Senate Bill S7821

                            
                    S T A T E   O F   N E W   Y O R K
________________________________________________________________________

                                 7821--A

                            I N  S E N A T E

                              May 13, 2010
                               ___________

Introduced  by  Sen.  C. JOHNSON  -- read twice and ordered printed, and
  when printed to be committed to the Committee on Health  --  committee
  discharged, bill amended, ordered reprinted as amended and recommitted
  to said committee

AN  ACT  to  amend the public health law and the social services law, in
  relation to fair procedures, practices and standards  for  actions  by
  the office of medicaid inspector general and social services districts

  THE  PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
BLY, DO ENACT AS FOLLOWS:

  Section 1. Section 30 of the public health law, as  added  by  chapter
442 of the laws of 2006, is amended to read as follows:
  S 30. Legislative intent. This title establishes an independent office
of Medicaid inspector general within the department to consolidate staff
and  other  Medicaid  fraud detection, prevention and recovery functions
from the relevant governmental entities into a single office, and grants
such office new powers and responsibilities.  As  such,  this  title  is
intended  to  create a more efficient and accountable structure, dramat-
ically reorganize and streamline the state's process  of  detecting  and
combating  Medicaid  fraud  and  abuse  and  maximize  the recoupment of
improper Medicaid payments.
  THE LEGISLATURE RECOGNIZES THE NEED TO  BALANCE  THE  ABILITY  OF  THE
STATE TO ENSURE THE INTEGRITY OF THE MEDICAL ASSISTANCE PROGRAM WITH THE
NEED  TO AFFORD DUE PROCESS TO PROVIDERS AND RECIPIENTS WHO ARE INVESTI-
GATED, AUDITED OR SUBJECT TO OTHER ACTIONS, IN ORDER TO ENSURE THAT SUCH
ACTIONS ARE CONDUCTED IN A FAIR AND CONSISTENT MANNER.  THE  LEGISLATURE
ALSO  RECOGNIZES  THE NEED FOR ESTABLISHED STATUTORY STANDARDS REGARDING
THE CONDUCT OF INVESTIGATIONS, AUDITS AND RECOVERY OF PAYMENTS AND OTHER
ACTIONS.
  S 2. Section 30-a of the public health law is amended by  adding  four
new subdivisions 4, 5, 6 and 7 to read as follows:
  4. "PROVIDER" MEANS ANY PERSON OR ENTITY ENROLLED AS A PROVIDER IN THE
MEDICAL ASSISTANCE PROGRAM.
  5.  "RECIPIENT"  MEANS  AN  INDIVIDUAL  WHO IS ENROLLED IN THE MEDICAL
ASSISTANCE PROGRAM, INCLUDING AN INDIVIDUAL WHO WAS PREVIOUSLY A RECIPI-

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
              

                                                           LBD17219-02-0

S. 7821--A                          2

ENT AND, IN AN APPROPRIATE CASE, AN INDIVIDUAL WHO IS LEGALLY  RESPONSI-
BLE FOR THE RECIPIENT.
  6.  "MEDICAL  ASSISTANCE" AND "MEDICAID" MEANS TITLE ELEVEN OF ARTICLE
FIVE OF THE SOCIAL SERVICES LAW AND THE PROGRAM THEREUNDER.
  7. "DRAFT AUDIT REPORT", "INITIAL AUDIT REPORT", "PROPOSED  NOTICE  OF
AGENCY ACTION" AND "FINAL NOTICE OF AGENCY ACTION" MEANS THOSE DOCUMENTS
PREPARED  AND ISSUED BY THE INSPECTOR UNDER THIS TITLE AND CORRESPONDING
REGULATIONS.
  S 3. Subdivision 20 of section 32 of the public health law,  as  added
by chapter 442 of the laws of 2006, is amended to read as follows:
  20.  to, consistent with provisions of this title AND OTHER APPLICABLE
FEDERAL AND STATE LAWS, REGULATIONS, POLICIES, GUIDELINES AND STANDARDS,
implement and amend, as needed, rules and regulations  relating  to  the
prevention,  detection,  investigation  and  referral of fraud and abuse
within the medical assistance program and  the  recovery  of  improperly
expended medical assistance program funds;
  S  4.  The  public health law is amended by adding a new section 37 to
read as follows:
  S 37. FAIR PROCEDURES, PRACTICES AND STANDARDS.  1. NO RECOVERY OF  AN
OVERPAYMENT RESULTING FROM THE ISSUANCE OF A FINAL AUDIT REPORT OR FINAL
NOTICE  OF AGENCY ACTION RELATING TO A MONETARY PENALTY BY THE INSPECTOR
SHALL COMMENCE UNTIL SIXTY DAYS AFTER THE ISSUANCE OF  THE  FINAL  AUDIT
REPORT  OR  FINAL  NOTICE  OF  AGENCY ACTION OR, WHERE AN ADMINISTRATIVE
HEARING HAS BEEN TIMELY REQUESTED BY A PROVIDER, UNTIL AFTER ISSUANCE OF
A DECISION AFTER THE ADMINISTRATIVE HEARING.  THE  INSPECTOR  SHALL  NOT
COMMENCE ANY RECOVERY UNDER THIS SUBDIVISION WITHOUT PROVIDING A MINIMUM
OF THIRTY DAYS ADVANCE WRITTEN NOTICE TO THE PROVIDER.
  2.  A RECOVERY OF AN OVERPAYMENT UNDER SUBDIVISION ONE OF THIS SECTION
SHALL BE MADE AT A RATE NOT  TO  EXCEED  TEN  PERCENT  OF  A  PROVIDER'S
MEDICAL  ASSISTANCE CLAIMS DUE AND PAYABLE FOR EACH BILLING CYCLE DURING
WHICH THE RECOVERY IS SOUGHT, OR SUCH OTHER  AMOUNT  AGREED  ON  BY  THE
INSPECTOR  AND  THE  PROVIDER.  IF ANOTHER EXISTING RECOVERY AGAINST THE
PROVIDER IS CURRENTLY IN EFFECT, THE TOTAL OF ALL  SUCH  RECOVERIES  MAY
NOT EXCEED TEN PERCENT OF A PROVIDER'S MEDICAL ASSISTANCE CLAIMS DUE AND
PAYABLE  FOR  THE  BILLING CYCLE FOR WHICH THE RECOVERIES ARE SOUGHT, OR
SUCH OTHER AMOUNT AGREED ON BY  THE  INSPECTOR  AND  THE  PROVIDER.  THE
INSPECTOR MAY SEEK INTEREST AT A RATE SPECIFIED IN REGULATION THAT SHALL
NOT  EXCEED  NINE  PERCENT  ON ANY OUTSTANDING OVERPAYMENT REMAINING ONE
HUNDRED TWENTY DAYS AFTER THE DATE ON WHICH WRITTEN NOTICE  IS  SENT  TO
THE PROVIDER.  THIS SUBDIVISION SHALL NOT APPLY IN THE CASE OF FRAUD.
  3.  THE  INSPECTOR  SHALL NOT HAVE AUTHORITY TO CONDUCT ANY REVIEWS OR
AUDITS OF CONTRACTS, COST REPORTS, CLAIMS,  BILLS,  OR  EXPENDITURES  OF
MEDICAL  ASSISTANCE  PROGRAM  FUNDS  THAT  WERE  THE SUBJECT MATTER OF A
PREVIOUS AUDIT OR REVIEW BY OR ON BEHALF OF  THE  INSPECTOR,  ANY  OTHER
STATE  OR  LOCAL  GOVERNMENTAL  AGENCY  OR OFFICE OR CONTRACTOR OR AGENT
THEREOF AUTHORIZED TO CONDUCT SUCH REVIEWS OR AUDITS IF  SUCH  AUDIT  OR
REVIEW  WAS  COMPLETED WITHIN THE LAST THREE YEARS, EXCEPT: ON THE BASIS
OF NEW INFORMATION, FOR GOOD CAUSE TO BELIEVE THAT THE  PREVIOUS  REVIEW
OR  AUDIT WAS ERRONEOUS, OR WHERE THE SCOPE OF THE INSPECTOR'S REVIEW OR
AUDIT IS SIGNIFICANTLY DIFFERENT FROM THE SCOPE OF THE  PREVIOUS  REVIEW
OR AUDIT.
  4. THE PERIOD OF ANY AUDIT CONDUCTED BY THE INSPECTOR SHALL NOT EXCEED
THREE  YEARS  UNLESS  A  FINDING  OF  FRAUD OR INTENTIONAL MISCONDUCT IS
ALLEGED IN THE DRAFT AUDIT REPORT OR DRAFT NOTICE OF AGENCY ACTION.
  5. (A) IN CONDUCTING AUDITS OR TAKING OTHER  ACTIONS  BASED  ON  LAWS,
REGULATIONS,  POLICIES, GUIDELINES, STANDARDS, OR INTERPRETATIONS ESTAB-

