OMIG Reform Legislation Passes New York Senate, Assembly; Awaits Governor’s Signature

Yesterday, June 23, 2011, the New York State Assembly passed A.5686A, a bill which could significantly impact the powers of the Office of the Medicaid Inspector General (OMIG).  The bill previously passed the New York State Senate on June 20, 2011 (S.3184A), and it now awaits only Governor Cuomo’s signature before it becomes law.

This groundbreaking piece of legislation imposes the following limitations upon the OMIG:

• Protects providers from audit disallowances if the provider complied with agency policies or interpretations which may not be changed retroactively by the OMIG;
• Permits the OMIG to extrapolate the results of its audit sample findings, in a statistically valid methodology,  provided they furnish certain details to the provider in a written report, such as the sample size and methodology, the sample result, the assumptions made about the accuracy and reliability of the sample, and the level of confidence;
• Where a recovery is claimed for an administrative or technical error, the provider is given the chance to re-submit the claim;
• Does not permit the OMIG to withhold provider payments until after an administrative hearing is held and a decision rendered by the administrative law judge if a hearing is requested by the provider; and
• Limits audits to a period of 3 years rather than the current 6 year period.

The bill also makes changes with respect to Medicaid recipient’s rights:

• The investigator who will interview a recipient regarding an investigation must provide, at least five business days in advance, the information regarding the basis for the investigation, any potential for criminal investigation, the individual’s right to company or an attorney during the questioning, the individual’s right to decline without the loss of benefits, and the right to a fair hearing in the event of incorrect payment.
• The recipient needs at least thirty days notice prior to commencing a recovery, adjustment, or voluntary repayment, and must be furnished with a written notice of such determination including the evidence relied on and the factual conclusions at the fair hearing.

When the original OMIG bill was passed in 2006, there was a widespread sense that something needed to be done about Medicaid fraud, waste and abuse in New York State.  Five years later, there is no longer widespread public confidence that the OMIG is doing its job properly.  Quoting from the bill’s supporting memorandum: “There is also a general sense that the OMIG feels it is above the laws, rules, and regulations that guide health care policy decisions in New York State.  This bill is designed to help level the playing field for Medicaid providers.  Quoting from the bill itself:

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 MANNER. THE LEGISLATURE ALSO RECOGNIZES THE NEED FOR ESTABLISHED STATUTORY  STANDARDS  REGARDING THE CONDUCT OF INVESTIGATIONS, AUDITS AND RECOVERY OF PAYMENTS AND OTHER ACTIONS.

Once signed by Governor Cuomo, the act will take effect October 1, 2011, and it will apply to any actions commenced or pending at that time.  It will not, however, invalidate any actions or steps that were taken prior to the effective date.

UPDATE:  This bill was vetoed by Governor Cuomo on September 23, 2011.

For more information, contact David R. Ross, Esq., Of Counsel, O’Connell and Aronowitz, former Acting Medicaid Inspector General under Governors Pataki and Spitzer, at dross@oalaw.com or (518) 462-5601.

This post was contributed by David Ross.