The enacted budget makes the following changes to the Executive Budget (analysis as of 4/2/07):

• Accepts the Executive Budget’s State Operations appropriations for the department and rejects the Senate proposal to eliminate the 157 new staff positions.

• Accepts the Executive Article VII proposal to create the New York False Claims Act with qui tam provisions, which will allow private persons to bring civil actions on behalf of New York State to recover funds wrongfully obtained through fraud.

• Rejects the Executive’s Article VII proposal to create the Martin Act for Health Care. 

The Senate recommends (analysis as of March 16, 2007):

• Rejects all of the Executive Budget’s proposed 157 new staff positions, which the Senate Resolution estimates to be a $1.32 million in General Fund savings.  It is interesting to note that the Senate assumes $150 million more in Medicaid fraud revenue despite their failure to support these new auditing positions.

• Adds $500,000 for OMIG to implement new fraud detection systems.

• Rejects Article VII language for the creation of the False Claim Act for Health Care and the Martin Act for Health Care.

The Executive Budget recommends (analysis as of January 31, 2007):

A FY 2007-08 workforce of 678.  This is an increase of 157 FTEs from the adjusted FTE level for FY 2006-07.  The following chart identifies adjustments in current fiscal years FTEs along with the recommended differences in FY 2007-08 FTEs by program (if the FTE’s are the same the program is not listed):

• The total appropriation for Personal Service is $22.3 million, an18.4% increase from the enacted SFY 2006-07 appropriation.

• An All Funds increase of $2.4 million, a 2.5% increased from the enacted SFY 2006-07 appropriation.

• According to the Assembly Ways and Means Committee the Executive Budget’s proposed decrease of $2.9 million in Special Revenue-Other funding is related to excess appropriation authority transferred from the Department of Health upon the Creation of OMIG in 2006. 

• Funding allocated in SFY 2006-07 to a Maintenance Undistributed (MU) appropriation for services & expenses related to the “Medicaid and abuse program” within the MA Audit and Fraud Prevention program appear to have been folded into the “services and expenses for outside experts for litigation” MU account. This represents an increase in the MU appropriation by over 200%.  Additionally, 77% of that MU appropriation is allocated to Personal Service. This may be related to the proposed creation of a “New York State False Claims Act.”

• The 157 FTE increase will include, according to the Agency Presentation, the following: 100 new auditors, 35 staff to strengthen fiscal and personnel operations, and 22 information technology staff.  The FTE increase will be primarily funded by the General Fund and Special Revenue-Federal funding.  However, there is a $1.9 million decrease, (9.9%) in Personal Service funding for the Medicaid Audit and Fraud Prevention Program, and an overall slight decrease(-0.8%)  in the General Fund appropriation for the entire Office. This shortfall appears to be made up by new personal service appropriations in the Medical Assistance program – Transfer to SUNY and the Services and Expenses for Outside Experts for Litigation” MU account. The source of the funding for the new FTEs and when the FTEs will begin employment should be clarified at statewide agency labor management.  According to the Assembly Ways and Means Committee the breakdown of the increase of 157 FTEs is as follows: 100 new auditors; 35 new administrative staff; 12 positions dedicated to information technology; 6 positions dedicated to the development of data mining tools; and 4 positions dedicated to the expansion of the internal fraud database.

• OMIG employed an estimated 144 employees under consultant contracts in SFY 2006-07 at an estimated cost of $6.8 million or an average cost of $47,257 per consultant contract employee.  It is estimated that the number of employees employed under consultant contracts will increase to 192 employees in SFY 2007-08, an increase of 48 contract employees.  The increase in funding compared to the increase in contract employees estimated for SFY 2007-08 would result in an average decrease cost per consultant employee, to $37,836 per employee.  The purpose and use of these contract employees and whether they can be replaced by state employees should be clarified at statewide labor management. 

• There is a $2 million, 47% increase in Nonpersonal Service funding for the Medicaid Audit and Fraud Prevention Program, the bulk (65%) of which is allocated for contractual services.  According to the Senate Finance Committee the Executive Budget “invests” $2.2 million in new funding for additional investments in technology that would assist the OMIG in its antifraud activities.  This “investment” may be related to the above referenced increase in Nonpersonal Services funding.   The Assembly Ways and Means Committee detail the investment in technology as including: an Office for Technology contract to upgrade systems of $1.39 million; enhancements to the internal fraud database (FACTS) of $434,000; and increased non-personal service costs of $362,000.  The purpose and use of this funding should be clarified at statewide labor management. 

• Article VII Medicaid Fraud, Waste, and Abuse provisions: the creation of a “New York State False Claims Act” to allow private persons to bring civil actions on behalf of New York State to recover funds wrongfully obtained through fraud; and the establishment of the “Martin Act,” which provides the Attorney General greater authority to investigate and prosecute health care fraud.