A little noticed provision of the Patient Protection and Affordable Care Act of 2010 prohibits Federal financial participation in the Medicaid program with respect to any amount expended for items or services furnished by a provider to whom the State has failed to suspend Medicaid payments during any period when there is a pending investigation of a credible allegation of fraud against the provider, unless the State determines that there is good cause not to suspend payments. While the regulations requiring suspension of payments went into effect on March 25, 2011, New York's Office of Medicaid Inspector General (OMIG) is still working to determine how it will best meet the requirements of the law.
The suspension of payments provision, set forth in 42 CFR §455.23, should be of great concern to providers who could, without warning, find all or part of their Medicaid payments suspended, based solely on an allegation of fraud, accompanied by a minimal OMIG investigation which lends the allegation an indicia of credibility. Since the State will face subsequent Federal audits to determine its compliance with this provision, the OMIG will likely construe its duty to suspend payments broadly rather than run the risk of losing the Federal financial participation for those payments.
Like the current OMIG standard for Medicaid withholds, "reliable information that a provider is involved in fraud or willful misrepresentation "¦ or abused the program" (18 NYCRR §518.7), an administrative finding of a "credible allegation of fraud" is bound to be highly subjective, and based heavily upon factual circumstances involving the exercise of significant agency discretion. As such, it is likely to engender significant litigation, especially given the potentially high stakes associated with this remedy for the provider community. The subjectiveness of the criteria may likewise be vulnerable to challenges based upon equal protection, due process, as well as traditional article 78 standards of arbitrary and capriciousness that are applicable, generally, to many types of administrative determinations.
According to the Centers for Medicare & Medicaid Services (CMS), a "credible allegation of fraud" may be an allegation from any source that has been verified to have an indicia of reliability. A credible allegation of fraud may come from a variety of sources, including but not limited to: (1) whistleblower complaints; (2) patient complaints; (3) claims data mining; (4) false claims cases; (5) audits and (6) law enforcement investigations.
CMS recognizes that the States often receive mistaken or false allegations of fraud and has encouraged the States to not rely on a singular allegation of fraud but to look to the totality of the facts and circumstances of a particular investigation.
An allegation of fraud could be verified through interviews, an internal review of billing data or myriad of other investigatory techniques employed by the State.
Once OMIG verifies a credible allegation of fraud, it must refer the allegation to the Medicaid Fraud Control Unit, or other law enforcement agency for further investigation. At that time, OMIG must immediately suspend all Medicaid payments to the provider, unless the State has good cause not to suspend payments or to suspend them in part.
As per the regulation, the State may find good cause not to suspend payments if any of the following are applicable: (1) law enforcement officials have specifically requested a suspension not be imposed because it would compromise the integrity or jeopardize the investigation; (2) there are alternative available remedies that could be implemented to more effectively and quickly protect Medicaid funds; (3) the State finds, based upon submission of written evidence by the provider, that the payment suspension should be removed; (4) recipient access to items or services would be jeopardized by the payment suspension; (5) law enforcement declines to certify that a matter is still under investigation or (6) the State determines that the payment suspension is not in the best interests of the Medicaid program. In addition to the above factors, the State may impose only a partial suspension if the credible allegation focuses solely and definitively on a specific type of claim or arises from a specific business unit of a provider.
OMIG is required to send a notice to the provider within five days of the suspension, unless requested in writing by a law enforcement agency to temporarily withhold such notice. In the latter instance, notice to the provider must be sent within 30 days, unless law enforcement requests a further delay. In any event, the delay will not exceed 90 days. Once notice is received, the provider has the right to submit written evidence for consideration by the OMIG. Additionally, the applicable state administrative appeals process will apply to these suspensions.
While the regulation states that all suspension of payment actions under this provision will be temporary, the reality is that the suspensions could last several months or years. The suspension would last until the "agency or prosecuting authorities determine that there is insufficient evidence of fraud by the provider" or "legal proceedings related to the provider's alleged fraud are completed" (42 CFR §455.23(c)). Even the brief interruption of Medicaid payments can have a severe adverse effect on a provider's continued ability to provide services under the program.
Hiscock & Barclay, LLP has substantial experience in bringing challenges to the State's institution of Medicaid payment withholds. Should you need assistance in these matters, please contact Jerry Solomon (585-295-4342) in our Rochester Office or Linda Clark (518-429-4241) in our Albany Office.