PURSUANT TO THE PROVISIONS OF THE State Administrative Procedure Act, NOTICE is hereby given of the following proposed rule:
Proposed Action:
Amendment of sections 518.1(c) and 518.5(b) of Title 18 NYCRR.
Statutory authority:
Public Health Law, section 32(20); Social Services Law, section 363-a(2)
Subject:
Provider Hearings.
Purpose:
To clarify hearing rights and introduce consistency with respect to the recoupment of third party liability overpayments.
Text of proposed rule:
Subdivision (c) of section 518.1 is amended to read as follows:
(c) An overpayment includes any amount not authorized to be paid under the medical assistance program, whether paid as the result of inaccurate or improper cost reporting, improper claiming, unacceptable practices, fraud, abuse or mistake. An overpayment as defined in this paragraph does not include amounts related to cases involving third party liability established under Parts 540.6(e) and 542 of this Title.
Subdivision (b) of section 518.5 is amended to read as follows:
(b) The procedures set forth in subdivision (a) of this section do not apply:
(1)W[w]here the department or its fiscal agent: adjusts or denies a claim prior to payment or withholds payment pursuant to a notice of withholding;[.]
(2) To cases involving third party liability under Parts 540.6 and 542 of this Title.
Text of proposed rule and any required statements and analyses may be obtained from:
Erin C. Morigerato, Esq., Senior Attorney, Office of the Medicaid Inspector General, 800 N. Pearl Street, Albany, NY 12204, (518) 408-0508, email: ecm03@omig.state.ny.us
Data, views or arguments may be submitted to:
Same as above.
Public comment will be received until:
45 days after publication of this notice.
Regulatory Impact Statement
1. Statutory Authority:
Social Services Law § 363-a(2) authorizes the Department of Health (Department) to promulgate such regulations as are necessary to implement the medical assistance program.
The Office of the Medicaid Inspector General (OMIG) was created within the Department under Chapter 442 of the Laws of 2006 as the entity responsible for coordinating and implementing state-wide initiatives related to fraud and abuse within the medical assistance program.
Public Health Law § 32 (20) specifically authorizes OMIG to implement and amend, as needed, rules and regulations related to the prevention, detection, investigation and referral of fraud and abuse within the medical assistance program and the recovery of improperly expended medical assistance program funds.
2. Legislative Objectives:
To amend the regulations regarding hearings for persons to contest reimbursement of third party liability overpayments identified and demanded by the medical assistance program. Pursuant to Public Health Law § 30 et seq., the Office of the Medicaid Inspector General was established to, among other reasons, prevent, detect, and recover fraud and abuse within the medical assistance program. Public policy and legal considerations require that the State be able to take appropriate and final action to ensure that medical providers are not permitted to abuse or defraud the Medicaid program if it is found that they do not comport with the medical or financial obligations for participation in the Medicaid program. Similarly, it is important that the state be able to recoup funds that were improperly paid to medical providers under circumstances consistent with and delineated in federal law and regulation. This proposed regulation assists the Office of the Medicaid Inspector General to achieve these legislative goals.
3. Needs and Benefits:
§ 518.1:
Currently, § 518.1(c) affords hearings for recoupment efforts regarding all overpayments. This unnecessarily affords hearing rights for certain improper Medicaid payments identified through third-party liability reviews under Parts 18 NYCRR 540.6(e) and 18 NYCRR 542. The amendment would eliminate the costly and administratively burdensome duplication of review processes noted by the Court of Appeals in Visiting Nurse v. Health Dept. (5 N.Y.3d 499 (2005)). In that case the Court held that as the regulatory definition of overpayment made no exception for hearings rights for third-party liability claims, the recoupment of such payments was required to be governed by the hearing provisions set forth in Parts 515, 517 and 519 of Title 18. The Court noted that while alternative review procedures were provided for in the third-party liability review program, it was unable to rule on "due process" adequacy thereof because of the present regulatory definition of overpayment.
Due to the large number of recipient care episodes in need of timely medical review determinations in third party insurance medical coverage liability cases, there is an inherent impracticability in mandating administrative hearing reviews. Instead, providers are afforded ample opportunity to provide documentary evidence and argument during an administrative review process.
Where third party payments have been made to providers, they are the result of prior administrative action by the paying agent, so further hearings as to the necessity of refunding the same to the Medicaid program would not only be duplicative but also inconsistent with current federal regulations.1
§ 518.5:
Due to the revision to § 518.1(c) discussed above, a conforming change must be made to § 518.5 regarding the right to an administrative hearing. As these claims are subject to separate administrative review, the right to a Part 519 hearing would be unnecessarily duplicative and burdensome.
4. Costs:
a. Costs to regulated parties for the implementation of and continuing compliance with the rule:
Private regulated parties are not anticipated to incur additional costs as a result of the proposed amendments.
b. Costs to State government:
State government is not expected to incur any additional costs as a result of the proposed amendment. To the contrary, it is expected that adoption of this rule will result in greater receipt of revenue to the state, as the OMIG will be able to take prompt action to obtain reimbursement from providers who owe revenue to the state, reducing the need for the state to search for assets that errant providers were able to hide during the pendency of unnecessary hearings. It is also expected that adoption of this rule will save the state from what would otherwise be needed additional personnel costs for additional hearing officers and support staff.
Costs to the Office of the Medicaid Inspector General:
OMIG is not expected to incur costs attributable to this proposed amendment. To the contrary, OMIG anticipates cost savings from eliminating costly and resource intensive administrative hearings and increased revenue resulting from the promulgation of this regulation as a result of an anticipated increased ability to identify responsible providers and to pursue reimbursement.
