2019 ANNUAL REPORT
ANDREW M. CUOMO
GOVERNOR
ERIN E. IVES
ACTING MEDICAID INSPECTOR
GENERAL
2019 Annual Report 1
2019 Annual Report 2
Contents
Message from the Acting Medicaid Inspector General Page 4
General Overview Page 5
➢ History and Authority
➢ Mission Statement
➢ Annual Reporting
2019 Program Integrity Activities
➢ Executive Initiative Page 6
➢ Managed Care Page 8
➢ Audits Page 12
➢ Third-Party Liability Page 18
➢ Investigations Page 20
➢ Recoveries Page 25
➢ Cost Savings Page 26
➢ Collaborations and Outreach Page 28
Administrative Actions Page 30
Conclusion Page 31
2019 Annual Report 3
OMIG Organizational Chart
2019 Annual Report 4
Message from the Acting Medicaid Inspector General
I am pleased to present the 2019 Annual Report detailing the initiatives of the Office of
the Medicaid Inspector General (OMIG) to detect and prevent fraud, waste, and abuse
in the State’s Medicaid program. OMIG investigative and auditing activities resulted in
more than $2.9 billion in Medicaid recoveries and cost savings in 2019.
As the following Annual Report will detail, 2019 highlights include:
➢ Cost-avoidance measures that generated savings of more than $2.3 billion.
➢ Medicaid recoveries - which are generated through provider audits and
investigations –accounted for more than $552 million.
➢ New authorization to conduct annual program integrity reviews of Managed Care
Organizations (MCO) and Managed Long-Term Care Plans (MLTCP).
➢ More than 1,800 audits finalized with identified overpayments exceeding $234
million.
➢ Over 3,000 investigations opened and more than 2,700 completed.
Working closely with other State agencies and our law enforcement partners at all
levels, OMIG will continue to protect the integrity of the Medicaid program, which saves
taxpayer dollars and helps ensure high-quality care throughout the State’s health care
delivery system.
Sincerely,
Erin E. Ives
Acting Medicaid Inspector General
2019 Annual Report 5
General Overview
History and Authority
On July 26, 2006, Chapter 442 of the Laws of 2006 was enacted, establishing the Office
of the Medicaid Inspector (OMIG) as an independent office within the New York State
Department of Health (DOH). The legislation amended the Executive, Public Health,
Social Services, Insurance, and Penal laws to create OMIG and institute the reforms
needed to effectively fight fraud and abuse in the State’s Medicaid program. The
statutory changes separated the administrative and program integrity functions, while
still preserving the single state agency structure required by federal law. The Medicaid
Inspector General reports directly to the Governor.
OMIG is charged with coordinating the fight against fraud and abuse in the Medicaid
program. To fulfill its mission, OMIG performs audits and reviews of Medicaid services
and providers and works with other federal and state agencies that have regulatory
oversight or law enforcement powers.
Mission Statement
The mission of OMIG is to enhance the integrity of the NYS Medicaid program by
preventing and detecting fraudulent, abusive, and wasteful practices within the Medicaid
program and recovering improperly expended Medicaid funds, while promoting a high
quality of patient care.
Annual Reporting
As required by NYS Public Health Law (PHL) §35(1), OMIG must annually submit a
report summarizing the activities of the agency for the prior calendar year. This Annual
Report includes information about audits, investigations, and administrative actions,
initiated and completed by OMIG, as well as other operational statistics that
demonstrate OMIG’s program integrity efforts.
Amounts reported within this document represent the value of issued final audit reports,
self-disclosures, administrative actions, and cost savings activities. OMIG recovers
overpayments when it is determined that a provider has submitted or caused to be
submitted claims for medical care, services, or supplies for which payment should not
have been made. OMIG recovers these amounts by receipt of cash, provider withholds,
and/or voided claims. The recovery amounts presented in this report may be associated
with overpayments identified in earlier reporting periods. Identified overpayment and
recovery amounts reflect total dollars owed to the Medicaid program, as well as
adjustments related to hearing decisions, and stipulations of settlement.
2019 Annual Report 6
2019 Program Integrity Activities
OMIG conducts and oversees the Medicaid program integrity activities that prevent,
detect, and investigate instances of Medicaid fraud, waste, and abuse. OMIG
coordinates such activities with several NYS agencies including the DOH, the Office for
People with Developmental Disabilities (OPWDD), the Office of Addiction Services and
Supports (OASAS), the Office of Mental Health (OMH), the Office of Temporary and
Disability Assistance, the Office of Children and Family Services, the Justice Center for
the Protection of People with Special Needs (Justice Center), the NYS Education
Department (NYSED), the fiscal agent employed to operate the Medicaid Management
Information System (MMIS), as well as local governments and entities.
OMIG receives and processes complaints of alleged Medicaid fraud, waste, and
abuse. All allegations are reviewed and investigated, and if a credible allegation of fraud
is suspected, OMIG refers such cases to the NYS Attorney General’s Medicaid Fraud
Control Unit (MFCU), pursuant to applicable laws and regulations. The agency also
works closely with local, state, and federal law enforcement entities as part of its efforts
to protect the integrity of the state’s Medicaid program.
Executive Initiative: Managed Care Program Integrity Reviews
Chapter 57 of the Laws of 2019, which took effect April 1, 2019, added subdivision 36
to Social Services Law (SOS) §364-j, authorizing OMIG to conduct annual reviews of
MCOs and MLTCPs to assess compliance with contractual standards that prevent
fraud, waste, or abuse. Current reviews utilize contractual obligations in effect on or
after January 1, 2015, with the review period beginning no earlier than January 1,
2018. MCOs/MLTCPs are entitled to receive draft and final audit reports, as well as
hearing rights pursuant to 18 NYCRR Part 517 and Part 519 respectively.
OMIG, in consultation with the DOH, published on its website a matrix of the
contractual provisions subject to review related to program integrity for the review
period, providing:
➢ the contractual obligation;
➢ the performance standard;
➢ a measurement assessment; and,
➢ a benchmark.
