Under Section 6402 of the Affordable Care Act, State Medicaid programs are required to suspend all Medicaid payments to providers under investigation for a “credible allegation of fraud”. After more than a year of delay and discussion, on August 22, New York adopted regulations implementing this requirement, joining a number of other states who have already done so. Prior to enactment of the new regulations in New York, the decision on whether to withhold payments was discretionary.
Pursuant to the regulations, the New York State Medicaid Program must withhold payments when it has determined, or been notified, that a provider is subject to a pending investigation involving a “credible allegation of fraud”. A “credible allegation of fraud” is defined as “an allegation that has indicia of reliability” and has been verified by a law enforcement organization, such as a Medicaid fraud control unit or State Attorney General.
There is a limited exception under which a State can avoid suspending payments, which exception requires the State to determine that “good cause” exists not to suspend payments, such as evidence that the suspension would jeopardize access to care or compromise a pending investigation.
There are no advance notice requirements in the New York regulations, as they simply require notice of withholding within five days of taking such action. Although the notice is required to describe the reasons for the action, it is not required to provide specific information concerning an ongoing investigation. The result of these regulations is that providers will not learn that their Medicaid payments are being withheld until the action has already been initiated, and then will be forced to initiate administrative proceedings should they elect to contest the withholding.
You can find a copy of the Notice of Adoption from the NYS Register here —> OMIG Regulations