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OMG! OMIG!
The Office of the Medicaid Inspector General
and Other Friends
Hermes Fernandez
Bond, Schoeneck & King, PLLC
(518) 533-3000
[email protected]
The Office of Medicaid
Inspector General
• Created by Statute (Chapter 442 of the
Laws of 2006, Public Health Law sections
30-36)
• Independent office to detect, prevent and
recover Medicaid fraud, abuse and illegal
acts
• Approximately 700 employees
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The Medicaid Inspector General
• Jim Sheehan, appointed by Eliot Spitzer
– Formerly Deputy US Attorney in Philadelphia
– Brought a number of high profile cases
against health care providers across the
nation
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OMIG’s Principle Powers
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Audit
Sanctions
Exclusions
Investigations
OMIG Audits
• Commenced by a notification letter
• Audit can cover six years from date of
notification letter
• If fraud, no time limit
• Audit must begin within 60 days, although
OMIG can extend for another 60 days
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OMIG Audits
• Take the notification letter seriously
• Start gathering records
• Do not alter or correct records
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OMIG Audits
• Notification Letter may ask for more than
case records
– Corporate Compliance Plan
– Minutes
• Survey Results
– Financial Statements
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OMIG Audits
• Audit begins with an entrance conference
– Pay attention
– Provide the records requested
– Keep looking
• On-site audit includes a closing (exit)
conference
• Desk audit – no closing conference
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OMIG Audits
• Usually done by a statistical sample
– 100 samples, spread over four years
– Sample and time can be different
• Results are extrapolated
– Findings are usually to a 90% confidence
level
– This creates a range of potential
overpayments
– Low point and midpoint are important
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OMIG Audits
• Exit Conference
– Preliminary Audit Report
• Not required by regulations
– Very important
– Respond, keep lines open
– Best chance to shape the Draft Audit Report
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OMIG Audits
• Draft audit report
– Findings and conclusions
• Provider response is a legal response
• This is close to OMIG’s final recoupment
demand
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OMIG Audit
• Provider response to draft audit due in 30
days
– Extensions usually granted
• Provider must state all grounds for
objection, e.g.:
– Statistical method improper
– Services were properly provided and recorded
– Audit period improper
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OMIG Audits
• Final audit report
– Comes with letter demanding recoupment
– Provider has right to evidentiary hearing
before DOH ALJ
• Hobson’s choice
– If no hearing, OMIG will accept low point
estimate
– If hearing, OMIG will seek mid-point estimate
– At hearing, provider bears burden of proof
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OMIG Audit
• OMIG will usually recoup through a
withhold
– Usually 10%
– Can be total
– Can be reduced to 5% for undue hardship
• Recoupments paid over time include
interest
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OMIG Audit
• Recoupment continues through the
hearing before the Administrative Law
Judge
• Can be reviewed through Article 78
process
• Recoupment continues through judicial
process
• Narrow window for success in Article 78
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OMIG Audit
• Common bases of recoupment
– Missing records
– No notes
– Note inadequately describes service
– Lapsed or untimely treatment plan
– Service does not tie to treatment plan
– Lack of credentials
– Missing signature or date
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OMIG Sanctions
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Could follow audit, could come separately
Investigation will look similar to audit
Notice of proposed agency action
30 days to respond
– Extensions are not automatic
• Notice of agency action
• May not include a right to administrative
hearing
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OMIG Sanctions
• Unacceptable practices
– False claims
– Care not provided
– Care excessive
– Care inadequate
– Bills excessive
– Inadequate records
– Employing an excluded person
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Immediate Sanctions
• Determination of imminent danger due to
provider’s continued participation
• Exclusion first, hearing second
• Indictment or conviction for false billings
• State or federal exclusion
• Immediate withholds
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OMIG Sanctions
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Program exclusion
Censure
Prior authorization
Recoupment
– With interest
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Self-Disclosure
• Necessary when overpayments have been
identified
• Cannot be deliberately ignorant
• Neither should you hunt for unknown
problems
– Ties into corporate compliance program
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Self-Disclosure
• Make a complete disclosure
– OMIG web-site has protocol
– Identify:
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Nature of Problem
How Discovered
Claims covered
Corrective action
– Can be done through an intermediary
• Good idea
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PPACA, FERA, and NY False
Claims Act
• PPACA = Patient Protection and
Affordable Care Act, signed by President
Obama on March 23, 2010
• FERA = Fraud Enforcement and Recovery
Act, signed by the President in May, 2009
• NY False Claims Act
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PPACA SECTION 6402(d) –
REPORTING AND RETURNING
OVERPAYMENTS
• ‘‘(1) IN GENERAL — If a person has received an
overpayment, the person shall—
• ‘‘(A) report and return the overpayment to the
Secretary, the State, an intermediary, a carrier,
or a contractor, as appropriate, at the correct
address; and
• ‘‘(B) notify the Secretary, State, intermediary,
carrier, or contractor to whom the overpayment
was returned in writing of the reason for the
overpayment
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WHAT IS AN
“OVERPAYMENT”?
