2015 Connecticut General Statutes
Title 17b - Social Services
Chapter 319s - Financial Assistance
Section 17b-99 - (Formerly Sec. 17-83k). Vendor fraud penalties. Distribution of medical assistance program rules. Regulations. Audits of service providers. Appeal.

(a) Any vendor found guilty of vendor fraud under sections 53a-290 to 53a-296, inclusive, shall be subject to forfeiture or suspension of any franchise or license held by such vendor from the state in accordance with this subsection, after hearing in the manner provided for in sections 4-176e to 4-180a, inclusive, and 4-181a. Any vendor convicted of vendor fraud under sections 53a-290 to 53a-296, inclusive, shall have such license or franchise revoked. Nothing in this subsection shall preclude any board or commission established under chapters 369 to 376, inclusive, 378 to 381, inclusive, and 383 to 388, inclusive, and the Department of Public Health with respect to professions under its jurisdiction which have no board or commission from taking any action authorized in section 19a-17. Any vendor who is convicted in any state or federal court of a crime involving fraud in the Medicare program or Medicaid program or aid to families with dependent children program or state-administered general assistance program or temporary family assistance program or state supplement to the federal Supplemental Security Income Program or any federal or state energy assistance program or general assistance program or state-funded child care program or the refugee program shall be terminated from such programs, effective upon conviction, except that the Commissioner of Social Services may delay termination for a period he deems sufficient to protect the health and well-being of beneficiaries receiving services from such vendor. A vendor who is ineligible for federal financial participation shall be ineligible for participation in such programs. No vendor shall be eligible for reimbursement for any goods provided or services performed by a person convicted of a crime involving fraud in such programs. The convicted person may request a hearing concerning such ineligibility for reimbursement pursuant to sections 4-176e to 4-180a, inclusive, and 4-181a provided such request is filed in writing with the Commissioner of Social Services within ten days of the date of written notice by the commissioner to the person of such ineligibility. The commissioner shall give notice of such ineligibility to such vendors by means of publication in the Connecticut Law Journal following the expiration of said ten-day hearing request period, if no timely request has been filed, or following the decision on the hearing. The Commissioner of Social Services may take such steps as necessary to inform the public of the conviction and ineligibility for reimbursement. No vendor or person so terminated or denied reimbursement shall be readmitted to or be eligible for reimbursement in such programs. Any sums paid as a result of vendor fraud under sections 53a-290 to 53a-296, inclusive, may be recovered in an action brought by the state against such person.

(b) For the purpose of determining compliance with subsection (a) of this section, all vendors shall notify the commissioner within thirty days after the date of employment or conviction, whichever is later, of the identity, interest and extent of services performed by any person convicted of a crime involving fraud in the Medicare program or Medicaid program or aid to families with dependent children program or state-administered general assistance program or temporary family assistance program or state supplement to the federal Supplemental Security Income Program or any federal or state energy assistance program or general assistance program or state-funded child care program or the refugee program. Prior to the commissioner’s acceptance of a provider agreement or at any time upon written request by the commissioner, the vendor shall furnish the commissioner with the identity of any person convicted of a crime involving fraud in such programs who has an ownership or control interest in the vendor or who is an agent or managing employee. The commissioner shall terminate, refuse to enter into or renew an agreement with a vendor, except a vendor providing room and board and services pursuant to section 17b-340, if such convicted person has such interest or is such agent or employee. In the case of a vendor providing room and board and services pursuant to said section 17b-340, the commissioner may terminate, refuse to enter into or renew an agreement after consideration of any adverse impact on beneficiaries of such termination or refusal.

