Education Law - SchoolNET

Medicaid Compliance: Immediate Action Needed by School Districts

November 5, 2009

As the result of a recent $539 million settlement between New York State and the federal government, the Office of the Medicaid Inspector General (OMIG) has focused its regulatory eye on School Supportive Health Service Programs (SSHSP) — requiring school districts to take immediate action in three key areas:

First, school district providers receiving or submitting Medicaid claims for $500,000 or more annually must have a mandatory Medicaid compliance program in place immediately.
Second, OMIG, the agency charged with protecting the integrity of the Medicaid program, will begin targeted audits of school districts and preschool providers to recover Medicaid overpayments.
Finally, school districts and preschool providers must take immediate steps to ensure that individuals excluded from participation in the Medicaid program are not involved in ordering or providing medical care, services, and/or supplies under the Medicaid program.

Mandatory Medicaid Compliance Programs: Certification Required by December 31, 2009

Although many Medicaid providers were required to have effective compliance programs in place as of October 1, 2009, the impact of this on school districts was not well publicized by relevant agencies until very recently. However, earlier this year, OMIG added a “new” category of Medicaid providers required to have an effective ompliance program — those for whom a “substantial portion” of their business is Medicaid. This was later defined to include providers who received or claimed $500,000 or more from Medicaid in a consecutive 12-month period.

It is our understanding that this threshold will obligate many school districts, and perhaps some preschool providers, to have effective Medicaid compliance programs in place. An evaluation of whether a Medicaid compliance program is required should be immediately undertaken because certification as to compliance with the mandatory requirements must be made to OMIG by December 31, 2009. (This deadline, originally set for December 1, was extended by OMIG on November 13.)

What is a Medicaid Compliance Program?
The eight key components OMIG requires in a compliance program are:

Written policies that set forth compliance expectations; provide guidance; and describe reporting, investigation, and resolution of noncompliance
Designation of a compliance officer who reports directly to the senior administrator and the governing body
Effective and regular training of employees, executives, and the governing body
A reporting process that allows anonymous good-faith reporting (note: State Education Department (SED) and Department of Health (DOH), as part of the settlement with the federal government, now require that school districts establish a confidential disclosure mechanism enabling anonymous reporting. A specific process for this confidential disclosure can be found on the SED Web site, www.nysed.gov)
A policy of non-intimidation and non-retaliation for good faith reporting
Disciplinary policies that are fairly enforced and punish non-compliant behavior or a failure to report non-compliance
A method for responding to compliance issues that ensures non-compliance is promptly corrected and recurrence is prevented
Identification of compliance risks and regular evaluation based on the specific provider type

School districts and preschool providers of Medicaid services should immediately implement a Medicaid compliance program that meets these core elements. Because only boards of education have the authority to adopt such a policy, it may be necessary for school boards to schedule special meetings in order to have the program in place by the December 1 deadline. Please contact Hodgson Russ LLP if you require assistance developing your Medicaid compliance program or have questions regarding effective implementation.

When?
The mandatory Medicaid compliance programs were required to be implemented by October 1, 2009. On October 30, OMIG posted on its Web site the form to be used to certify compliance with the mandatory Medicaid compliance program requirements in 18 NYCRR Part 521. The certification states that the provider has adopted, implemented, and maintains an effective Medicaid compliance program that meets the legal requirements of Social Services Law § 363-d and 18 NYCRR Part 521.

Although the form itself does not indicate the date it is due to OMIG, an e-mail notification to Medicaid providers requires that OMIG receive the online form by December 31, 2009. Failure to certify may result in the loss of Medicaid revenue or administrative sanctions, including exclusion from the Medicaid program.