• PPACA: ‘‘(B) OVERPAYMENT—The term
‘‘overpayment’’ means any funds that a person receives
or retains under title XVIII (Medicare) or XIX (Medicaid)
to which the person, after applicable reconciliation, is not
entitled under such title”
• NEW YORK: “An overpayment includes any amount not
authorized to be paid under the medical assistance
program, whether paid as the result of inaccurate or
improper cost reporting, improper claiming, unacceptable
practices, fraud, abuse or mistake.” 18 NYCRR §
518.1(c).
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UNACCEPTABLE PRACTICES
• 18 NYCRR 515.2
• Conduct contrary to the rules and regulations of
DSS, DOH, NYSED, OPWDD, OMH, OASAS,
U.S. HHS, and specifically includes:
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False or fraudulent claims
Bribes and kickbacks
Failing to meet the standard of care
Employment of sanctioned persons
Unacceptable recordkeeping
WHEN MUST AN OVERPAYMENT
BE RETURNED?
• An overpayment must be reported and
returned . . .by the later of –
– (A) the date which is 60 days after the date
on which the overpayment was identified; or
– (B) the date on which any corresponding cost
report is due, if applicable
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WHEN IS AN OVERPAYMENT
“IDENTIFIED”?
• OMIG: “identified” means learning of the
fact that an overpayment has been
received, not the amount of the
overpayment
• When do providers learn of the fact of an
overpayment?
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WHEN IS AN OVERPAYMENT
“IDENTIFIED”?
• PPACA: overpayments are funds received
and retained “after applicable
reconciliation”
– suggests that provider has an opportunity to
“reconcile” whether an overpayment occurred
• Interview employees
• Assess circumstances
• Consult with counsel
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WHAT IF OVERPAYMENT
MISIDENTIFIED?
• No obligation to report if your investigation
concludes no overpayment was made
– Risk is on provider who decides not to report
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DOCUMENT EFFORTS TO
IDENTIFY OVERPAYMENTS
• Create a record of your organization’s efforts to
address allegations of overpayments
– Develop form to document employee’s internal
disclosure
– Document interviews
– Document evidence
– Record of employees involved in determination
• Timely repayment as an element of an effective
compliance program
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RETURNING OVERPAYMENTS
TO NY MEDICAID
• Overpayments should be returned, reported,
and explained to OMIG
– Self-Disclosure Protocol
• Providers may use void process through CSC
for smaller or routine claims - $5,000 or less
– Billing errors
– Late reimbursement
– Documentation anomalies
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STATE THE REASON FOR THE
OVERPAYMENTS
– Duplicate payments
– Services not actually rendered
– Payment already made by primary insurance
– Payment for services rendered during a
period of non-entitlement (patient's
responsibility)
– Excluded provider
– Patient deceased
– Provider lacked required license or
certification
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MORE REASONS FOR
OVERPAYMENTS
– Service inconsistent with physician order or
treatment plan
– Service not ordered or authorized
– Order or service not sufficiently documented
as required by regulation or policy
• Prescriptions, Treatment Plans, Progress Notes
• Missing signatures
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ENFORCEMENT
• PPACA 6402(d)(3) “ENFORCEMENT” —
Any overpayment retained by a person
after the deadline for reporting and
returning the overpayment under
paragraph (2) is an obligation (as defined
in section 3729(b)(3) of title 31, United
States Code) for purposes of section 3729
of such title. (False Claims Act)
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CONSEQUENCES
• False Claims Act imposes liability for a person who
“knowingly conceals or knowingly and improperly avoids
or decreases an obligation to pay or transmit money or
property to the Government” new 31 U.S.C. 3729(a)(1)
(G) added by FERA
