New Jersey’s Medicaid Fraud Division (“MFD”) conducts routine coding audits, in addition to conducting fraud investigations, under the direction of the New Jersey Office of the State Comptroller. The MFD is empowered to protect the integrity of New Jersey’s Medicaid program and works to detect and recover funds that are improperly paid. Although their namesake would imply that the MFD focuses on fraud, to the contrary, most of their work concerns normal audits of providers who treat Medicaid patients, both through the State fund as well as those patients who have insurance coverage through one of the many Medicaid Managed Care Organizations (“MCOs”).
Recently, Frier Levitt has been alerted to a change in the standard operating procedure by the MFD that severely prejudices providers. This change should concern all providers who are subject to an MFD audit, as the timeline for fighting these reviews has been shortened and the carrot and stick approach of using state power to recover funds has been weighted heavily to a punitive end.
In the past, the MFD would approach a practice with audit findings and an identified overpayment demand that the practice would be allowed to appeal. As coding is largely subjective, the MFD afforded providers enough time to obtain an independent review of records and file an appeal through counsel. The appeal process, most of the time due to MFD’s internal delays, could last months.
Now, when MFD issues an overpayment demand they will concurrently file a Certificate of Debt (“COD”) with the State. Additionally, the MFD will direct all MCOs in the state to immediately start recouping funds from the provider’s current reimbursements until the “debt” is satisfied. Many times, the recoupments start at 30% across the board, but regulations allow the MFD to recoup 100% if they choose to. Further, the COD will not be lifted until the overpayment demand is fully satisfied.
Making matters worse, providers will now have just 20 days from the date of the initial overpayment demand letter to request a pre-hearing conference or to waive the pre-hearing conference and file an appeal with the Office of Administrative Law. This leaves the provider with less than three (3) weeks to retain counsel, analyze the overpayment demand and audit, find an expert witness to review the findings, and to decide regarding the best approach for fighting the MFD’s audit.
This new approach will disproportionately impact providers who treat the most vulnerable and at-risk patients, harming physicians who treat the poverty stricken as well as a significant number of children in the State of New Jersey. It is incumbent upon any physician who receives an overpayment demand from the MFD to act as quickly as possible to avoid financial hardship or further audits from the MFD. Preferably, healthcare counsel and a certified professional coder should be retained as soon as you receive an audit from the MFD requesting medical records so you can start preparing a potential defense before findings are issued.
Frier Levitt has significant experience defending physicians from Medicaid audits as well as other government payor audits. Our attorneys have successfully navigated all manner of overpayment demands from Medicare, Medicaid, and commercial insurance providers. If you are audited or receive an overpayment demand from Medicaid or the MFD, call Frier Levitt today.