OMIG Audits Beginning January 2010

New York’s Medicaid Inspector General, Jim Sheehan, has announced an audit program to begin in January 2010 directed at SSHSP and PSHSP programs. As a condition of the $539 million settlement with the federal government, OMIG audit protocols must be approved by federal Centers for Medicare and Medicaid Services. OMIG will audit each and every school district and preschool provider that received $1 million or more from Medicaid annually (estimated to be nine districts in nine counties). OMIG will also select districts and preschool providers for audit that received $250,000 to $1 million in Medicaid annually. School districts and preschool providers receiving less than $250,000 annually from Medicaid may also be selected for audit, but this is likely to be a small group. OMIG will notify selected audit targets by letter. A process to identify and respond to an OMIG audit letter should be implemented.

Since OMIG audits of the SSHSP and PSHSP programs are highly likely, school districts and preschool providers of Medicaid services may want to seriously consider making use of the OMIG self-disclosure process in advance of being audited. Providers who self-disclose may be offered incentives by OMIG, such as forgiveness or reduction of interest payments for up to two years, extended repayment terms, waiver of penalties and/or sanctions, and potential protection from whistleblower actions. OMIG has provided a self-disclosure guidance document, found at http://www.omig.state.ny.us/data/images/stories/self_disclosure/omig_provider_self_disclosure_guidance.pdf. However, due to the complexity of issues surrounding self-disclosures, school districts and preschool providers of Medicaid services should obtain the advice of experienced legal counsel. Hodgson Russ suggests that an internal assessment of the SSHSP or PSHSP Medicaid billing and documentation practices be undertaken immediately to enable an assessment of whether self-disclosure in advance of audit would be beneficial to the particular provider.

Although the OMIG audit protocols have yet to receive CMS approval, an OMIG audit of an SSHSP program will likely be a sample audit of 100 paid claims. These audits will likely focus on documentation and qualification issues. As Medicaid services, these SSHSP and PSHSP services must be properly documented according to the applicable governing regulations (for example, progress notes) and must have been provided by Medicaid qualified providers. The claims in the sample identified by the audit as inappropriate or not supported with documentation will be extrapolated to the entire universe of Medicaid claims submitted by the school district or preschool provider. That projected amount will be identified as an overpayment and be required to be returned to OMIG.

School districts and preschool providers should consider actively managing the audit process from the very beginning and evaluate whether to request an administrative hearing after the final audit report is issued by OMIG. School districts and preschool providers are encouraged to seek legal counsel early in the process to assist with identifying and providing the appropriate documentation as part of the audit, to ensure an accurate and fair extrapolation methodology is used by OMIG and to assist with objections to audit findings in the administrative hearing processes.

The New York State School Boards Association has coordinated with OMIG to offer a webinar on Thursday, November 12, 2009, from 3:30-5 p.m. to further discuss this complicated process. Register for the webinar at https://www1.gotomeeting.com/register/619516008 or contact the NYSSBA.

Identify Excluded Individuals Immediately

Federal and state law prohibit the submission of claims or acceptance of payment for medical care, services, or supplies provided by an individual who is suspended, disqualified, or otherwise prohibited from participation in the Medicaid program. A person excluded from the Medicaid program (or any other federal health care program) cannot be involved in any activity relating to furnishing medical care, services, or supplies to Medicaid recipients or receive any compensation from the Medicaid program.

School districts and preschool providers of Medicaid services should be aware that OMIG will implement a Medicaid payment ban for excluded individuals that covers (1) all reimbursement for direct medical care and services by an excluded individual, (2) payment for any administrative or management services by an excluded individual not directly related to patient care, and (3) any payment to cover an excluded individual’s salary, expenses, or fringe benefits, regardless of whether there is direct patient care by the excluded individual (such as a janitor).

Medicaid providers, including school districts and preschool providers, should screen all employees and contractors to determine whether any of them have been excluded from federal health care programs. This screening obligation is a condition of enrollment as a Medicaid provider. The federal suggested standard for such screening is a monthly review of the applicable public databases. There are software programs available to assist in searching the public databases identifying excluded, suspended, or disqualified individuals on the recommended time schedule. Please contact Hodgson Russ immediately if you need assistance implementing a screening program of your employees and contractors to meet this obligation.

For more information, please contact:

Bethany J. Hills (Health Law)
716.848.1554
bhills@hodgsonruss.com