Get To Know New Jersey Medicaid Auditors

The New Jersey Medicaid and New Jersey FamilyCare programs insures more than one million New Jersey residents. To verify that the state’s Medicaid dollars are spent effectively, and to comply with federal law that requires that state Medicaid programs investigate fraud, waste and abuse, the New Jersey legislature passed the Medicaid Program Integrity and Protection Act (N.J.S.A. 30:4D-53 et al), which established the office of the Medicaid Inspector General (OMIG), now the Medicaid Fraud Division (MFD or Division) within the office of the State Comptroller.

Medicaid Fraud Division

The MFD functions as a “watchdog” over the State’s Medicaid programs and to that end it: (1) audits and investigates program participants and coordinates oversight efforts among all state agencies that administer Medicaid programs; (2) recovers improperly paid Medicaid funds; (3) analyzes the quality of care  provided to Medicaid recipients; (4) pursues civil and administrative enforcement actions against those who engage in fraud, waste or abuse within the Medicaid program; (5) excludes or terminates providers from the Medicaid program; and (6) provides educational programs for Medicaid providers and contractors.

In 2011, the MFD recovered $116,330,341 in improperly paid Medicaid funds, which represents, according to the State Comptroller, a 31% increase from 2010. The Division is also credited with saving $210 million through its anti-fraud efforts.

The MFD consists of three units which work together with other state agencies to protect the integrity of the state Medicaid program.

Fiscal Integrity Unit

The Fiscal Integrity Unit focuses on overpayment recoveries identified by other MFD units, auditing provider claims, analyzing claims data for outliers and fraudulent patterns, and overseeing all third party liablitiy recoveries. This unit also performs durable medical equipment and pharmacy audits.

Providers are reminded to maintain adequate contemporaneous records to support their claims. This includes, among other things, demonstrating the medical necessity for services performed, equipment ordered or prescriptions written. These records must be kept for a period of five years from the date of care, service or supplies were furnished or billed, whichever is later.

Furthermore, the Division “strongly encourages providers whose payments from the Medicaid program exceed $100,000 per year to implement a compliance program.”

The Fiscal Integrity Unit is also responsible for excluding providers from the Medicaid program. In 2011 the Unit excluded 44 providers from the program.

According to the MFD’s FY2011 Work Plan, “[b]eing a Medicaid provider is a privilege not a right; therefore, where circumstances warrant it, providers are excluded from the Medicaid program.” Those circumstances include, among others: 1) being excluded by the federal government from participating in the Medicaid program; 2) the applicable licensing board has taken action against the provider’s license; or 3) the provider has been arrested, indicted, and/or convicted of a criminal act, especially health care fraud. The exclusion period may last between three to eight years, depending on provider conduct.

Investigation Unit

The Investigation Unit investigates providers and recipients to determine whether they have committed fraud, waste or abuse in the Medicaid, FamilyCare, and Charity Care programs. The unit also coordinates with the U.S. Attorney’s office and the state Division of Criminal Justice on Medicaid-related whistleblower cases filed under the federal and New Jersey False Claims Acts.

According to the State Comptroller’s annual report, “[i]n FY 2011, the Investigations Unit opened 266 cases, and made 80 referrals to other agencies…,” including the State Medicaid Fraud Control Unit (MFCU), which is a separate unit within the Office of the Attorney General Division of Criminal Justice Department, which, among other things, investigates and prosecutes Medicaid fraud and Civil False Claims that involve the Medicaid program.

The cases handled by the Investigations Unit involved issues such as recipient fraud, provider billings for services not rendered, duplicate billing, upcoding, unbundling, and drug diversion.

For example, last year the unit recovered $900,000 from CVS Pharmacy for Medicaid prescriptions filled by a store pharmacist who had been excluded from the Medicaid program.

The Special Investigation Unit, a subdivision within the Investigations Unit, verifies that all Medicaid providers are properly enrolled in the program, deny applications of those providers who do not meet the program requirements or submit false information on their applications.

New Jersey Medicaid regulations list 26 reasons for denial of an enrollment application.

Regulatory Unit

The Regulatory Unit is created to provide administrative, investigative and rule-making support to other MFD units. Furthermore, this unit negotiates and monitors corporate integrity agreements. This unit is also responsible for reviewing the Medicaid regulations to determine if regulatory revisions or new regulations are needed.

Medicaid Recovery Audit Contractor (RAC)

The MFD also oversees the efforts of the State’s Medicaid Recovery Audit Contractor (RAC). Medicaid RACs are required to be incorporated in every state program by the Affordability Care Act of 2010. New Jersey’s Division of Medical Assistance and Health Services, with assistance of MFD, selected the third party contractor, Health Management Systems, to serve as New Jersey’s RAC.  As with Medicare RACs, the NJ Medicaid RAC audit both fee-for-service and managed care providers to identify overpayment and collect between 9.03% or 12.5% of the money recovered. According to the New Jersey Medicaid Fraud Division Work Plan 2012, “MFD is coordinating RAC activities in an attempt to avoid providers undergoing multiple audits at any one time.”

Our law office defends medical providers facing Medicaid, Medicare, and insurance company audits.  If you have questions about the audit process or need legal assistance, please contact us.