Albany Oncologists To Repay Medicaid $1.2 Million

Attorney General Spitzer today announced that a group of upstate physicians and their management company have paid the State of New York more than $1.2 million to settle a lawsuit that the group improperly billed Medicaid for physician-administered drugs.

According to the lawsuit, New York Oncology Hematology, Inc., an Albany-based physician group practice, and its managing agent, now known as AOR Management Company of Pennsylvania, improperly billed Medicaid for physician-administered drugs in amounts in excess of the drugs’ actual cost, in violation of state law.

Under New York law, to ensure that medical judgment is not affected by inappropriate financial influences, doctors are not permitted to make a profit on the drugs they dispense. In the settlement announced today, New York Oncology and AOR Management reimbursed the state for the amounts they improperly billed New York between January 1995 to mid-September 2002. They also agreed to pay the Medicaid program interest (at a rate of 9%) and $7,500 in investigative costs and to dismiss a related lawsuit against the State regarding the Medicaid drug payment regulations.

The lawsuit arose in connection with a project undertaken by the Attorney General’s Medicaid Fraud Control Unit ("MFCU") to review physician drug billings, commonly known as J code claims, for compliance with the state pricing standard and other matters. Since 2002, this review has resulted in the recovery of more than $7.5 million from 36 providers, including hospitals, physician group practices and individual physicians throughout New York State. In addition, as a result of this project, annual J code billings to New York’s Medicaid program have dropped by more than 30%, resulting in annual savings to the Medicaid program of approximately $7 million annually.

"This project is another of our self-generated actions to police the Medicaid Program and ensure compliance with its rules," Spitzer said. "Our ongoing enforcement effort in this case resulted in a financial recovery and future savings to the program, and ensures that when vulnerable and critically ill citizens New Yorkers seek treatment, they can rest assured that their well being and not a profit motive will affect their practitioner’s judgment."
The Medicaid recovery in this case is part of Attorney General Spitzer’s continuing efforts to recover Medicaid overpayments lost to provider fraud and abuse. During federal fiscal years 1999 to 2004, Spitzer’s MFCU led the nation in reported recoveries. MFCU’s recoveries in ffy 2004 of $79.4 million set a national record and its recoveries in ffy 2005 (which ended on September 30, 2005) exceeded $218 million.

The J Code Project is being conducted by MFCU’s Special Projects Unit and the lawsuit against New York Oncology Hematology and AOR Management was brought by MFCU’s Civil Enforcement Unit. The Litigation Bureau of the Attorney General’s Office represented the New York State Department of Health in the related litigation.