– “knowingly” includes reckless disregard, deliberate ignorance
• PPACA makes clear that claims made for items or
services resulting from a violation of the anti-kickback
statute are false claims
• OMIG View: an overpayment which is timely reported
and explained will not give rise to FCA liability even if the
provider is unable to repay it within 60 days, unless there
is evidence of improper “avoidance”
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CIVIL MONETARY PENALTIES
• Knowing of an overpayment and failing to report and
return within 60 days: $10,000 for each item or service
overpaid
• Knowingly making a false record or statement material to
a false or fraudulent claim: $50,000 for each false
record or statement
• False statements, or omissions or misrepresentations on
an application for enrollment: $50,000
• Failure to grant timely access for purposes of audit,
investigation or evaluation: $15,000 per day
• Treble damages
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INCENTIVE TO SUSPEND
PAYMENTS
• Where “the State has failed to suspend
payments under the plan during any
period when there is pending an
investigation of a credible allegation of
fraud . . . as determined by the State . . .
unless the State determines in accordance
with [HHS] regulations there is good cause
not to suspend such payments” CMS may
recover payments from State
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CMS WITHHOLD REGULATION
(42 C.F.R. 455.23)
• State Medicaid agencies may withhold
payments based on “reliable evidence” of
fraud or willful misrepresentation
– Notice must state that payments are being
withheld in accordance with this section
• New York has further authority
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OMIG WITHHOLD REGULATION
(18 NYCRR 518.7)
• OMIG just needs “reliable information” that a
provider is involved in fraud, abuse or an
unacceptable practice
• Reliable Information
– Audit
– Utilization review identifies unacceptable practice or
significant overpayments
– State licensing board or agency
– Prosecutorial agency (MFCU)
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Excluded Persons
• Cannot work in a program funded by
Medicaid (overstatement, but best guide)
– Fee or cost report
– Crime by the excluded person
– Could be crime by the employer
• Billing for services delivered by excluded
person subject to recoupment
• OMIG maintains list on website
• Check every thirty days
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CMS EXCLUSION REGULATION
• “No payment will be made by Medicare,
Medicaid or any of the other federal health
care programs for any item or service
furnished by an excluded individual or
entity, or at the medical direction or on the
prescription of a physician or other
authorized individual who is excluded
when the person furnishing such item or
service knew or had reason to know of the
exclusion.” 42 CFR 1001.1901(b)
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NY EXCLUSION REGULATION
• 18 NYCRR 515.5 Sanctions effect (continued):
(b) No payment will be made for medical care, services or supplies ordered
or prescribed by any person while that person is excluded, nor for any
medical care, services or supplies ordered or prescribed in violation of any
condition of participation in the program.
(c) A person who is excluded from the program cannot be involved in any
activity relating to furnishing medical care, services or supplies to recipients
of medical assistance for which claims are submitted to the program, or
relating to claiming or receiving payment for medical care, services or
supplies during the period.
(d) Providers reimbursed on a cost-related basis may not claim as allowable
costs any amounts paid or credited to any person who is excluded from the
program or who is in violation of any condition of participation in the
program.
(e) Providers reimbursed on a fee-for-services basis may not submit any
claim and cannot be reimbursed for any medical care, services or supplies
furnished by any person who is excluded from the program or which are
furnished in violation of any condition of participation in the program.
