S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                   1069
 
                        2025-2026 Regular Sessions
 
                           I N  A S S E M B L Y
 
                              January 8, 2025
                                ___________
 
 Introduced by M. of A. PAULIN, ROSENTHAL, VANEL, SIMON, JACOBSON, SANTA-
   BARBARA,  KELLES,  McMAHON,  GONZALEZ-ROJAS, BURDICK, JENSEN, BEEPHAN,
   LUCAS, LUPARDO, STECK, SHIMSKY, WEPRIN,  HEVESI,  SEPTIMO,  LEVENBERG,
   SIMONE, BLUMENCRANZ, SEAWRIGHT, RAMOS, SAYEGH, GIBBS, TAPIA, BRABENEC,
   DINOWITZ, RAGA, MEEKS, DAVILA, WOERNER, DE LOS SANTOS -- read once and
   referred to the Committee on Health
 
 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.
                                                            LBD02919-01-5
 A. 1069                             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" MEANS ANY FUNDS THAT A PROVIDER RECEIVES OR RETAINS,
 TO WHICH THE PROVIDER IS NOT, AFTER APPLICABLE RECONCILIATION,  ENTITLED
 UNDER THE MEDICAL ASSISTANCE PROGRAM.
   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
 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-
 A. 1069                             3
 
 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) IF THE PROVIDER HAS WAIVED ITS RIGHT TO A HEARING, OR IF A PROVID-
 ER  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
 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.
 A. 1069                             4
 
   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
 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.
 A. 1069                             5
 
   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 January 1, 2028.