HFMA REGION 2 ANNUAL FALL INSTITUTE: OMIG DEVELOPMENTS-2010

1. HFMA REGION 2 ANNUAL FALL INSTITUTE: OMIG DEVELOPMENTS-2010 JAMES G. SHEEHAN MEDICAID INSPECTOR GENERAL 518 473-3782 James.Sheehan@omig.ny.gov WWW.OMIG.NY.GOV

2. 2011-12 WILL BE THE MOST DIFFICULT BUDGET YEAR FOR NEW YORK AND OMIG • Administration must address budget, cash, and taxpayer accountability issues “eliminating wasteful spending, and fighting fraud and abuse.” • State departments, school districts, health care providers, state parks, have all taken cuts-and will undoubtedly take more. • Enrollment in Medicaid has risen substantially as result of recession. • Increase in budget expectation for OMIG-recoveries and savings of $1.2 billion for FY 2010-2011 (more than double level in 2008-2009)NOTE: includes substantial third party cost avoidance. • High expectations and support for OMIG mission - Governor, Legislature, public, CMS. • Significant changes in law under Affordable Care Act.

3. OMIG CHALLENGES • Budget, program integrity, and compliance objectives for OMIG: • are improper payments being identified, reported, and recovered? • What are we doing to prevent improper payments? • How are we recovering improper payments? • Fairness and transparency- the basis for and the process for OMIG actions. How can health providers understand and plan for OMIG audits, reviews, matches of their activities? • Compliance mandates-every provider must have “effective” compliance program, including reporting of overpayments.

4. OMIG CHALLENGES • LEGISLATIVE CONCERNS: • REPUBLICAN TASK FORCE STATEMENT, JANUARY 2010-OMIG NEEDS TO INCREASE RECOVERIES FROM FRAUD, WASTE, AND ABUSE. “It’s time for a bare-knuckles effort to repossess the potentially billions of state dollars being lost to abuse, fraud, and waste,” Senator George Winner, Elmira.  • SENATOR Craig Johnson, Glen Cove - Proposes Legislative Commission on Medicaid Fraud Waste and Abuse “to review operations of OMIG.” • Assembly bills on audit sampling and projection.

5. OMIG CHALLENGES • OUTSIDE PERCEPTIONS OF NEW YORK MEDICAID HAVE TRAILED THE FACTS: • “You know, there are estimates that there’s $15 billion worth of fraud in Medicaid a year in New York City alone.” Senator Tom Coburn at yesterday’s Obama Health Summit • FACT: Actual CMS estimate: 1.5% improper payments to New York Medicaid providers in 2008.(Payment Error Rate Measurement program “PERM”) • “The biggest thing on fraud is to have undercover patients so that people know we’re checking on whether or not this is a legitimate bill.” Senator Tom Coburn at Obama Health Summit • FACT: New York has used investigators posing as undercover patients since at least the 1990’s

6. WHY CAN’T WE GO BACK TO THE GOOD OLD DAYS BEFORE OMIG? • “In an audit released last month, the (HHS) inspector general revealed that in New York City schools, 86 percent of the Medicaid claims that were paid from 1993 to 2001 lacked anyexplanation for why the services had been ordered... In Buffalo and other upstate schools, the auditors concluded that the figure was 56 percent for the same period.”* *- Source: New York Times article 2005

7. WHY DID THE LEGISLATURE CREATE OMIG? • 2005 New York Times Series • “The investigation found audits on Medicaid spending that were brushed aside, and reports on waste that appear to have been shelved.” • According to the Times, when “asked repeatedly to provide an in-depth explanation of their claim of major savings or for any state records or other documentation to back up the figures, department officials would not supply any.” • Fraud and abuse recoveries as percentage of Medicaid budget- • 2000=.5 % • 2003=.3% • 2004 <.2% (all as calculated by New York Times)

8. WHY DID THE LEGISLATURE CREATE OMIG? • CONSEQUENCES OF OLD MODEL:Spotlight by the Federal Government-2006 REPORT • “As the largest single Medicaid program in the nation, New York’s anti-fraud efforts over the last several years have not been proportionate to its vulnerability.” • “New York must do more to meet its program integrity obligations.” • “The Health Department's shift away from enforcing Medicaid antifraud rules and toward greater emphasis on educating providers on how to do things right [was] a shift it found troubling.” (New York Times summary)

