Part 517 - PROVIDER AUDITS

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Statutory Authority: 
Social Services Law, Sections 20(3)(d), 34(3)(f), 363-a(2), 368-c

Section 517.1 - Scope.

Section 517.1 Scope. (a) This Part applies to fiscal audits and reviews of a provider's claims, books, records, reports or other available documentation.

(b) Audits and reviews conducted pursuant to this Part do not preclude the department or any other authorized governmental body or agency from taking any other action with respect to the provider, including obtaining overpayments or restitution pursuant to a finding of unacceptable practices, auditing or reviewing of other payments or claims for payment for the same or similar periods, or taking any other action authorized by law.

 

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Section 517.2 - Definitions.

517.2 Definitions. The terms defined in Part 515 of this Title have the same meanings in this Part and, in addition, as used in this Part, the following terms shall have the following meanings:

(a) Facility shall mean:

(1) any medical facility, hospital, nursing home, residential care facility, home health agency, health maintenance organization and diagnostic and treatment center as defined in the Public Health Law; or

(2) any program or facility for which the Office of Mental Retardation and Developmental Disabilities establishes fees or rates of payment under the medical assistance program and which is not operated by such Office.

(b) Draft audit report and final audit report refer to the formal audit reports produced by the department after an on-site review of a provider's records and denominated as such on their face, as well as to those notices sent to providers advising them of overpayments detected through in-house claims reviews or other post-payment reviews of a provider's claims.

 

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Section 517.3 - Audit and record retention.

517.3 Audit and record retention. (a) Cost-based provider. (1) All fiscal and statistical records and reports of providers which are used for the purpose of establishing rates of payment made in accordance with the medical assistance program and all underlying books, records, documentation and reports which formed the basis for such fiscal and statistical records and reports are subject to audit. All underlying books, records and documentation which formed the basis for the fiscal and statistical reports filed by a provider with any State agency responsible for the establishment of rates of payment or fees must be kept and maintained by the provider for a period of not less than six years from the date of filing of such reports, or the date upon which the fiscal and statistical records were required to be filed, or two years from the end of the last calander year during any part of which a provider's rate or fee was based on the fiscal or statistical reports, whichever is later. In this respect, any rate of payment certified or established by the commissioner of the Department of Health or other official or agency responsible for establishing such rates will be construed to represent a provisional rate until an audit is performed and completed, or the period within which to conduct an audit has expired without such audit having been begun or notice of such audit having been issued, at which time such rate or adjusted rate will be construed to represent the final rate as to those items audited.

(2) All required fiscal and statistical reports are subject to audit for a period of six years from the date of their filing or from the date when such reports were required to be filed, whichever is later. This limitation does not apply to situations in which fraud may be involved or where the provider or an agent thereof prevents or obstructs the commissioner from performing an audit pursuant to this Part. Where reports and documentation have been submitted pursuant to a rate appeal of a provisional rate, such reports and documentation will likewise be subject to audit for a period of six years from the submission of material in support of such appeal or two years following certification of any revised rate resulting from such appeal, whichever is later.

(b) Fee-for-service providers. (1) All providers, who are not paid at rates or fees approved by the State Director of the Division of the Budget based upon their allowable costs of operation but who are paid in accordance with the rates, fees and schedules established by the department, must prepare and maintain contemporaneous records demonstrating their right to receive payment under the medical assistance program. All records necessary to disclose the nature and extent of services furnished and the medical necessity therefor, including any prescription or fiscal order for the service or supply, must be kept by the provider for a period of six years from the date the care, services or supplies were furnished or billed, whichever is later.

(2) All information regarding claims for payment submitted by or on behalf of the provider is subject to audit for a period of six years from the date the care, services or supplies were furnished or billed, whichever is later, and must be furnished, upon request, to the department, the Secretary of the United States Department of Health and Human Services, the Medicaid Fraud Control Unit or the New York State Department of Health for audit and review. This limitation does not apply to situations in which fraud may be involved or where the provider or an agent thereof prevents or obstructs an audit.

(c) Notification by the department to the provider of the department's intent to audit shall toll the six-year period for record retention and audit. The department shall not notify a provider of its intent to audit more than six years from the date of filing of the fiscal and statistical reports to be audited or six years from the date they were required to be filed, whichever is later. The audit shall begin within 60 days of such written notification of intent to audit. The department may extend this period for 60 days upon written notice to the provider. The department shall initiate no more than one extension of a notification of intent to audit.

