Monthly Archives: January 2013

Medicaid EXPANSION Put on Hold; Medicaid REFORM Imminent

North Carolina spends $36 million dollars a day on Medicaid!!!! Therefore, last year the General Assembly requested the State Auditor’s department conduct an audit on Medicaid spending.

The Office of the State Auditor (OSA) published a 75-page, January 2013 Performance Audit (Audit) for the Division of Medical Assistance (DMA). Apparently the OSA is less than pleased with DMA’s budgeting ability, use of Medicaid funds, and general bookkeeping practices.

With phrases, such as “DMA’s inability,” “insufficient monitoring of contracted administrative services,” and “indicative of its inadequate oversight,” it is clear that DMA flunked the Audit.

The purpose of the Audit was four-fold:

1. to determine if the DMA administrative functions complied withe the Medicaid State Plan and federal requirements;

2. to evaluate DMA’s process for preparing annual budgets and monitoring expenditures to determine whether DMA is accurately predicting costs;

3. to review the process by which DMA made State Amendments from beginning until approval by Centers of Medicare and Medicaid Services (CMS) for compliance with federal requirements;

4. to assess the timeliness, completeness and flow of budget and expenditure information from DMA to stakeholders (Secretary, Governor, etc.)

Interestingly, the Audit determined that, in 2011, of the $10.3 billion medical assistance spending (MAP) (basically, how much money Medicaid spent), $648.8 million went to administrative costs.

In other words, in 2011, Medicaid recipients, physicians providing Medicaid services, and other health care providers did not receive $648.8 million of Medicaid funds because the State of North Carolina (or…DMA) spent the money on itself.

Compared to 9 states with similar Medicaid budgets, North Carolina spent 38% MORE than the average of those 9 states.  Or, in other words, $180 million more.

Just think…if we lowered admin costs, and raised Medicaid reimbursement for physicians accepting Medicaid…..hmmmm…one can dream….

According to the Audit, 46.7% of the admin costs ($648.8 million) went to pay private contractor payments.  Like ValueOptions, Public Consulting Group, Carolinas Center for Medical Excellence, etc. Those contracts with the State make up almost 50% of admin costs.  Yet, when the conductors of the Audit requested copies of all private contractor contracts to review the contracts, DMA was unable to produce the copies. DMA is spending almost 50% of the Medicaid money on contractors, yet DMA can’t find the contracts??

As the Audit put it:

“DMA’s inability to provide this information is indicative of its inadequate oversight of contractual expenditures.”

Here are some other goodies:

“DMA does not appropriately manage Medicaid costs that are subject to agency control.”

“Finding #1: The Division has consistently exceeded budgeted amounts for contracted administrative costs and interagency transfers due to an apparent lack of oversight.”

A few hours ago, Governor McCrory, DHHS Sec. Wos, and State Auditor Beth Wood spoke on NC Medicaid funding.

Wos stated that DHHS has a duty to the taxpayers and has not been upholding its duty.  Wood stated that DMA and its sub departments have “no cost accountability.”

In response to  the Audit, McCrory (or the State) hired Medicaid expert Carol Steckel to revamp the Medicaid program.

McCrory said that NC cannot expand Medicaid without fixing the Medicaid system!

Finally! Let’s fix the Medicaid system. Let’s stop the useless spending and make sure that Medicaid dollars go to the recipients in need, not government fat!!

General Assembly Back: Medicaid PCS Issue is HOT

NC legislators are back at work as of noon today (January 30, 2013). The most pressing issue in Medicaid? Personal Care Services (PCS).

In 2012, when the Medicaid rules changed (The rules didn’t change in 2012. The rules were determined to change in 2013) as to who could receive PCS, thousands of adults receiving PCS in adult care homes, suddenly, did not meet the criteria for PCS. Thousands of Medicaid recipients would no longer receive PCS; therefore, many group homes would go bankrupt.

Just to show the great breadth of this problem: The Office of Administrative Hearings (OAH) received 15,000 appeals this month from Medicaid recipients no longer eligible to receive PCS.

Expect to see a bill with a fix to the group home issue in the House Appropriations Committee on Thursday.

