The Office of the Medicaid Inspector General (OMIG) is the state agency within the Department of Health which is charged with investigating compliance with the requirements of the New York Medicaid program. OMIG regularly works with other state and federal government agencies such as the federal Centers for Medicare and Medicaid Services, the New York Bureau of Narcotic Enforcement, and the Medicaid Fraud Control Unit to rout out fraud and abuse in the program. OMIG also retains the power to exclude individuals from participation in the Medicaid program, a penalty which can have disastrous consequences for providers.
As part of its duties – and in a similar fashion to Medicare and third-party insurers – OMIG routinely audits the activities of healthcare providers, pharmacies, medical-equipment companies, nursing homes and other health-related businesses in its search for fraudulent or otherwise impermissible billing practices. As a result, providers which bill and collect for patient services rendered under the Medicaid program often find themselves on the receiving end of an OMIG repayment demand. Essentially, if OMIG has determined that services previously billed and collected for by a provider were not medically necessary, unsupported by medical records, or otherwise should not have been reimbursed, OMIG is entitled to recoup those funds from the provider.
Although providers are entitled to appeal rights, there remains the possibility that a provider will be left with a final determination by OMIG that it owes tens or even hundreds of thousands of dollars back to the Medicaid program after its appeal rights are exhausted, which the provider may not be in a financial position to immediately repay.
As of July 2021, however, OMIG has developed and implemented a process which allows providers to apply for relief in the event that the results of an OMIG audit pose a financial hardship to the provider. Specifically, providers who are in receipt of a final audit report may contact OMIG and request a Financial Hardship Application. Following completion of the application, OMIG will contact the provider and work with them to determine an appropriate repayment plan and hardship accommodations.
For reference a copy of a sample Financial Hardship Application may be found here. Based on the sample application, the amount of documentation providers will need to produce before OMIG will consider their request for any type of relief is extensive. Providers will not only need to produce their current financial information such as the amount of cash on hand, outstanding loans and business liquidity, but also information about whether the provider has received COVID-19 financial relief, income from bequests or legacies, and all of the provider’s business interests in other entities. Providers must also account for all assets transferred by the provider to other business interests or entities. Accordingly, providers should seriously consider whether they are willing to make these disclosures before deciding to seek hardship relief, and work with their accountants and legal counsel to ensure all disclosures are accurate and complete.
Note that OMIG has previously been amenable to allowing extended repayment of liabilities in the specific context of voluntary self-disclosures of overpayments by providers as an inducement for providers to make such disclosures. Extended repayment options are also offered by CMS in some instances with respect to recoupment of funds paid under the federal Medicare Program.
Overall, the creation of the financial hardship process now allows for some much-needed flexibility where a provider is faced with a final audit report and accompanying repayment demand which they are either unable to fully satisfy, or where doing so would present a legitimate financial burden.
Weiss Zarett Brofman Sonnenklar & Levy, P.C. is a Long Island law firm providing a wide array of legal services to the members of the health care industry, including corporate and transactional matters, civil and administrative litigation, healthcare regulatory issues, bankruptcy and creditors’ rights, and commercial real estate transactions.
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