New York City Public Schools (NYCPS) failed to collect up to $431.6 million in Medicaid reimbursements

[Ralph Yozzo]

An audit released by NYC Comptroller Mark Levine revealed that New York City Public Schools (NYCPS) failed to collect up to $431.6 million in Medicaid reimbursements for special education services over three fiscal years (FY 2023–2025).

Key Audit Findings

• $273.4 Million Unclaimed: Delivered Occupational Therapy (OT), Physical Therapy (PT), and Speech Therapy (ST) services to Pre-K through 12th-grade students were never claimed.
• $132.8 Million Lost to Poor Documentation: Services that may have been provided could not be reimbursed because required medical documentation or tracking records were missing. Under Medicaid rules, failing a single documentation requirement invalidates the claim.
• $25.4 Million Unclaimed Evaluations & Counseling: Additional eligible costs for evaluations, reevaluations, and psychological counseling went unbilled.
• Missing Services or Records: NYCPS lacked any record of providing 16.2% of the OT, PT, or ST services mandated in students' Individualized Education Programs (IEPs)—indicating either the services weren't delivered or tracking failed.
• Unclaimed Service Categories: Out of 10 Medicaid-eligible service types provided to students, NYCPS only sought reimbursement for three (OT, PT, and ST), completely failing to claim for the remaining seven categories.
• Unresolved Past Audits: NYCPS fully implemented only 3 of 25 corrective recommendations agreed upon after a similar 2021 audit.

Comptroller Recommendations

1. Establish Interim Action Plans & Controls: Set clear milestones to validate claims, collect parental consents, and ensure written physician orders/referrals are present prior to billing.
2. Audit Mandatory Session Tracking: Consistently record all therapy sessions in tracking databases and investigate instances where required services were missed or undocumented.
3. Expand Medicaid Claiming: Conduct a cost-benefit analysis to expand claims processing to the remaining seven Medicaid-eligible service categories.
4. Reassess 2021 Recommendations: Fully implement previous recommendations once staffing levels stabilize and new special education software is deployed.

See https://comptroller.nyc.gov/newsroom/press-releases/comptroller-audit-finds-nyc-schools-failed-to-collect-up-to-431m-in-medicaid-reimbursements-for-special-education-services/