OMIG’s Powers To Be Limited By Pending New York Law

A bill introduced in the New York Senate on February 10, 2011, and which passed both of the New York’s State legislative houses in June (A.5686-A Gottfried and S.2184-A Little), is awaiting Gov. Cuomo’s approval. The bill will impact the power of the Office of the Medicaid Inspector General (OMIG) and will address some of the practices viewed as unjust by the provider community. Many providers believe that OMIG’s aggressive auditing approach has been unfair and see the office as having “strayed far from the goal of rooting out fraud and encouraging appropriate accountability.”

The Committee of Methadone Program Administrators of New York State Inc.’s memorandum in support of the bill, for example, captures the sentiment of the provider community with the following:

The current auditing practices used by the OMIG often focus on human error rather than intent to defraud. When error is discovered in a small audit sample, it is then magnified by the projection technique used by the OMIG. The result is often crippling disallowances. These disallowances can and do imperil the survival of good and valuable services to some of our most needy citizens. When such disallowances are presented to the service provider the OMIG usually encourages the provider settle quickly and pay a “low-point” settlement number. If the treatment provider decides to exercise their full legal rights of appeal rather than accept the “low-point” offer they risk a potentially much higher disallowance at the end of the process. This approach has the feel of a kind of legal extortion where the ultimate loser may be the substance abuser in need of treatment services.

The bill recognizes that OMIG’s practices have become disbalanced and is aimed at redressing them:

The legislature recognizes the need to balance the ability of the state to ensure the integrity of the medical assistance program with the need to afford due process to providers and recipients who are investigated, audited or subject to other actions, in order to ensure that such actions are conducted in a fair and consistent matter. The legislature also recognizes the need for established statutory standard regarding the conduct of investigations, audits and recovery of payments and other actions.

The bill that is before Gov. Cuomo aims to reign in OMIG’s power with the following amendments to the Public Health Law and Social Services Law:

  • limits OMIG’s “look-back” power to 3 years, instead of the current 6 year period
  • in conducting audits, only the the laws, regulations and policies that were in place at the time of the claim arose or conduct took place are to be used by OMIG
  • any new interpretation or changes to laws, regulations and policies must only be applied prospectively
  • the inspector is prohibited from seeking recovery from a provider based on administrative or technical defect in procedure or documentation when such errors were made without the intent to falsify or defraud
  • furthermore, in instances where the basis for recovery is administrative or technical defect in procedure or documentation and absent an intent to falsify or defraud, providers will be allowed to correct the defect and resubmit claims
  • the bill obligates the inspector to give a provider a detailed written explanation of the extrapolation method that OMIG uses and which shall include the following explanation: size of the sample, sampling methodology, the defined universe of claims, the specific claims included in the sample, the results of the sample, the assumptions made about the accuracy and reliability of the sample and the level of confidence in the sample results, and the steps taken and statistics utilized to calculated the alleged over payment as well as any applicable offset based on the sample results.

If signed by Gov. Cuomo, the bill will become effective on October 1, 2011 and will apply to matters commenced or pending on or after that date.