(c) The Department of Social Services shall distribute to all vendors who are providers in the medical assistance program a copy of the rules, regulations, standards and laws governing the program. The Commissioner of Social Services shall adopt by regulation in the manner provided for in sections 4-166 to 4-176, inclusive, administrative sanctions against providers in the Medicare program or Medicaid program or aid to families with dependent children program or state-funded child care program or state-administered general assistance program or temporary family assistance program or state supplement to the federal Supplemental Security Income Program including suspension from the program, for any violations of the rules, regulations, standards or law. The commissioner may adopt regulations in accordance with the provisions of chapter 54 to provide for the withholding of payments currently due in order to offset money previously obtained as the result of error or fraud. The department shall notify the proper professional society and licensing agency of any violations of this section.

(d) (1) The Commissioner of Social Services, or any entity with which the commissioner contracts for the purpose of conducting an audit of a service provider that participates as a provider of services in a program operated or administered by the department pursuant to this chapter or chapter 319t, 319v, 319y or 319ff, except a service provider for which rates are established pursuant to section 17b-340, shall conduct any such audit in accordance with the provisions of this subsection. For purposes of this subsection, (A) “clerical error” means an unintentional typographical, scrivener’s or computer error, (B) “extrapolation” means the determination of an unknown value by projecting the results of the review of a sample to the universe from which the sample was drawn, (C) “ninety-five per cent confidence level” means there is a probability of at least ninety-five per cent that the result is reliable, (D) “provider” means a person, public agency, private agency or proprietary agency that is licensed, certified or otherwise approved by the commissioner to supply services authorized by the programs set forth in said chapters, (E) “stratified sampling” means a method of sampling that involves the division of a population into smaller groups known as strata based on shared attributes, characteristics or similar paid claim amounts, (F) “statistically valid sampling and extrapolation methodology” means a methodology that is (i) validated by a statistician who has completed graduate work in statistics and has significant experience developing statistically valid samples and extrapolating the results of such samples on behalf of government entities, (ii) provides for the exclusion of highly unusual claims that are not representative of the universe of paid claims, (iii) has a ninety-five per cent confidence level or greater, and (iv) includes stratified sampling when applicable, and (G) “universe” means a defined population of claims submitted by a provider during a specific time period.

(2) Not less than thirty days prior to the commencement of any such audit, the commissioner, or any entity with which the commissioner contracts to conduct an audit of a participating provider, shall provide written notification of the audit to such provider and the statistically valid sampling and extrapolation methodology to be used in conducting such audit, unless the commissioner, or any entity with which the commissioner contracts to conduct an audit of a participating provider makes a good faith determination that (A) the health or safety of a recipient of services is at risk; or (B) the provider is engaging in vendor fraud. At the commencement of the audit, the commissioner, or any entity with which the commissioner contracts to conduct an audit of a participating provider, shall disclose (i) the name and contact information of the assigned auditor or auditors, (ii) the audit location, including notice of whether such audit shall be conducted on-site or through record submission, and (iii) the manner by which information requested shall be submitted. No audit shall include claims paid more than thirty-six months from the date claims are selected for the audit. A scanned copy of documentation supporting a claim shall be acceptable when the original documentation is unavailable.

(3) Any clerical error discovered in a record or document produced for any such audit shall not of itself constitute a wilful violation of program rules unless proof of intent to commit fraud or otherwise violate program rules is established. In determining which providers shall be subject to audits, the Commissioner of Social Services may give consideration to the history of a provider’s compliance in addition to other criteria used to select a provider for an audit.

(4) A finding of overpayment or underpayment to a provider in a program operated or administered by the department pursuant to this chapter or chapter 319t, 319v, 319y or 319ff, except a provider for which rates are established pursuant to section 17b-340, shall not be based on extrapolation unless the total net amount of extrapolated overpayment calculated from a statistically valid sampling and extrapolation methodology exceeds one and three-quarters per cent of total claims paid to the provider for the audit period.

(5) A provider, in complying with the requirements of any such audit, shall be allowed not less than thirty days to provide documentation in connection with any discrepancy discovered and brought to the attention of such provider in the course of any such audit. Such documentation may include evidence that errors concerning payment and billing resulted from a provider’s transition to a new payment or billing service or accounting system. The commissioner shall not calculate an overpayment based on extrapolation or attempt to recover such extrapolated overpayment when the provider presents credible evidence that an error by the commissioner, or any entity with which the commissioner contracts to conduct an audit pursuant to this subsection, caused the overpayment, provided the commissioner may recover the amount of the original overpayment.