9. OMIG – A Legislative Solution to Address Identified Issues • After a Joint, Bi-Partisan Legislative Conference Committee, in July 2006 Office of Medicaid Inspector General created as an independent entity separate from Department of Health. New law took effect in November 2006. • Legislative Intent of Enabling Statute:1 • To create a more efficient and accountable structure; • To reorganize and streamline the state's process of detecting and combating Medicaid fraud and abuse; and • To maximize the recoupment of improper Medicaid payments. • Requirement for Providers to Adopt Effective Compliance Programs:2 • “The legislature determines that there are key components that must be included in every compliance program and such components should be required if a provider is to be a medical assistance program participant.” 12006 N.Y. Laws, Chapter 442; N.Y. Public Health Law § 30. 2 N.Y. Social Services Law § 363-d.

10. OMIG’s Mission Our mission is to preserve the integrity of the New York State Medicaid program by preventing and detecting fraudulent, abusive and wasteful practices within the Medicaid program and recovering improperly expended Medicaid funds.1 1 N.Y. Public Health Law § 31.

11. “Abuse” & “Improper Payments” • Abuse • “Abuse means practices that are inconsistent with sound . . . medical or professional practices and which result in unnecessary costs . . ., payment for services which were not medically necessary, or payments for services which fail to meet recognized standards for health care.”1 • Similar provisions in other states. • Improper Payments • An improper payment is “any payment that should not have been made or that was made in an incorrect amount (including overpayments and underpayments) under . . . legally applicable requirements.”2 • 1-18 NYCRR § 515.1(b)(1). • 2 Federal Improper Payments Information Act of 2002; Improper Payments – Progress Made But Challenges Remain In Estimating and Reducing Improper Payments, GAO-09-628T (U.S. Government Accountability Office, April 22, 2009).

12. The Work of OMIG • Audit and Review Payments • Over 2000 final audits since October 1, 2008 (completed and posted on website) • Investigate Improper Payments • Causes, intent, extent • Educate Providers on Requirements and Compliance Methods, and Audit Results • Receive reports, refunds, and explanations of overpayments from providers under PPACA 6402 • Prevent Improper Payments (including exclusion of problem providers) • Refer and/or Assist Fraudulent Provider Prosecutions (by Medicaid Fraud Unit, US Attorneys) • Identify and Recover Payments Where Another Insuror is Responsible

13. THE WORK OF OMIG-AUDIT • FIELD REVIEWS-IMPROVEMENTS • At entrance conference, PPT lays out scope, purpose of audit, authority for audit • During audit, auditors expected to communicate what they are finding • At exit conference, summary sheet lays out reasons for disallowance of sampled claims • Provider has opportunity during audit, after exit conference, after draft audit to provide more information or rebut findings • New work plan will lay out sampling methodology in greater detail

14. THE WORK OF OMIG-AUDIT • FOCUS ON MEDICAL RECORDS AND ORDERS • IF SERVICE IS NOT DOCUMENTED, CANNOT BE BILLED • AUDIT TO REGULATION AND STATE PLAN • BUT-IF YOU HAVE WRITTEN STATEMENT BY DOH AUTHORIZING BILLING, OR WRITTEN RECORD OF ORAL STATEMENT,WE WILL GIVE THE BENEFIT OF DOUBT TO PROVIDER • IT IS NOT ENOUGH TO SAY “WE ALWAYS BILLED THIS WAY AND THEY ALWAYS PAID US.”

15. THE WORK OF OMIG-AUDIT • NURSING FACILITY REBASING SCHEMES • PERSONAL CARS ON COST REPORT • NO PHYSICIAN ORDERS FOR SERVICES, DRUGS, OR SUPPLIES • FORGED PHYSICIAN ORDERS • 8 HOURS OF WALKING FOR HOMEBOUND HOME HEALTH PATIENT • NO RECORD OF THRESHOLD SERVICE IN CLINIC

16. OMIG IS A PROGRAM INTEGRITY AGENCY • Focus on business processes, self-regulation, information • Deter and discourage improper payments on front end • Compliance • Clear, auditable rules • Program edits • Audit plan • Data mining • Communicate efforts and results • Recover improper payments quickly • Keep bad (quality or honesty) providers out • Investigate and refer fraudulent conduct