S. 7821--A                          3

LISHED OR ENFORCED BY A FEDERAL OR STATE AGENCY, INCLUDING  THE  INSPEC-
TOR,  THE  INSPECTOR SHALL APPLY THE LAWS, REGULATIONS, POLICIES, GUIDE-
LINES, STANDARDS, AND INTERPRETATIONS OF THAT AGENCY THAT WERE IN  PLACE
AT THE TIME THE SUBJECT CLAIM AROSE OR OTHER CONDUCT TOOK PLACE.  DISAL-
LOWANCES  MAY  BE  IMPOSED OR OTHER ACTION TAKEN ONLY FOR NON-COMPLIANCE
WITH THOSE LAWS, REGULATIONS, POLICIES, GUIDELINES,  OR  STANDARDS.  FOR
PURPOSES  OF  THIS  SUBDIVISION,  ANY  CHANGE IN SUCH LAWS, REGULATIONS,
POLICIES,  GUIDELINES,  STANDARDS,  OR  INTERPRETATIONS  SHALL  ONLY  BE
APPLIED PROSPECTIVELY AND UPON REASONABLE NOTICE.
  (B) TO THE EXTENT THAT THE INSPECTOR SANCTIONS A PROVIDER BASED SOLELY
ON  LAWS,  REGULATIONS,  POLICIES, GUIDELINES, STANDARDS, OR INTERPRETA-
TIONS ENFORCED BY A FEDERAL OR STATE AGENCY OTHER  THAN  THE  INSPECTOR,
THE  INSPECTOR  MAY  ONLY IMPOSE A SANCTION CONTEMPORANEOUS WITH, AND NO
LONGER IN DURATION THAN, ANY SUCH SANCTION IMPOSED BY SUCH OTHER AGENCY.
UPON THE EXPIRATION OF ANY SUCH  SANCTION  BY  SUCH  OTHER  AGENCY,  THE
INSPECTOR SHALL IMMEDIATELY REMOVE HIS OR HER SANCTION OF THAT PROVIDER,
WITHOUT  NEED  BY  THE  PROVIDER  TO  REAPPLY  TO THE MEDICAL ASSISTANCE
PROGRAM TO BECOME REINSTATED AS A PROVIDER.
  (C) IN ANY ACTION UNDER THIS TITLE, THE  INSPECTOR  SHALL  ACCEPT  ANY
DETERMINATION OF COMPLIANCE MADE BY A GOVERNMENTAL AGENCY WITH JURISDIC-
TION  TO MAKE SUCH A DETERMINATION, UNLESS THE INSPECTOR FINDS THAT SUCH
DETERMINATION OF COMPLIANCE WAS BASED  ON  MISINFORMATION,  WAS  CLEARLY
ERRONEOUS, OR WAS AFFECTED BY FRAUD OR OTHER INTENTIONAL MISCONDUCT.
  6.  AT  LEAST  TEN  DAYS PRIOR TO AN ADMINISTRATIVE HEARING UNDER THIS
TITLE, EACH PARTY TO THE HEARING SHALL  MAKE  A  GOOD  FAITH  EFFORT  TO
DISCLOSE  AT  A PRE-HEARING CONFERENCE THE EVIDENCE IT INTENDS TO INTRO-
DUCE AND A LIST OF WITNESSES IT INTENDS TO PRODUCE AT THE HEARING.  THIS
SUBDIVISION SHALL NOT PROHIBIT EITHER THE INSPECTOR OR THE PROVIDER FROM
INTRODUCING ANY EVIDENCE INCLUDING DOCUMENTARY EVIDENCE OR THE TESTIMONY
FROM A WITNESS THAT WAS NOT DISCLOSED PRIOR TO  OR  AT  THE  PRE-HEARING
CONFERENCE.  THE INSPECTOR SHALL IMMEDIATELY PROVIDE TO THE PROVIDER ANY
EVIDENCE THAT THE INSPECTOR MAY POSSESS OR ACQUIRE  THAT  WOULD  SUPPORT
THE  ALLOWABILITY OR PROPRIETY OF THE PROVIDER'S COST REPORTING, BILLING
OR OTHER PRACTICE OR PRACTICES AT ISSUE IN THE HEARING OR  IS  OTHERWISE
EXCULPATORY. UNLESS ANY EVIDENCE IS DETERMINED BY THE ADMINISTRATIVE LAW
JUDGE  TO  BE  IRRELEVANT  OR IMMATERIAL OR ANY TESTIMONY UNDULY REPETI-
TIOUS, ALL EVIDENCE, INCLUDING BUT NOT LIMITED TO NON  CONTEMPORANEOUSLY
PREPARED  DOCUMENTARY  EVIDENCE, AND ALL TESTIMONY FROM WITNESSES, SHALL
BE ADMITTED BY THE ADMINISTRATIVE LAW JUDGE WHO SHALL GIVE SUCH EVIDENCE
OR TESTIMONY APPROPRIATE WEIGHT IN RENDERING A RECOMMENDATION  OR  DECI-
SION.
  7.  THE  INSPECTOR SHALL MAKE NO RECOVERY FROM A PROVIDER FOR FINDINGS
THAT ARE BASED ON THE ACTIONS OR THE RESPONSIBILITY OF ANOTHER  PROVIDER
OR  GOVERNMENTAL  AGENCY,  UNLESS THE PROVIDER KNEW OR REASONABLY SHOULD
HAVE KNOWN THAT IT WAS CLAIMING PAYMENT TO WHICH IT WAS NOT ENTITLED. IN
ANY RECOVERY SUBJECT TO  THIS  SUBDIVISION,  THE  INSPECTOR  SHALL  SEEK
RECOVERY  PRIMARILY FROM THE PROVIDER BEARING THE PRIMARY RESPONSIBILITY
FOR THE OVERPAYMENT OR IMPROPER PAYMENT.
  8. (A) THE INSPECTOR SHALL MAKE NO RECOVERY FROM A PROVIDER, BASED  ON
AN ADMINISTRATIVE OR TECHNICAL DEFECT IN PROCEDURE OR DOCUMENTATION MADE
WITHOUT  INTENT  TO  FALSIFY  OR  DEFRAUD, IN CONNECTION WITH CLAIMS FOR
PAYMENT FOR MEDICALLY NECESSARY CARE, SERVICES AND SUPPLIES OR THE  COST
THEREOF  AS SPECIFIED IN SUBDIVISION TWO OF SECTION THREE HUNDRED SIXTY-
FIVE-A OF THE SOCIAL SERVICES LAW PROVIDED IN OTHER  RESPECTS  APPROPRI-
ATELY  TO  A  BENEFICIARY  OF  THE MEDICAL ASSISTANCE PROGRAM, EXCEPT AS
PROVIDED IN PARAGRAPH (B) OF THIS SUBDIVISION.

