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OMIG Regulations Would Expand Penalties for Overpayments and Compliance Program Failures

The New York State Office of the Medicaid Inspector General (OMIG) recently published a proposed rule in the State Register that would impose stronger monetary penalties and other actions affecting Medicaid managed care plans and providers. The rule stems from provisions in the final budget for State Fiscal Year (SFY) 2020-21 [Chapter 56 of the Laws of 2020].

The proposed rule would repeal and replace current regulations at 18 NYCRR Part 516 governing imposition of monetary penalties for Medicaid overpayments, incorporating the authority granted to OMIG in conjunction with the Department of Health (DOH), pursuant to Chapter 56 of the Laws of 2020. The law authorizes OMIG to impose monetary penalties on Medicaid providers, Medicaid Managed Care Organizations (MMCOs), or Managed Long Term Care plans (MLTCs) for:

  • Failing to grant timely access to facilities and records, upon a reasonable notice, for the purpose of audits, investigations, or reviews;
  • Instances when the entity knew of, or should have performed due diligence to identify, an overpayment and fails to report the overpayment to OMIG;
  • Intentional or unintentional establishment of arrangements or contracts with any individual or entity that is known or should be known to be suspended or excluded from participating in the Medicaid program.

The regulation also outlines the procedures for imposing and collecting monetary penalties and allows for due process protections for providers, MMCOs, and MLTCs as the law allows.

Chapter 56 of the Laws of 2020 and these regulations also ratchet up the potential consequences of failing to implement and maintain an effective compliance program:

  • Effective April 1, 2020, implementation of a provider compliance program is now “a condition of payment from the medical assistance program.” As a result, OMIG can recoup all Medicaid payments to a provider during a period when the provider did not have an effective compliance program in place.
  • OMIG may impose a monetary penalty of $5,000 per month, up to 12 months, for the failure to adopt and implement a compliance program meeting statutory requirements. The penalty increases to $10,000 per month, for up to 12 months, if a penalty was previously imposed within the past five years. These penalties can be imposed for compliance program reviews conducted on or after Jan. 1, 2021.

The proposed regulation also authorizes imposition of monetary penalties in cases when an MMCO or MLTC submits a cost report to DOH that contains a misstatement of fact.

A memorandum from Hinman Straub summarizes the proposed regulations and the underlying changes in Chapter 56 of the Laws of 2020. Comments on the proposed regulations are due by Mon., Sept. 14, 2020.

Contact: Dan Heim, dheim@leadingageny.org, 518-461-2934