The initial review period for the Managed Care Program Integrity Reviews (MCPIR) is
January – December 2018 and pertains to the Managed Care/Family Health Plus/HIV
Special Needs/Health and Recovery Plan Model Contract (Model Contract) dated
March 1, 2014 and as amended October 1, 2015.
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Fifteen program integrity obligations were selected for the initial review period, which
are divided into two broad categories:
➢ Fraud and Abuse Prevention
➢ Reporting Requirements
Pursuant to SOS §364-j(36)(c), where OMIG determines that an MCO is not meeting
its program integrity obligations under the Model Contract, OMIG may recover up to
two percent (2%) of the administrative component of the Medicaid premium paid to
the MCO for the period under review. OMIG will evaluate MCO performance
according to the standards outlined in each line of the Matrix and assess a score for
that line (between 0% and 100%), and then take the total average score for all Matrix
lines. The recovery percentage will be calculated based on the following average
scores:
OMIG initiated 15 mainstream managed care MCPIRs and received documentation
from the MCOs for evaluation. OMIG is currently reviewing the documentation
submitted by the MCOs in preparation for producing audit reports to the MCOs
identifying specific finding areas and recovery amounts.
2019 Annual Report 8
Managed Care
In NYS, several types of MCOs participate in Medicaid managed care, including
mainstream managed care plans, health maintenance organizations, prepaid health
service plans, MLTCPs, and Human Immunodeficiency Virus (HIV) Special Needs
Plans (SNP). OMIG’s program integrity initiatives in managed care include audits of
MCOs’ cost reports and related data, investigations of providers and enrollees, and
meetings between OMIG liaisons and MCOs’ Special Investigation Units (SIU) to
identify targets and discuss cases.
Managed Care Audit Activities
OMIG’s audit efforts include performing various match-based reviews utilizing data
mining and analysis to identify potential audit areas/targets. These audits led to the
recovery of inappropriate premium payments and identification of actions to address
systemic and programmatic concerns.
These efforts resulted in 483 finalized audits with more than $179 million in identified
overpayments. Highlights of managed care audit activities are described below.
Managed Care Annual Deceased Enrollee Audit
OMIG continues to audit managed care enrollment issues in several project
areas, including monthly premium payments made on behalf of deceased
enrollees. Local Departments of Social Services (LDSS) conduct first-level
reviews and submit retroactive disenrollment notifications to the MCOs to recover
premium payments paid after an individual’s date of death. OMIG performs
second-level reviews by comparing monthly premium payments paid to MCOs
against data provided by NYS’s Bureau of Vital Statistics, the New York City
(NYC) Bureau of Vital Statistics, and individuals who are indicated as deceased
on eMedNY. OMIG identifies monthly premium payments paid to the MCOs for
months subsequent to the enrollee’s month of death that were not voided by the
MCOs as part of the first-level reviews. OMIG finalized 98 audits and identified
more than $40 million in inappropriate premium payments paid on behalf of
deceased enrollees after their date of death.
MC - Family Planning Chargeback/MCO
Federal regulation 42 CFR 431.51 permits access to family planning and
reproductive services for Medicaid recipients. As a result, Medicaid managed
care enrollees may receive these services from any fee-for-service (FFS)
Medicaid provider, without referral or prior approval from the MCO. If the
enrollee’s MCO incorporates family planning and reproductive services as part of
its benefit package, the Model Contract includes a chargeback provision. Under
this provision, if a managed care enrollee seeks treatment from a provider
outside the MCO network, the provider is compensated by Medicaid, and the
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MCO agrees to reimburse Medicaid for the payments made to the non-network
provider. OMIG collaborated with DOH to finalize the criteria to identify these
family planning services and reconcile the claims subject to the chargeback with
the MCO. OMIG conducted a reconciliation where MCOs reviewed the claims
identified by OMIG to ensure they met the criteria and were not billed by one of
their network providers. OMIG finalized 13 chargeback audits identifying more
than $14 million in overpayments.
Any claim billed by a network provider that was removed from the MCO’s
chargeback liability was reviewed as part of the Family Plan Chargeback/FFS
project. This project resulted in 47 finalized audits with identified overpayments of
more than $1.5 million.
Foster Care
When a child is placed in agency-based foster care a per diem rate is paid to the
foster care agency responsible for the child’s care, and that child is no longer
eligible for Medicaid managed care. Currently, there are separate upstate and
downstate Welfare Management Systems (WMS), which are used for enrolling
recipients in the Medicaid program. As a result of these separate systems, a child
may be issued a duplicate client identification number, which creates the
possibility that duplicate Medicaid payments may be made.
After the child is placed in foster care, the New York State of Health (NYSoH),
LDSS, and New York City Human Resources Administration (NYC HRA) are
responsible for retroactively adjusting the enrollee eligibility file, notifying OMIG of
the retroactive disenrollment, and notifying the MCO to void any premium
payments received when the child was in agency-based foster care for the entire
payment month. OMIG then conducts a second-level review to identify instances
where a child was placed in agency-based foster care for the entire payment
month and the MCO did not void the premium payment. OMIG finalized 14
projects and identified overpayments of more than $17 million.
Incarceration Match
On an annual basis, OMIG conducts an incarceration match project. OMIG uses
Medicaid enrollee data from the Medicaid Data Warehouse (MDW) and
compares it to files provided by the NYS Department of Corrections and
Community Supervision and the NYS Division of Criminal Justice Services to
identify individuals who were incarcerated while also being listed on monthly
Managed Care enrollee rosters. Model Contract language allows for the recovery
of monthly premium payments from MCOs for enrollees listed on the monthly
roster, who are determined to be incarcerated for an entire payment month.
Following up on the first-level review conducted by the LDSS, OMIG has
routinely conducted a second-level review to recover inappropriately paid
premium payments for incarcerated Medicaid managed care enrollees. OMIG
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finalized 47 incarceration match audits, identifying more than $31 million in
overpayments.