S. 7821--A                          4

  (B) WHERE THE BASIS FOR RECOVERY IS  AN  ADMINISTRATIVE  OR  TECHNICAL
DEFECT  IN  PROCEDURE  OR  DOCUMENTATION  WITHOUT  INTENT  TO FALSIFY OR
DEFRAUD, THE INSPECTOR SHALL  AFFORD  THE  PROVIDER  AN  OPPORTUNITY  TO
CORRECT THE DEFECT AND RESUBMIT THE CLAIM WITHIN SIXTY DAYS OF NOTICE OF
THE  DEFECT. IF A SATISFACTORY CLAIM IS NOT RESUBMITTED UNDER THIS PARA-
GRAPH, THE INSPECTOR MAY SEEK TO RECOVER UP TO TEN PERCENT OF THE AMOUNT
THAT WOULD OTHERWISE BE RECOVERABLE, EXCEPT THAT WHERE THE DEFECT DETER-
MINED THE QUANTITY OR VALUE OF PAYMENT CLAIMED, THEN THE RECOVERY MAY BE
THE DIFFERENCE BETWEEN THE AMOUNT  RECEIVED  BY  THE  PROVIDER  AND  THE
AMOUNT  THAT  SHOULD  HAVE BEEN RECEIVED IF THE CLAIM HAD BEEN SUBMITTED
PROPERLY.
  9. (A) THE INSPECTOR SHALL NOT APPLY ANY  EXTRAPOLATION  METHOD  TO  A
CATEGORY  OF  ERROR OR DEFECT WITHIN A SAMPLE UNLESS THE INSPECTOR SHALL
FIRST DETERMINE THAT THE CATEGORY OF ERROR OR DEFECT IN THE  BILLING  OR
OTHER  PRACTICE  IDENTIFIED  BY  THE  INSPECTOR  IN THE SAMPLE OF CLAIMS
EXCEEDS A RATE OF FIVE PERCENT WITHIN THE SAMPLE OF  CLAIMS,  AFTER  THE
INSPECTOR  AFFORDS THE PROVIDER REASONABLE OPPORTUNITY TO RESPOND TO THE
INSPECTOR'S INITIAL FINDINGS.  HOWEVER,  NOTWITHSTANDING  THE  PRECEDING
SENTENCE, THE INSPECTOR AND THE PROVIDER MAY AGREE TO THE USE OF EXTRAP-
OLATION.
  (B)  THE  INSPECTOR SHALL FURNISH TO THE PROVIDER AT AN AUDIT ENTRANCE
CONFERENCE OR IN ANY DRAFT AUDIT FINDINGS ISSUED OR TO BE ISSUED TO  THE
PROVIDER,  A  DETAILED  WRITTEN  EXPLANATION OF THE EXTRAPOLATION METHOD
EMPLOYED, INCLUDING THE SIZE OF THE SAMPLE,  THE  SAMPLING  METHODOLOGY,
THE  DEFINED  UNIVERSE  OF  CLAIMS,  THE SPECIFIC CLAIMS INCLUDED IN THE
SAMPLE, THE RESULTS OF THE SAMPLE, THE ASSUMPTIONS MADE ABOUT THE  ACCU-
RACY  AND  RELIABILITY  OF THE SAMPLE AND THE LEVEL OF CONFIDENCE IN THE
SAMPLE RESULTS, AND THE STEPS  UNDERTAKEN  AND  STATISTICS  UTILIZED  TO
CALCULATE THE ALLEGED OVERPAYMENT AND ANY APPLICABLE OFFSET BASED ON THE
SAMPLE  RESULTS. THIS WRITTEN INFORMATION SHALL INCLUDE A DESCRIPTION OF
THE SAMPLING AND EXTRAPOLATION  METHODOLOGY,  IN  SUFFICIENT  DETAIL  TO
PERMIT  THE  PROVIDER  TO  TEST AND RECREATE THE METHODOLOGY IN ORDER TO
PROPERLY AND FULLY DEFEND ANY  DETERMINATION  OF  OVERPAYMENT  WHICH  IS
BASED ON THIS PROCESS.
  (C) THE SAMPLING AND EXTRAPOLATION METHODOLOGIES USED BY THE INSPECTOR
SHALL  BE  STATISTICALLY REASONABLY VALID FOR THE INTENDED USE AND SHALL
BE ESTABLISHED IN REGULATIONS OF THE INSPECTOR.
  10. ANY FUNDS AND INTEREST THEREON DETERMINED BY  THE  INSPECTOR,  THE
COMMISSIONER OR HIS OR HER DESIGNEE, ADMINISTRATIVE PROCEEDING, OR COURT
TO  HAVE  BEEN  IMPROPERLY WITHHELD OR RECOUPED FROM A PROVIDER SHALL BE
REFUNDED TO THE PROVIDER, WITH INTEREST ON THE AMOUNT OF THE WITHHELD OR
RECOUPED FUNDS FROM THE DATE OF WITHHOLDING OR  RECOUPMENT  THROUGH  THE
DATE  OF REFUND PAYABLE AT THE SAME RATE AS ANY INTEREST ASSESSED BY THE
STATE ON RECOUPED FUNDS, AS WELL AS ANY REASONABLE COSTS INCURRED BY THE
PROVIDER AS A CONSEQUENCE OF THE IMPOSITION OF THE IMPROPER WITHHOLD  OR
RECOUPMENT, TO BE REFUNDED AND PAID TO THE PROVIDER AS SOON AS PRACTICA-
BLE BUT IN NO EVENT MORE THAN NINETY DAYS AFTER THE DETERMINATION.
  11.  WHERE  ANY  AUDIT  OR  CIVIL OR ADMINISTRATIVE ENFORCEMENT ACTION
UNDER THIS TITLE WOULD EITHER (A) RECOUP FROM  THE  PROVIDER  AN  AMOUNT
GREATER  THAN  TEN PERCENT OF THE AMOUNT IT WOULD OTHERWISE RECEIVE FROM
THE MEDICAL ASSISTANCE PROGRAM DURING THE PERIOD IN WHICH THE RECOUPMENT
WOULD OCCUR, OR (B) SUSPEND OR TERMINATE THE PROVIDER'S PARTICIPATION IN
THE MEDICAL ASSISTANCE PROGRAM, THE INSPECTOR SHALL DEMONSTRATE THAT THE
ENFORCEMENT ACTION WILL NOT UNDULY JEOPARDIZE THE QUALITY AND AVAILABIL-
ITY OF MEDICAL CARE AND SERVICES IN  THE  AREA  SERVED  BY  A  PROVIDER,
INCLUDING  ALTERNATIVES  TO  THE CARE, SERVICES AND SUPPLIES PROVIDED BY

S. 7821--A                          5

THE PROVIDER AND THE ABILITY OF A PROVIDER TO CONTINUE  PROVIDING  CARE,
SERVICES  AND  SUPPLIES  AND THE BEST INTEREST OF THE MEDICAL ASSISTANCE
PROGRAM AND MEDICAL ASSISTANCE RECIPIENTS.
  12.  IN CARRYING OUT HIS OR HER DUTIES UNDER THIS TITLE, THE INSPECTOR
SHALL ASSIGN PERSONNEL, AGENTS AND CONTRACTORS WITH  APPROPRIATE  TRAIN-
ING,  EDUCATION,  OR  EXPERTISE  (INCLUDING CLINICAL EXPERTISE WHERE THE
MATTER IN DISPUTE CONCERNS  THE  VALIDITY  OF  THE  PROVIDER'S  CLINICAL
OBSERVATION,  DIAGNOSIS,  TREATMENT,  OR  DOCUMENTATION)  AND  SHALL NOT
ASSIGN ANY PERSON, AGENT OR CONTRACTOR TO CONDUCT,  REVIEW,  OR  PARTIC-
IPATE, DIRECTLY OR INDIRECTLY IN AN AUDIT, REVIEW, EXAMINATION OR INVES-
TIGATION  OF  AN  ENTITY WITH WHICH SUCH PERSON, AGENT OR CONTRACTOR WAS
EMPLOYED OR ASSOCIATED  OR  HAD  A  CONTRACTUAL  RELATIONSHIP  OR  OTHER
ENGAGEMENT  WITH  AT  ANY  TIME PRIOR TO THE COMMENCEMENT OF SUCH AUDIT,
REVIEW, EXAMINATION OR INVESTIGATION.
  13. FOR THE PURPOSES OF  THIS  TITLE,  THERE  SHALL  BE  A  REBUTTABLE
PRESUMPTION  THAT  THE  CLINICAL  OBSERVATION, DIAGNOSIS, TREATMENT, AND
DOCUMENTATION BY A PROVIDER ARE VALID. THE INSPECTOR MAY  NOT  DISALLOW,
RECOVER,  OR  WITHHOLD  A  MEDICAL  ASSISTANCE  PAYMENT  ON THE BASIS OF
MEDICAL NECESSITY OR CLINICAL JUDGMENT OR STANDARDS WITHOUT AFFIRMATIVE-
LY FINDING IN WRITING THAT THE PROVIDER'S CLINICAL OBSERVATION,  DIAGNO-
SIS, TREATMENT, OR DOCUMENTATION IS NOT VALID. SUCH A FINDING MAY NOT BE
RELIED UPON OR USED AS THE BASIS FOR ANY EXTRAPOLATION.
  14. IN CONDUCTING AUDITS, REVIEWS, INVESTIGATIONS, AND CIVIL OR ADMIN-
ISTRATIVE  ACTIONS, THE INSPECTOR SHALL CONSIDER ALL DOCUMENTS AND OTHER
INFORMATION, IN ANY MEDIUM AND IN ANY FORM, SUBMITTED BY A  PROVIDER  OR
SUPPLIER  THAT  ARE  RELEVANT  TO  DETERMINE WHETHER MEDICALLY NECESSARY
COVERED CARE, SERVICES OR SUPPLIES WERE PROVIDED TO AN ELIGIBLE  RECIPI-
ENT.
  15. IN CONDUCTING AUDITS, REVIEWS, INVESTIGATIONS, AND CIVIL OR ADMIN-
ISTRATIVE ACTIONS, THE INSPECTOR SHALL DETERMINE IN WRITING WHICH BOOKS,
PAPERS, RECORDS, AND DOCUMENTS THAT ARE NECESSARY, RELEVANT, AND MATERI-
AL TO A SPECIFIC ACTION THAT THE INSPECTOR MAY SEEK TO INSPECT, COPY, OR
OBTAIN.  THE INSPECTOR SHALL GIVE THE PROVIDER REASONABLE WRITTEN NOTICE
OF THE WRITTEN DETERMINATION PRIOR  TO  SEEKING  TO  INSPECT,  COPY,  OR
OBTAIN THE BOOKS, PAPERS, RECORDS OR DOCUMENTS.
  16. NOTWITHSTANDING ANY LAW OR REGULATION TO THE CONTRARY, THE INSPEC-
TOR  SHALL  MAKE  NO  RECOVERY  BASED  ON THE FAILURE OF THE PROVIDER TO
SUBMIT A CLAIM FOR PAYMENT FOR MEDICAL CARE, SERVICES, OR SUPPLIES WITH-
IN NINETY DAYS OF THE DATE THE MEDICAL CARE, SERVICES, OR SUPPLIES  WERE
FURNISHED, PROVIDED THAT SUCH CLAIM IS SUBMITTED WITHIN TWO YEARS OF THE
DATE FURNISHED.
  S  5.  The  public health law is amended by adding a new section 38 to
read as follows:
  S 38. FAIR PROCEDURES, PRACTICES AND STANDARDS  FOR  RECIPIENTS.    1.
THIS  SECTION APPLIES TO ANY ADJUSTMENT OR RECOVERY OF A MEDICAL ASSIST-
ANCE PAYMENT FROM A RECIPIENT, AND ANY INVESTIGATION OR OTHER PROCEEDING
RELATING THERETO. NO ADJUSTMENT OR  RECOVERY  SUBJECT  TO  THIS  SECTION
SHALL  OCCUR  UNLESS  THE RECIPIENT HAS BEEN AFFORDED THE PROTECTIONS OF
THE PROCEDURES, PRACTICES AND STANDARDS UNDER  THIS  SECTION,  INCLUDING
NOTICE AND HEARING RIGHTS.
  2.  AT  LEAST  TEN  DAYS PRIOR TO COMMENCEMENT OF ANY INTERVIEW WITH A
RECIPIENT AS PART OF AN INVESTIGATION, THE INSPECTOR OR  OTHER  INVESTI-
GATING  ENTITY  SHALL  PROVIDE  THE RECIPIENT WITH WRITTEN NOTICE OF THE
INVESTIGATION. THE NOTICE OF THE INVESTIGATION SHALL SET FORTH THE BASIS
FOR THE INVESTIGATION; THE POTENTIAL FOR REFERRAL FOR CRIMINAL  INVESTI-
GATION;  THE INDIVIDUAL'S RIGHT TO BE ACCOMPANIED BY A RELATIVE, FRIEND,