Medicaid Recipients Under 21: Not Allowed to Self-Refer Selves to Mental Health Services

In the wake of the killings in Connecticut and with all the recent discussions nationally about mental health, I realized something yesterday that floored me:

In North Carolina, an 18-year-old Medicaid recipient is not allowed to self-refer him or herself to a therapist.

According to DMA Clinical Policy 8C, a Medicaid recipient,  under the age of 21, who wants to seek mental health services by a therapist (Outpatient Behavioral Health services) is required to have an “individual, verbal or written referral, based on the beneficiary’s treatment needs by a Community Care of North Carolina/Carolina Access (CCNC/CA) primary care provider, the LME-MCO or a Medicaid-enrolled psychiatrist.”

Medicaid recipients over the age of 21 can self-refer him or herself to mental health services.

Adam Lanza, the boy who shot so many innocent children and teachers in Connecticut, was 20-years-old at the time of the horrible event.

Yet, if he lived in North Carolina, he could not have self-referred himself to receive therapy.  He would have needed to see a doctor first.

I understand that Medicaid recipients under the age of 21 CAN see a therapist. But, by placing another hoop for them to jump through (seeing another doctor first), just makes it that much harder to receive therapy. If access to mental  health services is that important, why make it more difficult for Medicaid recipients under 21?

Surely, a 20-year-old Medicaid recipient has the capability to determine whether he or she is in need of therapy.


Shortage of Dentists for Medicaid Recipients

I’ve blogged before about the shortage of dentists for Medicaid recipients. Just see my post “Medicaid Expansion: BAD for the Poor” to read about Deamonte Driver’s story and why he died due to not being able to find a dentist accepting Medicaid. But, today and yesterday, I decided to conduct my own personal investigation.

(First, let me assure you that this blog is not condemning dentists for not accepting Medicaid recipients.  I am informatively (I know, not a word) pointing out the facts. We cannot expect dentists to accept Medicaid when the Medicaid reimbursements dentists receive cannot even cover their costs.)

I googled “Raleigh dentist” and called, randomly, 20 dentists listed.  I said the same thing to each receptionist, “Hi. I was wondering whether you accept Medicaid.” Every office had a receptionist answer (no recording asking whether I wanted to continue in English or Spanish). Every office receptionist was very sorry, but the dental practice did not accept Medicaid. 0. Zero out of a random 20.

So I went on North Carolina Department Health and Human Services’ (DHHS) website for dental providers. I pulled up the dental providers, and, lo, and behold, 44 pages were full of dental providers for Medicaid recipients. Literally, 1,760 dental providers are listed (44 pages times 40 lines per page). (However, some practices are listed more than once, so this number is an approximation).

I thought, Wow. Tons of dentists in North Carolina accept Medicaid.  Then I looked again.  On the far right side of the chart, there is a space for whether the dental practice is accepting new clients. Roughly 1/2 of the listed dental providers are NOT accepting new Medicaid clients.

I called a few of the dentists in Wake County accepting Medicaid.  Again, I asked whether they accepted Medicaid.  One stated, “Yes, but not at the moment.”  Another said, “Yes, but only for children 21 and under.”  Another gave a blanket, “Yes.

So that’s Wake County…what about more rural counties?

I called a few dentists in Union County. Two practices did not answer. One dental practice answered and gave me a “Yes.” According to the DHHS chart of Medicaid-accepting dental providers, 20 dentists in Union County accept Medicaid.  4 of which are not accepting new clients and one dental practice is listed as the health department.  There are no orthodontists in Union County accepting Medicaid.

The phone numbers for two dental providers in Swain County were changed or disconnected. There are only 3 dental providers in Swain County. There are no orthodontists in Swain County.

There is only 1 dental provider accepting Medicaid in Pamlico County.  According to the DHHS chart, the one dental provider is not accepting new patients.  There are no orthodontists in Pamlico County.

Polk County lists 3 dentists accepting Medicaid, but not one of the dentists are accepting new clients.  There are no orthodontists in Polk County.

Mitchell County has 4 dental providers acccepting Medicaid.  But 3 of those dental practices are not accepting new clients.  There are no orthodontists in Mitchell County

In Clay County, the only dental practice accepting Medicaid recipients is the health department.

