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Health Care Providers Protest Zealous Auditing

Friday, January 08, 2010

Health care providers say they’re getting swept up in a Medicaid fraud dragnet and being forced to pay thousands and sometimes millions of dollars to the government, despite not having committing fraud.

New York created the Office of the Medicaid Inspector General or OMIG in 2006, following allegations that widespread criminal schemes were costing state and federal taxpayers billions of dollars a year. The agency was set up in 2006 to police the multi-billion-dollar Medicaid system -– far and away the nation’s largest. Today, the agency has a $100 million budget and 600 auditors, inspectors, and others. According to an agreement with the federal government, OMIG is expected to uncover a half-billion dollars in fraud this year alone.

Nassau County State Senator Craig Johnson conducted oversight hearings yesterday out of concern the agency is too quick to penalize, in order to get money for the fiscally starved state. Trade groups representing hospitals, nursing homes, and other health-care providers told the state Senate's Committee on Investigation and Government Operations that OMIG is going after clerical errors with the same zeal as criminal fraud in order to get money for the state.

"We need to make sure that Medicaid fraud is being addressed and being corrected and being stopped and being prosecuted. At the same time, we need to make sure Mr. Sheehan’s office is doing it in a way that’s appropriate, and not over-zealous," Johnson said.

Johnson was referring to former federal prosecutor James Sheehan, a former federal prosecutor who leads the Office of the Medicaid Inspector General. Sheehan said his agency’s mission is not only to go after criminal fraud, but to make sure providers comply with regulations and only get reimbursed for the services they provide.

Sheehan noted that, in a single month last year, New York State pharmacies filed Medicaid claims for 300 dead people. He said that's just one example of abuse that occurs in the system, some of which is criminal fraud and some of which is clerical sloppiness. "Sometimes no one is paying attention to what the doctor ordered. Sometimes there’s no record the service was delivered," he said. "And in those circumstances, the law is pretty clear: Unless you meet the conditions of payment, we can’t pay you for the service." Sheehan added that when OMIG demands restitution from a provider, it isn’t actually imposing fines, but simply having them return incorrect overpayments by the state.

One former state Senate worker who helped create the agency said it was undergoing "growing pains," as it quickly ramped up to its current size

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