S. 7821--A                          6

ADVOCATE OR ATTORNEY DURING QUESTIONING; CONTACT INFORMATION  FOR  LOCAL
LEGAL  SERVICES  OFFICES; THE INDIVIDUAL'S RIGHT TO DECLINE TO BE INTER-
VIEWED OR PARTICIPATE IN AN INTERVIEW BUT TERMINATE THE  QUESTIONING  AT
ANY  TIME  WITHOUT  LOSS OF BENEFITS; AND THE RIGHT TO A FAIR HEARING IN
THE EVENT THAT THE INVESTIGATION RESULTS IN A DETERMINATION OF INCORRECT
PAYMENT.
  3. THE PERIOD THAT IS THE SUBJECT OF AN INVESTIGATION SHALL NOT EXCEED
THREE YEARS, UNLESS THE INITIAL NOTICE OF INVESTIGATION  UNDER  SUBDIVI-
SION  TWO  OF  THIS SECTION INCLUDES ALLEGATIONS OF FRAUD OR INTENTIONAL
MISREPRESENTATION. DURING THE  INVESTIGATION,  THE  INSPECTOR  OR  OTHER
INVESTIGATING  ENTITY  MAY REQUEST DOCUMENTATION THAT IS RELEVANT TO THE
ISSUE OF INELIGIBILITY, AND MAY ENTER INTO AN AGREEMENT WITH THE RECIPI-
ENT SUBJECT TO THE INVESTIGATION FOR VOLUNTARY REPAYMENTS.  HOWEVER,  NO
SUCH  AGREEMENT  SHALL  BE  ENTERED  INTO  PRIOR TO THE RECIPIENT HAVING
ACCESS TO PROOF OF THE ALLEGATION OF INELIGIBILITY  AND  THE  AMOUNT  OF
MEDICAL  ASSISTANCE PAYMENT AT ISSUE. IN CASES INVOLVING FINANCIAL HARD-
SHIP, THE RATE OF REPAYMENT SHALL NOT BE IN EXCESS OF TEN PERCENT OF THE
RECIPIENT'S HOUSEHOLD INCOME,  UNLESS  THE  INSPECTOR  OR  INVESTIGATING
ENTITY AND THE RECIPIENT AGREE TO ANOTHER AMOUNT.
  4.  FOLLOWING  COMPLETION OF THE INVESTIGATION AND AT LEAST SIXTY DAYS
PRIOR TO COMMENCING A RECOVERY OR ADJUSTMENT ACTION OR REQUESTING VOLUN-
TARY REPAYMENT,  THE  INSPECTOR  OR  OTHER  INVESTIGATING  ENTITY  SHALL
PROVIDE THE RECIPIENT WITH WRITTEN NOTICE OF THE DETERMINATION OF INCOR-
RECT  PAYMENT  TO  BE RECOVERED OR ADJUSTED. THE NOTICE OF DETERMINATION
SHALL IDENTIFY THE EVIDENCE RELIED UPON, SET FORTH THE  FACTUAL  CONCLU-
SIONS OF THE INVESTIGATION, AND EXPLAIN THE RECIPIENT'S RIGHT TO REQUEST
A FAIR HEARING IN ORDER TO CONTEST THE OUTCOME OF THE INVESTIGATION. THE
EXPLANATION OF THE RIGHT TO A FAIR HEARING SHALL CONFORM TO THE REQUIRE-
MENTS OF SUBDIVISION TWELVE OF SECTION TWENTY-TWO OF THE SOCIAL SERVICES
LAW AND REGULATIONS THEREUNDER.
  5.  A FAIR HEARING UNDER SECTION TWENTY-TWO OF THE SOCIAL SERVICES LAW
SHALL BE AVAILABLE TO ANY RECIPIENT WHO RECEIVES A  NOTICE  OF  DETERMI-
NATION UNDER SUBDIVISION FOUR OF THIS SECTION, REGARDLESS OF WHETHER THE
RECIPIENT IS STILL ENROLLED IN THE MEDICAL ASSISTANCE PROGRAM. IF A FAIR
HEARING  IS  REQUESTED,  NO  RECOVERY  OR  ADJUSTMENT  ACTION  SHALL  BE
COMMENCED UNLESS THE REQUEST FOR A FAIR HEARING HAS  BEEN  WITHDRAWN  OR
THE  FAIR  HEARING HAS BEEN HELD AND RESULTED IN AN UNFAVORABLE DECISION
TO THE RECIPIENT.
  S 6. Paragraph (b) of subdivision 3 of section  363-d  of  the  social
services  law,  as  amended by section 44 of part C of chapter 58 of the
laws of 2007, is amended and a new subdivision 5 is  added  to  read  as
follows:
  (b)  In  the  event  that  the  commissioner of health or the Medicaid
inspector general finds that the provider does not have  a  satisfactory
program  [within ninety days after the effective date of the regulations
issued pursuant to subdivision four of this  section,  the]  UNDER  THIS
SECTION,  THE COMMISSIONER OR MEDICAID INSPECTOR GENERAL SHALL SO NOTIFY
THE PROVIDER, INCLUDING SPECIFICATION OF BASIS OF THE FINDING SUFFICIENT
TO ENABLE THE PROVIDER TO ADOPT A SATISFACTORY COMPLIANCE  PROGRAM.  THE
provider  SHALL SUBMIT TO THE COMMISSIONER OR MEDICAID INSPECTOR GENERAL
A PROPOSED SATISFACTORY COMPLIANCE PROGRAM  WITHIN  SIXTY  DAYS  OF  THE
NOTICE  AND SHALL ADOPT THE PROGRAM AS EXPEDITIOUSLY AS POSSIBLE. IF THE
PROVIDER DOES NOT PROPOSE AND ADOPT A SATISFACTORY PROGRAM IN SUCH  TIME
PERIOD,  THE  PROVIDER  may  be  subject  to  any sanctions or penalties
permitted by federal or state laws and regulations, including revocation

S. 7821--A                          7

of the provider's agreement to participate  in  the  medical  assistance
program.
  5.  ANY  REGULATION,  DETERMINATION, OR FINDING OF THE COMMISSIONER OR
THE MEDICAID INSPECTOR GENERAL RELATING TO A  COMPLIANCE  PROGRAM  UNDER
THIS  SECTION  SHALL BE SUBJECT TO AND CONSISTENT WITH SUBDIVISION THREE
OF THIS SECTION.
  S 7. Subdivision 2 of section  369  of  the  social  services  law  is
amended by adding a new paragraph (e) to read as follows:
  (E)(I) MEDICAL ASSISTANCE SHALL BE CONSIDERED INCORRECTLY PAID WHEN AN
INDIVIDUAL  HAS  RECEIVED  AN ADEQUATE EXPLANATION OF HIS OR HER DUTY TO
PROVIDE OR REPORT INFORMATION RELEVANT TO AN ELIGIBILITY  DETERMINATION,
AND,  EITHER  FAILED  TO PROVIDE OR REPORT RELEVANT INFORMATION THAT WAS
KNOWN, OR UNDER THE CIRCUMSTANCES REASONABLY SHOULD HAVE BEEN KNOWN,  BY
THE  INDIVIDUAL,  OR  THE  INDIVIDUAL  WAS  RESPONSIBLE  FOR INTENTIONAL
MISREPRESENTATIONS OR FRAUD DURING THE  APPLICATION  OR  RECERTIFICATION
PROCESS.
  (II)  NO  ADJUSTMENT  OR  RECOVERY,  INCLUDING A REQUEST FOR VOLUNTARY
REPAYMENT, MAY BE MADE AGAINST THE PROPERTY OF ANY INDIVIDUAL ON ACCOUNT
OF ANY MEDICAL ASSISTANCE INCORRECTLY PAID TO OR ON BEHALF OF  AN  INDI-
VIDUAL  UNDER  THIS  TITLE,  EXCEPT  AFTER  AN  INVESTIGATION  HAS  BEEN
COMPLETED BY A SOCIAL SERVICES DISTRICT  OR  APPROPRIATE  STATE  AGENCY,
SUBJECT TO SECTION THIRTY-EIGHT OF THE PUBLIC HEALTH LAW.
  S  8.  This  act shall take effect on the ninetieth day after it shall
have become a law and shall apply to any matter commenced or pending  on
or  after  such date.   However with respect to any matter pending on or
after such date, this act shall not  invalidate  any  actions  or  steps
taken or commenced prior to such date and shall only apply to actions or
steps commenced on or after such date.

