Enrolled providers in the New York Medicaid program, including pharmacies, face specific, time‑sensitive obligations to disclose changes in ownership, control, and key management personnel to the New York State Department of Health (the “Department”) within 15 days, as noted in this recent Provider Alert. Failure to comply with these disclosure requirements can jeopardize a provider’s continued participation in the New York Medicaid program and its ability to remain operational.
These changes include (i) direct or indirect ownership of the enrolled provider; (ii) control interest in the enrolled provider; and (iii) managing employee of the enrolled provider.[1] An indirect ownership interest is an ownership interest in an entity that has an ownership interest in the disclosing entity.[2]
Enrollment Denials for the Applicant and Commonly Owned Pharmacies
Failure to timely report required changes can result in termination of the provider’s Medicaid enrollment. Moreover, noncompliant pharmacy providers often encounter denials of enrollment for affiliated pharmacies that subsequently seek enrollment in the New York Medicaid Program. Applicants must provide accurate ownership information and certify compliance with all applicable laws, including federal and state disclosure regulations.[3]
Failure to provide updated ownership or control information constitutes noncompliance with the law and enrollment requirements.
In addition to having the authority to deny an application containing a false representation or omission of any material fact, the Department has broad discretion to review any other factor having a direct bearing on the applicant’s ability to be fiscally responsible to the program or otherwise “affect the effective and efficient administration of the program”.[4]
Overpayment Exposure
Many providers primarily associate reporting requirements with an asset or stock purchase and overlook the importance of reporting changes of management or control. A managing employee includes a general manager, business manager, administrator, director, or other individual who exercises operational or managerial control over, or who directly or indirectly conducts the day-to-day operation of an institution, organization or agency, and includes, but is not limited to, laboratory directors and supervising pharmacists.[5]
The New York Medicaid Pharmacy Manual Policy Guidelines (the “Pharmacy Policy”) requires managing employee changes to be reported within seven (7) days from the date of the change.[6] Failure to provide timely notice may result in enrollment termination and overpayment exposure identified during audit activity.
In the case of a new supervising pharmacist, timely notification to the Department also triggers confirmation by the Department that the supervising pharmacist is qualified and appropriately licensed, a material condition of Medicaid payment. If claims are submitted without a qualified supervising pharmacist, the Department may recoup claims payments for prescriptions dispensed while an unqualified supervising pharmacist is affiliated with the pharmacy.
Collateral Enforcement Actions Absent Proactive Compliance
As previously reported by Frier Levitt, state Boards of Pharmacy also take enforcement action for failure to timely report changes in a pharmacy’s ownership and/or supervising pharmacist. A disciplinary action by a state’s Board of Pharmacy not only involves potential suspension and fines, but subsequent reporting to other state Boards of Pharmacy in which the pharmacy is licensed, payors and pharmacy benefit managers (PBMs) regarding the disciplinary action.
Given the short reporting windows and high stakes, providers should coordinate among legal, compliance, and operations teams to ensure timely completion and submission of all required enrollment updates. Maintaining accurate, up‑to‑date information with the Department and Board of Pharmacy is not merely a technical requirement; it is essential to preserving New York Medicaid enrollment and avoiding potential payor terminations and claim recoupments.
How Frier Levitt Can Help
Frier Levitt works with pharmacies nationwide to navigate the intersection of network participation risks and Board of Pharmacy enforcement following a lapse in compliance. Our team advises pharmacies at every stage, from proactive compliance assessments and self-audit development to inspection response, changes in ownership and control disclosure requirements, developing corrective action plans, Medicaid appeals, and PBM termination challenges. For more information, call Frier Levitt to speak with an attorney.
[1] 18 NYCRR §502.5.
[2] See 18 NYCRR § 502.2(g).
[3] See 18 NYCRR §502.5; 42 CFR §455.104.
[4] See 18 NYCRR §504.5(a),(1) (13), (14).
[5] 18 NYCRR § 502.2(h).
[6] Pharmacy Policy at 20, available at https://www.emedny.org/ProviderManuals/Pharmacy/PDFS/Pharmacy_Policy_Guidelines.pdf.
