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News Release    

October 17, 2005      

For Further Information Contact:
William R. Steinhaus, County Executive
(845) 486-2000

Steinhaus Announces Effort to Fight Medicaid Fraud
Dutchess County Hires IBM to Help Fight Fraud

Poughkeepsie… County Executive William R. Steinhaus announces Dutchess County has joined the New York State Association of Counties’ (NYSAC) VerifyNY Medicaid fraud and abuse detection project.  NYSAC, in cooperation with IBM, is offering this opportunity to a limited number of counties as a pilot demonstration project.

County Executive Steinhaus said, “Dutchess County has long investigated fraud by those individuals who receive Medicaid benefits, targeting those who hid income and other information, through a program I initiated in the Department of Social Services in 1993.  As a direct result of these efforts, we have successfully saved or avoided the expenditure of millions of taxpayer dollars.” 

“Now from today’s initiative, we’ll be able to take these efforts to a whole new level, allowing the county to recapture monies that have been incorrectly or fraudulently billed by providers. It will also give us an opportunity to work better with our Medicaid recipients to change and improve how they get medical care,” said Steinhaus.

In the past, state laws would not allow counties to look at whether medical or health care providers were cheating or abusing the system.  Under this new demonstration project, the state will now allow counties to “data mine” a huge database of Medicaid spending and look at who’s getting paid all the Medicaid millions. IBM developed the VerifyNY software, which analyzes who gets paid Medicaid money and identifies irregularities that have the potential of provider fraud and/or abuse.  IBM then provides the analysis to the county to investigate specific claims and/or providers. 

New York counties bear the largest local government expense burden for Medicaid in the United States.  Blatant abuses amounting to millions of dollars were uncovered in a recent investigative story in The New York Times

The Executive said, “It’s bad enough New York State provides the richest Rolls Royce Medicaid program of any state in the nation, but when we are told billions of dollars are wasted on fraud and abuse, then that’s even more painful for taxpayers to hear. That is why we will take an unprecedented step in Dutchess County to use IBM’s expertise to help identify this abuse and fraud and start to squeeze that money out of the bloated state Medicaid system.”

The statewide Medicaid program exceeds $45 billion dollars and estimates made in The New York Times expose suggest 10 – 20% of that is waste, abuse or fraud.  Even conservative estimates suggest $4 billion could be saved statewide.

In Dutchess County, approximately $275 million is spent annually through providers and health organizations – funded through a combination of federal, state, and county tax dollars.  In a typical month there is a Medicaid caseload of more than 14,000 recipients in Dutchess County.  

Over recent years, counties and county officials focused their attention on public education of the Medicaid mandate and its impact on taxpayer supported county budgets in New York.  These efforts successfully placed pressure on Albany, which resulted in adoption of a new Medicaid funding method that slows the growth of Medicaid costs to the county government budgets. 

The growth will be limited to an annual escalator percentage over a county’s 2005 base year Medicaid costs.   So while a step in the right direction, this new Medicaid funding method will still cost Dutchess County taxpayers more in 2006 than in 2005. 

“This aggressive step I have authorized today through the VerifyNY – IBM partnership is essential to look across the entire Medicaid system of users and providers, as well as by the specific medical services delivered,” said Steinhaus.  “Counties finally will have an ability to make sure certain Medicaid expenditures were necessary and cost-effective. We are encouraged about the possibilities and we are looking forward to working with NYSAC and IBM to put an end to costly abuse and fraud in the Medicaid system.” 

The cost to Dutchess County for an analysis of six high cost areas of medical care through the VerifyNY project will be approximately $22,250.


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Last Updated: 10/18/2005