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SCREENING
• DOH Medicaid Update April 2010 Vol. 26, No. 6
– Providers have an obligation to screen employees,
prospective employees, and contractors, both
individuals and entities, to determine if they have
been excluded or terminated from participation in
federal health care programs or New York Medicaid
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SCREENING LISTS
• List of Excluded Individuals/Entities (LEIE) (OIG)
– http://www.oig.hhs.gov/fraud/exclusions/exclusions_li
st.asp
• List of Parties Excluded From Federal
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Procurement and Nonprocurement Programs
– http://www.epls.gov
Restricted, Terminated or Excluded Individuals
or Entities
– www.omig.state.ny.us
IMPACT ON EMPLOYERS
• Potential Liability for Employing or Contracting
with Excluded Individuals/Entities
• $10,000 civil monetary penalty for each item/service claimed
• Plus treble damages = amount claimed for each item/service
• Possible exclusion for the provider-employer
• Must apply for reinstatement
• “Knows or Should Know” of the Employee’s Exclusion
• Check the Exclusion Lists!
• OMIG: potentially amounts to a false claim under FCA
• Separate basis for administrative sanctions or exclusion
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OMIG COMPLIANCE
EXPECTATIONS
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Check 3 exclusion lists for each new hire
Check 3 exclusion lists for contractors
Check 3 exclusion lists for referral sources
Check 3 exclusion lists once each month for
updates
• Require contractors to conduct similar checks on
their employees and contractors
• Report each verified hit on current employees
and current contractors from any of three
exclusion lists to OMIG through disclosure
protocol
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COMPLIANCE PROGRAMS
• YOUR BEST DEFENSE
– NEW YORK REQUIRES . . .
• MEDICAID - $500,000+
• An effective plan
– PPACA WILL REQUIRE . . .
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COMPLIANCE PROGRAMS
• An effective compliance program in New
York will satisfy PPACA
• OMIG Compliance Program
– 8 Elements (18 NYCRR Part 521)
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COMPLIANCE PROGRAMS
1) Written policies and procedures that describe
compliance expectations, as embodied in a
code of conduct, implement the operation of
the Program, and provide guidance on dealing
with potential compliance issues.
2) Designation of a compliance officer as the
person vested with day-to-day operation of the
Program.
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COMPLIANCE PROGRAMS
3) Training and education on compliance
issues, expectations, and Program
operation.
4) Establishment of communication lines to
the compliance officer that are accessible
to allow compliance issues to be reported.
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COMPLIANCE PROGRAMS
5) Fair and firmly enforced disciplinary
policies, to encourage good faith
participation in the Program, and to outline
sanctions for:
– Failing to report suspected problems;
– Participating in, encouraging, directing,
facilitating, or permitting non-compliant
behavior.
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COMPLIANCE PROGRAMS
6) Systems for routine identification of
compliance risk areas for self-evaluation of
such risk areas, including internal audits
and, as appropriate, external audits.
7) Implementation of systems for
responding to, investigating and correcting
compliance issues, and for reporting and
refunding overpayments.
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COMPLIANCE PROGRAMS
8) Non-intimidation and non-retaliation for
good faith participation in the Program
– Reporting and investigating potential
compliance issues
– Participating in self-evaluations, audits, and
remedial actions
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Medicaid Fraud Control Unit
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Part of the Attorney General’s office
Similar, but different authorities to OMIG
Has civil and criminal authorities
Can exercise OMIG audit authorities
Makes referrals to OMIG for withholds,
sanctions and penalties
Medicaid Fraud Control Unit
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Executive Law § 63(12)
Powerful enforcement tool
“Repeated fraudulent or illegal acts”
“Persistent fraud or illegality”
Injunctions, restitution, damages
Civil subpoena authority – forced
testimony
• Doesn’t preclude criminal prosecution
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Medicaid Fraud Control Unit
• Criminal Charges
– Grand Larceny
• Civil Recovery
• Either or both
• Conduct during investigation can tip the
balance
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Self-incrimination
• Right to remain silent
• Everything you say can be used against
you
• Medicaid providers have a duty to
cooperate
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Stop talking
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The investigator is not your friend
Call your attorney
Only speak with your attorney present
Everyone you speak to is a potential
witness
• The walls have ears
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Record Preservation
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Records must be preserved
Electronic records, too
Don’t alter records
Don’t recreate missing records
OMG! OMIG!
The Office of the Medicaid Inspector General
and Other Friends
Hermes Fernandez
Bond, Schoeneck & King, PLLC
(518) 533-3000
[email protected]