Sheehan’s Top Ten Implications for Medicaid Program Integrity

I attended the Fall Meeting of the New York State Bar Association’s Health Law Section on Saturday, October 23, 2010. The program was entitled Health Care Reform: Understanding the Implications. It was an informative program and a good opportunity to network with members of the New York State Health Care bar.

Jim Sheehan, the New York State Medicaid Inspector General, was one of the presenters. He gave his top 10 implications for New York State Medicaid Program Integrity:

10. OIG Fiscal Year 2010-11 Workplan. The workplan has a number of items that focus on New York health care providers. Mr. Sheehan noted that OIG equated meeting the conditions of participation with qualifying for Medicare payment in some of its descriptions of workplan items, which OMIG has been criticized for doing in its audits.

9. New York State’s health care reform implementation website. Mr. Sheehan and other presenters encouraged everyone to visit this site to learn about New York’s efforts to implement federal health care reform.

8. Prescriptions for Oxycodone. Medicaid pays for this drug, which is at the center of a health care crisis. Too many people are dying from an overdose, and the street value of the drug is incentivizing unscrupulous beneficiaries, physicians and pharmacies to commit fraud to make a quick buck.

7. PPACA Sunshine Act Provisions. Drug, medical device, biological, and medical device companies have to report direct payments over $10 to physicians and teaching hospitals beginning March 31, 2013. This information will be made available to the public. Some drug companies have been making this information available already under the terms of their corporate integrity agreements.

6. Media Focus on Physician Payments from Drug Companies. Organizations like Pro Publica will be publicizing this information and using media outlets to inform the members of the public. Doctors should be ready for questions from their patients.

5. Medicaid RACs. CMS is rolling out the rules for Medicaid recovery audit contractors this fall. OMIG hopes to have a contract in place early next year. As Mr. Sheehan noted, adding yet another auditor to the mix is overkill at this point.

4. The most expensive piece of medical equipment is a doctor’s pen. CMS has issued regulations (42 CFR § 424.516(f)) that requires physicians to keep orders for certain services (home health, DME, prosthetics and orthotics) for seven years. The medical records must document the required face-to-face encounter for home care certifications and DME.

3. Credentialing and Exclusion. PPACA requires states to deny or terminate enrollment of any provider or supplier who has been terminated by another state’s Medicaid program or Medicare. Mr. Sheehan noted the use of the word “terminated” rather than “excluded,” and questioned whether they mean the same thing. In New York, OMIG can terminate a provider without cause and without any due process.

2 and 1. Retention of Ovepayment = False Claim. PPACA obligates a provider to report and return any overpayments to CMS, the State, the fiscal intermediary or carrier within 60 days after the date the overpayment is identified or the date of any corresponding cost report. The failure to return an overpayment within the required 60 day period is defined as a false claim.

Mr. Sheehan made a distinction between two different types of overpayment situations at a nursing home. In one case, the nursing home discovers that it billed for services after the beneficiary had passed away (must return payment within 60 days of discovery). In the other case, the nursing home has advised the state that its rate was overstated in a prior year, but the state had not made the necessary adjustment. In that case, the obligation to return the overpayment is either satisfied by the report to the State or has not arisen yet because there has not been a reconciliation of the applicable cost report.

Mr. Sheehan has announced previously that OMIG will not enforce the 60-day repayment obligation until January 1, 2011. He expects a submission under OMIG’s self-disclosure protocol to toll the 60-day period. He isn’t sure yet whether OMIG will have the discretion to compromise any portion of the obligation to repay the overpayment or even work out a repayment plan with the provider.

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