S T A T E O F N E W Y O R K
________________________________________________________________________
5329--B
2023-2024 Regular Sessions
I N S E N A T E
March 2, 2023
___________
Introduced by Sens. HARCKHAM, FERNANDEZ, KENNEDY, MAY, WEBB -- read
twice and ordered printed, and when printed to be committed to the
Committee on Health -- reported favorably from said committee and
committed to the Committee on Finance -- committee discharged, bill
amended, ordered reprinted as amended and recommitted to said commit-
tee -- recommitted to the Committee on Health in accordance with
Senate Rule 6, sec. 8 -- committee discharged, bill amended, ordered
reprinted as amended and recommitted to said committee
AN ACT to amend the public health law and the social services law, in
relation to the functions of the Medicaid inspector general with
respect to audit and review of medical assistance program funds and
requiring notice of certain investigations
THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
BLY, DO ENACT AS FOLLOWS:
Section 1. Section 30-a of the public health law, as added by chapter
442 of the laws of 2006, is amended to read as follows:
§ 30-a. Definitions. For the purposes of this title, the following
definitions shall apply:
1. "ABUSE" MEANS PROVIDER PRACTICES THAT ARE INCONSISTENT WITH SOUND
FISCAL, BUSINESS OR MEDICAL PRACTICES, AND RESULT IN AN UNNECESSARY COST
TO THE MEDICAID PROGRAM, OR IN REIMBURSEMENT FOR SERVICES THAT ARE NOT
MEDICALLY NECESSARY OR THAT FAIL TO MEET PROFESSIONALLY RECOGNIZED STAN-
DARDS FOR HEALTH CARE. IT ALSO INCLUDES BENEFICIARY PRACTICES THAT
RESULT IN UNNECESSARY COST TO THE MEDICAID PROGRAM.
2. "CREDITABLE ALLEGATION OF FRAUD" (A) MEANS AN ALLEGATION WHICH HAS
BEEN VERIFIED BY THE INSPECTOR, FROM ANY SOURCE, INCLUDING BUT NOT
LIMITED TO THE FOLLOWING:
I. FRAUD HOTLINES TIPS VERIFIED BY FURTHER EVIDENCE;
II. CLAIMS DATA MINING; AND
III. PATTERNS IDENTIFIED THROUGH PROVIDER AUDITS, CIVIL FALSE CLAIMS
CASES, AND LAW ENFORCEMENT INVESTIGATIONS.
EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD04963-03-4
S. 5329--B 2
(B) ALLEGATIONS ARE CONSIDERED TO BE CREDIBLE WHEN THEY HAVE AN INDI-
CIA OF RELIABILITY AND THE INSPECTOR HAS REVIEWED ALL ALLEGATIONS, FACTS
AND EVIDENCE CAREFULLY AND ACTS JUDICIOUSLY ON A CASE-BY-CASE BASIS.
3. "FRAUD" MEANS AN INTENTIONAL DECEPTION OR MISREPRESENTATION MADE BY
A PERSON WITH THE KNOWLEDGE THAT THE DECEPTION OR MISREPRESENTATION
COULD RESULT IN SOME UNAUTHORIZED BENEFIT TO THE PERSON OR SOME OTHER
PERSON. IT INCLUDES ANY ACT THAT CONSTITUTES FRAUD UNDER APPLICABLE
FEDERAL OR STATE LAW.
4. "Inspector" means the Medicaid inspector general created by this
title.
[2.] 5. "Investigation" means investigations of fraud, abuse, or ille-
gal acts perpetrated within the medical assistance program, by providers
or recipients of medical assistance care, services and supplies.
6. "MEDICAL ASSISTANCE," "MEDICAID," AND "RECIPIENT" SHALL HAVE THE
SAME MEANING AS THOSE TERMS IN TITLE ELEVEN OF ARTICLE FIVE OF THE
SOCIAL SERVICES LAW AND SHALL INCLUDE ANY PAYMENTS TO PROVIDERS UNDER
ANY MEDICAID MANAGED CARE PROGRAM.