In Ashe County, there are 3 dentists listed that will accept Medicaid.  Only 2 are accepting new clients, one of which is the health department.  There are no orthodontists in Ashe County.

In Alamance County, there are 4 dentists listed by DHHS who will accept Medicaid patients.  The first one I called (an orthodontist) told me that they accepted Medicaid patients only from certain general dentists.  The second one was not accepting new patients.  The third one (also an orthodontist) informed me that Medicaid does not cover orthodontia services for Medicaid recipients over 21 (I must sound old!!!) The fourth dental practice’s voicemail informed me that the office is only open Wednesdays and Thursdays  for limited times. Of the 4 dental practices accepting Medicaid, 3 were orthodontists, one did not accept new clients.  The only general dentist (pediatric) only practiced in the local office two days a week.

Shortage of dentists accepting Medicaid? You decide.


Mt. Gilead Group Home Closes Doors: So Many Questions Remain

Last week, a Montgomery County adult care home was forced to close down, causing dozens of adult, Medicaid recipients to be without health care or housing.

Owners Amy and Larry Patton had called the Department of Health and Human Services (DHHS) previously and informed DHHS that the slow Medicaid reimbursements were going to close down their facility.

There is very little information from the Pattons regarding the reasons the group home had to close, except for their complaints to DHHS regarding slow Medicaid reimbursements. It appears that they removed all valuable items from the Mt. Gilead, North Carolina group home, such as TVs and refrigerators, in the middle of the night. Employees came in the morning to find everything gone.

The residents and families of the residents in the adult care home are outraged, and rightly so. They should be outraged. But are they outraged at the correct people/companies?

As a Medicaid attorney, I see health care providers struggling every day to make payroll.  The health care providers depend heavily on Medicaid reimbursements (a) being provided, and (b) being timely. If these Medicaid payments fail to come or fail to come timely, the health care provider, like any other business, is forced to close.

I have no evidence that Pattons were not receiving their Medicaid payment except for the complaint they made to DHHS regarding timeliness.  There may have been more complaints.  We will probably never know.

But it is a fact that there are health care providers in North Carolina which are not receiving Medicaid payments.  In 2011, due to the Affordable Care Act (ACA) NC General Assembly passed Session Law 2011-399, which codified DHHS’ authority for pre-payment reviews.  A pre-payment review places the health care provider in a situation that few providers are capable of overcoming. Basically, the Agency stops the medicaid payments to the provider until the provider can prove in 3 consecutive months that the provider can document a 70% accuracy rate based on the Agency’s standards.

According to NC Gen. Stat. 108C-7, the prepayment review can only last up to 12 months, at which time the provider will, most likely, lose its ability to serve Medicaid recipients if it is unable to meet the documentation requirements.

But 12 months without Medicaid payments will wipe out a health care provider.

Surprisingly, NC Gen. Stat 108C-7 does not allow a health care provider to appeal. No due process.

Now I have no evidence that the Pattons were subject to a pre-payment review. I have no evidence that the Pattons were not receiving Medicaid payments.  But for a group care home to close its doors when the owners were not new to Medicaid (they also owned two other group homes in Guilford County), unexpectedly and without providing help to its Medicaid recipients is mysterious.

These were people trying to help Medicaid recipients.  They owned 3 group homes. I question whether the Pattons, like so many other health care providers, were subject to pre-payment review with no appeal rights.

NC’s Price of Medicaid Expansion: And the Federal Gov’s Contribution

Exactly  how much has the federal government contributed to NC Medicaid?  Throughout the years, I’ve heard 75%, 2/3, and as low as 60%.  So I wanted to find out exactly how much the federal government gives North Carolina. I also wanted to compare the percentage to other states. And what will change if NC expands Medicaid? What changes?

Turns out that the Centers for Medicare and Medicaid (“CMS”) offers the historical stats I wanted.

In 2009 (the data for 2010 is not available yet, although it seems that by 2013 the data should be available), North Carolina’s population was 9,380,884.  1,974,287 of those residents were Medicaid enrolled.

In 2009, total Medicaid pay-outs were $10,888,466,523.00 (Yes, folks, that is ten BILLION).