(6) The commissioner, or any entity with which the commissioner contracts, for the purpose of conducting an audit of a provider of any of the programs operated or administered by the department pursuant to this chapter or chapter 319t, 319v, 319y or 319ff, except a service provider for which rates are established pursuant to section 17b-340, shall produce a preliminary written report concerning any audit conducted pursuant to this subsection, and such preliminary report shall be provided to the provider that was the subject of the audit not later than sixty days after the conclusion of such audit.

(7) The commissioner, or any entity with which the commissioner contracts, for the purpose of conducting an audit of a provider of any of the programs operated or administered by the department pursuant to this chapter or chapter 319t, 319v, 319y or 319ff, except a service provider for which rates are established pursuant to section 17b-340, shall, following the issuance of the preliminary report pursuant to subdivision (6) of this subsection, hold an exit conference with any provider that was the subject of any audit pursuant to this subsection for the purpose of discussing the preliminary report. Such provider may present evidence at such exit conference refuting findings in the preliminary report.

(8) The commissioner, or any entity with which the commissioner contracts, for the purpose of conducting an audit of a service provider, shall produce a final written report concerning any audit conducted pursuant to this subsection. Such final written report shall be provided to the provider that was the subject of the audit not later than sixty days after the date of the exit conference conducted pursuant to subdivision (7) of this subsection, unless the commissioner, or any entity with which the commissioner contracts for the purpose of conducting an audit of a service provider, agrees to a later date or there are other referrals or investigations pending concerning the provider.

(9) Any provider aggrieved by a decision contained in a final written report issued pursuant to subdivision (8) of this subsection may, not later than thirty days after the receipt of the final report, request, in writing, a contested case hearing in accordance with chapter 54. Such request shall contain a detailed written description of each specific item of aggrievement. The designee of the commissioner who presides over the hearing shall be impartial and shall not be an employee of the Department of Social Services Office of Quality Assurance or an employee of an entity with which the commissioner contracts for the purpose of conducting an audit of a service provider. A provider shall be permitted to raise during such hearing that a negative audit finding was due to a provider’s compliance with a state or federal law or regulation. Following review on all items of aggrievement, the designee of the commissioner who presides over the hearing shall issue a final decision not later than ninety days following the close of evidence or the date on which final briefs are filed, whichever occurs later. When a provider requests a hearing pursuant to this subdivision, and the provider is contesting an overpayment amount based on extrapolation, the Department of Social Services shall not recoup the overpayment amount at issue until a final decision is issued after the hearing.

(10) The provisions of this subsection shall not apply to any audit conducted by the Medicaid Fraud Control Unit established within the Office of the Chief State’s Attorney.

(11) The commissioner shall provide free training to providers on how to enter claims to avoid errors and shall post information on the department’s Internet web site concerning the auditing process and methods to avoid clerical errors. Not later than February 1, 2015, the commissioner shall establish and publish on the department’s Internet web site audit protocols to assist the Medicaid provider community in developing programs to improve compliance with Medicaid requirements under state and federal laws and regulations, provided audit protocols may not be relied upon to create a substantive or procedural right or benefit enforceable at law or in equity by any person, including a corporation. The commissioner shall establish audit protocols for specific providers or categories of service, including, but not limited to: (A) Licensed home health agencies, (B) drug and alcohol treatment centers, (C) durable medical equipment, (D) hospital outpatient services, (E) physician and nursing services, (F) dental services, (G) behavioral health services, (H) pharmaceutical services, (I) emergency and nonemergency medical transportation services, and (J) not later than January 1, 2016, homemaker companion services. The commissioner shall ensure that the Department of Social Services, or any entity with which the commissioner contracts to conduct an audit pursuant to this subsection, has on staff or consults with, as needed, a medical or dental professional who is experienced in the treatment, billing and coding procedures used by the provider being audited.

