Medicaid Investigation Bill Approved by Legislature
Gottfried-Little Bill Will Return Focus to Fighting Medicaid Fraud and Abuse, Heads to Governor for Signature
June 23, 2011

The state agency that investigates health care providers under Medicaid would be required to follow some new rules under a bill (A.5686-A/S.3184-A) passed by both houses of the State Legislature this week. The bill would set forth standards for the Office of the Medicaid Inspector General (OMIG) audit process in order to protect honest providers and the patients they serve.

On Thursday, June 23, the bill, authored by Assembly Health Committee Chair Richard N. Gottfried, passed the Assembly by a vote of 113 to 0 and carried bi-partisan co-sponsorship from 65 Assembly Members. The Senate bill, sponsored by Senator Betty Little, passed unanimously (62 to 0) on Monday, June 20, with 11 additional co-sponsors. The legislation requires approval by the Governor to become law.

“To crack down on Medicaid fraud, I helped write the law that set up the Office of the Medicaid Inspector General,” said Assembly Member Gottfried. “The Office of the Medicaid Inspector General is catching a lot of bad guys and recovering hundreds of millions. But it’s also grabbing many innocent health care providers and accusing them of wrongdoing for simple clerical errors or legitimate disagreements about medical necessity.”

Key provisions of the bill would change current practices by requiring:

  • When OMIG audits a small sample of a provider’s claims and then applies the findings to all that provider’s claims, OMIG must disclose its sampling methodology, which must be statistically valid.
  • When OMIG demands repayment from a provider because of an unintentional administrative or technical error, the provider will be given 30 days to submit a corrected claim.
  • If a service was provided in proper compliance with Medicaid rules at the time of service, payment cannot be denied because those rules were changed later.
  • Consumer protections for a fair hearing when an investigation is declared by OMIG.

“The bill simply provides some basic fairness and reasonable rules,” Gottfried added.