On December 28, 2022, the New York State Office of the Medicaid Inspector General (“OMIG”) issued final regulations overhauling the mandatory compliance program requirements imposed on certain Medicaid participating providers and Medicaid managed care organizations (“MMCOs”). While the regulations became effective immediately upon issuance, enforcement will be delayed until March 28, 2023 (90 days after the regulations became effective). The new regulations are materially the same as originally proposed and therefore, as noted in Hancock’s previous alert, providers and MMCOs covered by these regulations face a daunting task in implementing significant changes to their existing compliance programs. And while the increase in the monetary threshold from $500,000 in annual Medicaid claims to $1,000,000 for certain providers covered by the mandate may relieve some smaller providers, particularly physician groups, from this burden, licensed entities (i.e. those licensed pursuant to Articles 28 and/or 36 of the Public Health Law and Mental Hygiene Law Article 16 and 36) are provided no such relief.
In response to comments about the significant burden (financial and otherwise) that the new regulations will impose on already-strained New York health care delivery systems, particularly the new compliance program staffing requirements, OMIG indicated that it will, “take into consideration a provider’s and MMCO’s documented good faith efforts to hire and retain staff in any review or enforcement action.” OMIG expressed similar sentiments in response to other questions about possible enforcement actions.
One major change implemented by the new regulations is the focus on compliance program “effectiveness”, including a provider’s obligation to audit, and maintain objective evidence of, program effectiveness. In declining to provide more specific guidance as to how OMIG will judge whether or not a program is “effective”, the agency indicated that it “will consider provider size, complexity, resources, culture and organizational experience to determine effectiveness” and that it will apply “reasonableness” in all such reviews. Even so, OMIG asserts explicitly that effective compliance programs must have outcomes that prove such effectiveness.
The new regulations also expand the risk areas that compliance programs must address to include actions by providers’/MMCOs’ “contractors”. As part of this new focus, the regulations require that providers/MMCOs be able to terminate agreements with contractors for failure to comply with the providers’/MMCOs’ compliance program. This new contractual mandate will initially apply only to contracts that are executed or renewed after March 28, 2023, but all contracts will be required comply no later than December 28, 2024. Helpfully, OMIG has clarified that a contractor’s compliance with providers’/MMCOs’ compliance programs apply only, “to the extent it is related to their contracted role and responsibilities within the provider’s identified risk areas”. OMIG also indicated that it will provide additional guidance on this topic at some point in the future.
The new regulations also include more detail on the OMIG Self-Disclosure Program. In response to several questions, OMIG indicated that it will be issuing further guidance, including on such topics as acceptable extrapolation methodologies, the interplay of self-disclosures versus voiding or adjusting claims identified in the ordinary course of business and joint self-disclosures by more than one provider. In response to one question, OMIG stated clearly that if an overpayment involves Medicaid money, the self-disclosure must be made to OMIG or, if applicable, an MMCO, regardless of whether or not the provider is also making a disclosure to the federal government or a fiscal intermediary.
These are just a few of the issues included in the new regulations or discussed by OMIG in response to questions. We will continue to monitor OMIG publications on compliance program effectiveness and provide additional updates in the near future.
Please contact attorneys in our Healthcare Industry Group with any questions.