17. OMIG CORE PRINCIPLE: SOCIAL SERVICES LAW 363-d REQUIRES OF ALL MEDICAID PROVIDERS OVER $500,000 • 18 NYCRR 521-Regulation-”effective compliance program” with eight elements • Frequently Asked Questions • www.omig.ny.gov • Upcoming Webinar on compliance in November

18. Core OMIG Principle:Collaborate with Providers to Enhance Compliance • Program Integrity on Front-End (four “R”s) • Require, Recommend, Review and Reward effective compliance programs • “Effective” Compliance Program Reviews • Disclosure to state of overpayments received, when identified (over 80 disclosures in 2009, over 130 to date in 2010) (PPACA webinar, Exclusions webinar on website.) • Certification completed? • Risk assessment, audit and data analysis, remedial measures (elements 6 and 7) • Credit balance obligations

19. Core OMIG Principle:Communicate, Promote Transparency and Fairness • Annual work plan posted on website-FFY 2011 shortly • List of excluded persons on website • Each final audit report on website (approximately 2000 to date) • Established audit protocols • Audit survey to auditees • Over 80 presentations to trade and professional groups each year

20. Core OMIG Principles • Promote High Quality of Care • OMIG will protect the health and welfare of NYS Medicaid enrollees by promoting Medicaid program integrity at all levels of health care. • Promote Accountability and Measurement • OMIG will be a good steward of the taxpayer’s dollar and use the resources it has been given to efficiently and effectively accomplish its mission. • Achieve and Exceed Goals • OMIG will achieve or exceed externally defined financial goals consistent with our legal standards and audit rules, as demonstrated by complete, timely and accurate data.

21. Core OMIG Principle: Listen • Recognize that every human institution can make mistakes, and every administrative process can be improved, particularly at an agency which is only three years old. • Take seriously the concerns raised by provider groups about the extent and nature of our audits and reviews, the training and performance of our staff, and techniques to improve our performance • Take seriously concerns raised by beneficiaries and beneficiary groups about the care received from providers

22. Core OMIG Principle:Develop and Use Innovative Data Mining Capabilities The Future of Medicaid Program Integrity Through Data Mining • $200 Billion in claims in data warehouse • End-to-end integration • Using new databases and analytic tools (Salient and others) • Identify and communicate compliance data analysis processes which will identify problem at source • Identify and communicate issues discovered through data mining • Train and equip employees and organizations in data analysis techniques

23. THE CHANGING LANDSCAPE OF DATA MINING AND PROVIDER RECOVERIES BY GOVERNMENT • Driven by the Improper Payments Act of 2002, and Deficit Reduction Act of 2005 • What improper payments occur? Who gets them? • What systems and controls were in place (at payor, provider, and enrollee) to prevent and detect improper payments? • What improvements are required to systems and controls to prevent recurrence? • Measurement of systems errors • Using same systems approach to billing “errors” and never events that has been developed for medical errors and never events

24. Data Mining • We need to balance sensitivity (ability to detect improper payments) vs. reliability (risk of false positives) • High error rates/multiple attributes • Fair treatment, due process, prompt resolution • Ultimate goal - providers should be able to build data mining systems in on front end, not wait for government detection of improper claims • Ultimate goal-disclosures by providers of identified errors

25. DATA MINING IN HEALTH CARE-TRADITIONAL FOCUS ON CLAIM, NOT PROVIDER • CMS-National Correct Coding Initiative Coding Policy Manual for Medicare Services • Claimcheck (McKesson product)-how does this claim pass two million edits • NY EMEDNY system-several thousand edits (refill too soon, subject to prior approval, deceased patient) • Ingenix Claims editing Knowledgebase • Claims Clearinghouse reviews  • IPRO observation bed and DRG reviews

26. DATA MINING IN HEALTH CARE-MOVING BEYOND FOCUS ON CLAIM • Disease states (ICD-9) • Claims history (this provider) • Claims history (all providers) • Encounter data-this provider • Demographic data from external sources • Regression analysis-run patients or providers with this result backwards • Attempts by this provider

