OMIG Posts Proposed Rule on Monetary Penalties

Situation Report | July 27, 2020

The state Office of the Medicaid Inspector General (OMIG) has proposed a rule to impose stronger monetary penalties and other actions that affect Medicaid managed care plans or providers. The rule stems from provisions in the recent state budget.

It is at

An initial review indicates that this rule implements the following final budget provisions:  

  • Medicaid Monetary Penalties. The final budget authorizes OMIG, in consultation with the state Department of Health (DOH), to apply monetary penalties to providers, Managed Care Organizations (MCOs) and Managed Long Term Care (MLTC) plans who: 1) did not grant timely access to facilities and records, upon reasonable notice, for the purpose of audits, investigations, or reviews; 2) knew or should have known that an overpayment has been identified and it is not reported; 3) arrange or contract with any individual or entity that is known or should be known to be suspended or excluded from Medicaid. The final budget removes language limiting the amount of an overpayment that may be recovered to the amount paid for such claim. It also removes the limitation on monetary penalties currently in effect when less than 25 percent of the claims subject to an audit result in an overpayment.
  • Medicaid Compliance Program. The final budget requires providers, MCOs and MLTCs to adopt and implement an effective compliance program that includes measures to prevent, detect, and correct non-compliance with Medicaid requirements and to prevent, detect and correct fraud, waste and abuse. OMIG is authorized to impose a penalty of $5,000 per month for the failure to adopt and implement a compliance program that meets statutory requirements ($10,000 per month if in second year of non-compliance).

The proposed rule also authorizes the imposition of a monetary penalty in cases where a managed care provider (which includes a Managed Long Term Care plan) submits a cost report to DOH that contains a misstatement of fact.