Building upon an earlier project conducted by MFCU, OMIG began requesting
incarceration data directly from the county jails across NYS. This data provides
more detailed information, including periods of incarceration prior to sentencing,
to discover additional Medicaid enrollees who may not have been previously
identifiable in the NYS data alone. This additional information has the potential to
positively impact the results of future reviews.
Managed Care Project Teams
OMIG has six project teams, each tasked with the goal of improving and expanding the
agency’s program integrity work in Medicaid managed care. Staff from all OMIG
Divisions and regional offices participate on the teams with agency efforts being
coordinated by the project management office. OMIG’s six project teams oversee the
following focus areas:
➢ Data
➢ Managed Care Contract and Policy/Relationship Management (MCCPRM)
➢ Managed Care Plan Review
➢ Managed Care Network Provider Review
➢ Pharmacy
➢ Value-Based Payments (VBP)
Following are select highlights from the project teams:
Managed Care Network Provider Review
The Managed Care Network Provider Team finalized six OASAS provider
reviews; additional audits are in various stages of the audit process. While
conducting these reviews, OMIG auditors enhanced their understanding of the
following:
➢ complexities of reviewing network providers both at the provider and plan
levels;
➢ ensuring the validity of encounter data; and,
➢ the intricacies of auditing when there is a subcontractor involved with the
reporting of encounters.
Managed Care Plan Review
Team members initiated on-site visits with MLTCPs to discuss program integrity-
related processes and procedures. Similar to the mainstream managed care on-
site visits that were completed previously, these visits are part of a coordinated
2019 Annual Report 11
effort to gain a greater understanding of MLTCP business practices. While
MLTCPs receive significantly higher capitation rates than mainstream MCOs,
MLTCPs with fewer than 10,000 enrollees lack a SIU dedicated to handling
issues of fraud, waste, and abuse. OMIG conducted five MLTCP on-site visits
and found that the program integrity functions of the MLTCPs could be improved,
and there was a low volume of referrals for fraud, waste and abuse. OMIG will
use information gained from these on-sites to continue its collaboration with DOH
to strengthen program integrity requirements for the MLTCPs.
Value Based Payments
OMIG’s Value Based Payment (VBP) Team’s mission is to determine how value-
based payment systems are being implemented, identify potential areas for
improvement and make recommendations to DOH to help strengthen program
integrity in value-based payment systems. Since its inception, VBP Team
members have participated on the VBP Workgroup, which brings MCOs and
other state agencies together to discuss changes in the VBP Roadmap and
effects on VBP in the future. Several divisions within DOH gave presentations on
the Roadmap and changes that MCOs could expect in the coming year. OMIG’s
VBP Project Team will continue to monitor the progress of VBP implementation
and will collaborate with DOH to develop criteria for program integrity oversight
as the program grows.
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Audits
As part of OMIG’s efforts to protect the integrity of the Medicaid program, staff conduct
audits of services provided to beneficiaries. The objective of these audits is to assess
providers’ compliance with applicable federal and state laws, rules, and policies
governing the NYS Medicaid program, and to verify that:
➢ Medicaid-reimbursable services were rendered for the dates billed;
➢ appropriate rate or procedure codes were billed for services rendered;
➢ patient-related records are maintained and contain the documentation required
by regulations; and,
➢ claims for payment were submitted in accordance with DOH regulations and the
appropriate provider manuals.
Fee-For-Service Audit Activities
OMIG finalized 408 FFS audits that resulted in identified overpayments of more than
$23 million. The most common audit findings were associated with documentation;
specifically, missing, late or not properly authorized plans of care. These findings
reinforced to providers the importance of maintaining proper documentation. These
plans of care may have different titles across the various categories of service in the
Medicaid program, but they form the fundamental basis for authorized Medicaid
services. Below are some examples of FFS audits.
Licensed Home Care Services Agency (LHCSA)
Under the NYS Medicaid program, medically necessary nursing services may be
provided to eligible individuals in their homes by Registered Nurses (RNs) or
Licensed Practical Nurses (LPNs). A physician provides written orders or a letter
of medical justification, then a certified home health agency or a LDSS provides a
written assessment of the need for private duty nursing and authorizes a specific
number of hours of care.
Nursing services are reimbursed at hourly fees not to exceed those negotiated by
the LDSS, and approved by DOH, Office of Health Systems Management, and
the State Budget Director. Issues identified during these audits include:
➢ missing service documentation;
➢ billing for nursing services in excess of hours authorized;
➢ deficiencies in the nurse’s health assessment records, including lack of
tuberculosis tests; and
➢ absence of evaluation by the agency of the nurse’s performance.
OMIG finalized four audits with identified overpayments of more than $3 million.
2019 Annual Report 13
OASAS Opioid Treatment Program
An Opioid Treatment Program (OTP) is an OASAS-certified program where
methadone or other approved medications are administered to treat opioid
dependency. These programs encompass medical and support services
including counseling, educational, and vocational rehabilitation, and are designed
to support and help treat individuals with opioid-dependency issues, in many
cases by providing daily dispensing of necessary medication. If providers are not
following the applicable regulations and program requirements, there is the
potential for significant consequences for the very individuals relying on them for
life-saving services.
OMIG’s audits provide critical oversight of these very important programs. OTP
services are provided in either hospital-based or free-standing settings. OMIG
reviews clinical documentation to ensure OTPs are in compliance with applicable
regulations. Issues identified during these audits include:
➢ missing or late individual treatment or recovery plan review;
➢ missing or late signature on an individual treatment or recovery plan
review; and,
➢ failure to meet individual counseling requirements.
OMIG finalized one audit and identified overpayments of more than $4 million.
Electronic Health Records (EHR) Incentive Payment Program
In 2009, the United States Congress included provisions in the American
Recovery and Reinvestment Act allocating approximately $19 billion in federal
incentives to eligible Medicaid providers and hospitals for the adoption and
meaningful use of certified electronic health record technology (CEHRT). With
CMS approval, each state administers the program ensuring that the federal
incentives are issued to the eligible providers enrolled in the state’s Medicaid
program. In NYS, this program is referred to as the NY Medicaid EHR Incentive
Program, however on the federal level the official name was changed in 2018 to
the Promoting Interoperability Program. The program is designed to encourage
providers to replace paper-based systems with EHRs that will increase the
interoperability and patients´ access to health information while reducing costs
and increasing the overall efficiency of the country’s healthcare system.