[3.] 7. "Office" means the office of the Medicaid inspector general
created by this title.
8. "OVERPAYMENT" SHALL MEAN ANY AMOUNT PAID TO A PROVIDER FOR MEDICAL
ASSISTANCE IN EXCESS OF THE AMOUNT ALLOWABLE UNDER THE STATE PLAN FOR
MEDICAL ASSISTANCE IN EFFECT AT THE TIME OF SUCH SERVICE, OR ALLOWABLE
UNDER ANY FEDERALLY APPROVED MEDICAID WAIVER, EXPERIMENT, PILOT, OR
DEMONSTRATION PROJECT. NOTWITHSTANDING ANY STATE LAW TO THE CONTRARY, AN
OVERPAYMENT SHALL NOT INCLUDE CIRCUMSTANCES OF PROVIDER NONCOMPLIANCE
WITH STATE LAWS, REGULATIONS OR APPLICABLE PROMULGATED STATE AGENCY
POLICIES, GUIDELINES, STANDARDS, PROTOCOLS OR INTERPRETATIONS WHICH ARE
NOT A CONDITION OF PAYMENT, UNLESS THE PROVIDER OBTAINED PAYMENT BY
FRAUD OR DECEIT, OR WHERE THE PROVIDER WAS PREVIOUSLY PROVIDED NOTICE OF
ITS FAILURE TO COMPLY AND HAS FAILED TO CORRECT SUCH NONCOMPLIANCE. AN
OVERPAYMENT SHALL NOT INCLUDE NONCOMPLIANCE WITH ANY APPLICABLE PROMUL-
GATED STATE AGENCY POLICIES, GUIDELINES, STANDARDS, PROTOCOLS OR INTER-
PRETATIONS WHERE SUCH POLICY, GUIDELINE, STANDARD, PROTOCOL OR INTERPRE-
TATION IS FACIALLY, OR AS APPLIED, REASONABLY SUSCEPTIBLE TO MORE THAN
ONE MEANING, PROVIDED THE PROVIDER COMPLIED WITH ONE SUCH REASONABLE
MEANING.
9. "PROVIDER" MEANS ANY PERSON OR ENTITY ENROLLED AS A PROVIDER IN THE
MEDICAL ASSISTANCE PROGRAM.
§ 2. Subdivision 20 of section 32 of the public health law, as added
by chapter 442 of the laws of 2006, is amended to read as follows:
20. to, consistent with [provisions of] this title AND APPLICABLE
FEDERAL LAWS, REGULATIONS, POLICIES, GUIDELINES AND STANDARDS, implement
and amend, as needed, rules and regulations relating 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;
§ 3. The public health law is amended by adding two new sections 37
and 38 to read as follows:
§ 37. AUDIT AND RECOVERY OF MEDICAL ASSISTANCE PAYMENTS TO PROVIDERS.
ANY AUDIT OR REVIEW OF ANY PROVIDER CONTRACTS, COST REPORTS, CLAIMS,
BILLS, OR MEDICAL ASSISTANCE PAYMENTS BY THE INSPECTOR, ANYONE DESIG-
NATED BY THE INSPECTOR OR OTHERWISE LAWFULLY AUTHORIZED TO CONDUCT SUCH
AUDIT OR REVIEW, OR ANY OTHER AGENCY WITH JURISDICTION TO CONDUCT SUCH
AUDIT OR REVIEW, SHALL COMPLY WITH THE FOLLOWING STANDARDS:
1. RECOVERY OF ANY OVERPAYMENT RESULTING FROM ANY AUDIT OR REVIEW OF
PROVIDER CONTRACTS, COST REPORTS, CLAIMS, BILLS, OR MEDICAL ASSISTANCE
S. 5329--B 3
PAYMENTS SHALL NOT COMMENCE PRIOR TO SIXTY DAYS AFTER DELIVERY TO THE
PROVIDER OF A FINAL AUDIT REPORT OR FINAL NOTICE OF AGENCY ACTION, OR
WHERE THE PROVIDER REQUESTS A HEARING OR APPEAL WITHIN SIXTY DAYS OF
DELIVERY OF THE FINAL AUDIT REPORT OR FINAL NOTICE OF AGENCY ACTION,
UNTIL A FINAL DETERMINATION OF SUCH HEARING OR APPEAL IS MADE.
