In recent years, New York health-care providers have seen an explosion of state oversight and enforcement activities. With the creation of the Office of the Medicaid Inspector General (OMIG), the aggressive attention of the attorney general's Medicaid Fraud Control Unit (MFCU) and the passage (and recent enhancement) of the state false claims act, there is no question that the Legislature and relevant state agencies are determined to protect taxpayer dollars by aggressively pursuing waste, fraud and abuse and by insisting that providers take meaningful steps to police their own activities. These state efforts fully complement similar efforts at the federal level to increase provider compliance.
The million-dollar question for providers who have weathered these storms at the state level is: What is next?
With a new governor and attorney general set to assume office in January, New York providers and practitioners are giving thought to whether, and how, the change in leadership might impact state health-care enforcement activities. With new leaders set to take office, will the health-care community see any relaxation of the state's frenetic drive to create a "culture of compliance" through increased oversight and enforcement?
For what it's worth, here is my reading of the "tea leaves."
Given the state's financial mess, all state agencies in the coming years will be forced to scramble for resources and "do more with less." OMIG and MFCU will not escape scrutiny of their budgets, and some downsizing or reorganization at each agency is a distinct possibility.
In my view, however, both agencies will escape the worst of the state's budget-trimming exercises. First, both OMIG and MFCU receive 75 percent of their budgets from the federal government, and it is unlikely that there will be any decrease in available federal funding.
To the contrary, given the current federal emphasis on health-care enforcement and compliance, a more likely scenario is that federal authorities will continue to want to see these agencies robustly staffed and fully functioning.
Not only does this federal funding make these agencies a bargain for the state, but both agencies also both produce significant revenues for the state that far exceed their operational costs.
The math is compelling. According to the recently released OMIG Annual Report for 2009, OMIG produced state savings (including both direct audit recoveries and avoided overpayments) of more than $1 billion in state fiscal year 2009-10. Given these numbers and the state's economic condition, it seems likely that Gov.-elect Andrew Cuomo will only want to enhance OMIG's operation.
New York's MFCU is similarly recognized as a national leader and has achieved equally impressive results. Since 2004, MFCU repeatedly set records for Medicaid dollars recovered (in federal fiscal years 2004, 2005, 2006, 2008). And it was recently recognized by the federal agency responsible for oversight of the state Medicaid Fraud Control Units - the Office of the Inspector General in the federal Department of Health and Human Services (HHS-OIG) - as the best MFCU in the nation for its work in 2008. In announcing this award, HHS-OIG observed that MFCU had obtained "a return of investment of approximately $6.64 for every Federal dollar expended."
As these numbers make plain, it is simply good business and sound fiscal policy for the state to continue to invest in agencies that generate revenues, protect patients and promote compliance with the law. The deterrent impact of enforcement activity by both OMIG and MFCU, which also unquestionably increases compliance and saves taxpayer dollars, should also be included in any assessment of the value of these agencies.
Finally, it is clear that both agencies are favored by newly elected Gov. Cuomo and Attorney General Eric Schneiderman.
During his term as attorney general, Cuomo made combating Medicaid fraud and patient abuse one of his top priorities and, as noted above, MFCU under his leadership achieved national recognition. To accomplish these impressive results, Attorney General Cuomo forged a strong partnership with OMIG, which only came into existence in 2006.
In the few short years since its creation, OMIG has dramatically changed the landscape for Medicaid providers in New York. It has become, under the creative leadership of Medicaid Inspector General James Sheehan, a national model for state administrative agencies responsible for detecting and preventing Medicaid fraud, waste and abuse.
Sheehan's office has brought order to Medicaid regulatory enforcement by coordinating multi-agency efforts, and it has produced huge increases in audits, recoveries and criminal referrals. Commendably, it has achieved these improvements while operating with remarkable transparency (just take a look at the website at www.omig.ny.gov) and sensitivity to the fact that providers need clear guidance, given the complexity of the Medicaid system.
My guess is that as governor, Mr. Cuomo will only want to continue and to improve upon OMIG's impressive record.
It is also clear that there will be no diminution of enforcement enthusiasm at MFCU under Attorney General Schneiderman. Building upon MFCU's record of aggressive Medicaid enforcement has been a key component of Eric Schneiderman's platform in his race for the attorney general spot. In a release issued Oct. 15, candidate Schneiderman observed that "in these tough times when budgets must be cut, it is essential that we constantly improve our fight to stop Medicaid fraud and save taxpayer dollars."
He also declared that he intends to fully use the state's false claims act - Article 13 of the State Finance Law - to attack Medicaid fraud. According to Schneiderman, who was instrumental in obtaining passage of this whistleblower statute in 2007 and who sponsored legislation in 2010 which significantly strengthened it, this statute is the "state's most effective Medicaid fraud-fighting tool."
Given these strong statements, there should be little doubt that as attorney general, Schneiderman will work assiduously to prove that he was right in this assessment.