New York Medicaid managed care programs may see new regulations


On July 26, 2022, we published a blog post detailing the first part of three proposed regulations released by the New York State Office of the Medicaid Inspector General (OMIG). The proposed settlement repeal the current Part 521 – Supplier Compliance Programs of Title 18 of the New York Codes, Rules, and Regulations (NYCRR) in its entirety and establishes new requirements for providers to detect and prevent fraud, waste, and abuse in the Medicaid program under a new Part 521: Fraud, Waste and Abuse Prevention (Part 521). If passed, the proposed rules would implement changes related to Medicaid provider compliance programs, Medicaid Managed Care Organization (MMCO) fraud, waste, and abuse prevention, and ” Medicaid providers’ obligation to report, return, and explain Medicaid overpayments through OMIG’s self-insurance”. Disclosure program.

In this article, we summarize the second subpart of Part 521 covering proposed regulations that would require MMCOs to develop and implement programs to detect and prevent fraud, waste, and abuse in the Medicaid program.

Definitions – Article 521-2.1 & Article 521.2:

The regulation defines “abuse” to include practices that are inconsistent with sound tax, business, medical or professional practices. These practices could have the following consequences:

  • Unnecessary costs for the Medicaid program; and

  • Payments for services that do not meet accepted healthcare standards or are not medically necessary.

The definition of “fraud” includes the following elements:

  • Intentional deception or misrepresentation made knowing that it could result in an unauthorized advantage; and

  • Acts that constitute fraud under applicable federal or New York law, including the New York Medicaid Misrepresentation Act.

Obligations of Medicaid Managed Care Organizations – Section 521-2.3

The requirements below will serve as a minimum standard for an MMCO’s fraud, waste and abuse prevention program, and as such, an MMCO’s prevention program may go beyond the requirements below. below:

  • Fraud, Waste and Abuse Prevention Policies: MMCOs should adopt and implement policies to detect and prevent fraud, waste and abuse.

  • Record keeping: In addition to record retention requirements imposed under an MMCO’s contract with the Department of Social Services, MMCOs and their contractors must retain all records demonstrating that they have adopted, implemented and operated a program. prevention of fraud, waste and abuse that meets the requirements of this Subpart.

  • Contracts with third parties: MMCOs should ensure that their contracts with participating contractors, agents, subcontractors, independent contractors and vendors specify that such parties are subject to audit, investigation or review as part of the prevention program. of MMCO fraud, waste and abuse.

Compliance Program – Section 521-2.4(a):

As detailed in our previous article, MMCOs (among other entities) must implement and maintain a compliance program in accordance with Subpart 521-1. Under this subpart 521-2, MMCOs must ensure that their fraud, waste and abuse prevention programs are integrated into their compliance program and otherwise meet the requirements of section 521-1.4 (a) relating to written policies and procedures, duties of the Compliance Officer, and training requirements.

Special Investigation Unit – Section 521-2.4(b):

MMCOs with a registered population of more than 1,000 or more in any given year must establish a full-time Special Investigations Unit (SIU). SIUs must identify and investigate instances of potential fraud, waste, and abuse, then report those instances to OMIG and report potential fraud to the Medicaid Fraud Control Unit (MFCU). The UES of an MMCO must operate as a separate and distinct unit from any other function or unit of the MMCO.

  • Staffing requirements: MMCOs must employ at least one full-time lead investigator and an SIU manager. The Principal Investigator and SIU Director should be based in New York City and will be responsible for communication and coordination with OMIG and MFCU. Additionally, MMCOs must employ or utilize existing employees to support the work of the SIU. MMCOs must employ one full-time investigator for every 60,000 enrollees, except in the case of a managed long-term care plan, which must employ one full-time investigator for every 6,000 enrollees. MMCOs may propose alternative minimum staffing levels to OMIG if those staffing levels are no less effective than required by this Subpart.

