June 26, 2019

The following is an article appearing in a recent newsletter issued by our colleagues at Barclay Damon LLP:

Almost four years ago, we wrote about a trailblazing decision from Administrative Law Judge John Harris Terepka that castigated OMIG’s “gotcha” approach to audits that sought to penalize providers for technical, ministerial errors that had no relation to whether a provider actually performed necessary services. In January 2018, we published a blog post related to a concerning effort by OMIG to recoup alleged overpayments from transportation providers through “system match” audits that are based on claiming errors without any consideration of whether a provider actually performed services. Recently, an administrative decision provided new guidance to OMIG to shift its focus from technical errors in claiming to substantive deficiencies related to the services actually provided.

System match audits are designed to determine if claims for Medicaid payments are submitted correctly via Medicaid’s electronic claims adjudication system. For many of our clients, the system match audit findings incorrectly alleged the submitted claims omitted key items, such as a driver’s license number for the driver performing the trip or the vehicle license plate number used for the trip, rendering the claim subject to complete recoupment. In response to the draft audit reports, we disputed the validity of OMIG’s data and highlighted potential data management and maintenance deficiencies at OMIG’s fiscal agent as the cause of the “missing” data rather than any errors on the part of providers.

We also advanced the argument that because the providers had received payment for all of the disallowed claims, they had no notice that there were any potential issues within the two-year window for claim adjustments. By initiating delayed audits just after the expiration of the two-year correction window, OMIG effectively prevented providers from availing themselves of this common-sense remedy. The delayed audits, together with OMIG’s flat refusal to consider contemporaneous documentation, rendered these audits a “gotcha”-style exercise that has proven devastating to many providers that delivered services in good faith.

Our repeated requests that OMIG review the integrity of its own data and consider contemporaneous provider documentation that contains the allegedly missing information went unheeded. The issues came to a head in late May, when Judge William J. Lynch issued a decision In the Matter of Chelsea Express Transportation, Inc. that rebuked OMIG for seeking disallowances in a situation almost identical to one in which our clients received system match audits last year amid similar arguments that OMIG’s own data was compromised and unreliable.

In Chelsea Express, a provider was alleged to have submitted claims with nine zeroes in the driver’s license field or a completely blank driver’s license field. The provider credibly demonstrated it had no notice of any claiming deficiencies and that, when it received the draft audit from OMIG identifying the deficiencies, it took immediate steps to remedy the problem. The provider also offered contemporaneous documentation to demonstrate it had properly maintained documents containing the allegedly missing information. In response, OMIG argued that contemporaneous documentation had no impact on the amount of the disallowances sought and that any claiming error warranted a complete disallowance for the service provided. OMIG sought a windfall from the provider by recouping all payments made for these claims despite the provider furnishing the labor, fuel, insurance, maintenance, and other expenses associated with the transportation services.

In his decision, Judge Lynch noted OMIG has the ability to implement “edits” that would avoid simple and common data entry errors (such as blanks, zeroes, or single digits) by denying a facially deficient claim that would then prompt a provider to timely correct and re-submit a corrected claim. An OMIG management specialist testified that such edits can be implemented, but had no knowledge of whether such an edit was in place to identify claims with missing driver’s license numbers. Judge Lynch found that OMIG deprived the provider of the opportunity to correct the claim by failing to enable such an edit or otherwise notifying the provider that a claim was inaccurate.

The decision is a significant victory for providers because it requires OMIG auditors to review and consider contemporaneous documentation offered in response to a draft audit report. By reviewing only the claim submission and refusing to review the contemporaneous documentation, OMIG was “taking the unreasonable position that an inadvertent, innocent error on a claim’s submission means the claim can never be paid no matter how completely the documentation produced on audit justifies the claim.” This is a powerful and welcome reinforcement of the “rule of reason” that first appeared in Judge Terepka’s Statewide Ambulette decision. Notably, Judge Terepka was copied on Judge Lynch’s decision.