To receive an incentive payment in NYS, providers must attest to their eligibility
through the DOH’s online portal known as the Medicaid EHR Incentive Program
Administrative Support Service. For providers’ first year of the program they must
attest to the adoption, implementation, or upgrade (AIU) of an EHR system
certified by the Office of the National Coordinator for Health Information
Technology. For subsequent years in the program, providers must attest to
2019 Annual Report 14
meaningful use of a certified EHR system by meeting federal objectives and
requirements.
The NY Medicaid EHR Incentive Program began paying incentives in 2011 and
will end in 2021. In accordance with a CMS-approved audit strategy, OMIG’s
post-payment audits of providers receiving the incentive payments in NYS, will
continue through the end of the federal fiscal year 2023. Where paid providers
are determined ineligible for the incentive, OMIG recoups the funds and repays
the federal government at 100% federal share.
To meet its audit objectives, OMIG continues to work closely with program
stakeholders, such as DOH, the Regional Extension Centers – NYC Regional
Electronic Adoption Center for Health (REACH), New York eHealth Collaborative
(NYeC), as well as program staff from other states.
In 2019, OMIG finalized 208 audits with identified overpayments of over $3
million which was returned to the Federal Government.
Self-Disclosure
OMIG operates the statewide mandatory self-disclosure program, which provides a
mechanism for Medicaid providers to report, return, and explain self-identified
overpayments. The self-disclosure program is administered in accordance with the
following statutory and regulatory authority:
➢ Affordable Care Act (ACA) of 2010 §6402 – which states that Medicaid and
Medicare overpayments must be returned within 60 days of identification, or by
the date any corresponding cost report was due, whichever is later.
➢ Title 42 of the United States Code (USC) §1320a-7k(d)(1) & (2) - requires a
person who has received an overpayment to report the overpayment, the reason
for the overpayment, and to return the overpayment within 60 days of
identification or by the date the corresponding cost report is due, if applicable.
➢ NYS PHL §32(18) – which states OMIG shall, in conjunction with the
commissioner, develop protocols to facilitate the efficient self-disclosure and
collection of overpayments and monitor such collections, including those that are
self-disclosed by providers. The provider’s good faith self-disclosure of
overpayments may be considered as a mitigating factor in the determination of
an administrative enforcement action.
➢ 18 NYCRR §521(7) – which requires the refunding of overpayments as part of a
provider’s compliance program.
To meet these requirements, providers identify and investigate possible fraud, waste,
abuse, or inappropriate payments they may have received through self-review,
implementation of compliance programs, and internal controls. OMIG’s self-disclosure
unit finalized 307 reviews with identified overpayments of more than $12 million.
2019 Annual Report 15
2019 Annual Report 16
Data Mining and Technological Support
OMIG’s Bureau of Business Intelligence (BBI) provides a comprehensive range of
services and functions that drive agency initiatives through the optimum use of data.
BBI utilizes resources such as eMedNY, Salient, and the MDW, to extract, organize,
analyze, and report data. This data analysis covers a wide range of provider types and
program areas and supports the effective operation of all OMIG divisions. In addition,
BBI frequently processes data requests from several federal, state, and county
government entities to assist with program integrity efforts.
BBI processed the following requests:
➢ 1,625 data requests, which consisted of Medicaid FFS and managed care
data extraction and analysis in support of:
❖ OMIG Division of Medicaid Audit (DMA), Bureau of Compliance (BOC),
and Division of Medicaid Investigations (DMI) activities;
❖ System Match and Recovery audits;
❖ CMS Payment Error Rate Measurement (PERM) audit;
❖ CMS Healthcare Fraud Prevention Partnership (HFPP) Data Analysis and
Review Committee (DARC);
❖ Office of the State Comptroller audits;
❖ U.S. Department of Health and Human Services Office of Inspector
General (HHS-OIG) audits;
❖ Unified Program Integrity Contractor (UPIC) Audits;
❖ United States Department of Justice (U.S. DOJ);
❖ District Attorney’s Offices;
❖ Department of Homeland Security;
❖ Medicaid EHR Incentive Program;
❖ OPWDD;
❖ OMH;
❖ Federal Bureau of Investigations (FBI); and
❖ Self-disclosure reviews.
➢ 165 statistical samples created for DMA audits and DMI investigations,
including:
❖ County Demonstration audits;
❖ UPIC audits;
❖ Self-disclosure reviews;
❖ Medicaid EHR Incentive Program audits; and
❖ Dental reviews.
2019 Annual Report 17
Positive Provider Reports
During the audit process there are instances when OMIG determines that - for the audit
period and objective reviewed - the provider has generally adhered to applicable
Medicaid billing rules and regulations. In these cases, OMIG issues an Audit
Summation Letter advising the provider that, pursuant to 18 NYCRR §517.3(h), the
audit is concluded and no further action on the provider’s part is required. These reports
are posted on the OMIG website as “Positive Reports.”
Audit Summations
Audit Department
2019
County Demonstration Program
11
Medicaid in Education
8
Provider
284
Rate
214
Total
517
2019 Annual Report 18
Third-Party Liability
Medicaid is the payor of last resort; however, there are instances when Medicaid
payments are made on claims for which third-party liability was not identified at the time
of service or Medicaid billing. Once these other third-party liability coverages are
discovered and confirmed, recovery of Medicaid overpayments for both FFS claims and
managed care encounter claims are made from the various third parties, including
providers, commercial insurance carriers, Medicare, casualty settlements, and the
estates of deceased Medicaid beneficiaries.
