According to recently issued final audit reports, the New York State Office of the Medicaid Inspector General (OMIG) has revised its policy to give providers greater flexibility when responding to final audit reports. The new policy eliminates the previously deployed threat of a higher recoupment in the event the provider asked for a hearing per audit regulations, a policy that garnered significant criticism by the provider community as a penalty for seeking due process.
OMIG employs statistical sampling to extrapolate the results of a reviewed sample across the full universe of claims. Extrapolation is a method of estimating or projecting the total alleged overpayment based on a small sample of claims data. Within this framework, the result often yields a range of audit payments. The lower confidence interval (LCL) is the more conservative figure, whereas the middle confidence figure (MCL) is a more aggressive estimate. In practice, the LCL effectively serves as the “floor” of the estimate and is generally smaller than the point estimate that OMIG might otherwise seek to recover. Historically, OMIG only sought the higher repayment using the MCL if a provider lost at hearing. More recently, however, this flexibility to settle at the LCL before hearing was rescinded, giving providers only 20 days after the issuance of a final audit report to accept settlement at the LCL, thereby eliminating the ability to request a hearing and negotiate and further investigate the findings.
Effective immediately, as confirmed in recently issued final audit reports, providers may once again request a hearing without triggering the penalty of the higher MCL. This means that the opportunity to resolve audit findings at the lower confidence interval remains available even after an appeal is filed and throughout pre-hearing discussions.
This change represents a meaningful shift in OMIG’s approach. Providers now have more time and flexibility to contest audit findings, evaluate their defenses, and participate in the pre-hearing process without losing the option of ultimately resolving the matter at the lower confidence interval. The extended window gives providers a clearer path to settlement and reduces the immediate pressure that accompanied the prior 20-day deadline.
In addition to this policy update, OMIG issued an updated protocol for durable medical equipment (DME) on August 20, 2025. DME providers should carefully review the updated protocol to ensure compliance with the revised audit standards.
Providers are also reminded of OMIG’s recent expansion of compliance program reviews, which extended the review period for newly initiated compliance program reviews from three months to 12 months. To learn more, read Barclay Damon’s alert analyzing that development.
Attorneys on Barclay Damon’s Health Care Controversies and Health & Human Services Providers Teams routinely assist providers with OMIG audits, compliance reviews, and protocol updates.
If you have any questions regarding the content of this alert, please contact Linda Clark, Health Care Controversies Team co-leader, at lclark@barclaydamon.com; Bob Hussar, of counsel, at rhussar@barclaydamon.com; Imad Rafi, associate, at irafi@barclaydamon.com; or another member of the firm’s Health Care Controversies or Health & Human Services Providers Teams.