27. OMIG DATA MINING INITIATIVES • IDENTIFYING CAUSES OF IMPROPER PAYMENTS: THE DECEASED PATIENTS PROJECT • Billing by Medicaid providers for months after October 2009 • 300 deceased patients billed for month; number drops with each mailing

28. THE DECEASED PATIENTS PROJECT • “NOT DEAD” • BILLING ERROR • SILENCE-two months • BORN AGAIN (OR AT LEAST REENROLLED) • RULES ALLOW BILLING

29. PAYMENTS FOR DECEASED PATIENTS PROJECT • PATIENT’S BODY TRANSFERRED TO TEACHING HOSPITAL AFTER DEATH FOR ORGAN HARVESTING-CODED AS ADMISSION • PATIENT’S MEDICAID NUMBER VISITED THREE DENTAL CLINICS IN WEEK AFTER DEATH • PICKUP OF CONTROLLED SUBSTANCES BY PARTNER AFTER PATIENT DEATH • DELIVERY OF BED AFTER PATIENT DEATH • ROSTER BILLING

30. DATA MINING: CREDENTIALING AND EXCLUSION • WHERE ARE THEY NOW? PROBLEM DOCTORS , NURSES, PHARMACISTS, THERAPISTS, AND PROVIDERS-STRAIGHTFORWARD FALSE CLAIM ACTION-CMS, OIG CITE 1999 STANDARD • KEEPING BAD AND EXCLUDED PROVIDERS OUT OF HEALTH CARE- USING AUTOMATED BACKGROUND CHECKS, PRIOR LICENSE ACTIONS, PRIOR EXCLUSIONS (state and federal) • CMS and OIG-all billing for services provided or ordered by excluded persons cannot be paid from federal programs

31. EXCLUSIONS • Section 1932(d)(1) of the Social Security Act prohibits organizations: • from having an employment, consulting, or other agreement with an individual or entity for the provision of items and services that are significant and material to the entity’s obligations under its contract with the State where the individual or entity is debarred, suspended, or excluded.

32. Effect of Exclusion From Participation in Medicaid • September 1999 OIG bulletin • No excluded person can receive any compensation from federal health care programs • In effect, this bars even janitors if their compensation is derived in any part from Medicaid • http://www.oig.hhs.gov/fraud/docs/alertsandbulletins/effected.htm

33. Provider Exclusions – State Medicaid Directors Letter 08-003 and 09-001 (available on CMS website) • Issued on June 12, 2008 and January 2009 • Reminds States of their duty to report to HHS-OIG about excluded persons • Reminds States of the consequences of paying excluded providers • Recommends that providers screen employees and contractors for excluded individuals both prior to hiring and contracting and periodically thereafter

34. Data MiningPayment Controls & Monitoring • POS card swipe machines to ensure member is present when service allegedly was performed-real time reporting • Selection of providers with high improper payment rates for prepayment review of claims • Home health worker call in on arrival or departure from patient home • Edit 1141-prepayment review • GPS on ambulettes

35. MedicaidData Matches/Demographics-What Projects Tell Us About Provider Systems? • Men having babies • Fillings in crowns • Deceased enrollees • Home health services during hospital stay • Prescriptions filled during hospital stay • OIG/HHS – “high error rate providers”

36. Conclusion • COMMITMENT TO FAIR PROCESS AND TRANSPARENCY • COMMITMENT TO LISTEN TO AND ADDRESS CONCERNS RAISED BY PROVIDERS AND BENEFICIARIES • IDENTIFY, MEASURE AND ADDRESS SYSTEMS CAUSES OF IMPROPER PAYMENTS • FOCUS ON PROVIDERS AND NETWORKS, NOT JUST CLAIMS • GOVERNMENT NEEDS TO FIND WAYS TO GET RESULTS OF DATA MINING AND AUDIT INTO HANDS OF PROVIDERS AND ASSOCIATIONS • PROVIDERS NEED TO RESPOND THROUGH SYSTEMATIC COMPLIANCE EFFORTS TO INFORMATION FROM DATA MINING AND AUDIT

37. FREE STUFF • Mandatory compliance program-hospitals, managed care, all providers over $500,000/year • Over 1500 provider audit reports, detailing findings in specific industry • 2010-11 work plan issued shortly Listserv (put your name in, get emailed updates) • New York excluded provider list OMIG website-WWW.OMIG.NY.GOV