Medicaid Recovery Audit Contractor
Pursuant to the federal requirement under ACA, OMIG engaged a Recovery Audit
Contractor (RAC) to supplement the agency’s Medicaid program integrity efforts. The
RAC’s mission is to: reduce improper payments through the efficient detection and
collection of overpayments; to report suspected fraudulent and/or criminal activities; and
implement actions that will prevent future improper payments. Utilizing data mining to
identify improper payments and working with providers to recover any overpayments
helps to dissuade providers from submitting future improper claims. OMIG recovered
more than $67 million in overpayments as a result of these efforts, which was $14.9
million more than in 2018. In addition to the increase in recoveries, the efforts of the
RAC prevented additional improper payments.
Casualty and Estate Project
SOS §369 gives the State the authority to make recoveries from estates and personal
injury actions. Recovery of Medicaid funds from casualty and estate settlements are
performed by OMIG’s contractor, Health Management Systems’ (HMS), as part of third-
party retroactive recovery projects.
Casualty recoveries are made when a Medicaid recipient is injured, receives a
settlement as a result of that sustained injury, and Medicaid paid for the treatment of
injuries. Any amounts paid by Medicaid are then subject to recovery by the State from
those settlement funds. When a Medicaid recipient passes away, the estate and any
assets owned by the recipient are subject to recovery for Medicaid expenses for
services provided prior to the recipient’s death.
HMS uses a variety of sources to identify casualty and estate cases including contacts
with the LDSS, County Surrogate’s court filings, as well as numerous files and referrals
from other state and public entities.
The recoveries for the Casualty and Estate project increased by $13 million from $105
million in 2018 to $118 million in 2019. The increase can be attributed to multiple areas
of program and process improvements identified by OMIG and HMS collaboratively.
HMS focused on streamlining their casework and review process, enhancing quality
assurance, and increasing database reporting functionality. These additions and
2019 Annual Report 19
improvements reduced turnaround times resulting in more timely and increased
recoveries.
OMIG and HMS increased education and outreach to LDSS regarding the Casualty &
Estate program. Webinars were held with LDSS on county specific issues, as well as
general information regarding the database system utilized by HMS to track casework.
OMIG implemented a new process utilizing caseworkers designated to counties in order
to facilitate regular dissemination of information between the counties and HMS.
Additionally, HMS utilized their experience and large network of contacts to increase
outreach to attorneys, the bar association, and the court systems statewide. Bringing
more awareness of the program and processes has led to an increase in referrals and
efficiency in the flow of information utilized by HMS to recoup Medicaid funds for both
casualty and estate cases.
2019 Third-Party Liability and RAC Recoveries
Activity Area
Amount
Casualty & Estate
$118,626,318
Third-Party Liability
97,057,023
Recovery Audit Contractor
67,518,058
Home Health Care Medicare Maximization Project
21,074,286
Self-Disclosed TP Health Insurance
1,313,799
Total
$305,589,484
2019 Annual Report 20
Investigations
OMIG investigates allegations of fraud and abuse within the Medicaid program.
Enrolled and non-enrolled providers (e.g., home health aides, consumer directed
personal assistance program), entities, and recipients can all potentially be subjects of
an investigation. Allegations are analyzed utilizing a variety of methods, including but
not limited to, data mining, undercover operations, analysis of returned Explanation of
Medicaid Benefits (EOMB) letters, and interviews of complainants and subjects.
Investigations can lead to administrative actions, sanctions, referrals, and recoveries.
Investigative activities may involve partnering with a variety of law enforcement
organizations and entities. The outcomes of these partnerships are often the result of
years of work. As detailed in the examples below, the joint efforts over time by OMIG’s
investigative staff and other law enforcement agencies resulted in action against several
individuals during the period covered by this report.
Pharmacy Investigation
In March 2019, in Manhattan Supreme Court, the NYS Attorney General MFCU
announced an owner of three NYC-based pharmacies pled guilty to Grand Larceny and
was sentenced to two to six years in state prison, as well as being required to forfeit
more than $3.6 million in restitution to Medicaid. The owner paid kickbacks to have HIV
prescriptions filled at her pharmacies and billed for medication that was never actually
provided. During the investigation, MFCU requested the services and expertise of
OMIG’s pharmacy consultants who examined and assisted in the seizure of various
drugs. MFCU investigators sought and obtained an additional search warrant for a
second location. OMIG assisted with cataloging the drugs that had been seized at the
additional site. OMIG excluded the owner and the three pharmacies from the Medicaid
program in 2017.
Recipient Fraud Investigations
The Recipient Investigations Unit (RIU) is OMIG's single point of contact for all
Statewide Medicaid eligibility and prescription drug diversion investigations. The RIU
conducts investigations generated from complaints and referrals from the general
public, as well as other state, federal and local governmental and law enforcement
agencies. The RIU also conducts investigations as a result of internal data mining and
data analysis. The RIU coordinates with LDSS, NYSoH, and local, county, state, and
federal law enforcement and regulatory agencies to advance the integrity of the
Medicaid program. Outcomes of these investigations include prosecution, fiscal
recovery, or other administrative actions.
Recipient Fraud Investigation with Erie County
OMIG received an anonymous complaint alleging that a Medicaid recipient was
concealing her actual residential address. During the investigation, it was found
2019 Annual Report 21
that the recipient failed to report the correct number of people living in the
household and income of the household members, which would have made the
recipient ineligible for benefits. OMIG’s made a referral to the Erie County District
Attorney’s (DA) office and this investigation concluded with a prosecution of the
recipient. In February 2019, the recipient was charged with Grand Larceny in the
Third Degree, Welfare Fraud in the Third Degree and two counts of Offering a
False Instrument for Filing in the First Degree, all felonies. As a result of the
misrepresentation, the recipient received $17,687 in Medicaid benefits and
$14,966 in Supplemental Nutrition Assistance from July 2013 through October
2017, to which they were not entitled. In August 2019, the recipient pleaded guilty
to Welfare Fraud in the Fourth Degree, a Class E misdemeanor, signed a
Confession of Judgment, and entered into a repayment agreement with LDSS for
full restitution with ordered probation supervision.