(P.A. 75-420, S. 4, 6; 75-558, S. 2; P.A. 76-242, S. 1, 2; P.A. 77-614, S. 587, 608, 610; P.A. 78-221, S. 1–3; 78-303, S. 85, 136; P.A. 81-41, S. 1, 2; P.A. 82-190, S. 1, 2; P.A. 83-179; P.A. 84-235, S. 1, 2; P.A. 85-324; P.A. 88-176; 88-317, S. 71, 107; P.A. 93-262, S. 1, 87; 93-381, S. 9, 39; P.A. 95-257, S. 12, 21, 58; P.A. 96-169, S. 2; June 18 Sp. Sess. P.A. 97-2, S. 45, 165; June Sp. Sess. P.A. 00-2, S. 22, 53; P.A. 05-195, S. 1; P.A. 06-196, S. 131; P.A. 07-217, S. 73; P.A. 10-116, S. 1; P.A. 11-25, S. 6; 11-236, S. 5; P.A. 14-162, S. 1; June Sp. Sess. P.A. 15-5, S. 400.)

History: P.A. 75-420 allowed substitution of department of social services for welfare department in P.A. 75-558 which created the section; P.A. 76-242 included vendors providing services to recipients under Title XIX of Social Security Act in prohibitions of Subsec. (a), added reference to hearing in Subsec. (b) and added Subsec. (c) re adoption of regulations and distribution of rules to vendors; P.A. 77-614 and P.A. 78-303 replaced commissioner and department of social services with commissioner and department of income maintenance; P.A. 78-221 prohibited presenting false claim for payment with intent to defraud and added prohibition against accepting payments in excess of amounts due in Subsec. (a) and added Subsec. (d) imposing five-year limitation on prosecution; P.A. 81-41 added the requirement in Subsec. (b) that vendors convicted of medical assistance fraud be terminated from the program and provided the procedure for their readmission, and in Subsec. (c) empowered commissioner to adopt regulations re withholding of payments due to offset money previously obtained through error or fraud; P.A. 82-190 extended applicability of Subsec. (b) to include vendors convicted of a crime involving fraud in the aid to families with dependent children program, the state supplement to the Federal Supplemental Security Income Program or any federal or state energy assistance program or general assistance program; P.A. 83-179 defined the term “vendor,” added the exception from termination upon conviction to protect the health and well-being of beneficiaries, added the provisions re ineligibility for reimbursement for goods or services performed by a person convicted of a crime involving fraud in assistance programs and inserted Subsec. (c) re notice of the identity, interest and services performed by such convicted person, relettering remaining Subsecs. accordingly; P.A. 84-235 added the language in Subsec. (b) concerning the suspension or revocation of a franchise or license based on the number of convictions for larceny and amended Subsec. (d) by listing the programs for which administrative sanctions are required; P.A. 85-324 amended Subsec. (b) to clarify the authority of the boards and commissions and the commissioner of health services to take action under Sec. 19a-17 in vendor fraud actions; P.A. 88-176 added the refugee program to Subsecs. (b) and (c), added a provision re the effect of vendor ineligibility for federal financial participation and reduced to one year the time in which a vendor may apply for readmission to the programs in Subsec. (b); P.A. 88-317 amended references to Secs. 4-177 to 4-180 in Subsec. (b) and amended reference to Secs. 4-166 to 4-176 and Ch. 54 in Subsec. (d), to include new sections added to Ch. 54, effective July 1, 1989, and applicable to all agency proceedings commencing on or after that date; P.A. 93-262 authorized substitution of commissioner and department of social services for commissioner and department of income maintenance, effective July 1, 1993; P.A. 93-381 replaced department of health services with department of public health and addiction services, effective July 1, 1993; Sec. 17-83k transferred to Sec. 17b-99 in 1995; P.A. 95-257 replaced Commissioner and Department of Public Health and Addiction Services with Commissioner and Department of Public Health, effective July 1, 1995; P.A. 96-169 deleted