NYC public schools lost out on staggering $431.6M in Medicaid payouts: audit

Big Apple public schools lost out on a staggering $431.6 million in Medicaid cash, failing to collect federal reimbursements on services for students with disabilities, according to a new audit by the city comptroller’s office.

The report spanning fiscal years 2023-25 found the city’s public schools left $273.4 million — roughly 46% of total provided services in occupational therapy, physical therapy and speech therapy for students — on the table.

An additional $132.7 million in mandated services for disabled students was never properly documented, the comptroller’s office found.

“Failing to collect Medicaid reimbursements the city is entitled to is more than a fiscal problem — it raises serious questions about whether the government is operating as effectively as New Yorkers need it to,” City Comptroller Mark Levine said in a statement.

The investigation was a follow-up to a 2021 audit, which found that public schools weren’t seeking Medicaid reimbursement for the services they provided to disabled students, despite being eligible to get paid back by the feds.

But the new audit found the school system deliberately chose not to seek repayment in a slew of instances — including for 10 federally-covered services, like psychological counseling for certain students — losing at least an additional $25.4 million in the three-year period.

“NYCPS (New York City Public Schools) continues not to seek reimbursement for a significant percentage of encounters that are legally reimbursable,” the report said. “In some cases, it chooses not to; in others, processes for collecting documentation needed to seek reimbursement from Medicaid are ineffective.”

City public schools are required to provide eligible students with various rehabilitation programs, but the audit also found no record of nearly 20% of all services they were mandated to provide. 

The Department of Education had adopted only three of the 30 recommendations given in 2021, and eight that were partially implemented included – with a total of 19 actionable steps left completely unaddressed. 

The DOE has a whopping near $45 billion budget, the most of any city agency.

A spokesperson for the DOE argued the comptroller’s report contained “assumptions and misconceptions,” and overstated what the agency can be reimbursed for in the current structure.

“Our priority is to provide high-quality services to every student who needs them while maximizing available funding to strengthen those services,” the spokesperson said in a statement.

“We will continue pursuing every operationally feasible reimbursement opportunity to maximize available resources and ensure every student receives the resources they deserve.”