                            
                    S T A T E   O F   N E W   Y O R K
________________________________________________________________________

                                 7821--B

                            I N  S E N A T E

                              May 13, 2010
                               ___________

Introduced by Sens. C. JOHNSON, ADDABBO, KLEIN, STACHOWSKI -- read twice
  and ordered printed, and when printed to be committed to the Committee
  on  Health -- committee discharged, bill amended, ordered reprinted as
  amended and recommitted to said  committee  --  committee  discharged,
  bill  amended,  ordered  reprinted  as amended and recommitted to said
  committee

AN ACT to amend the public health law and the social  services  law,  in
  relation  to  fair  procedures, practices and standards for actions by
  the office of medicaid inspector general and social services districts

  THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND  ASSEM-
BLY, DO ENACT AS FOLLOWS:

  Section  1.  Section  30 of the public health law, as added by chapter
442 of the laws of 2006, is amended to read as follows:
  S 30. Legislative intent. This title establishes an independent office
of Medicaid inspector general within the department to consolidate staff
and other Medicaid fraud detection, prevention  and  recovery  functions
from the relevant governmental entities into a single office, and grants
such  office  new  powers  and  responsibilities. As such, this title is
intended to create a more efficient and accountable  structure,  dramat-
ically  reorganize  and  streamline the state's process of detecting and
combating Medicaid fraud  and  abuse  and  maximize  the  recoupment  of
improper Medicaid payments.
  THE  LEGISLATURE  RECOGNIZES  THE  NEED  TO BALANCE THE ABILITY OF THE
STATE TO ENSURE THE INTEGRITY OF THE MEDICAL ASSISTANCE PROGRAM WITH THE
NEED TO AFFORD DUE PROCESS TO PROVIDERS AND RECIPIENTS WHO ARE  INVESTI-
GATED, AUDITED OR SUBJECT TO OTHER ACTIONS, IN ORDER TO ENSURE THAT SUCH
ACTIONS  ARE  CONDUCTED IN A FAIR AND CONSISTENT MANNER. THE LEGISLATURE
ALSO RECOGNIZES THE NEED FOR ESTABLISHED STATUTORY  STANDARDS  REGARDING
THE CONDUCT OF INVESTIGATIONS, AUDITS AND RECOVERY OF PAYMENTS AND OTHER
ACTIONS.
  S  2.  Section 30-a of the public health law is amended by adding four
new subdivisions 4, 5, 6 and 7 to read as follows:
  4. "PROVIDER" MEANS ANY PERSON OR ENTITY ENROLLED AS A PROVIDER IN THE
MEDICAL ASSISTANCE PROGRAM.

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
              

                                                           LBD17219-03-0

S. 7821--B                          2

  5. "RECIPIENT" MEANS AN INDIVIDUAL WHO  IS  ENROLLED  IN  THE  MEDICAL
ASSISTANCE PROGRAM, INCLUDING AN INDIVIDUAL WHO WAS PREVIOUSLY A RECIPI-
ENT  AND, IN AN APPROPRIATE CASE, AN INDIVIDUAL WHO IS LEGALLY RESPONSI-
BLE FOR THE RECIPIENT.
  6.  "MEDICAL  ASSISTANCE" AND "MEDICAID" MEANS TITLE ELEVEN OF ARTICLE
FIVE OF THE SOCIAL SERVICES LAW AND THE PROGRAM THEREUNDER.
  7. "DRAFT AUDIT REPORT", "INITIAL AUDIT REPORT", "PROPOSED  NOTICE  OF
AGENCY ACTION" AND "FINAL NOTICE OF AGENCY ACTION" MEANS THOSE DOCUMENTS
PREPARED  AND ISSUED BY THE INSPECTOR UNDER THIS TITLE AND CORRESPONDING
REGULATIONS.
  S 3. Subdivision 20 of section 32 of the public health law,  as  added
by chapter 442 of the laws of 2006, is amended to read as follows:
  20.  to, consistent with provisions of this title AND OTHER APPLICABLE
FEDERAL AND STATE LAWS, REGULATIONS, POLICIES, GUIDELINES AND STANDARDS,
implement and amend, as needed, rules and regulations  relating  to  the
prevention,  detection,  investigation  and  referral of fraud and abuse
within the medical assistance program and  the  recovery  of  improperly
expended medical assistance program funds;
  S  4.  The  public health law is amended by adding a new section 37 to
read as follows:
  S 37. FAIR PROCEDURES, PRACTICES AND STANDARDS.  1. NO RECOVERY OF  AN
OVERPAYMENT RESULTING FROM THE ISSUANCE OF A FINAL AUDIT REPORT OR FINAL
NOTICE  OF AGENCY ACTION RELATING TO A MONETARY PENALTY BY THE INSPECTOR
SHALL COMMENCE UNTIL SIXTY DAYS AFTER THE ISSUANCE OF  THE  FINAL  AUDIT
REPORT  OR  FINAL  NOTICE  OF  AGENCY ACTION OR, WHERE AN ADMINISTRATIVE
HEARING HAS BEEN TIMELY REQUESTED BY A PROVIDER, UNTIL AFTER ISSUANCE OF
A DECISION AFTER THE ADMINISTRATIVE HEARING.  THE  INSPECTOR  SHALL  NOT
COMMENCE ANY RECOVERY UNDER THIS SUBDIVISION WITHOUT PROVIDING A MINIMUM
OF THIRTY DAYS ADVANCE WRITTEN NOTICE TO THE PROVIDER.
  2.  A RECOVERY OF AN OVERPAYMENT UNDER SUBDIVISION ONE OF THIS SECTION
SHALL BE MADE AT A RATE NOT  TO  EXCEED  TEN  PERCENT  OF  A  PROVIDER'S
MEDICAL  ASSISTANCE CLAIMS DUE AND PAYABLE FOR EACH BILLING CYCLE DURING
WHICH THE RECOVERY IS SOUGHT, OR SUCH OTHER  AMOUNT  AGREED  ON  BY  THE
INSPECTOR  AND  THE  PROVIDER.  IF ANOTHER EXISTING RECOVERY AGAINST THE
PROVIDER IS CURRENTLY IN EFFECT, THE TOTAL OF ALL  SUCH  RECOVERIES  MAY
NOT EXCEED TEN PERCENT OF A PROVIDER'S MEDICAL ASSISTANCE CLAIMS DUE AND
PAYABLE  FOR  THE  BILLING CYCLE FOR WHICH THE RECOVERIES ARE SOUGHT, OR
SUCH OTHER AMOUNT AGREED ON BY  THE  INSPECTOR  AND  THE  PROVIDER.  THE
INSPECTOR MAY SEEK INTEREST AT A RATE SPECIFIED IN REGULATION THAT SHALL
NOT  EXCEED  NINE  PERCENT  ON ANY OUTSTANDING OVERPAYMENT REMAINING ONE
HUNDRED TWENTY DAYS AFTER THE DATE ON WHICH WRITTEN NOTICE  IS  SENT  TO
THE PROVIDER.  THIS SUBDIVISION SHALL NOT APPLY IN THE CASE OF FRAUD.
  3.  THE  INSPECTOR  SHALL NOT HAVE AUTHORITY TO CONDUCT ANY REVIEWS OR
AUDITS OF CONTRACTS, COST REPORTS, CLAIMS,  BILLS,  OR  EXPENDITURES  OF
MEDICAL  ASSISTANCE  PROGRAM  FUNDS  THAT  WERE  THE SUBJECT MATTER OF A
PREVIOUS AUDIT OR REVIEW BY OR ON BEHALF OF  THE  INSPECTOR,  ANY  OTHER
STATE  OR  LOCAL  GOVERNMENTAL  AGENCY  OR OFFICE OR CONTRACTOR OR AGENT
THEREOF AUTHORIZED TO CONDUCT SUCH REVIEWS OR AUDITS IF  SUCH  AUDIT  OR
REVIEW  WAS  COMPLETED WITHIN THE LAST THREE YEARS, EXCEPT: ON THE BASIS
OF NEW INFORMATION, FOR GOOD CAUSE TO BELIEVE THAT THE  PREVIOUS  REVIEW
OR  AUDIT WAS ERRONEOUS, OR WHERE THE SCOPE OF THE INSPECTOR'S REVIEW OR
AUDIT IS SIGNIFICANTLY DIFFERENT FROM THE SCOPE OF THE  PREVIOUS  REVIEW
OR AUDIT.
  4. THE PERIOD OF ANY AUDIT CONDUCTED BY THE INSPECTOR SHALL NOT EXCEED
THREE  YEARS  UNLESS  A  FINDING  OF  FRAUD OR INTENTIONAL MISCONDUCT IS
ALLEGED IN THE DRAFT AUDIT REPORT OR DRAFT NOTICE OF AGENCY ACTION.