Investigations with Suffolk County
OMIG participated in a joint investigation with Suffolk County LDSS Special
Investigations Unit. The investigation substantiated concealment of income
allegations against a NYS Medicaid recipient, proving that the recipient
concealed their true earnings from July 1, 2018 through July 25, 2019. If
reported, it would have made them ineligible to receive Medicaid benefits. In
November 2019, the recipient requested and entered into a voluntary repayment
agreement to repay Medicaid for any expenditures made on their behalf, totaling
$7,735.
In a second investigation, OMIG was contacted by the Suffolk County LDSS and
notified that the Suffolk County DA’s office was interested in pursuing charges
against a recipient for Medicaid Recipient Fraud. OMIG assisted in the
investigation by confirming the recipient was an owner of a transportation
company and provided additional income documentation proving the recipient
received income from the NYS Medicaid program through the transportation
company. On June 26, 2019, the recipient was sentenced to three to six years of
incarceration for Welfare Fraud in the Second Degree, a class C felony, for
misrepresenting his income on Medicaid recipient applications to the Suffolk
County LDSS. Additionally, a restitution judgment order was filed for $200,000.
Consumer Directed Personal Assistance Program and Recipient
Investigation
OMIG received an anonymous complaint alleging that a Medicaid recipient was
not reporting income and was also receiving services in the Consumer Directed
Personal Assistance Program (CDPAP) while being cared for by his wife, a
violation of CDPAP rules because a spouse is not permitted to provide services.
A joint investigation by OMIG and Suffolk County LDSS revealed that the
recipient was working and failed to report all income sources. The case was
referred to the Suffolk County DA’s office. In November 2019, the recipient pled
2019 Annual Report 22
guilty to Welfare Fraud in the Fifth Degree, a Class A misdemeanor, in violation
of New York State Penal Law § 158.05. The recipient was sentenced to a
conditional discharge and a restitution judgment order, totaling $290,037.
Explanation of Medicaid Benefits
EOMBs are used to confirm that recipients have received the services being billed to
the Medicaid program. Each month 5,000 EOMBs are sent to confirm an array of
services including transportation, medical, dental, and pharmacy, along with the date of
the service. Recipients are asked to verify they received the service(s) and, if there
were any issues, to report them to OMIG by mailing back the completed EOMB.
OMIG uses EOMBs to substantiate allegations of fraud, as a tool to interview recipients
who didn’t receive the services listed or had other fraud issues to report, and as an
investigative tool. Below are some examples of success in OMIG’s use of EOMBs.
High-Cost Prescriptions
The EOMB Unit targeted high-cost drugs, including doxepin 5% cream. Doxepin
is an expensive cream indicated for short-term use only, typically up to eight
days. One pharmacy had a high number of refills for this drug, which is unusual
due to the potential psychotropic side effects of the cream. Some reasons that
EOMBs were returned included:
➢ a prescription was refilled for a recipient who passed away three
months prior;
➢ recipients picked up the first prescription and did not pick up the refills
that were billed; and,
➢ recipients who never received or were prescribed the medication.
Based on 29 EOMBs received with allegations, this provider was referred to
HHS-OIG.
Optician Investigation
OMIG began an investigation of an optician after receiving a complaint from a
Medicaid recipient alleging the provider charged the recipient for services not
received. OMIG sent out 301 EOMBs to recipients of the provider and received
79 EOMBs containing additional allegations. Examples of allegations received
include the following:
➢ not knowing who the doctor was;
➢ not having used this optician;
➢ not having or wearing bifocals;
➢ not having received any of the services listed; and
➢ not having new glasses in years.
2019 Annual Report 23
OMIG investigators confirmed a sample of these allegations by conducting face-
to-face interviews with a selection of the recipients. Due to these findings, OMIG
referred the provider to the NYS Office of Professional Discipline (OPD). OPD
charged the provider with fraudulently practicing the profession of Ophthalmic
Dispensing due to the fact that the provider submitted numerous claims to
Medicaid for reimbursement for services that were never performed. The optician
surrendered his license and was excluded from the NYS Medicaid program in
January 2019.
Summary of Investigations by Source of Allegation and Region
Initial Source
Downstate
Upstate
Out of State
Totals
Opened
Completed
Opened
Completed
Opened
Completed
Opened
Completed
Anonymous
213
197
114
138
0
1
327
336
District Attorneys
5
40
1
0
0
0
6
40
EOMB
48
15
41
16
0
0
89
31
Enrolled Recipients
84
73
22
30
3
4
109
107
Federal Agencies
61
47
11
14
2
1
74
62
General Public
183
178
118
118
6
6
307
302
LDSS
7
15
29
56
0
0
36
71
Managed Care Plans
171
118
85
143
20
18
276
279
Managed Long-Term Care Plans
170
139
14
28
0
0
184
167
Non-Enrolled Providers
0
1
0
0
0
0
0
1
Non-Enrolled Recipients
12
12
4
5
0
0
16
17
Providers
65
107
51
56
2
2
118
165
State Agencies (including OMIG)
573
524
665
540
254
76
1,492
1,140
UPIC
9
0
0
0
0
0
9
0
Total
1,601
1,466
1,155
1,144
287
108
3,043
2,718
2019 Annual Report 24
Program Integrity Referrals to MFCU and Other Agencies
OMIG is required by law to refer suspected fraud and criminality to MFCU. OMIG also
refers its findings to other state and local agencies, including those responsible for
oversight of professional licensure, specifically, the NYSED’s OPD and DOH’s Office of
Professional Medical Conduct (OPMC). OPD and OPMC may take administrative action
against individuals who hold professional licenses.