(d) If an audit has not been commenced within 60 days of a notification of intent to audit or within 120 days of an extended notification, the effectiveness of the notification shall lapse. However, the department may issue subsequent notifications of intent to audit within the six-year period described in subdivision (b) of this section. The passage of this six-year period shall preclude the department from conducting an audit unless there is in existence an unexpired notification of intent to audit or an extended notification. The passage of this six-year period shall not prohibit the department from concluding an audit already begun.

(e) Notwithstanding the provisions of subdivisions (c) and (d) of this section, the period within which to commence an audit may be indefinitely extended on account of delays in the commencement of the audit caused or requested by the provider or a representative of the provider.

(f) An on-site audit begins with an entrance conference at which the nature and extent of the audit must be discussed. The time, manner and place of an audit will be determined by the department.

(g) Where feasible, the department shall enter into an agreement to undertake a combined audit with other organizations and agencies having audit responsibilities to satisfy the department's auditing needs. In this respect, the department reserves the right, after entering into any such agreement, to use the findings of the combined audit or to perform an independent audit of either limited or comprehensive scope of the same fiscal period audited by the other organization or agency.

(h) In its discretion, the department may terminate an audit at any time in the audit process. The provider shall be notified in writing of such termination. This written notification shall serve in the place of a closing conference, draft audit report or final audit report, as appropriate. If an audit is terminated, the department is precluded from recommencing an audit of those items which were the subject of the terminated audit.

 

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Section 517.5 - Draft audit report.

517.5 Draft audit report. (a) If, after affording the provider the opportunity for a closing conference upon completion of an on-site field audit and after consideration of any additional documentation and information presented in connection therewith, or after a review of a provider's claims and payments on in-house post-payment review, the department believes that overpayments have been made to the provider, a draft audit report may be issued identifying the items which are being disallowed and advising the provider of the basis for the proposed action and the legal authority therefor. When feasible, the draft report will also specify the amount of the overpayment.

(b) The draft audit report must contain a clear statement of the action to be taken, must afford the provider the opportunity to object to the proposed action within 30 days of receipt of the notice, must advise the provider that failure to object within the time provided may result in the adoption of the proposed action as the final agency action and must advise the provider that, pursuant to section 519.18 of this Title, the issues to be addressed at an administrative hearing will be limited to those matters contained in any objection to the proposed action.

(c) The report must be mailed to the provider's designated payment address or correspondence address or last known address and must be accompanied by a document identifying the person to whom objections to the report should be mailed. The provider's objections to the draft audit report must be mailed by the provider to that person within 30 days of receipt of the report which will be presumed in the absence of evidence to the contrary to be five days after the date on the draft report. Any objections must include a statement detailing the specific items of the draft report to which the provider objects and provide any additional material or documentation which the provider wishes to be considered in support of the objections.

 

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Section 517.6 - Final audit report.

517.6 Final audit report. (a) After receipt of the provider's objections to the draft audit report, or at any time after the expiration of 40 days after mailing of the draft audit report without objections having been received, a final report may be issued. In preparing the final audit report, the department must consider the objections, any supporting documents and materials submitted therewith, the draft audit report, and any additional material which may become available.

(b) The final audit report and/or the cover letter accompanying it must clearly advise the provider:

(1) of the nature and amount of the audit findings, the basis for the action and the legal authority therefor;

(2) of the action which will be taken;

(3) of the effective date of the intended action which will be not less than 20 days from the date of the final audit report;

(4) of the right to appeal the audit findings set forth in the final audit report and of the requirements and procedures for requesting an administrative hearing;

(5) that the request may not address issues regarding the methodology used to determine the rate or any issue that was raised or could have been raised at a proceeding to appeal a rate determination but shall be limited to those issues relating to determinations contained in the final audit report.

 

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Section 517.14 - Rate adjustments after audit.

517.14 Rate adjustments after audit. Audit adjustments which result in rate revisions must be applied to all rate periods which are affected by the audited costs. Any resulting adjustment to the reimbursement of a provider may be satisfied pursuant to Part 518 of this Title.

 

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Section 517.17 - Transferred audits.

517.17 Transferred audits. Providers which requested bureau reviews in accordance with the provisions of 10 NYCRR Part 86 and which did not receive final determinations based thereupon are entitled to a final audit report in accordance with the provisions of section 517.6 of this Part and to a hearing in accordance with the provisions of Part 519 of this Title. Providers which have requested hearings in accordance with 10 NYCRR Part 86 or former Part 518 of this Title are entitled to a hearing in accordance with Part 519 of this Title.

 

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