S. 7821--B                          3

  5. (A) IN CONDUCTING AUDITS OR TAKING OTHER  ACTIONS  BASED  ON  LAWS,
REGULATIONS,  POLICIES, GUIDELINES, STANDARDS, OR INTERPRETATIONS ESTAB-
LISHED OR ENFORCED BY A FEDERAL OR STATE AGENCY, INCLUDING  THE  INSPEC-
TOR,  THE  INSPECTOR SHALL APPLY THE LAWS, REGULATIONS, POLICIES, GUIDE-
LINES,  STANDARDS, AND INTERPRETATIONS OF THAT AGENCY THAT WERE IN PLACE
AT THE TIME THE SUBJECT CLAIM AROSE OR OTHER CONDUCT TOOK PLACE.  DISAL-
LOWANCES MAY BE IMPOSED OR OTHER ACTION TAKEN  ONLY  FOR  NON-COMPLIANCE
WITH  THOSE  LAWS,  REGULATIONS, POLICIES, GUIDELINES, OR STANDARDS. FOR
PURPOSES OF THIS SUBDIVISION, ANY  CHANGE  IN  SUCH  LAWS,  REGULATIONS,
POLICIES,  GUIDELINES,  STANDARDS,  OR  INTERPRETATIONS  SHALL  ONLY  BE
APPLIED PROSPECTIVELY AND UPON REASONABLE NOTICE.
  (B) TO THE EXTENT THAT THE INSPECTOR SANCTIONS A PROVIDER BASED SOLELY
ON LAWS, REGULATIONS, POLICIES, GUIDELINES,  STANDARDS,  OR  INTERPRETA-
TIONS  ENFORCED  BY  A FEDERAL OR STATE AGENCY OTHER THAN THE INSPECTOR,
THE INSPECTOR MAY ONLY IMPOSE A SANCTION CONTEMPORANEOUS  WITH,  AND  NO
LONGER IN DURATION THAN, ANY SUCH SANCTION IMPOSED BY SUCH OTHER AGENCY.
UPON  THE  EXPIRATION  OF  ANY  SUCH  SANCTION BY SUCH OTHER AGENCY, THE
INSPECTOR SHALL IMMEDIATELY REMOVE HIS OR HER SANCTION OF THAT PROVIDER,
WITHOUT NEED BY THE  PROVIDER  TO  REAPPLY  TO  THE  MEDICAL  ASSISTANCE
PROGRAM TO BECOME REINSTATED AS A PROVIDER.
  (C)  IN  ANY  ACTION  UNDER THIS TITLE, THE INSPECTOR SHALL ACCEPT ANY
DETERMINATION OF COMPLIANCE MADE BY A GOVERNMENTAL AGENCY WITH JURISDIC-
TION TO MAKE SUCH A DETERMINATION, UNLESS THE INSPECTOR FINDS THAT  SUCH
DETERMINATION  OF  COMPLIANCE  WAS  BASED ON MISINFORMATION, WAS CLEARLY
ERRONEOUS, OR WAS AFFECTED BY FRAUD OR OTHER INTENTIONAL MISCONDUCT.
  6. AT LEAST TEN DAYS PRIOR TO AN  ADMINISTRATIVE  HEARING  UNDER  THIS
TITLE,  EACH  PARTY  TO  THE  HEARING  SHALL MAKE A GOOD FAITH EFFORT TO
DISCLOSE AT A PRE-HEARING CONFERENCE THE EVIDENCE IT INTENDS  TO  INTRO-
DUCE AND A LIST OF WITNESSES IT INTENDS TO PRODUCE AT THE HEARING.  THIS
SUBDIVISION SHALL NOT PROHIBIT EITHER THE INSPECTOR OR THE PROVIDER FROM
INTRODUCING ANY EVIDENCE INCLUDING DOCUMENTARY EVIDENCE OR THE TESTIMONY
FROM  A  WITNESS  THAT  WAS NOT DISCLOSED PRIOR TO OR AT THE PRE-HEARING
CONFERENCE. THE INSPECTOR SHALL IMMEDIATELY PROVIDE TO THE PROVIDER  ANY
EVIDENCE  THAT  THE  INSPECTOR MAY POSSESS OR ACQUIRE THAT WOULD SUPPORT
THE ALLOWABILITY OR PROPRIETY OF THE PROVIDER'S COST REPORTING,  BILLING
OR  OTHER  PRACTICE OR PRACTICES AT ISSUE IN THE HEARING OR IS OTHERWISE
EXCULPATORY. UNLESS ANY EVIDENCE IS DETERMINED BY THE ADMINISTRATIVE LAW
JUDGE TO BE IRRELEVANT OR IMMATERIAL OR  ANY  TESTIMONY  UNDULY  REPETI-
TIOUS,  ALL EVIDENCE, INCLUDING BUT NOT LIMITED TO NON CONTEMPORANEOUSLY
PREPARED DOCUMENTARY EVIDENCE, AND ALL TESTIMONY FROM  WITNESSES,  SHALL
BE ADMITTED BY THE ADMINISTRATIVE LAW JUDGE WHO SHALL GIVE SUCH EVIDENCE
OR  TESTIMONY  APPROPRIATE WEIGHT IN RENDERING A RECOMMENDATION OR DECI-
SION.
  7. THE INSPECTOR SHALL MAKE NO RECOVERY FROM A PROVIDER  FOR  FINDINGS
THAT  ARE BASED ON THE ACTIONS OR THE RESPONSIBILITY OF ANOTHER PROVIDER
OR GOVERNMENTAL AGENCY, UNLESS THE PROVIDER KNEW  OR  REASONABLY  SHOULD
HAVE KNOWN THAT IT WAS CLAIMING PAYMENT TO WHICH IT WAS NOT ENTITLED. IN
ANY  RECOVERY  SUBJECT  TO  THIS  SUBDIVISION,  THE INSPECTOR SHALL SEEK
RECOVERY PRIMARILY FROM THE PROVIDER BEARING THE PRIMARY  RESPONSIBILITY
FOR THE OVERPAYMENT OR IMPROPER PAYMENT.
  8.  (A) THE INSPECTOR SHALL MAKE NO RECOVERY FROM A PROVIDER, BASED ON
AN ADMINISTRATIVE OR TECHNICAL DEFECT IN PROCEDURE OR DOCUMENTATION MADE
WITHOUT INTENT TO FALSIFY OR DEFRAUD,  IN  CONNECTION  WITH  CLAIMS  FOR
PAYMENT  FOR MEDICALLY NECESSARY CARE, SERVICES AND SUPPLIES OR THE COST
THEREOF AS SPECIFIED IN SUBDIVISION TWO OF SECTION THREE HUNDRED  SIXTY-
FIVE-A  OF  THE SOCIAL SERVICES LAW PROVIDED IN OTHER RESPECTS APPROPRI-