Subsec. (a) defining vendor fraud, relettering Subsecs. (b) to (d) as (a) to (c), respectively, amended Subsec. (a) to replace reference to larceny with vendor fraud, to delete suspension penalties for vendors convicted of vendor fraud and make revocation of license or franchise the penalty for the first conviction of vendor fraud and to make termination or denial of reimbursement permanent, replacing a one-year period and deleted Subsec. (c) re limits on prosecution; June 18 Sp. Sess. P.A. 97-2 added the state-administered general assistance program and the temporary family assistance program to the provisions of this section, effective July 1, 1997; June Sp. Sess. P.A. 00-2 added provisions re a vendor who is convicted of a crime involving fraud in a state-funded child care program and made technical changes in Subsec. (a) for the purpose of gender neutrality, effective July 1, 2000; P.A. 05-195 added new Subsec. (d) re audits of service providers by the Department of Social Services, effective July 1, 2005; P.A. 06-196 made technical changes in Subsec. (d)(7), effective June 7, 2006; P.A. 07-217 made a technical change in Subsec. (b), effective July 12, 2007; P.A. 10-116 amended Subsec. (d) by adding provision in Subdiv. (1) requiring regulations to be appended to audit notification, by making technical changes in Subdivs. (5) and (7), by adding provision in Subdiv. (8) requiring issuance of a final decision, by adding new Subdiv. (9) providing for right to appeal final decision, by redesignating existing Subdiv. (9) as Subdiv. (10) and by adding Subdiv. (11) requiring commissioner to adopt regulations, effective July 1, 2010 (Revisor’s note: In 2011, a reference to “subdivision (12)” in Subsec. (d)(1) was changed editorially by the Revisors to “subdivision (11)” for accuracy); P.A. 11-25 made technical changes in Subsec. (d); P.A. 11-236 amended Subsec. (d) by adding exception to audit provisions for service providers for which rates are established under Sec. 17b-340 and, in Subdiv. (9), by restating provision allowing provider to appeal final decision, specifying that final decision is issued pursuant to Subdiv. (8) and making a technical change, effective July 1, 2011; P.A. 14-162 amended Subsec. (d) to define “extrapolation” and “universe”, add provision allowing commissioner to consider history of compliance in choosing provider for audit in Subdiv. (2), change from $150,000 to $200,000 the annual aggregate claim amount that may trigger finding based on extrapolation and make a technical change in Subdiv. (3), add provision allowing provider to present evidence at exit conference in Subdiv. (6) and add provisions re free provider training and audit protocols in Subdiv. (11), effective July 1, 2014; June Sp. Sess. P.A. 15-5 amended Subsec. (d) by designating existing provisions re definitions as new Subdiv. (1) and amending same by adding definitions of “clerical error”, “ninety-five per cent confidence level”, “stratified sampling” and “statistically valid sampling and extrapolation methodology”, redesignating existing Subdivs. (1) to (8) as Subdivs. (2) to (9), adding provisions re audit procedures and disclosures and deleting provision re copy of regulations to be appended to notification in redesignated Subdiv. (2), deleting provision re recordkeeping, typographical, scrivener’s or computer error in redesignated Subdiv. (3), deleting former Subparas. (A) to (C) and adding provision re extrapolated overpayment in redesignated Subdiv. (4), adding provisions re documentation of evidence re payment and billing errors in redesignated Subdiv. (5), replacing references to review with references to hearing and adding provisions re 90-day deadline and recoupment of overpayment amount in redesignated Subdiv. (9), deleting former Subdiv. (9) re appeal, deleting provisions re adoption of regulations and adding Subpara. (J) re homemaker companion services in Subdiv. (11), and making technical changes, effective July 1, 2015.