City public schools lost $356 million during the past three years in federal Medicaid payments for special education services because city and state officials failed to properly apply for reimbursement, the Daily News has learned.
“Red tape and bureaucracy should not stand in the way of (the city) being reimbursed for the vast array of services provided,” city Controller Scott Stringer said in a report obtained by The News.
As a result, between 2012 and this year, the city Department of Education kept shifting funds originally slated for books, supplies and other general costs to pay for those special education services, Stringer said.
And unless officials reform their practices quickly, the school system will miss out on another $310 million from Medicaid over the next four years — for an astonishing total loss of $666 million.
“That’s just unacceptable,” Stringer said. “There’s no excuse for leaving so much money on the table.”
Under federal law, Medicaid provides 100% reimbursement to state and local school districts for special education services such as speech, occupational and physical therapy, counseling, evaluations of students, and pupil transportation.
Each school district, however, must first pay for the service, then provide extensive documentation to its state education department, which in turn applies to Medicaid for reimbursement. After Washington approves the money, the states and local districts get to split the payments between them.
But over the past few years, United Federation of Teachers President Mike Mulgrew and other school system labor leaders have warned that New York City, unlike other school districts in the state, keeps botching its documentation of special education expenditures.
Stringer’s report appears to back that up. He found the city has collected only a tiny fraction of the Medicaid money it should have.
In the fiscal year that ended June 30, for example, the Department of Education initially expected to receive $117 million from Medicaid for services to 170,000 special education pupils. Instead, it has received just $2.2 million, and billed for only another $180,000.
Department of Education officials say they’ve been working hard to improve the Medicaid billing system they inherited from the Bloomberg years.
“We are confident that our . . . corrective action plan, along with additional actions the DOE has taken since last December, will result in increased Medicaid revenue this fiscal year and in the future,” department spokeswoman Devora Kaye said.
