MED-21-12-00001-A Withholding of Payments; Incorporation by Reference

8/22/12 N.Y. St. Reg. MED-21-12-00001-A

NEW YORK STATE REGISTER

VOLUME XXXIV, ISSUE 34

August 22, 2012

RULE MAKING ACTIVITIES

MEDICAID INSPECTOR GENERAL, OFFICE OF

NOTICE OF ADOPTION

 

I.D No. MED-21-12-00001-A

Filing No. 797

Filing Date. Aug. 06, 2012

Effective Date. Aug. 22, 2012

Withholding of Payments; Incorporation by Reference

PURSUANT TO THE PROVISIONS OF THE State Administrative Procedure Act, NOTICE is hereby given of the following action:

Action taken:

Amendment of sections 518.7 and 518.9 of Title 18 NYCRR.

Statutory authority:

Public Health Law, section 32

Subject:

Withholding of payments; Incorporation by reference.

Purpose:

To amend regulations governing the withholding of Medicaid payments in accordance with federal requirements.

Text of final rule:

Section 518.7 of title 18 of NYCRR is amended to read as follows:

518.7 Withholding of payments.

(a) Basis for withholding.

(1) The department may withhold payments under the program, in whole or in part, when it has [reliable information that] determined that a provider [is involved in fraud or willful misrepresentation involving claims submitted to the program; or] has abused the program or has committed an unacceptable practice. [Reliable information] The department's determination that a provider has abused the program, or has committed an unacceptable practice may consist of preliminary findings by the department's audit or utilization review staff of unacceptable practices or significant overpayments, information from a State professional licensing or certifying agency of an ongoing investigation of a provider involving fraud, abuse, professional misconduct or unprofessional conduct, or information from a State investigating or prosecutorial agency or other law enforcement organization [agency] of an ongoing investigation of a provider for fraud or criminal conduct involving the program. The department may withhold payment of current and future claims to the provider and any affiliate.

(2) The department must withhold payments under the program, in whole or in part, when it has determined or has been notified that a provider is the subject of a pending investigation of a credible allegation of fraud unless the department finds good cause not to withhold payments in accordance with 42 C.F.R. 455.23. A credible allegation of fraud is an allegation that has indicia of reliability and has been verified by the department, or the Medicaid fraud control unit, or another State agency, or law enforcement organization.

(i) Whenever the department initiates a withholding, in whole or in part, in relation to a pending investigation of a credible allegation of fraud, the department must make a fraud referral to the Medicaid fraud control unit. If the Medicaid fraud control unit does not accept the referral, then the department may refer the matter to another law enforcement organization.

(ii) The fraud referral made under this paragraph must be in writing and provided to the Medicaid fraud control unit or other law enforcement organization not later than the next business day after the withhold is enacted.

(b) Notice of the withholding will [usually] be given [prior to or contemporaneously with the withholding; however, in no event will notice of the withholding be given more than] within five days of [after the withholding of payments] taking such action unless requested in writing by a law enforcement organization to delay such notice. The notice will describe the reasons for the action, but need not include specific information concerning an ongoing investigation.

(c) The notice of withholding must:

(1)(i) state that the payments are being withheld in accordance with [42 C.F.R. 455.23 and] this section; and

(ii) in cases where there is a pending investigation of a credible allegation of fraud state that the payments are being withheld in accordance with 42 C.F.R. 455.23;

(2) state that the withholding is for a temporary period only and recite the circumstances under which the withholding will be terminated;

(3) specify whether the withholding applies to all or only some claims and identify which claims if not all claims are involved; and

(4) advise of the right to submit written arguments and documentation in opposition to the withholding and how to submit them in accordance with subdivision (e) of this section.

(d) The withholding may continue only temporarily.

(1) When initiated by the department prior to issuance of a draft audit report or notice of proposed agency action, the withholding will not continue for more than 90 days unless a written draft audit report or notice of proposed agency action is sent to the provider. Issuance of the draft report or notice of proposed action may extend the withholding until an amount reasonably calculated to satisfy the overpayment is withheld, pending a final determination on the matter.

(2) When initiated by the department after issuance of a draft audit report or notice of proposed agency action, the withholding will not continue for more than 90 days unless a written final audit report or notice of agency action is sent to the provider. Issuance of the report or notice of action may extend the withholding until an amount reasonably calculated to satisfy the overpayment is withheld, pending a final determination on the matter.

(3) When initiated by another State agency or law enforcement organization, the withholding may continue until the agency or prosecuting authority determines that there is insufficient evidence to support an action against the provider or its affiliate, or until the agency or criminal proceedings are completed.