2. PROVIDER CONTRACTS, COST REPORTS, CLAIMS, BILLS OR MEDICAL ASSIST-
ANCE PAYMENTS THAT WERE THE SUBJECT MATTER OF A PREVIOUS AUDIT OR REVIEW
WITHIN THE LAST THREE YEARS SHALL NOT BE SUBJECT TO REVIEW OR AUDIT
AGAIN EXCEPT ON THE BASIS OF NEW INFORMATION, FOR GOOD CAUSE TO BELIEVE
THAT THE PREVIOUS REVIEW OR AUDIT WAS ERRONEOUS, OR WHERE THE SCOPE OF
THE INSPECTOR'S REVIEW OR AUDIT IS SIGNIFICANTLY DIFFERENT FROM THE
SCOPE OF THE PREVIOUS REVIEW OR AUDIT.
3. ANY REVIEWS OR AUDITS OF PROVIDER CONTRACTS, COST REPORTS, CLAIMS,
BILLS OR MEDICAL ASSISTANCE PAYMENTS SHALL APPLY THE STATE LAWS, REGU-
LATIONS AND THE APPLICABLE, DULY PROMULGATED POLICIES, GUIDELINES, STAN-
DARDS, PROTOCOLS AND INTERPRETATIONS OF STATE AGENCIES WITH JURISDICTION
AND IN EFFECT AT THE TIME THE PROVIDER ENGAGED IN THE APPLICABLE REGU-
LATED CONDUCT OR PROVISION OF SERVICES. FOR THE PURPOSE OF THIS SUBDI-
VISION, THE STATE LAW, REGULATION OR THE APPLICABLE PROMULGATED AGENCY
POLICY, GUIDELINE, STANDARD, PROTOCOL OR INTERPRETATION SHALL NOT BE
DEEMED IN EFFECT IF FEDERAL GOVERNMENTAL APPROVAL IS PENDING OR DENIED.
THE INSPECTOR SHALL PUBLISH PROTOCOLS APPLICABLE TO AND GOVERNING ANY
AUDIT OR REVIEW OF A PROVIDER OR PROVIDER CONTRACTS, COST REPORTS,
CLAIMS, BILLS OR MEDICAL ASSISTANCE PAYMENTS ON THE OFFICE OF MEDICAID
INSPECTOR GENERAL WEBSITE.
4. (A) IN THE EVENT OF ANY OVERPAYMENT BASED UPON A PROVIDER'S ADMIN-
ISTRATIVE OR TECHNICAL ERROR, THE PROVIDER SHALL HAVE THE LONGER OF
SIXTY DAYS FROM NOTICE OF THE MISTAKE OR SIX YEARS FROM THE DATE OF
SERVICE TO SUBMIT A CORRECTED CLAIM PROVIDED (I) THE ERROR WAS A GENUINE
ERROR WITHOUT INTENT TO FALSIFY OR DEFRAUD, (II) THE PROVIDER MAINTAINED
CONTEMPORANEOUS DOCUMENTATION TO SUBSTANTIATE THE CORRECT CLAIMS INFOR-
MATION, (III) SUCH ERROR IS THE SOLE BASIS FOR THE FINDING OF AN OVER-
PAYMENT, AND (IV) THERE IS NO FINDING OF ANY OVERPAYMENT FOR SUCH ERROR
BY A FEDERAL AGENCY OR OFFICIAL.
