On January 8, 2025, New York Attorney General Letitia James unveiled new measures aimed at curbing Medicaid fraud in the medical transportation industry. The announcement focuses on transportation companies that use fraudulent billing schemes to steal from Medicaid and exploit vulnerable patients.
The Office of the Attorney General (OAG) issued cease and desist notices to 54 transportation companies across the state, warning them of potential financial penalties and prison sentences if they continue their illegal practices, which involve overcharging Medicaid for services not rendered.
The OAG’s investigations into these companies have already secured over $10 million in recovered funds and led to 11 criminal convictions. Additionally, recent settlements with four transportation companies have resulted in over $847,000 in penalties for their fraudulent billing activities.
Medicaid reimburses authorized businesses for transporting Medicaid recipients to and from medical services. Licensed taxi companies, for example, can enroll as eligible providers, and they are assigned to transport patients to non-emergency medical appointments. These companies are required to use licensed drivers and appropriate vehicles, billing Medicaid only for the actual services provided. They are permitted to bill for a base rate, along with mileage and any applicable tolls.
However, the OAG’s Medicaid Fraud Control Unit (MFCU) has uncovered widespread abuse in the industry. Some companies have been billing for fake trips, inflating mileage and tolls, and using unlicensed drivers. In other cases, companies have exploited vulnerable Medicaid recipients, paying them kickbacks to request fraudulent transportation services. Investigators have even uncovered instances where these schemes targeted Medicaid recipients seeking substance abuse treatment.
In response, the OAG has issued cease and desist notices to the 54 companies, demanding they halt these illegal billing practices. Fifteen of the companies also face demands for repayment of fraudulently obtained funds. These notices highlight the legal violations and potential penalties, including civil and criminal charges, if the companies fail to comply.
In addition to the cease-and-desist notices, Attorney General James announced four new settlements with transportation providers for violations of Medicaid transportation rules, which will return over $847,000 to the state. These settlements include:
- A transportation provider in Erie County will repay over $373,000.
- A transportation company in Albany County will repay $350,000.
- A provider in Erie County, along with its owner, will repay more than $66,000.
- A transportation company in Saratoga County has agreed to repay $58,000.
Compliance Perspective
Issue
Nursing homes that coordinate non-emergency medical transportation for residents must take steps to ensure that transportation providers comply with Medicaid/Medicare regulations. Failure to properly vet vendors, ensure accurate billing, or monitor services provided can lead to legal and financial penalties, including exclusions from Medicaid/Medicare programs. It is essential that nursing homes have strong internal policies, training, and auditing procedures to avoid fraudulent practices and ensure that transportation services are legitimate and medically necessary.
Discussion Points
- Ensure that your facility has comprehensive policies and procedures in place to screen transportation vendors, verifying that they are not excluded from Medicaid/Medicare programs. These procedures should be regularly reviewed and updated to reflect any changes in regulations.
- Provide training for all relevant staff involved in selecting and managing transportation vendors. This training should cover how to verify that vendors are compliant with Medicaid/Medicare requirements, understand what constitutes a false claim, and recognize the importance of accurately documenting services rendered.
- Implement regular audits of transportation vendors and billing practices to ensure that services billed to Medicaid/Medicare are legitimate. Audits should confirm that transportation was actually provided, that it was medically necessary, and that the correct procedures for reimbursement were followed.
*This news alert has been prepared by Med-Net Concepts, Inc. for informational purposes only and is not intended to provide legal advice.*