(4) When initiated by the department when it has determined or has been notified that a provider is the subject of a pending investigation of a credible allegation of fraud all withholding actions will be temporary and will not continue after either of the following:

(i) The department, or the Medicaid fraud control unit, or other law enforcement organization determines that there is insufficient evidence of fraud by the provider.

(ii) Legal proceedings related to the provider's alleged fraud are completed.

(e) Appeals.

(1) A provider or its affiliate that is the subject of the withholding is not entitled to an administrative hearing, but may, within 30 days of the date of the notice, submit written arguments and documentation that the withhold should be removed.

(2) Within 60 days of receiving written arguments or documentation in response to a withhold, the department will review the determination and notify the provider or its affiliate of the results of that review. After the review, the determination to impose a withhold may be affirmed, reversed or modified, in whole or in part.

(3) A decision by the department to affirm, reverse or modify a withhold on appeal shall not be a determination of the merits of any investigation initiated by another State agency, the Medicaid fraud control unit, or other law enforcement organization.

Section 518.9 of title 18 of NYCRR is amended to read as follows:

518.9 Incorporation by reference.

The provisions of the Code of Federal Regulations which have been incorporated by reference in this Part have been filed in the Office of the Secretary of State of the State of New York, the publication so filed being the booklet entitled: Code of Federal Regulations, title 42, Parts 455.23, revised as of October 1, [2008] 2011, published by the Office of the Federal Register, National Archives and Records Administration, as a special edition of the Federal Register. The regulations incorporated by reference may be examined at the Office of the Department of State, 99 Washington Ave, Albany, NY 12231 at the law libraries of the New York State Supreme Court and the New York State, and at the Office of the Medicaid Inspector General, Office of Counsel, 800 N. Pearl Street, Albany, New York 12204. They may also be purchased from the Superintendent of Documents, Government Printing Office Washington, DC 20402. Copies of the Code of Federal Regulations are also available at many public libraries and bar association libraries.

Final rule as compared with last published rule:

Nonsubstantive changes were made in section 518.7(a)(1).

Text of rule and any required statements and analyses may be obtained from:

Michael D'Allaird, Esq., Office of the Medicaid Inspector General, 800 North Pearl Street, Albany, New York 12204, [phone], email: Michael.D'[e-mail]

Revised Regulatory Impact Statement, Regulatory Flexibility Analysis, Rural Area Flexibility Analysis and Job Impact Statement

The change made to the last published rule does not necessitate a revision to the RIS, RFA, RAFA or JIS because it was a non-substantial change made for the purposes of correcting a technical error in the publication of the proposed rule, and does not require any changes to the RIS, RFA, RAFA, or JIS.

Assessment of Public Comment

The Office of the Medicaid Inspector General (OMIG) received comments from seven (7) organizations on its proposed rulemaking amending 18 NYCRR § 518.7 & § 518.9 to conform with federal requirements. Comments were highly detailed. Criticisms centered mainly on (1) the definition of a "credible allegation of fraud" not expressly referencing the department's commitment to review each allegation carefully, judiciously and on a case-by-case basis; (2) assertions that the proposed rulemaking went beyond the federal regulations and guidance; (3) the sufficiency of notice provisions; (4) the lack of a an administrative hearing right on the withhold; and (5) the sufficiency of parameters in the regulation relative to the Medicaid Fraud Control Unit's (MFCU) or other law enforcement organization's investigation of the credible allegation of fraud. The OMIG acknowledges these concerns. However, in drafting this rulemaking the OMIG verified that its provisions are consistent with federal regulations and relevant guidance. To clarify, the OMIG will review and verify all of the facts and circumstances of an allegation of fraud carefully, judiciously and on a case-by-case basis before initiating a withholding pursuant to this rulemaking. The OMIG will consider all relevant factors when evaluating a pending investigation of a credible allegation of fraud and the application of good cause exceptions. The OMIG will coordinate with the MFCU, other law enforcement organizations and agency partners with regard to enforcement of this rulemaking. We believe this rulemaking as written comports with due process and complies with federal regulations and associated guidance. The OMIG made no substantive changes to this rulemaking as a result of reviewing and assessing the public comments. However, the OMIG did make a non-substantive technical correction to 18 NYCRR § 518.7(a)(1). To clarify the term "law enforcement agency" has been deleted and replaced with the term "law enforcement organization". A full assessment of public comments will be posted on the OMIG's website at the following address: http://www.omig.ny.gov.