(B) NO OVERPAYMENT SHALL BE CALCULATED FOR ANY ADMINISTRATIVE OR TECH-
NICAL ERROR CORRECTED AS REQUIRED IN PARAGRAPH (A) OF THIS SUBDIVISION.
(C) "ADMINISTRATIVE OR TECHNICAL ERROR" SHALL INCLUDE ANY ERROR THAT
CONSTITUTES EITHER A (I) MINOR ERROR OR OMISSION OR (II)CLERICAL ERROR
OR OMISSION UNDER THE MEDICARE MODERNIZATION ACT OR CENTERS FOR MEDICAID
AND MEDICAID SERVICE REGULATIONS, AND SHALL INCLUDE HUMAN AND CLERICAL
ERRORS THAT RESULT IN ERRORS AS TO FORM OR CONTENT OF A CLAIM.
5. (A) IN DETERMINING THE AMOUNT OF ANY OVERPAYMENT TO A PROVIDER, THE
INSPECTOR SHALL UTILIZE SAMPLING AND EXTRAPOLATION CONSISTENT WITH THE
CENTERS FOR MEDICARE AND MEDICAID SERVICES POLICIES AS DESCRIBED IN THE
CENTERS FOR MEDICARE AND MEDICAID PROGRAM INTEGRITY MANUAL.
(B) THE FINAL AUDIT REPORT OR FINAL NOTICE OF AGENCY ACTION SHALL
INCLUDE A STATEMENT OF THE SPECIFIC FACTUAL AND LEGAL BASIS FOR UTILIZ-
ING EXTRAPOLATION AND THE INAPPROPRIATE USE OF EXTRAPOLATION SHALL BE A
BASIS FOR APPEAL. THIS SUBDIVISION SHALL NOT BE CONSTRUED TO LIMIT THE
RECOUPMENT OF AN OVERPAYMENT IDENTIFIED WITHOUT THE USE OF EXTRAPO-
LATION.
(C) UNTIL THE PROVIDER HAS WAIVED ITS RIGHT TO A HEARING, OR IF A
PROVIDER REQUESTS A HEARING, UNTIL THE HEARING DETERMINATION IS ISSUED,
THE PROVIDER SHALL HAVE THE RIGHT TO PAY THE LOWER CONFIDENCE LIMIT PLUS
APPLICABLE INTEREST IN FULFILLMENT OF THIS PARAGRAPH, THE APPLICABLE
S. 5329--B 4
LOWER CONFIDENCE LIMIT SHALL BE CALCULATED USING AT LEAST A NINETY
PERCENT CONFIDENCE LEVEL.
6. (A) THE PROVIDER SHALL BE PROVIDED AS PART OF THE DRAFT AUDIT FIND-
INGS A DETAILED WRITTEN EXPLANATION OF THE EXTRAPOLATION METHOD
EMPLOYED, INCLUDING THE SIZE OF THE SAMPLE, THE SAMPLING METHODOLOGY,
THE DEFINED UNIVERSE OF CLAIMS, THE SPECIFIC CLAIMS INCLUDED IN THE
SAMPLE, THE RESULTS OF THE SAMPLE, THE ASSUMPTIONS MADE ABOUT THE ACCU-
RACY AND RELIABILITY OF THE SAMPLE AND THE LEVEL OF CONFIDENCE IN THE
SAMPLE RESULTS, AND THE STEPS UNDERTAKEN AND STATISTICAL METHODOLOGY
UTILIZED TO CALCULATE THE ALLEGED OVERPAYMENT AND ANY APPLICABLE OFFSET
BASED ON THE SAMPLE RESULTS. THIS WRITTEN INFORMATION SHALL INCLUDE A
DESCRIPTION OF THE SAMPLING AND EXTRAPOLATION METHODOLOGY.
