Healthcare Law Alert: OMIG Issues New Instructions and Guidelines for Self-Disclosing and Repaying Medicaid Overpayments

On January 31, 2023, the New York State Office of the Medicaid Inspector General (OMIG) issued new instructions and guidelines for self-disclosing and repaying overpayments Medicaid participating providers have received from the Medicaid program. In addition, because failing to maintain the records required to prove a provider’s entitlement to Medicaid payment also violates Medicaid regulations, the guidelines explain the process for providers to report damaged, lost, or destroyed records to OMIG.

Similar (but not identical) to Medicare’s self-reporting regulations issued by the Centers for Medicare and Medicaid Services (CMS), the New York State rule requires Medicaid overpayments to be repaid within sixty days of a provider’s “identification” of such overpayment. The regulations further define “identification” as when a provider has determined, or should have determined through the exercise of reasonable diligence, not only that it has received an overpayment, but also has calculated the amount of the overpayment. Unlike the CMS guidance, however, the OMIG guidance does not elaborate on what timeframe it believes satisfies the requirement for “reasonable diligence” in researching and calculating overpayments once concerns are raised. (CMS guidance states that investigations/calculations taking more than six months after receipt of credible information suggesting an overpayment was received are suspect).

The guidelines further indicate that any OMIG-initiated compliance program review occurring subsequent to a self-disclosure will consider whether or not the corrective action plan described in its self-disclosure submission was implemented by the provider. Failure to do so is one indication that the compliance program may not be “effective”.

The guidelines contain an interesting reference to the process of “voiding” or “adjusting” Medicaid claims, a not uncommon occurrence in provider billing processes. The guidelines indicate that voiding and adjusting claims is one way of repaying an overpayment, but that all such actions should be completed before a provider makes the self-disclosure submission. Read in a different light, this seems to suggest that every instance leading to a void or adjustment of a Medicaid claim must also be disclosed to OMIG via a formal self-disclosure submission. Hancock is pursuing additional guidance from OMIG on this issue.

Violations of the self-disclosure process include but are not limited to failing to make a self-disclosure when required; failing to cooperate in OMIG’s validation of the existence and amount of the overpayment; intentionally omitting material information in a self-disclosure; and failing to repay as required. In addition to repayment of the overpayment, results of such violations can lead to imposition of financial penalties, not to exceed $10,000 per item or service, unless a penalty was imposed on a provider within the previous five years. In such a case, the penalty will not exceed $30,000 per item or service. Violations of the self-disclosure process (and thus the imposition of penalties) can also give rise to concerns over the effectiveness of the compliance program, which can engender problems under separate compliance program regulations.

Finally, the guidelines also discuss mandatory reporting of damaged, lost, or destroyed records that Medicaid requires be maintained. The guidelines require that providers self-disclose to OMIG (using the same mechanism as an overpayment self-disclosure) as soon as practical, but in no event later than thirty calendar days after a provider discovers such records have been damaged, lost, or destroyed. The guidelines also clarify that making such a report does not absolve the provider from the recordkeeping mandate. Should the claims at issue come under audit at another time, OMIG can still find that the provider violated the recordkeeping requirement and, thus, must repay the Medicaid payments at issue. While the guidance does indicate that OMIG can evaluate whether mitigating circumstances exist for the failure to maintain the required documents, they are silent on whether or not a provider will receive “credit” for reporting the damaged, lost, or destroyed documents in the first place.

Updates will be provided should more information become available.  Any providers with questions about overpayments and documenting self-disclosures are encouraged to contact any of the attorneys in our Healthcare Industry Group.

This communication is for informational purposes and is not intended as legal advice.