The federal government paid $7,818,867.023.00 or 71.81%.  The State paid $3,069,599,500.00 or 28.29%. The federal government’s 2009 contribution to NC’s Medicaid was higher than the national average, which was 66.30% in 2009.  However, that was not always the case. In 2008, the federal government contributed 64.22% to NC’s Medicaid expenditures. Although it is important to note that in 2008, the national average declined to 57.03%. So NC was still above average.

But why the huge discrepancy? Why in 2008 does the federal government, on average, pay for a little over half the states’ Medicaid costs, and, in 2009, pay, on average, 2/3 of the states’ Medicaid costs?

The federal government pays states for a specified percentage of program expenditures, called the Federal Medical Assistance Percentage (FMAP).

FMAP varies by state based on criteria such as per capita income. The regular average state FMAP is 57%, but ranges from 50% (the minimum) for wealthier states up to 75% in states with lower per capita incomes (the maximum regular FMAP is 82 %). 

This all sounds, to me, like a lot of statistical jargon.  So I went to NC’s historical FMAPs. According to, NC’s FMAP in 2009 was 74.51%. But, according to CMS, the actual federal Medicaid payment was 71.81%. So why the difference? Maybe one of the websites incorrectly calculated the FMAP.  If so, it seems (just by gut) that CMS would have the actual Medicaid costs; thus providing more accurate data.  The State Health Facts website also projected NC’s FMAP up through 2013, so again, it appears that the State Health Facts’ data were more projections.  Just in case you were wondering, the State Health Facts website projected NC’s FMAP for 2013 as 65.51%.

Why will it go down? Apparently, all the factors that contribute to NC’s FMAP.

Well, we also have to consider Obamacare or the Affordable Care Act (ACA). If NC expands Medicaid, from 2014-2016, the federal government will cover 100% of our Medicaid costs (not ALL Medicaid costs) but 100% of costs to cover newly-covered Medicaid recipients.  For example, if the projections are correct and 700,000 more North Carolinians will be covered if NC accepts the ACA, than the federal government will pay for 100% of the newly-eligible 700,000 Medicaid recipients, or, in other words, the federal government will pay 100% of approximately 35% of NC Medicaid costs. The rest of the NC Medicaid costs in 2014, or 65% of overall Medicaid costs, will be paid by the federal government at the normal FMAP amount (somewhere between 60-66%)

Let’s throw out some more projections: Remember, in 2009, the State paid $3,069,599,500.00 or 28.29%. But the FMAP was high at 71.81%. The State Health Facts website projected NC’s FMAP as 65.51% in 2013.  So let’s use 65.51% for 2014 when it is projected that 700,000 more North Carolinians will be Medicaid recipients. In 2009, 1,974,287 people in North Carolina were Medicaid recipients.  For the sake of simplicity, let’s say that by 2014 the number rounds up to 2,000,000 and the projected 700,000 additional Medicaid recipients occurred, as predicted, for a grand total of 2,700,000 North Carolina residents depending on Medicaid.

If we paid $10,888,466,523.00 for 1,974,287 people (both federal money and state money), I think it is a safe approximation that we would pay approximately $11,000,000,000.00 (this number is merely for this example) for 2,000,000 people (the increase in money is for an estimated additional 25,713 Medicaid recipients and the decrease in our projected FMAP). The additional 700,000 Medicaid recipients would cost approximately another $3,850,000,000.00 (assuming about 35% increase is correct with 700,000 more Medicaid recipients).

Thus the projected  grand total of Medicaid costs to NC in 2014 (if NC expands Medicaid) will be approximately $14,738,466,523.00.  The federal government, based on these estimations, will pay approximately $3,850,000,000 (100% of newly-eligible persons’ Medicaid costs) + $7,150,000,000 (65% of regular Medicaid costs based on the FMAP) for a total of 11,000,000,000.00.  Leaving the $3,738,466,523.00 for North Carolina to pay.

Seems pretty sweet, right? I mean, our Medicaid costs do not increase terribly and the federal government pays for way more Medicaid costs in NC. However, this sweet deal does not last. Starting sometime after 2016 (the federal government states that the decrease will be “phased in”), the federal government’s portion for the newly-eligible Medicaid recipients decreases from 100% to 90%.