  • SIU Investigator Qualifications: SIU Investigators must possess either: (i) a minimum of 5 years of experience in the healthcare field in the investigation and audit of fraud, waste and abuse, a minimum of 5 years of experience investigating insurance claims or professional experience investigating with law enforcement agencies, or 7 years professional experience investigating investigations involving economic or insurance issues; (ii) an associate’s or bachelor’s degree in criminal justice or a related field; or (iii) employment as an investigator in the SIU of an MMCO on or before the effective date of this Subpart.

  • SIU Work Plan: At least once a year, the TUIs usually draw up a work plan detailing the activities they plan to carry out during the coming year. The work plan can be a stand-alone document or be part of the compliance program described in Subpart 521-1

  • Delegation: An MMCO may delegate any or all of the functions of the SIU, however, the MMCO shall be ultimately responsible for compliance with the requirements of this Subpart.

MMCO Audits and Investigations – Section 521-2.4(c)

Through their respective SIUs and in coordination with MMCO compliance officers, MMCOs must audit, investigate, or review instances of fraud, waste, and abuse related to their participation in the Medicaid program. Such audits, investigations, and reviews must involve at least one percent or more of the Medicaid Program’s total claims that it pays to providers and contractors and must pertain to MMCO’s clinical and billing records.

Fraud, Waste and Abuse Prevention Plan Requirements – Section 521-2.4(i)

MMCOs must develop and submit to OMIG a Fraud, Waste and Abuse Prevention Plan within 90 calendar days of the effective date of this Subpart or the signing of a new contract with the Department of Social Services to begin participating as an MMCO. MMCOs must implement a fraud, waste and abuse prevention plan within 180 calendar days from the date the MMCO executes its contract with the Department of Social Services to participate as an MMCO and develops its plan in accordance with this section. These fraud, waste and abuse prevention plans should include the following:

  • A description of the MMCO’s program to prevent and detect fraud, waste and abuse.

  • A description, if applicable, of the SIU organization, including: titles and job descriptions of investigators, investigation supervisors and other personnel; minimum qualifications for employment in positions; the geographic location and assigned location of each investigator and investigation supervisor; support staff and other material resources available to the SIU; and the oversight and reporting structure within the SIU and between the SIU and MMCO management.

  • A detailed description of the roles, responsibilities and interaction between the SIU and the MMCO Compliance Officer; the MMCO legal department; MMCO’s complaints, quality, member services, usage review, compliance procedures and underwriting functions; and OMIG, the Department of Social Services and MFCU.

  • MMCO’s policies and procedures as detailed above in the Compliance Program section and in Subpart 521-1.4(a).

  • The criteria for internal referral of a case to the SIU for assessment. In addition, the plan must include the criteria used by the SIU to report potential cases of fraud, waste, and abuse to the Department of Human Services and OMIG.

MMCO Annual Reports – Section 521-2.4(j)

After January 31 of each calendar year, each MMCO must file an annual report (on a form to be developed by the Department of Social Services) for the previous year which must include at least the following:

  • A description of the MMCO’s experience, performance and cost-effectiveness in implementing the fraud, waste and abuse program.

  • MMCO’s proposals to modify its fraud, waste and abuse prevention program and its plan to modify its operations to address deficiencies.

  • A summary of MMCO SIU staffing.

  • A summary of any MMCO contractors or vendors that perform audit investigations or review functions.

  • The total number of reported cases of potential fraud, waste or abuse identified by the MMCO.

  • The MMCO SIU work plan for the next calendar year.

  • The results of service verification reviews, as specified in the MMCO’s contract with the Department of Social Services.

Looking forward:

If enacted, Part 521-2 will require MMCOs to review and possibly restructure their fraud, waste and abuse prevention plans. OMIG is accepting public comments on these proposed regulations until September 11, 2022. You may submit written comments via email to Michael T. D’Allaird at [email protected].

©1994-2022 Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, PC All rights reserved.National Law Review, Volume XII, Number 243


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