(B) THE SAMPLING AND EXTRAPOLATION METHODOLOGIES UTILIZED BY THE
INSPECTOR SHALL BE CONSISTENT WITH ACCEPTED STANDARDS OF SOUND AUDITING
PRACTICE AND STATISTICAL ANALYSIS.
7. THE REQUIREMENTS OF THIS SECTION SHALL BE INTERPRETED CONSISTENT
WITH AND SUBJECT TO ANY APPLICABLE FEDERAL LAW, RULES AND REGULATIONS,
OR BINDING FEDERAL AGENCY GUIDANCE AND DIRECTIVES. THE REQUIREMENTS OF
THIS SECTION SHALL NOT APPLY TO ANY INVESTIGATION BY THE INSPECTOR WHERE
THERE IS CREDIBLE ALLEGATIONS OF FRAUD OR WHERE THERE IS A FINDING THAT
THE PROVIDER HAS ENGAGED IN DELIBERATE ABUSE OF THE MEDICAL ASSISTANCE
PROGRAM.
§ 38. PROCEDURES, PRACTICES AND STANDARDS FOR RECIPIENTS. 1. THIS
SECTION APPLIES TO ANY ADJUSTMENT OR RECOVERY OF A MEDICAL ASSISTANCE
PAYMENT FROM A RECIPIENT, AND ANY INVESTIGATION OR OTHER PROCEEDING
RELATING THERETO.
2. AT LEAST FIVE BUSINESS DAYS PRIOR TO COMMENCEMENT OF ANY INTERVIEW
WITH A RECIPIENT AS PART OF AN INVESTIGATION, THE INSPECTOR OR OTHER
INVESTIGATING ENTITY SHALL PROVIDE THE RECIPIENT WITH WRITTEN NOTICE OF
THE INVESTIGATION. THE NOTICE OF THE INVESTIGATION SHALL SET FORTH THE
BASIS FOR THE INVESTIGATION; THE POTENTIAL FOR REFERRAL FOR CRIMINAL
INVESTIGATION; THE INDIVIDUAL'S RIGHT TO BE ACCOMPANIED BY A RELATIVE,
FRIEND, ADVOCATE OR ATTORNEY DURING QUESTIONING; CONTACT INFORMATION FOR
LOCAL LEGAL SERVICES OFFICES; THE INDIVIDUAL'S RIGHT TO DECLINE TO BE
INTERVIEWED OR PARTICIPATE IN AN INTERVIEW BUT TERMINATE THE QUESTIONING
AT ANY TIME WITHOUT LOSS OF BENEFITS; AND THE RIGHT TO A FAIR HEARING IN
THE EVENT THAT THE INVESTIGATION RESULTS IN A DETERMINATION OF INCORRECT
PAYMENT.
3. FOLLOWING COMPLETION OF THE INVESTIGATION AND AT LEAST THIRTY DAYS
PRIOR TO COMMENCING A RECOVERY OR ADJUSTMENT ACTION OR REQUESTING VOLUN-
TARY REPAYMENT, THE INSPECTOR OR OTHER INVESTIGATING ENTITY SHALL
PROVIDE THE RECIPIENT WITH WRITTEN NOTICE OF THE DETERMINATION OF INCOR-
RECT PAYMENT TO BE RECOVERED OR ADJUSTED. THE NOTICE OF DETERMINATION
SHALL IDENTIFY THE EVIDENCE RELIED UPON, SET FORTH THE FACTUAL CONCLU-
SIONS OF THE INVESTIGATION, AND EXPLAIN THE RECIPIENT'S RIGHT TO REQUEST
A FAIR HEARING IN ORDER TO CONTEST THE OUTCOME OF THE INVESTIGATION. THE
EXPLANATION OF THE RIGHT TO A FAIR HEARING SHALL CONFORM TO THE REQUIRE-
MENTS OF SUBDIVISION TWELVE OF SECTION TWENTY-TWO OF THE SOCIAL SERVICES
LAW AND REGULATIONS THEREUNDER.