S. 7821--B                          4

ATELY TO A BENEFICIARY OF THE  MEDICAL  ASSISTANCE  PROGRAM,  EXCEPT  AS
PROVIDED IN PARAGRAPH (B) OF THIS SUBDIVISION.
  (B)  WHERE  THE  BASIS  FOR RECOVERY IS AN ADMINISTRATIVE OR TECHNICAL
DEFECT IN PROCEDURE  OR  DOCUMENTATION  WITHOUT  INTENT  TO  FALSIFY  OR
DEFRAUD,  THE  INSPECTOR  SHALL  AFFORD  THE  PROVIDER AN OPPORTUNITY TO
CORRECT THE DEFECT AND RESUBMIT THE CLAIM WITHIN SIXTY DAYS OF NOTICE OF
THE DEFECT. IF A SATISFACTORY CLAIM IS NOT RESUBMITTED UNDER THIS  PARA-
GRAPH, THE INSPECTOR MAY SEEK TO RECOVER UP TO TEN PERCENT OF THE AMOUNT
THAT WOULD OTHERWISE BE RECOVERABLE, EXCEPT THAT WHERE THE DEFECT DETER-
MINED THE QUANTITY OR VALUE OF PAYMENT CLAIMED, THEN THE RECOVERY MAY BE
THE  DIFFERENCE  BETWEEN  THE  AMOUNT  RECEIVED  BY THE PROVIDER AND THE
AMOUNT THAT SHOULD HAVE BEEN RECEIVED IF THE CLAIM  HAD  BEEN  SUBMITTED
PROPERLY.
  9.  (A)  THE  INSPECTOR  SHALL NOT APPLY ANY EXTRAPOLATION METHOD TO A
CATEGORY OF ERROR OR DEFECT WITHIN A SAMPLE UNLESS THE  INSPECTOR  SHALL
FIRST  DETERMINE  THAT THE CATEGORY OF ERROR OR DEFECT IN THE BILLING OR
OTHER PRACTICE IDENTIFIED BY THE  INSPECTOR  IN  THE  SAMPLE  OF  CLAIMS
EXCEEDS  A  RATE  OF FIVE PERCENT WITHIN THE SAMPLE OF CLAIMS, AFTER THE
INSPECTOR AFFORDS THE PROVIDER REASONABLE OPPORTUNITY TO RESPOND TO  THE
INSPECTOR'S  INITIAL  FINDINGS.  HOWEVER,  NOTWITHSTANDING THE PRECEDING
SENTENCE, THE INSPECTOR AND THE PROVIDER MAY AGREE TO THE USE OF EXTRAP-
OLATION.
  (B) THE INSPECTOR SHALL FURNISH TO THE PROVIDER AT AN  AUDIT  ENTRANCE
CONFERENCE  OR IN ANY DRAFT AUDIT FINDINGS ISSUED OR TO BE ISSUED TO THE
PROVIDER, A DETAILED WRITTEN EXPLANATION  OF  THE  EXTRAPOLATION  METHOD
EMPLOYED,  INCLUDING  THE  SIZE OF THE SAMPLE, THE SAMPLING METHODOLOGY,
THE DEFINED UNIVERSE OF CLAIMS, THE  SPECIFIC  CLAIMS  INCLUDED  IN  THE
SAMPLE,  THE RESULTS OF THE SAMPLE, THE ASSUMPTIONS MADE ABOUT THE ACCU-
RACY AND RELIABILITY OF THE SAMPLE AND THE LEVEL OF  CONFIDENCE  IN  THE
SAMPLE  RESULTS,  AND  THE  STEPS  UNDERTAKEN AND STATISTICS UTILIZED TO
CALCULATE THE ALLEGED OVERPAYMENT AND ANY APPLICABLE OFFSET BASED ON THE
SAMPLE RESULTS. THIS WRITTEN INFORMATION SHALL INCLUDE A DESCRIPTION  OF
THE  SAMPLING  AND  EXTRAPOLATION  METHODOLOGY,  IN SUFFICIENT DETAIL TO
PERMIT THE PROVIDER TO TEST AND RECREATE THE  METHODOLOGY  IN  ORDER  TO
PROPERLY  AND  FULLY  DEFEND  ANY  DETERMINATION OF OVERPAYMENT WHICH IS
BASED ON THIS PROCESS.
  (C) THE SAMPLING AND EXTRAPOLATION METHODOLOGIES USED BY THE INSPECTOR
SHALL BE STATISTICALLY REASONABLY VALID FOR THE INTENDED USE  AND  SHALL
BE ESTABLISHED IN REGULATIONS OF THE INSPECTOR.
  10.  ANY  FUNDS  AND INTEREST THEREON DETERMINED BY THE INSPECTOR, THE
COMMISSIONER OR HIS OR HER DESIGNEE, ADMINISTRATIVE PROCEEDING, OR COURT
TO HAVE BEEN IMPROPERLY WITHHELD OR RECOUPED FROM A  PROVIDER  SHALL  BE
REFUNDED TO THE PROVIDER, WITH INTEREST ON THE AMOUNT OF THE WITHHELD OR
RECOUPED  FUNDS  FROM  THE DATE OF WITHHOLDING OR RECOUPMENT THROUGH THE
DATE OF REFUND PAYABLE AT THE SAME RATE AS ANY INTEREST ASSESSED BY  THE
STATE ON RECOUPED FUNDS, TO BE REFUNDED AND PAID TO THE PROVIDER AS SOON
AS  PRACTICABLE BUT IN NO EVENT MORE THAN NINETY DAYS AFTER THE DETERMI-
NATION.
  11. WHERE ANY AUDIT OR  CIVIL  OR  ADMINISTRATIVE  ENFORCEMENT  ACTION
UNDER  THIS  TITLE  WOULD  EITHER (A) RECOUP FROM THE PROVIDER AN AMOUNT
GREATER THAN TEN PERCENT OF THE AMOUNT IT WOULD OTHERWISE  RECEIVE  FROM
THE MEDICAL ASSISTANCE PROGRAM DURING THE PERIOD IN WHICH THE RECOUPMENT
WOULD OCCUR, OR (B) SUSPEND OR TERMINATE THE PROVIDER'S PARTICIPATION IN
THE MEDICAL ASSISTANCE PROGRAM, THE INSPECTOR SHALL DEMONSTRATE THAT THE
ENFORCEMENT ACTION WILL NOT UNDULY JEOPARDIZE THE QUALITY AND AVAILABIL-
ITY  OF  MEDICAL  CARE  AND  SERVICES  IN THE AREA SERVED BY A PROVIDER,

S. 7821--B                          5

INCLUDING ALTERNATIVES TO THE CARE, SERVICES AND  SUPPLIES  PROVIDED  BY
THE  PROVIDER  AND THE ABILITY OF A PROVIDER TO CONTINUE PROVIDING CARE,
SERVICES AND SUPPLIES AND THE BEST INTEREST OF  THE  MEDICAL  ASSISTANCE
PROGRAM AND MEDICAL ASSISTANCE RECIPIENTS.
  12.  IN CARRYING OUT HIS OR HER DUTIES UNDER THIS TITLE, THE INSPECTOR
SHALL ASSIGN PERSONNEL, AGENTS AND CONTRACTORS WITH  APPROPRIATE  TRAIN-
ING,  EDUCATION,  OR  EXPERTISE  (INCLUDING CLINICAL EXPERTISE WHERE THE
MATTER IN DISPUTE CONCERNS  THE  VALIDITY  OF  THE  PROVIDER'S  CLINICAL
OBSERVATION,  DIAGNOSIS,  TREATMENT,  OR  DOCUMENTATION)  AND  SHALL NOT
ASSIGN ANY PERSON, AGENT OR CONTRACTOR TO CONDUCT,  REVIEW,  OR  PARTIC-
IPATE, DIRECTLY OR INDIRECTLY IN AN AUDIT, REVIEW, EXAMINATION OR INVES-
TIGATION  OF  AN  ENTITY WITH WHICH SUCH PERSON, AGENT OR CONTRACTOR WAS
EMPLOYED OR ASSOCIATED  OR  HAD  A  CONTRACTUAL  RELATIONSHIP  OR  OTHER
ENGAGEMENT  WITH  AT  ANY  TIME PRIOR TO THE COMMENCEMENT OF SUCH AUDIT,
REVIEW, EXAMINATION OR INVESTIGATION.
  13. FOR THE PURPOSES OF  THIS  TITLE,  THERE  SHALL  BE  A  REBUTTABLE
PRESUMPTION  THAT  THE  CLINICAL  OBSERVATION, DIAGNOSIS, TREATMENT, AND
DOCUMENTATION BY A PROVIDER ARE VALID. THE INSPECTOR MAY  NOT  DISALLOW,
RECOVER,  OR  WITHHOLD  A  MEDICAL  ASSISTANCE  PAYMENT  ON THE BASIS OF
MEDICAL NECESSITY OR CLINICAL JUDGMENT OR STANDARDS WITHOUT AFFIRMATIVE-
LY FINDING IN WRITING THAT THE PROVIDER'S CLINICAL OBSERVATION,  DIAGNO-
SIS, TREATMENT, OR DOCUMENTATION IS NOT VALID. SUCH A FINDING MAY NOT BE
RELIED UPON OR USED AS THE BASIS FOR ANY EXTRAPOLATION.
  14. IN CONDUCTING AUDITS, REVIEWS, INVESTIGATIONS, AND CIVIL OR ADMIN-
ISTRATIVE  ACTIONS, THE INSPECTOR SHALL CONSIDER ALL DOCUMENTS AND OTHER
INFORMATION, IN ANY MEDIUM AND IN ANY FORM, SUBMITTED BY A  PROVIDER  OR
SUPPLIER  THAT  ARE  RELEVANT  TO  DETERMINE WHETHER MEDICALLY NECESSARY
COVERED CARE, SERVICES OR SUPPLIES WERE PROVIDED TO AN ELIGIBLE  RECIPI-
ENT.
  15. IN CONDUCTING AUDITS, REVIEWS, INVESTIGATIONS, AND CIVIL OR ADMIN-
ISTRATIVE ACTIONS, THE INSPECTOR SHALL DETERMINE IN WRITING WHICH BOOKS,
PAPERS, RECORDS, AND DOCUMENTS THAT ARE NECESSARY, RELEVANT, AND MATERI-
AL TO A SPECIFIC ACTION THAT THE INSPECTOR MAY SEEK TO INSPECT, COPY, OR
OBTAIN.  THE INSPECTOR SHALL GIVE THE PROVIDER REASONABLE WRITTEN NOTICE
OF THE WRITTEN DETERMINATION PRIOR  TO  SEEKING  TO  INSPECT,  COPY,  OR
OBTAIN THE BOOKS, PAPERS, RECORDS OR DOCUMENTS.
  16. NOTWITHSTANDING ANY LAW OR REGULATION TO THE CONTRARY, THE INSPEC-
TOR  SHALL  MAKE  NO  RECOVERY  BASED  ON THE FAILURE OF THE PROVIDER TO
SUBMIT A CLAIM FOR PAYMENT FOR MEDICAL CARE, SERVICES, OR SUPPLIES WITH-
IN NINETY DAYS OF THE DATE THE MEDICAL CARE, SERVICES, OR SUPPLIES  WERE
FURNISHED, PROVIDED THAT SUCH CLAIM IS SUBMITTED WITHIN TWO YEARS OF THE
DATE FURNISHED.
  S  5.  The  public health law is amended by adding a new section 38 to
read as follows:
  S 38. FAIR PROCEDURES, PRACTICES AND STANDARDS  FOR  RECIPIENTS.    1.
THIS  SECTION APPLIES TO ANY ADJUSTMENT OR RECOVERY OF A MEDICAL ASSIST-
ANCE PAYMENT FROM A RECIPIENT, AND ANY INVESTIGATION OR OTHER PROCEEDING
RELATING THERETO. NO ADJUSTMENT OR  RECOVERY  SUBJECT  TO  THIS  SECTION
SHALL  OCCUR  UNLESS  THE RECIPIENT HAS BEEN AFFORDED THE PROTECTIONS OF
THE PROCEDURES, PRACTICES AND STANDARDS UNDER  THIS  SECTION,  INCLUDING
NOTICE AND HEARING RIGHTS.
  2.  AT  LEAST  TEN  DAYS PRIOR TO COMMENCEMENT OF ANY INTERVIEW WITH A
RECIPIENT AS PART OF AN INVESTIGATION, THE INSPECTOR OR  OTHER  INVESTI-
GATING  ENTITY  SHALL  PROVIDE  THE RECIPIENT WITH WRITTEN NOTICE OF THE
INVESTIGATION. THE NOTICE OF THE INVESTIGATION SHALL SET FORTH THE BASIS
FOR THE INVESTIGATION; THE POTENTIAL FOR REFERRAL FOR CRIMINAL  INVESTI-

