Withholding Medicaid Payments Based on Allegations of Fraud

New York State will withhold payments under Medicaid when its Department of Health has determined or has been notified that a provider is the subject of a pending investigation into “a credible allegation of fraud.” 

Amended regulations providing for withholding of payment were adopted to comply with requirements in the Patient Protection and Affordable Care Act of 2010.  They became effective on August 22, 2012.

Under the amended regulations, the state “must” withhold payments when it has determined or has been notified that a provider is the subject of a pending investigation of a credible allegation of fraud, unless the department finds good cause not to withhold payments.

A credible allegation of fraud is an allegation that has indicia of reliability and has been verified by the Department of Health, the Medicaid fraud control unit, another state agency, or a law enforcement organization.

The amended regulations also permit, but do not require, the state to withhold payments when it has “determined that a provider has abused the program or has committed an unacceptable practice.”

An unacceptable practice does not always rise to the level of being a credible allegation of fraud.  In such cases, the state may exercise its discretion and impose a withholding against a provider where it has been determined, based on preliminary findings, that the provider has committed an unacceptable practice.

The withholding of payments may continue for only 90 days unless further determinations are made.  The Department of Health also has discretion, even in the case of mandatory withholding, to continue making payments.

If you are facing allegations of Medicaid fraud or unacceptable practices, you should consult with an experienced lawyer immediately to protect your rights.To schedule a free and confidential consultation by telephone or in person, call my office today at (917) 652-6504 or click here to communicate with me via email.

John Howley
New York, New York

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