For NC, just the 10%  increase in 2017 means approximately $1,100,000,000.00, increasing NC’s costs for Medicaid payments to up around $4.8 billion. In NC Medicaid history, NC has never paid over 4 billion. But NC will pay way over $4.8 billion in only four years under the ACA.

This is not a blog against Medicaid expansion. I am merely pointing out the financial undertakings and consequences if NC expands. If NC expands, NC must be ready to pay for the Medicaid program. Read the rest of this entry

NC State Law May Violate Federal Medicaid Law

The U.S. Supreme Court heard oral arguments January 8, 2013, as to whether the federal Medicaid Act trumps North Carolina‘s Medicaid seizure law.  As of now, when a plaintiff wins a medical malpractice lawsuit, the State is authorized to recoup up to 1/3 of any jury award or settlement or the actual amount of Medicaid payments (whichever is less), regardless of how much of the award was designated for medical expenses.

The underlying case is Delia v. E.M.A.

The Facts: Emily M. Armstrong was born on February 25, 2000. She was seriously injured during her delivery resulting in mental retardation, cerebral palsy and several other medical conditions. Two months after Emily was born, Emily’s parents, Sandra and William Earl Armstrong applied for Medicaid. From Emily’s birth until her untimely death, Medicaid paid over $1.9 million in medical expenses on Emily’s behalf.  Emily’s parents and guardian sued the physicians who delivered her and settled for $2.8 million.  DHHS immediately placed a lien on the settlement money.

The Legal Issue: Whether N.C. Gen. Stat. § 108A-57 is preempted by the Medicaid Act’s anti-lien provision, 42 U.S.C. §§ 1396a(a)(25), 1396k(a),

The Legal Issue in English:  The Federal law prohibits recovery from any payments not made for past medical expenses. In other words, if the jury or settlement does not specify which portion of the settlement or award was reimbursement of medical expenses, then Medicaid cannot recoup any money.  In North Carolina a minor child is not allowed to recover for past medical expenses.  Therefore, in Emily’s case, none of the monies was designated as past medical expenses. Thus….Medicaid (under the federal law) cannot be reimbursed for the expenses paid out for  Emily. Which law wins? Federal or State?

Once the case was settled, the NC Court ordered that $933,333 of the settlement must be paid to the state.

Emily’s parents sued NC DHHS in the U.S. District Court for the Western District of North Carolina, saying that federal law prevents the State from any reimbursement.

The North Carolina U.S. District Court for the Western District of North Carolina granted summary judgment in favor of the State, saying the State law trumps federal law.  Emily’s parents appealed.

The United States Court of Appeals for the Fourth Circuit vacated the lower court’s decision. However, the appellate court held that DHHS had the right to recoup a portion of Emily’s settlement, but it remanded the case because the State failed to provide an itemization of how much of the settlement was designated as past medical expenses.

The Supreme Court of the United States granted the State’s petition for certiorari.  John Maddrey argued on behalf of the State. Christopher Browning, Jr., argued on behalf of Emily’s parents.

Now we wait….Does the North Carolina law allowing the State to take 1/3 of a settlement, if the money was not designated as past medical expenses, violate federal Medicaid law disallowing the states from taking money from a settlement unless the settlement money was designated  as past medical expenses.

The question that has to be answered, not saying that it can be answered, is: When the insurance company for the physicians settled with Emily’s parents, were they paying for past medical expenses? Or were they paying for Emily’s parents’ loss of child, mental anguish and pain and suffering?

Guess we need another trial to determine that issue.

Tip #8: Avoiding Medicaid Recoupments

After talking with the Office of Administrative Hearings (OAH) today and learning that, in the past 30 days, there have been 15,000 Medicaid appeals filed, I realized how important these Tips to Avoid Medicaid Recoupment may be. Granted, I am sure most of those Medicaid appeals are Medicaid recipients appealing denials of services, but, still, that is a lot of appeals!!

Tip #8: Always keep every revised version of whichever DMA Clinical Policy applies to your practice.

For example, if you provide orthodontia services to Medicaid recipients, then you should have every version of Clinical Policy 4B, starting when you started providing orthodontia services until the present.