S. 7821--B                          6

GATION;  THE INDIVIDUAL'S RIGHT TO BE ACCOMPANIED BY A RELATIVE, FRIEND,
ADVOCATE OR ATTORNEY DURING QUESTIONING; CONTACT INFORMATION  FOR  LOCAL
LEGAL  SERVICES  OFFICES; THE INDIVIDUAL'S RIGHT TO DECLINE TO BE INTER-
VIEWED  OR  PARTICIPATE IN AN INTERVIEW BUT TERMINATE THE QUESTIONING AT
ANY TIME WITHOUT LOSS OF BENEFITS; AND THE RIGHT TO A  FAIR  HEARING  IN
THE EVENT THAT THE INVESTIGATION RESULTS IN A DETERMINATION OF INCORRECT
PAYMENT.
  3. THE PERIOD THAT IS THE SUBJECT OF AN INVESTIGATION SHALL NOT EXCEED
THREE  YEARS,  UNLESS THE INITIAL NOTICE OF INVESTIGATION UNDER SUBDIVI-
SION TWO OF THIS SECTION INCLUDES ALLEGATIONS OF  FRAUD  OR  INTENTIONAL
MISREPRESENTATION.  DURING  THE  INVESTIGATION,  THE  INSPECTOR OR OTHER
INVESTIGATING ENTITY MAY REQUEST DOCUMENTATION THAT IS RELEVANT  TO  THE
ISSUE OF INELIGIBILITY, AND MAY ENTER INTO AN AGREEMENT WITH THE RECIPI-
ENT  SUBJECT TO THE INVESTIGATION FOR VOLUNTARY REPAYMENTS.  HOWEVER, NO
SUCH AGREEMENT SHALL BE ENTERED  INTO  PRIOR  TO  THE  RECIPIENT  HAVING
ACCESS  TO  PROOF  OF  THE ALLEGATION OF INELIGIBILITY AND THE AMOUNT OF
MEDICAL ASSISTANCE PAYMENT AT ISSUE. IN CASES INVOLVING FINANCIAL  HARD-
SHIP, THE RATE OF REPAYMENT SHALL NOT BE IN EXCESS OF TEN PERCENT OF THE
RECIPIENT'S  HOUSEHOLD  INCOME,  UNLESS  THE  INSPECTOR OR INVESTIGATING
ENTITY AND THE RECIPIENT AGREE TO ANOTHER AMOUNT.
  4. FOLLOWING COMPLETION OF THE INVESTIGATION AND AT LEAST  SIXTY  DAYS
PRIOR TO COMMENCING A RECOVERY OR ADJUSTMENT ACTION OR REQUESTING VOLUN-
TARY  REPAYMENT,  THE  INSPECTOR  OR  OTHER  INVESTIGATING  ENTITY SHALL
PROVIDE THE RECIPIENT WITH WRITTEN NOTICE OF THE DETERMINATION OF INCOR-
RECT PAYMENT TO BE RECOVERED OR ADJUSTED. THE  NOTICE  OF  DETERMINATION
SHALL  IDENTIFY  THE EVIDENCE RELIED UPON, SET FORTH THE FACTUAL CONCLU-
SIONS OF THE INVESTIGATION, AND EXPLAIN THE RECIPIENT'S RIGHT TO REQUEST
A FAIR HEARING IN ORDER TO CONTEST THE OUTCOME OF THE INVESTIGATION. THE
EXPLANATION OF THE RIGHT TO A FAIR HEARING SHALL CONFORM TO THE REQUIRE-
MENTS OF SUBDIVISION TWELVE OF SECTION TWENTY-TWO OF THE SOCIAL SERVICES
LAW AND REGULATIONS THEREUNDER.
  5. A FAIR HEARING UNDER SECTION TWENTY-TWO OF THE SOCIAL SERVICES  LAW
SHALL  BE  AVAILABLE  TO ANY RECIPIENT WHO RECEIVES A NOTICE OF DETERMI-
NATION UNDER SUBDIVISION FOUR OF THIS SECTION, REGARDLESS OF WHETHER THE
RECIPIENT IS STILL ENROLLED IN THE MEDICAL ASSISTANCE PROGRAM. IF A FAIR
HEARING  IS  REQUESTED,  NO  RECOVERY  OR  ADJUSTMENT  ACTION  SHALL  BE
COMMENCED  UNLESS  THE  REQUEST FOR A FAIR HEARING HAS BEEN WITHDRAWN OR
THE FAIR HEARING HAS BEEN HELD AND RESULTED IN AN  UNFAVORABLE  DECISION
TO THE RECIPIENT.
  S  6.  Paragraph  (b)  of subdivision 3 of section 363-d of the social
services law, as amended by section 44 of part C of chapter  58  of  the
laws  of  2007,  is  amended and a new subdivision 5 is added to read as
follows:
  (b) In the event that the  commissioner  of  health  or  the  Medicaid
inspector  general  finds that the provider does not have a satisfactory
program [within ninety days after the effective date of the  regulations
issued  pursuant  to  subdivision  four of this section, the] UNDER THIS
SECTION, THE COMMISSIONER OR MEDICAID INSPECTOR GENERAL SHALL SO  NOTIFY
THE PROVIDER, INCLUDING SPECIFICATION OF BASIS OF THE FINDING SUFFICIENT
TO  ENABLE  THE PROVIDER TO ADOPT A SATISFACTORY COMPLIANCE PROGRAM. THE
provider SHALL SUBMIT TO THE COMMISSIONER OR MEDICAID INSPECTOR  GENERAL
A  PROPOSED  SATISFACTORY  COMPLIANCE  PROGRAM  WITHIN SIXTY DAYS OF THE
NOTICE AND SHALL ADOPT THE PROGRAM AS EXPEDITIOUSLY AS POSSIBLE. IF  THE
PROVIDER  DOES NOT PROPOSE AND ADOPT A SATISFACTORY PROGRAM IN SUCH TIME
PERIOD, THE PROVIDER may  be  subject  to  any  sanctions  or  penalties
permitted by federal or state laws and regulations, including revocation

S. 7821--B                          7

of  the  provider's  agreement  to participate in the medical assistance
program.
  5.  ANY  REGULATION,  DETERMINATION, OR FINDING OF THE COMMISSIONER OR
THE MEDICAID INSPECTOR GENERAL RELATING TO A  COMPLIANCE  PROGRAM  UNDER
THIS  SECTION  SHALL BE SUBJECT TO AND CONSISTENT WITH SUBDIVISION THREE
OF THIS SECTION.
  S 7. Subdivision 2 of section  369  of  the  social  services  law  is
amended by adding a new paragraph (e) to read as follows:
  (E)(I) MEDICAL ASSISTANCE SHALL BE CONSIDERED INCORRECTLY PAID WHEN AN
INDIVIDUAL  HAS  RECEIVED  AN ADEQUATE EXPLANATION OF HIS OR HER DUTY TO
PROVIDE OR REPORT INFORMATION RELEVANT TO AN ELIGIBILITY  DETERMINATION,
AND,  EITHER  FAILED  TO PROVIDE OR REPORT RELEVANT INFORMATION THAT WAS
KNOWN, OR UNDER THE CIRCUMSTANCES REASONABLY SHOULD HAVE BEEN KNOWN,  BY
THE  INDIVIDUAL,  OR  THE  INDIVIDUAL  WAS  RESPONSIBLE  FOR INTENTIONAL
MISREPRESENTATIONS OR FRAUD DURING THE  APPLICATION  OR  RECERTIFICATION
PROCESS.
  (II)  NO  ADJUSTMENT  OR  RECOVERY,  INCLUDING A REQUEST FOR VOLUNTARY
REPAYMENT, MAY BE MADE AGAINST THE PROPERTY OF ANY INDIVIDUAL ON ACCOUNT
OF ANY MEDICAL ASSISTANCE INCORRECTLY PAID TO OR ON BEHALF OF  AN  INDI-
VIDUAL  UNDER  THIS  TITLE,  EXCEPT  AFTER  AN  INVESTIGATION  HAS  BEEN
COMPLETED BY A SOCIAL SERVICES DISTRICT  OR  APPROPRIATE  STATE  AGENCY,
SUBJECT TO SECTION THIRTY-EIGHT OF THE PUBLIC HEALTH LAW.
  S  8.  This  act shall take effect on the ninetieth day after it shall
have become a law and shall apply to any matter commenced or pending  on
or  after  such date.   However with respect to any matter pending on or
after such date, this act shall not  invalidate  any  actions  or  steps
taken or commenced prior to such date and shall only apply to actions or
steps commenced on or after such date.