Referrals to Other Agencies
Agency
2019
AG - Not MFCU
7
Internal Revenue Service
1
Law Enforcement Agency
55
LDSS
44
Local District Attorney
15
Local Municipality
3
MAS-Medical Answering Service
4
NYC Department for the Aging
1
NYC Department of Health
3
NYC HRA Bureau of Client Fraud Investigations
71
NYC Office of the Special Narcotics Prosecutor
5
NYS Bureau of Narcotic Enforcement
3
NYS Department of Environmental Conservation
1
NYS Department of Health
159
NYS Department of Justice
21
NYS DOH Office of Professional Medical Conduct
20
NYSED – Not Professional Discipline
10
NYSED – Office of Professional Discipline
112
NYS Justice Center
2
Out of State
1
UPIC
4
US Attorney
13
US Health and Human Services (HHS-OIG)
7
Total
562
Referrals to MFCU
Provider Type
2019
Capitation Provider
2
Child Care Institution
1
Clinical Psychologist
1
Clinical Social Worker (CSW)
2
Consumer Directed Aide
22
Dentist
5
Diagnostic and Treatment Center
2
Home Health Agency
12
Home Health Aide
3
Laboratory
4
Long Term Care Facility
2
Medical Appliance Dealer
4
Multi-Type
4
Multi-Type Group
1
Non-Enrolled Provider
33
Nurse
7
Owner
1
Pharmacy
27
Physician
28
Physicians Group
7
Podiatrist
1
Social Adult Day Care
3
Therapist
1
Transportation
33
Total
206
2019 Annual Report 25
2019 Recoveries
The chart below includes all OMIG recovery activities, which comprise audits,
investigations, third-party payments recovered from other insurers, Medicaid RAC
activities, and estate and casualty recovery projects. The recoveries represent both the
Federal and State share of funds and equal the actual dollars recouped by OMIG during
the reporting period. The recoveries reflect cash deposits and voids resulting from
OMIG and contractor audits, less any refunds paid to providers. The recovery amounts
presented in this report may be associated with overpayments identified in earlier
reporting periods. Some of these recoveries may have also appeared in data contained
in other areas of this report.
2019 Recoveries
Activity Area
Amount
Managed Care
$185,276,879
Casualty & Estate
118,626,318
Third-Party Liability
97,057,023
Recovery Audit Contractor
67,518,058
Provider
22,855,784
Home Health Care Medicare Maximization Project
21,074,286
Self-Disclosure
14,932,023
Rate
14,106,272
System Match and Recovery
5,436,128
County Demonstration Program
4,133,721
Self-Disclosed TP Health Insurance
1,313,799
Medicaid in Education
14,775
Investigation Financial Activities
(89,072)
Total
$552,255,994
2019 Annual Report 26
Cost Savings
Cost savings activities prevent inappropriate, duplicate, or erroneous Medicaid
payments from being made. OMIG’s cost savings are calculated as estimates based on
historical and current Medicaid claims data. Cost savings amounts are not monetary
recoveries. Cost savings initiatives are intended to save taxpayer dollars proactively and
protect the integrity of the Medicaid program. Each OMIG cost savings action or
initiative has its own methodology for calculating program costs that are avoided. For
example, OMIG utilizes program edits in the Medicaid billing system that deny provider
claims, thereby preventing improper Medicaid payments from being made; those denied
claims represent cost savings. In another example, when OMIG has an interaction with
a provider, the agency will subsequently compare billing patterns prior to the interaction
with those after to determine the cost savings attributable to OMIG’s actions.
OMIG utilizes an internal workgroup of cross-divisional staff to develop, review, and
approve its cost savings methodologies. This team reviews all cost savings initiatives on
an ongoing basis to identify and assess variations in the savings amounts reported.
Variations can occur naturally over time for any of OMIG’s initiatives, and the workgroup
ensures that methodologies are being reviewed on a timely basis and updated as
needed. As a result of these proactive efforts, OMIG saved NYS taxpayers more than
$2.3 billion. Some examples of these activities are outlined below.
Pre-Payment Insurance Verification
OMIG’s third-party liability contractor, HMS, performs pre-payment insurance
verification (PPIV) services and third-party retroactive recovery projects. For this project,
HMS identifies and loads new third-party health insurance segments to the MMIS,
establishing Medicaid as the payor of last resort to make sure the appropriate insurer
will be billed first. PPIV cost avoidance for 2019 was more than $2.2 billion, an increase
of over $224 million from calendar year 2018. The increase can be attributed in part to:
➢ Expanding the scope period from 6 months to 12 months to look for overlapping
insurance coverage.
➢ Streamlining verification methods enabled HMS to clear up a large backlog of
PBM manual verifications by switching to an automated process.
➢ Making general process improvements to HMS’ system logic allowed them to
select and process more records. This enhancement links Medicaid members to
corresponding TPHI, allowing for more matches to be made, leading to additional
cost savings.
At the end of 2019, OMIG agreed to increase the number of weekly records from 20,000
to 25,000 allowing HMS to deliver additional segments. The results of this change will
be reflected in the cost avoidance reported in 2020.
2019 Annual Report 27
Exclusion Cost Savings
OMIG issued 706 notices excluding individuals and entities from the NYS Medicaid
program resulting in the removal of undesirable providers and significant cost savings.
OMIG calculates cost savings for those excluded providers that had previously been
enrolled and billing as FFS providers in the program.
In addition to the actions taken by OMIG based on unacceptable practices discovered
during investigations or audits of providers, there are derivative actions that originate
from other agencies including OPD, OPMC, HHS-OIG and MFCU. OMIG also searches
the internet for press releases and articles that identify providers that have been
arrested or convicted of health care related crimes. OMIG then contacts the appropriate
court to obtain the pertinent documents to take administrative action against the
provider. Cost savings are counted as Exclusion/Terminations - External, if the
administrative action is a result of an outside agency/source. However, if the
administrative action is a result of an OMIG investigation and/or referral to one of its
partners, it’s counted as Exclusion/Terminations - Internal.
Recipient Medicaid MC Benefits
OMIG staff collaborated with the newly established Consumer Investigations Unit (CIU)
within DOH. The meeting was set up to establish and reinforce OMIG’s referral
processes and methods of working collaboratively to close Medicaid benefits when an
investigation revealed fraudulent activity. Additionally, the discussion covered DOH’s
responsibilities in closing a Medicaid benefit, and what actions OMIG could take to
streamline the process. OMIG and DOH established direct contacts to refer cases and
will continue to refer investigative findings to this new unit. The CIU will also send
referrals to OMIG when they suspect fraudulent activity. Our collaboration with CIU
ensures that benefits are closed when our investigation is completed which are then
counted on our cost savings initiative. Cost Savings associated with these closed
benefits were more than $650,000.
