New York State Office of the Medicaid Inspector General Expands Provider Self-Disclosure Requirements for Routine Overpayments

On August 21, 2023, the New York State Office of the Medicaid Inspector General (“OMIG”) released updated guidance for self-disclosures by Medicaid providers (the “Updated Self-Disclosure Guidance”).¹ Critically, the Updated Self-Disclosure Guidance introduces a new process for Medicaid providers to report, return and explain self-identified overpayments resulting from “routine and transactional errors” that have already been voided or adjusted through an “abbreviated” process. This abbreviated process is in addition to the pre-existing “full process” available for overpayments due to systematic errors, which remains unchanged. In the past, many routine overpayments have been returned through administrative voids, rather than through formal self-disclosures; the new abbreviated process in the Updated Self-Disclosure Guidance introduces additional procedural requirements and considerations for providers.

The Updated Self-Disclosure Guidance expressly supersedes earlier guidance that OMIG issued in January 2023, immediately following its adoption of new regulations on December 28, 2022, which created confusion around the scope of provider reporting obligations and whether routine and transactional overpayments needed to be separately reported. The following alert briefly describes the differences between “full” and “abbreviated” disclosures; summarizes factors for how providers should distinguish between these processes; and addresses additional considerations.

Pathways for Self-Disclosure Process

The Updated Self-Disclosure Guidance establishes two pathways in OMIG’s self-disclosure process: (1) the Full Self-Disclosure Process and (2) the Abbreviated Self-Disclosure Process. Each process begins with the Medicaid provider’s discovery of receipt of a Medicaid overpayment and subsequent investigation to identify and explain the overpayment.² This identification step includes determining (1) why the overpayment occurred; (2) how it occurred; (3) who/what was involved in causing it to occur; (4) who was involved in discovering it; (5) what will be done to correct it and prevent similar overpayments from occurring in the future; and (6) quantification of the overpayment.³ There is no dollar threshold for reporting, such that all overpayments – no matter how de minimis – are theoretically subject to reporting.⁴

Once a Medicaid provider reviews the reason for the overpayment, it must determine which of the OMIG self-disclosure processes is appropriate.⁵ This determination is based on the type of error identified: errors that require formal corrective action plans should be self-disclosed through the Full Self-Disclosure Process, and errors that are more transactional or routine in nature, including overpayments that historically have been repaid through voids or adjustments, “may be better” suited to the Abbreviated Self-Disclosure Process.⁶

Full Self-Disclosure Process

Within 60 days of the identification of the overpayment, a Medicaid provider must submit a completed Full Self-Disclosure Statement form, Certification form, and Claims Data form of affected Medicaid claims or Mixed Payor Calculation form for excluded provider disclosures, if applicable.⁷ The OMIG Self-Disclosure Unit will review the submission documentation and verify the overpayment amount, requesting additional information as needed. Once the review is complete, the Self-Disclosure Unit issues a Determination Notice to the Medicaid provider to confirm the total overpayment amount, any amounts already repaid through void or adjustment and any balance due and provide repayment instructions.

Examples of Medicaid payments appropriate for the Full Self-Disclosure Process include: (1) any error that requires a Medicaid provider to create and implement a formal corrective action plan; (2) actual, potential or credible allegations of fraudulent behavior by employees or others; (3) discovery of an employee on the Excluded Provider list; (4) documentation errors that result in overpayments; (5) overpayments that resulted from software or billing systems updates; (6) systemic billing or claiming issues; (7) overpayments that involve more than one Medicaid provider (e.g., Health Homes and Care Management Agencies); (8) non-claim-based Medicaid overpayments; (9) any error with substantial monetary or program impacts; and (10) any instance upon direction by OMIG.⁸

Abbreviated Self-Disclosure Process

For overpayments appropriate for the Abbreviated Self-Disclosure Process, within 60 days of identification of an overpayment, a Medicaid provider should void or adjust overpaid claims as appropriate and add the claims to the Self-Disclosure Abbreviated Statement form (which also contains an embedded link to a fillable spreadsheet).⁹ OMIG recommends Medicaid providers aggregate submissions of these forms in a monthly report, which must be submitted by the fifth of the month following the month in which claims were voided or adjusted.¹⁰ OMIG anticipates the first full month of reports to be in September and the first monthly reporting to be due Thursday, October 5, 2023.¹¹

After a submission, a Medicaid provider will receive confirmation of receipt of the Self-Disclosure Abbreviated Statement form via email; OMIG may request additional information as needed. OMIG will review to verify that the provider successfully completed the voids or adjustment transactions and to ensure that no larger issues exist militating further corrective action.¹² OMIG will not issue a Determination Notice – in contrast to the “Full Process” – as the overpaid claims reported and explained through the “Abbreviated Process” will already have been repaid by void or adjustment. In its discretion, OMIG may request that a Medicaid provider submit a Full-Disclosure Statement.

Examples of Medicaid overpayments appropriate for self-disclosure using the Abbreviated Process include: (1) routine credit balance or coordination of benefit overpayments; (2) typographical human errors; (3) routine Net Available Monthly Income adjustments; (4) instances of missing or faulty authorization for services due to human error; (5) instances of missing or insufficient support documentation due to human error; (6) inappropriate rate, procedure or fee codes used due to typographical or human error; and (7) routine recipient enrollment issues.

Exceptions from the Self-Disclosure Process

As OMIG provided in preexisting guidance, Medicaid providers should not self-disclose when an overpayment is included in a separate review or audit conducted by OMIG or another enforcement agency, such as the U.S. Department of Health and Human Services Office of Inspector General or the New York State Office of the Attorney General.¹³ If an overpayment is not already addressed in an existing review, but an enforcement agency or other agency notifies a Medicaid provider of a potential overpayment, the provider is obligated to investigate and to determine if an overpayment exists, and, thereafter, self-disclose any overpayments.¹⁴

Providers should not self-disclose when a provider’s overpayment is included in a broader, State-initiated rate adjustment cost settlement or other payment adjustment mechanism, including retroactive rate adjustments, charity care and cost reporting reviews.¹⁵ Finally, the definition of “overpayment” remains unchanged, such that an overpayment exists only after “reconciliation” processes are completed. To the extent a Medicaid payment is subject to reconciliation, including pursuant to a cost- or enrollment-based reimbursement methodology, then an overpayment has not occurred until that reconciliation is completed.

Impact and Implications

By expanding the self-disclosure program, the Updated Self-Disclosure Guidance adds administrative burden incumbent on Medicaid providers, requiring them to report overpayments that were previously deemed insignificant or the result of simple errors and mistakes. In the past, these payments were simply administratively voided or adjusted, but the Updated Self-Disclosure Guidance now affirmatively requires Medicaid providers to report every instance of a payment that was voided or adjusted, without a threshold for materiality.

Medicaid providers and compliance staff may wish to consider new policies and processes (a) to define when to use the full or abbreviated processes; and (b) to ensure that monthly reports of voided or adjusted routine and transactional errors are timely reported to OMIG, consistent with the new guidance. While the Updated Self-Disclosure Guidance attempts to streamline the process for reporting of more routine self-disclosures, these disclosures will require careful consideration among compliance, legal and finance staff, resulting in increased administrative burden and potentially greater scrutiny of Medicaid providers.