OMIG to Adopt New Fraud, Waste and Abuse Prevention Requirements

By Frank J. Fanshawe

July 13, 2022 | Client Alerts

In the July 13, 2022 issue of the New York State Register, the New York State Office of Medicaid Inspector General (OMIG) published a proposed regulation that it will likely adopt this fall.  The proposed regulation will add a new 18 NYCRR Part 521 to implement statutory changes in the State Fiscal Year 2020-2021 Budget (Chapter 56 of the Laws of 2020, Part QQ) in relation to: (i) provider compliance programs; (ii) Medicaid Managed Care Plan Organization (MMCO) fraud, waste and abuse prevention programs; and (iii) the reporting and returning of Medicaid overpayments to OMIG. 
Provider Compliance Programs
The proposed regulation repeals the current Provider Compliance Program regulatory requirements and replaces them with a new Subpart 521-1, which imposes obligations on “required providers” to adopt and implement effective compliance programs.  The proposed Subpart 521-1 defines “required providers,” consistent with existing law, as any entity subject to Article 28 or 36 of the PHL, Article 16 or 31 of the MHL, MMCOs (including managed long-term care plans (MLTCs)) and any other entity for which Medicaid is a substantial portion of its business.  The current Provider Compliance Program regulations, unlike the proposed Subpart 521-1, do not apply to MMCOs (including MLTCs). 
Additionally, the proposed Subpart 521-1 includes several new requirements that do not appear in existing regulations, including:

  • 10-year document retention requirements for MMCOs and a six-year document retention period for all other “required providers.”
  • All compliance program requirements expressly apply to the “required provider’s” contractors, agents, subcontractors, and independent contractors. 
  • A new “risk area” -- contractors, subcontractors, agents and independent contractor oversight -- must be considered by all “required providers,” and a number of additional “risk areas” must also be considered by MMCOs (including MLTCs).  
  • Providers that are “required providers” must submit a compliance certification to each MMCO for which they are a participating provider upon execution of the MMCO’s participating provider agreement and annually thereafter (and the submission method shall be described on the MMCO’s website).
  • “Required providers” must comply with OMIG’s regulations regarding Medicaid overpayments (see discussion in the last section below).
  • Specifically enumerating the compliance officer’s duties, including his or her reporting structure. (Notably, under the proposed regulations, the compliance officer is no longer required to be an “employee” of the “required provider.”)
  • Establish and implement an effective system for the routine monitoring and identification of compliance risks, including the types of audits the provider must undertake and the frequency of such audits. 
  • Establish and maintain procedures for responding to and addressing compliance issues as they are raised. 

MMCO Fraud, Waste and Abuse Programs
The proposed regulations also add a new Subpart 521-2, which, consistent with current law, requires MMCOs (including MLTCs) to implement Medicaid fraud, waste, and abuse programs.  Although similar obligations are imposed by existing regulations (i.e., 10 NYCRR 98-1.21 and 
 11 NYCRR 86.6), these existing regulations either exclude MLTCs or apply to only MLTCs that have an enrolled population of 10,000 or more.  The proposed Subpart 521-2, however, applies to all MLTCs regardless of enrollment, and further requires the establishment of a dedicated full-time Special Investigation Unit (with details about staffing, reporting and work plan requirements) if the MMCO has an enrolled population of 1,000 or more.
Some of the more significant requirements in proposed Subpart 521-2 that do not appear in existing regulations, include:
  • Audit and investigation requirements which include the scope of such audits and investigations and the general requirements for conducting such audits and investigations.            
  • Obligations to report cases of fraud, waste and abuse to OMIG in accordance with the MMCO’s contract with the Department of Health.
  • Obligation to file a fraud, waste and abuse prevention plan with OMIG (which can be a plan that was prepared pursuant to another state regulation as long as all of the requirements of Subpart 521-2 are included in the submission).
Medicaid Overpayments
The proposed Subpart 521-3 adds provisions, consistent with existing law, that require “persons” to report, explain and return Medicaid overpayments to OMIG.  The term “person” includes home care agencies, hospices and MMCOs (including MLTCs and their contractors and participating providers) and virtually any other provider or supplier that is enrolled in the Medicaid program.  
Generally, the proposed Subpart 521-3 follows existing law, requiring all “persons” to report and return to OMIG (through its Self-Disclosure Program) all Medicaid overpayments (plus applicable interest) by the later of: the date which is 60 days after the date on which the overpayment was identified; or the date any corresponding cost report is due, if applicable.  A “person” has identified an overpayment, according to both existing law and the proposed regulation, when such a person “has or should have through the exercise of reasonable diligence, determined that they received an overpayment and quantified the amount of the overpayment.”
OMIG’s proposed Part 521 regulation, once published in the State Register, will be subject to a 60-day public comment period.  These proposed regulations represent the next phase of OMIG’s efforts to implement the provisions of Chapter 56 of the Laws of 2020, Part QQ, which focuses on provider compliance and greatly increased OMIG’s authority to investigate and sanction instances of non-compliance.  For example, Part QQ amended Social Services Law § 145-b to allow OMIG to impose civil monetary penalties of up to $15,000 per day for a failure to grant timely access to facilities and records, as well as making the existence of the compliance programs addressed by the proposed Subpart 521-1 a “condition of payment” from Medicaid.  
Our Health Care attorneys at Lippes Mathias will continue to monitor the proposed regulations on compliance programs, self-disclosure, and Medicaid managed care fraud, waste and abuse prevention programs and will report on any updates when finalized.    
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