OMG! OMIG! The Office of the Medicaid Inspector General and Other Friends Hermes Fernandez Bond, Schoeneck & King, PLLC (518) 533-3000 [email protected].

OMG! OMIG!

The Office of the Medicaid Inspector Generaland Other Friends

Hermes FernandezBond, Schoeneck & King, PLLC

(518) [email protected]

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The Office of MedicaidInspector 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

• Audit

• Sanctions

• Exclusions

• Investigations

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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

• 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

• 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:

• 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:

– False or fraudulent claims– Bribes and kickbacks– Failing to meet the standard of care– Employment of sanctioned persons– Unacceptable recordkeeping

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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_list.asp

• List of Parties Excluded From Federal Procurement and Nonprocurement Programs– http://www.epls.gov

• Restricted, Terminated or Excluded Individuals or Entities– www.omig.state.ny.us

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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

• 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

• 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

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Medicaid Fraud Control Unit

• 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

• 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

• Records must be preserved

• Electronic records, too

• Don’t alter records

• Don’t recreate missing records

OMG! OMIG!

The Office of the Medicaid Inspector Generaland Other Friends

Hermes FernandezBond, Schoeneck & King, PLLC

(518) [email protected]