2019 Cost Savings Activities
Activity Area
Amount
Dental Claim Denials (Active Pre-Payment Review Providers) – Edit 1141
$748,689
Enrollment and Reinstatement Denials
35,560,417
Exclusions/Terminations – Internal
5,344,344
Exclusions/Terminations – External
4,896,806
Medical Claim Denials (Active Pre-Payment Review Providers) – Edit 1141
3,604,825
Medicare Coordination of Benefits w/Provider Submitted Duplicate Claims
11,912,408
Pre-Payment Insurance Verification Commercial
1,806,109,807
Pre-Payment Insurance Verification Medicare
402,418,357
Recipient Medicaid MC Benefits - Case Closures for False Information
650,607
Recipient Restriction
93,926,493
Total
$2,365,172,753
2019 Annual Report 28
OMIG Collaborations and Outreach
OMIG offers outreach and educational presentations about the Medicaid program to
providers and the public. Below are some examples of OMIG presentations:
HFPP Executive Board and Leadership Forum
OMIG attended the Health Care Fraud Prevention Partnership (HFPP) Executive Board
and Leadership Forum held in Washington, DC in September 2019. HFPP was
established in 2012 to conduct nationwide studies of providers to identify trends and
patterns of abusive billing practices. OMIG has been an active participant in HFPP since
2015. HFPP was created based on a Government Accountability Office
recommendation to CMS to develop a vulnerability analysis process throughout the
industry to get ahead of the “pay-and-chase” approach. Currently, there are 170
partners in HFPP. The September 2019 Executive Board and Leadership Forum was
held to update executive staff on the successes and future initiatives of HFPP. The
Executive Board Meetings are facilitated by CMS and are generally attended by MCO’s,
CMS, DOJ, Department of Labor, Coalition Against Insurance Fraud, and other federal
agencies. As a result of its ongoing involvement with HFPP, OMIG received a personal
invitation to attend the September 2019 meeting.
Medicaid Integrity Institute
In September 2019, OMIG staff attended the “Program Integrity in Medicaid Managed
Care” seminar at the Medicaid Integrity Institute (MII) in Columbia, South Carolina. MII
was developed by the CMS in collaboration with the U.S. DOJ, Office of Legal
Education to meet the training and education needs of state Medicaid program integrity
employees. OMIG presented to the participants on managed care program integrity
efforts and the many different initiatives put into place to enhance working relationships
with the MCOs. Some of the initiatives discussed were:
➢ Function of the designated SIU liaisons as the single point of contact;
➢ Enhance communication in regard to fraud referrals; and
➢ Quarterly meetings held with the MCO SIUs.
Wage Parity Reviews
The NYS wage parity law, PHL § 3614–c, requires employers within Suffolk,
Westchester, and Nassau counties and New York City to comply with established levels
of total compensation for home care workers. Wage parity increases are funded through
the Medicaid rates, and the law prohibits Medicaid payment for any episode of care
furnished by a home care aide who is compensated at a rate less than the minimums
established within the law. OMIG continues to work in collaboration with the NYS
Department of Labor (DOL) to conduct wage parity reviews of LHCSA.
2019 Annual Report 29
The purpose of the OMIG review has been to analyze a sample of employees and
determine if those employees received total compensation as defined under wage parity
law. Completed reviews are referred to DOL for further investigation and to enforce the
statutory wage requirements when providers are not paying home care workers in
compliance with wage parity parameters. OMIG concluded nine reviews which were
referred to DOL. Each referral included a detailed summary of OMIG’s initial findings to
assist DOL when conducting their audit. DOL completed an audit resulting from an
OMIG referral with more than $210,000 identified by DOL in audit findings.
2019 Annual Report 30
Administrative Actions
Sanctions – Exclusions
Sanctions that can be imposed on a provider by OMIG include censure, exclusion, or
conditional or limited participation in the Medicaid program (18 NYCRR §515). OMIG
imposed sanctions based upon any of the following:
➢ investigations, audits, or reviews that identified unacceptable practices as
defined by 18 NYCRR §515.2;
➢ a determination that the provider represented an imminent danger to the public
health or welfare;
➢ NYSED actions, such as license surrender, suspension, or revocation, for
Medicaid and non-Medicaid providers;
➢ actions taken by DOH’s OPMC involving professional misconduct and physician
disciplinary actions, including suspensions, revocations, surrenders, and consent
agreements;
➢ felony indictments and convictions of crimes relating to the furnishing or billing for
medical care, services, or supplies;
➢ Federal HHS-OIG exclusion actions; and/or
➢ ownership information and affiliations of excluded providers.
OMIG issued 706 exclusions and 133 censures. The NYS Medicaid Exclusion List
contains 7,313 Medicaid and non-Medicaid provider exclusions. This list is updated
daily (except holidays and weekends) and is available to the public on OMIG’s website,
www.omig.ny.gov.
Exclusions
Reasons for Exclusions
Number of
Actions
Affiliations – 18 NYCRR 504.1(d)(1)
81
Unacceptable Practice – 18 NYCRR 515.2
5
Indictments – 18 NYCRR 515.7(b)
92
Convictions – 18 NYCRR 515.7(c)
176
Imminent Danger – 18 NYCRR 515.7(d)
3
Professional Misconduct – 18 NYCRR 515.7(e)
157
Mandatory Exclusion – 18 NYCRR 515.8
192
Grand Total
706
2019 Annual Report 31
Conclusion
OMIG appreciates the opportunity to share the results of its Medicaid program integrity
activities for 2019. OMIG’s provider education and outreach programs, coupled with its
comprehensive audit and investigative efforts, and success in identifying and recovering
inappropriate Medicaid payments, play a vital role in preventing and detecting Medicaid
fraud and abuse, while promoting the delivery of high-quality care to millions of New
Yorkers. OMIG’s commitment to preventing, detecting, and rooting out fraud and abuse
in the Medicaid program remains unwavering.
