not have complied with certain Federal and State requirements” — and said state officials should work with Medical Answering Services to “refund to the federal government any unallowable amounts.”
Asked if they would stop doing business with Medical Answering Services, Hochul spokesman Avi Small said, “The Executive Chamber has no involvement in the agency RFP process and did not direct, suggest or imply to the Department of Health that they should select a particular vendor for this contract.”
The Hochul rep also noted the contract was initially awarded during a period when Cuomo was governor, and she was lieutenant governor.
A state Health spokesman said Wednesday that “while the Department disagrees with many of their findings” it “will work with HHS to address all concerns as clearly stated in our response.”
“We are committed to ensuring that Medicaid members can access efficient transportation to necessary medical services and that transportation providers appropriately document their services,” said spokesperson Cort Ruddy.
And in a June 8 response to the audit, Kristin Proud, the health department’s acting executive director, defended the Hochul-tied company, saying: “The new [transportation manager of Medical Answering Services] had established a record of providing high quality, cost-efficient service in 55 of New York State’s 62 counties,” and outbid its competitors for the services provided. She insisted that Medical Answering Services saved the Medicaid Program “almost $19 million per year.”
Medical Answering Services declined to comment for this article.
Hochul’s Republican opponent in the race for governor, Long Island Rep. Lee Zeldin, said the brutal federal audit involving a Hochul-connected contractor is more reason voters should choose him to run the statehouse.
“Pay-to-play corruption is Kathy Hochul and Albany’s favorite pastime. Kathy Hochul enthusiastically trades access and hard earned tax dollars for campaign donations,” Zeldin charged.
“The state needs to immediately cancel contracts with this company and Kathy Hochul must immediately return the massive amount of campaign cash she received from this government vendor.”
Michael Henry, the GOP candidate for attorney general in the Nov. 8 election, said “this dirty deal should be stopped” and questioned the interactions of Hochul’s office with the firm’s lobbyists during the contract bidding, saying the matter “must be thoroughly investigated.”
The pay to play allegations are just the latest to be leveled at Hochul, who is facing calls for a probe over $637 million in no-bid state contracts. to political donor Charlie Tebele’s Digital gadgets firm. Tebele hosted a campaign fundraiser for Hochul last November — just four days before she declared a state of emergency that paved the way for his company to receive the contracts. And he and his family members have funneled $300,000 to Hochul’s campaign.
Medicaid is the federal public health insurance for the needy whose distribution is overseen by states. Federal rules require that states provide necessary transportation for Medicaid beneficiaries to get to and from medical appointments under the Non Emergency Medical Transportation Program [NEMT].
The federal government reimburses the state for much of the costs but “providers of services must maintain records necessary” to justify the costs for the services.
The audit covered 4,768,858 payments totaling $445 million, with $269.6 million billed to the federal government for which the state claimed reimbursement.
The audit sampled 100 payments and found only 17 complied with both federal and state billing requirements, 41 did not comply and 42 others were questionable.
The audit found 22 examples of providing “no valid medical practitioner’s order for transportation services,” 13 examples of transportation services that were not adequately documented, seven examples failing to provide proof of driver qualification requirements, and other snafus.
“The payments for unallowable and potentially unallowable services occurred because the State agency’s monitoring of its NEMT program and transportation manager was not adequate to ensure compliance with requirements for authorizing, documenting and billing NEMT services,” the audit said.
“On the basis of our sample results, we estimated that the state agency claimed at least
$84,329,893 in federal Medicaid reimbursement for payments to NEMT providers that did not comply with federal and state requirements. ‘
“In addition,” the audit said, “we estimated that the state agency claimed $112,028,279 in federal Medicaid reimbursement for payments to NEMT providers that may not have complied with Federal and State requirements.”
The audit also said the transportation providers “did not provide any or did not provide sufficient documentation” to determine compliance with driver and vehicle requirements.
The audit said the transportation manager — in this case Medical Answering Services — is “responsible” to give “prior authorization” to transportation providers to pick up patients and for “maintaining documentation of the authorization.”