If you have not this, never fear, you can go to The WayBack Machine, a website that keeps an archive of certain websites, including the material found on the website at different time periods. The WayBack Machine has archived the NC DMA websites over time.

Keeping every revised version of the applicable Clinical Policy will help health care providers avoid Medicaid recoupments, IF, and only IF, each time a new revised version is published, go through both the replaced version and the newly updated version page by page. Compare the old version to the new version. Find every word that was changed or sentence that was added, or additional criteria added. Highlight, on the new version, all the additional words. On the new version, mark where words or sentences have been deleted.

Doing this exercise will do two things: (1) the health care provider will be intimately knowledgable about the Clinical Policy (which is always helpful); and (2) the health care provider will know which sections or criteria were most important to the State. Wherever a change occurred, it is due to something.  Usually you can figure it out.  For example, if the new version of Clinical Policy 4B requires an additional criterion of the Medicaid recipient, in order to receive braces, to demonstrate a mental health diagnosis caused by crooked teeth (I’m  making this up), then one could deduce that too many Medicaid recipients received braces in the past and that the State is trying to make it more difficult to receive braces.

Highlighting the changes in the new policies will help health care providers proactively avoiding Medicaid recoupments because the health care provider will understand each new criterion or hoop to jump through for the upcoming Medicaid claims.

However, doing this exercise will also help the health care provider who has received an audit and received the Tentative Notice of Overpayment claiming the provider owes money to the State. This is how: The Medicaid audits are auditing claims from 2009-2010 (usually). The Clinical Policies have changed immensely over the years.  Many policies are more stringent now than in the past.  The people conducting the Medicaid audits, often, in my experience, audit the health care provider with the current Clinical Policy in place now, not the Clinical Policy from the applicable time period.  This results in incorrect audits and incorrect results.

Know the policies. Know the changes to the policies. Avoid Medicaid recoupments.


My Name Change

In case anyone was wondering, I recently changed my name from  Knicole Allen to Knicole Emanuel. I got married:)

So there is not another Knicole writing the blog.

Tip #7: Avoiding Medicaid Recoupments

Health care providers: In case you haven’t noticed, currently, the State is barreling through Medicaid audits. If you are a health care provider who has received a Tentative Notice of Overpayment, then you know how many trees the State is killing. These Notices are NOT short.  Many Notices are hundreds of pages and claim that the health care provider owes hundreds of thousands, some even millions, of Medicaid payments back to the State.  Obviously, this is extremely daunting to the health care provider. Paying hundreds of thousands of dollars to the State, in many cases, would put the provider out of business.  The providers need the Medicaid reimbursements to pay staff and keep their doors open.

So, how can you avoid the Tentative Notice of Overpayment? If you’ve read my past “Tips for Avoiding Medicaid Recoupments,” then you know that organization of your documents is key. The details, the small details, are the big mistakes, i.e., the dates are correct, the times in and out are recorded, the signatures are legible, etc.

Today’s tip is a bit more expensive, but will pay for itself by the Tentative Notices of Overpayment that you do not get, the lawyers you do not hire, and the hours of stress that you do not undergo because you were proactive at the onset.

If you have not already, health care providers, invest in a computer program designed specifically for health care providers who accept Medicaid. If you already have a computer program, great! You are on your way to running an audit-less company.

If you are still submitting paper documents to the State, you are not alone. Most health care providers have not invested in a computer program to go “paperless.” It is an expensive endeavor. But with the scrutiny in which the State places on the documentation  for Medicaid, a good computer system is worth its weight in gold.

However, make sure the computer program:

1. is designed for North Carolina Medicaid.

2. has the capacity to hold the large number of documents for a long time.

3. is organized in a way that you can find any documents quickly and easily.

4. is affordable.

5. has reputable client support.

So how do you find the right one? If you have googled computer systems for Medicaid providers, I’m sure you were as confused as I was. Not to mention, probably terrified once you read that NC State paid $122 million to HP for its contract extension.

Not to fear: There are  numerous affordable computer software programs for health care providers. I suggest two things: (1) Ask other health care providers what software they use and whether they like the service; (2) Call between 5-10 software companies and ask them to send a sales rep to your office to explain what the software can do for you. By asking around and having reps come explain the systems, you will have enough knowledge to determine which software package is right for you.