4. A FAIR HEARING UNDER SECTION TWENTY-TWO OF THE SOCIAL SERVICES LAW
SHALL BE AVAILABLE TO ANY RECIPIENT WHO RECEIVES A NOTICE OF DETERMI-
NATION UNDER SUBDIVISION THREE OF THIS SECTION, REGARDLESS OF WHETHER
THE RECIPIENT IS STILL ENROLLED IN THE MEDICAL ASSISTANCE PROGRAM.
§ 4. Paragraph (c) of subdivision 3 of section 363-d of the social
services law, as amended by section 4 of part V of chapter 57 of the
S. 5329--B 5
laws of 2019, is amended and a new subdivision 8 is added to read as
follows:
(c) In the event that the commissioner of health or the Medicaid
inspector general finds that the provider does not have a satisfactory
program [within ninety days after the effective date of the regulations
issued pursuant to subdivision four of this section], THE COMMISSIONER
OR MEDICAID INSPECTOR GENERAL SHALL SO NOTIFY THE PROVIDER, INCLUDING
SPECIFICATION OF THE BASIS OF THE FINDING SUFFICIENT TO ENABLE THE
PROVIDER TO ADOPT A SATISFACTORY COMPLIANCE PROGRAM. THE PROVIDER SHALL
SUBMIT TO THE COMMISSIONER OR MEDICAID INSPECTOR GENERAL A PROPOSED
SATISFACTORY COMPLIANCE PROGRAM WITHIN SIXTY DAYS OF THE NOTICE AND
SHALL ADOPT THE PROGRAM AS EXPEDITIOUSLY AS POSSIBLE. IF THE PROVIDER
DOES NOT PROPOSE AND ADOPT A SATISFACTORY PROGRAM IN SUCH TIME PERIOD,
the provider may be subject to any sanctions or penalties permitted by
federal or state laws and regulations, including revocation of the
provider's agreement to participate in the medical assistance program.
8. ANY REGULATION, DETERMINATION OR FINDING OF THE COMMISSIONER OR THE
MEDICAID INSPECTOR GENERAL RELATING TO A COMPLIANCE PROGRAM UNDER THIS
SECTION SHALL BE SUBJECT TO AND CONSISTENT WITH SUBDIVISION THREE OF
THIS SECTION.
§ 5. Section 32 of the public health law is amended by adding a new
subdivision 6-b to read as follows:
6-B. TO CONSULT WITH THE COMMISSIONER ON THE PREPARATION OF AN ANNUAL
REPORT, TO BE MADE AND FILED BY THE COMMISSIONER ON OR BEFORE THE FIRST
DAY OF JULY TO THE GOVERNOR, THE TEMPORARY PRESIDENT OF THE SENATE, THE
SPEAKER OF THE ASSEMBLY, THE MINORITY LEADER OF THE SENATE, THE MINORITY
LEADER OF THE ASSEMBLY, THE COMMISSIONER, THE COMMISSIONER OF THE OFFICE
OF ADDICTION SERVICES AND SUPPORTS, AND THE COMMISSIONER OF THE OFFICE
OF MENTAL HEALTH ON THE IMPACTS THAT ALL CIVIL AND ADMINISTRATIVE
ENFORCEMENT ACTIONS TAKEN UNDER SUBDIVISION SIX OF THIS SECTION IN THE
PREVIOUS CALENDAR YEAR WILL HAVE AND HAVE HAD ON THE QUALITY AND AVAIL-
ABILITY OF MEDICAL CARE AND SERVICES, THE BEST INTERESTS OF BOTH THE
MEDICAL ASSISTANCE PROGRAM AND ITS RECIPIENTS, AND FISCAL SOLVENCY OF
THE PROVIDERS WHO WERE SUBJECT TO THE CIVIL OR ADMINISTRATIVE ENFORCE-
MENT ACTION;
§ 6. This act shall take effect on the thirtieth day after it shall
have become a law.
