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Alliance Note: The Alliance continues to support efforts to reform the NYS Office of Medicaid Inspector General (OMIG) audits to ensure agencies which are successfully providing services are not unnecessarily punished for minor mistakes which do not affect the quality of their services, such as clerical errors. The Assembly and Senate included a bill in their One House budgets which will change this process to make it more fair for providers who are acting in good faith. We urge the Legislature and Governor to keep this bill in the final budget for the year. See below for more information.

The Battle Over Medicaid Audits
By Jason Beeferman | Politico Pro | March 29, 2024

Assemblymember Amy Paulin agrees with stopping fraud and abuse within the Medicaid system. But she also wants to stop the state’s Medicaid Inspector General from punishing “already stretched and understaffed” Medicaid providers for unintentional clerical errors.

“They’re jeopardizing health care providers that are doing a good job, not committing fraud in any way,” Paulin said.

Paulin and Sen. Pete Harckham are promoting a bill that would change the way the state’s Office of the Medicaid Inspector General performs audits. It would also adjust the standards for the recovery of payments after an audit.

The bill, /, has bipartisan support from over 40 cosponsors in the two Houses, but its merits are contested by OMIG.

“This legislation would modify the OMIG’s ability to enforce such standards by limiting the audit and recovery of Medicaid claims that were improperly justified,” office spokesperson Bill Schwarz said in a statement.

Proponents of the bill contend that OMIG issues fines and penalties for “technical errors.” But OMIG says audit recoveries are not penalties or fines. Instead, the audits only ask providers to return any money paid inappropriately.

“M�DzԾ���� paid to providers to which they are not entitled must be returned to the State,” OMIG said in a second statement, adding that the audits reflect what is required under regulation and state and federal law.

Still, lawmakers say they’ve heard from Medicaid providers in their districts that were the subject of unfair treatment.

Assemblymember Harvey Epstein, one of the bill’s cosponsors, said abortion provider ParkMed, located in his district, was “targeted” by OMIG and fined nearly $1 million for “correctable technical errors” that occurred when the provider switched electronic billing systems.

“The tactics used during Medicaid audits conducted by the NYS OMIG are needlessly punitive and, ultimately, ineffective in preventing fraud and abuse in the healthcare system,” he said in a statement.

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Medicaid Providers Reignite Efforts to Overhaul ‘Unnecessarily Punitive’ Audit Process
By Amanda D’Ambrosio | Crain’s Health Pulse | March 28, 2024

Health care providers are urging the state to overhaul how it , claiming that current protocols for administrative errors threaten to put them out of business.

The Office of the Medicaid Inspector General oversees spending in the , identifying fraud and clawing back money that’s been inappropriately spent. In 2022 the inspector general saved the state . 

But some of the tactics used by the Medicaid oversight agency are “unnecessarily punitive” and threaten to close providers’ doors, health care groups say. Among the tactics is a process that allows the inspector general to extrapolate fines for small administrative errors like mistyping a provider identification number to large swaths of claims — and as a result, charge providers millions in fines, they added.

Nearly 50 health organizations sent a letter to Gov. Kathy Hochul and the legislature Wednesday to include a bill to reform the audit process in the final budget, which is due on April 1.

Assemblywoman Amy Paulin, chair of the health committee and sponsor of the bill, said she is pushing to include the bill in the final budget because the current audit process fines providers unfairly and threatens to erode necessary care.

“It’s bureaucracy on steroids,” Paulin said.

����’s&�Բ�����; in recent years that providers have pushed for reforms to the Medicaid audit process. The state Senate and Assembly passed legislation to reform the process in 2022, but the governor vetoed it that December. Hochul said in a veto memo that she thought the bill would hinder the inspector general’s ability to root out fraud and abuse in the Medicaid program.

But Paulin said that the bill never threatened to jeopardize the state’s ability to crack down on Medicaid fraud. Rather, she said the bill was vetoed because it was a budget issue, as preventing auditors from going after technical errors could produce a loss in state funding.

The new bill would prevent the inspector general from extrapolating fines for technical or human errors to large batches of claims. It would also give providers more time to appeal Medicaid audits, and prevent the state from taking back any funding before the appeal is complete.

The governor’s office did not respond to a request for comment about Hochul’s stance on the legislation.

“It doesn’t make sense to use tactics that are so aggressive,” said Lauri Cole, executive director of the ���������� State Council of Community Behavioral Healthcare, which signed the letter. Cole added that ����������’s Medicaid audits are stricter than the federal government’s.

Exorbitant fines have led some programs to shut down. In 2020 Mount Sinai Beth Israel in Lower Manhattan  after racking up a $7.7 million fine, Crain’s previously reported. The large penalty stemmed from 12 claims errors that produced a $400 fine.

Allegra Schorr, president of the Coalition of Medication-Assisted Treatment Providers and Advocates, which represents addiction providers in ����������, said that many providers live in fear of getting a Medicaid audit that forces them to go out of business. Providers can challenge the Office of the Medicaid Inspector General, but it’s less risky to settle, she added. Many providers with little legal resources end up taking huge settlements. “The system is not designed to produce a fair, truthful audit experience,” Schorr said. “It’s designed to extort funds from providers.”