Costs to local government:
Local government is not expected to incur costs attributable to this proposed amendment. Revenue recovered that would otherwise evade collection due to delays and the opportunity for providers to hinder recovery will enable the state to reimburse local government's share of recouped funds.
Because failure to enact this regulation will result in currently unquantifiable additional costs due to the unknown quantity of future hearing requests should this regulation not be promulgated, precise cost savings cannot be projected at this time.
5. Local Government Mandates:
The proposed regulation imposes no new mandates on any county, city, town or village government; or school, fire or other special district.
6. Paperwork:
The proposed regulation change will create no additional paperwork.
7. Duplication:
This regulation change does not duplicate any other law, rule or regulation.
8. Alternatives:
OMIG invited comments from various small business groups and provider associations at an advisory meeting for this regulation held on November 5, 2008. No significant alternatives were suggested beyond minor language changes which have been incorporated in the final text. Leaving the regulation in its current form would impose additional costs, reduced program quality, and diminished revenues. As previously noted, leaving the regulation unchanged may jeopardize an unquantifiable amount in gross Medicaid recoveries annually.
9. Federal Standards:
The proposed regulation violates no federal statute or regulation but is necessary to bring State regulations into conformity with Federal regulations.
10. Compliance Schedule:
To be made effective upon publication and promulgation pursuant to the State Administrative Procedure Act.
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142 C.F.R. 433.139 and 42 C.F.R. 433.310-433.320
Regulatory Flexibility Analysis
1. Effect of Rule:
There are over 173,000 providers, such as physicians, nurses, home health aides, hospitals, etc. that are enrolled in the medical assistance program, all of which are potentially affected by this proposed rule. There are some local governmental entities that will be affected by this rule.
2. Compliance Requirements:
There are no reporting, recordkeeping, or other affirmative acts that a small business or local government will have to undertake to comply with this rule.
3. Professional Services:
Neither small business nor local government will require professional services to comply with this proposed rule.
4. Compliance Costs:
This rulemaking does not impose any additional costs on any regulated business or industry or local government to comply with the rule. There is no annual cost anticipated for continuing compliance with the rule. However, there may be an additional cost to regulated business or industry should they fail to comply with the regulations.
5. Economic and Technological Feasibility:
The proposed regulation would present no economic or technological difficulties to any small businesses or local governments that participate in the medical assistance program. This proposal does not impose a requirement for purchase or use of new technologies.
6. Minimizing Adverse Impact:
This proposed rule will not have an adverse economic impact on the ability of small businesses or local governments to comply with Department requirements, as this rule does not change the substance of the requirements but instead may impose additional costs only upon medical providers who are not in compliance with regulations.
7. Small Business and Local Government Participation:
OMIG invited comments from various small business groups and provider associations at an advisory meeting for this regulation held on November 5, 2008. No significant alternatives were suggested beyond minor language changes which have been incorporated in the final text.
Small businesses and local government entities affected by this regulation will have the opportunity to submit written comments after publication of a general notice of proposed rulemaking.
Furthermore, because provider participation in the Medicaid program is voluntary, providers who disagree with the regulatory scheme can choose to decline participation in the Medicaid program.
Finally, because the Office of the Medicaid Inspector General is an enforcement agency whose purpose is to detect, prevent and address fraud, and because participation is voluntary, input from providers from whom OMIG attempts to detect and prevent fraud will necessarily carry less weight than in rulemaking where provider participation is mandatory or where the purpose of the rule is not enforcement of wrongdoing by the regulated providers.
Rural Area Flexibility Analysis
1. Types and estimated numbers of rural areas:
Rural areas are defined as counties with a population under 200,000 and, for counties with a population larger than 200,000, rural areas are defined as towns with population densities of 150 or fewer persons per square mile. Forty-four counties in New York State with a population under 200,000 are classified as rural, and nine other counties include certain townships with population densities characteristic of rural areas. This rule will apply to all medical assistance program providers in rural areas.
2. Reporting, recordkeeping and other compliance requirements; and professional services:
There will be no additional reporting, recordkeeping, or other compliance requirements for rural providers regarding this rule. There are no professional services likely to be needed in a rural area to comply with this rule.
3. Costs:
There will be no initial capital costs or annual costs to comply with this rule for public or private entities in urban or rural areas.
4. Minimizing adverse impact:
These amendments will not have an adverse impact on parties in rural areas.
5. Rural area participation:
OMIG invited comments from various small business groups and provider associations at an advisory meeting for this regulation held on November 5, 2008. No significant alternatives were suggested beyond minor language changes which have been incorporated in the final text. Public and private interests in rural areas will have the same opportunity as public and private interests in urban areas to submit written comments after publication of a general notice of proposed rulemaking.
Job Impact Statement
1. Nature of Impact:
This proposed rulemaking would not affect current employment opportunities in the public or private sector. However, passage of this proposed rule will assist the state in avoiding the projected need to hire additional staff to address an anticipated significant increase in hearings. This projection is based upon a recent court decision affording medical providers an opportunity for hearings in certain circumstances when none have been previously offered.
2. Category and Numbers Affected:
Should this proposed regulation be enacted, employment opportunities will remain status quo. Should this proposed regulation fail to be enacted, it is anticipated that the State of New York will require additional hearing officers, attorneys, support staff, auditors, and possibly other types of personnel to conduct and participate in hearings that are not presently being conducted. The quantity of personnel projected to be needed is presently unknown, as the number of hearings that may be requested cannot be quantified at this time.
3. Regions of Adverse Impact:
Enactment of this proposed regulation would not have an adverse impact on jobs or employment opportunities. As such, there is no area of the state disproportionately affected.
