Monthly Archives: March 2013

Knicole Emanuel Moves to Williams Mullen

I am pleased to announce that I left a wonderful law firm yesterday as an associate and will be joining Williams Mullen law firm next week as a partner.

Yes, I will be practicing the same law: Medicaid litigation. Yes, this blog will continue. Yes, I will still be fighting for health care providers and Medicaid recipients.

I will just be continuing my practice on a bigger platform, allowing me to better serve all my current clients and future clients.

You can contact me at:

(Direct Dial) (919) 981-4031

Williams Mullen
301 Fayetteville Street
Suite 1700
Raleigh, NC 27601
Telephone: 919.981.4000
Fax: 919.981.4300
Thank you for reading my blog. I am so excited for the future.
Oh, and, give me a little time to change all the info on this blog 🙂

Tip #11 to Avoid Medicaid Recoupment

I realized that it had been a while since I added a “Tip to Avoid Medicaid Recoupment.” So I decided to remedy that. But this one is a little drastic, and hopefully, not too many providers will adhere to this tip. (And, if you have a sense of humor, this is a bit sarcastic).

Tip #11: Do not accept Medicaid clients.

Obviously, you realize that I do NOT actually want health care providers to stop accepting Medicaid to stop.

But, in my line of work, I see A LOT of Tentative Notices of Overpayment and A LOT of Prepayment Reviews, and A LOT of Medicaid contract terminations or rescissions.

I’ve tried to evaluate the reasons cited by the Department of Health and Human Services (DHHS) and its auditing agents that these millions of documents are noncompliant. I’ve come to a preliminary opinion that the problem is not the documentation of the health care providers.  99.8% of the time the providers have rendered the services, provided quality service, and received proper reimbursement. The problem is either (a) the intelligence of the auditors; or (b) the instructions given to the auditors. The Recoupment Audit Companies (RACs), like Carolinas Center for Medical Excellence (CCME), Public Consulting Group (PCG), and HP Enterprises (HP) are on a rampage to audit as many providers as possible, recoupment as much monies as possible, and, I guess, throw a huge Christmas party at the end of the year celebrating the health care providers they have put out of business and the Medicaid recipients with no health care.  But, hey, they will be able to spring for Dom Perignon.

On a serious note, my point of all this is that I would LOVE to say, “Hey, providers, if you do this, then you will not under a recoupment audit.”

But the RACs’ auditing procedures are arbitrary, not founded in policy, and sometimes as unpredictable as New England weather.

So there is no “one thing” that can prevent you from a RAC Medicaid audit.

The audit could be spurred on by a disgruntled employee calling DMA and accusing you of Medicaid fraud without merit.  Maybe CCME has a list of all the health care providers who accept Medicaid and each day 10 employees get to throw darts at the list, which determines which providers get audited. Maybe DMA has the world’s biggest raffle ticket drum.

Maybe instead of “Tips for Avoiding Medicaid Recoupment,” I should start a series of blogs entitled, “Crazy Reason No. 1 That CCME or PCG Found Noncompliance.”

I will think about it.

In the meantime, if you truly want to avoid a Medicaid recoupment, stop accepting Medicaid.

MCO Rebuffs ALJ Order That Expressly States “Binding on [MCO];” Don’t Fret; This is Not the End!

Can an Managed Care Organization (MCO) refuse to comply with a Judge’s Order? Are MCOs above such Orders? Are MCOs, which handle federal and state Medicaid funds, beyond the supervision or reach of the very entities of which contract them? If Division of Medical Assistance (DMA) contracts out to a private company, does that allow DMA to say, “Hey, if you have a complaint, take it to the private company. Even though we supposedly manage the North Carolina Medicaid system, since we gave authority to a private company, we are no longer liable for the Medicaid’s system’s problems?”

This is the question that I am encountering. My answer? Heck No! (I didn’t want to use an explicative). DMA manages Medicaid. Period. Any entity acting on DMA’s behalf is an agent of the State. Until proven otherwise (and maybe even then), I refuse to accept lack of accountability between DMA and the MCOs.

Yet, a couple weeks ago, we were successful in arguing to an Administrative Law Judge (ALJ) that, by contract, an MCO acted as an agent of the DMA when the MCO rescinded or refused to offer a health care provider a contract with the MCO to provide Medicaid services to Medicaid recipients.

In fact, the Order explicitly states (I am removing the MCO’s name), “[The MCO] contracts with the Respondent’s Division of Medical Assistance (DMA) to act on Respondent’s behalf as a Medicaid managed care organization (“MCO”) for mental health, intellectual/developmental disability and substance abuse services in Durham county and other surrounding counties.”

Can it get any clearer? Remember when John Hancock signed the Declaration of Independence large enough for the King to read his signature without his glasses? Maybe the Judge, when drafting this Order, should have used larger font.

The Judge explicitly Ordered that the MCO acts as an agent of DMA. The Judge explicitly Ordered this in a signed, executed Preliminary Injunction Order.

Thus, I forwarded this signed and executed Order to the MCO.  This is what I received (in an email with all names removed, except mine:) ):

“Knicole:  Thank you for your email.  [MCO] was not a party to this litigation and the Office of Administrative Hearings does not have the authority (or jurisdiction) to direct us to enroll a provider into our Network.”

What? Double-take. Jaw dropping.

Ok, well, I disagree. Anyone else?

I know the Judge agrees with me. The Order also states, “Such STAY is binding on Respondent’s officers, agents, servants, employees, and attorneys pending on the decision of this pending litigation, including [the MCOs] refusal to contract with Petitioner to provide Medicaid funded services through [the MCO].”

Don’t worry, we are planning to pursue the MCOs’ email refusing to abide the Order. 🙂

But, meanwhile, this whole argument of mine (the agency relationship between DMA and the MCOs) is at issue in the General Assembly in House Bill 320.  House Bill 320 states, in part, “Jurisdiction of OAH. – The Office of Administrative Hearings does not have jurisdiction over a dispute concerning a grievance or managed care action, except as expressly set forth in this Chapter.”

First, this House Bill has NOT been passed into law. (Which obviously begets the logical response: If a statute is needed to determine that the MCOs are NOT agents of DMA, obviously, as of now, MCOs are agents of DMA).

If this House Bill is passed, the fact that this proposed statute states that OAH does not have jurisdiction over the MCOs, the statute is indirectly stating that the MCOs are NOT agents of DMA.  (Because OAH only has jurisdiction over state agencies and its agents).

Guess who proposed this statute?


Biting your nails?

Holding your breath?

An MCO.  Shocker.


NC Medicaid RACs Paid to Find Errors By Providers, No Incentive to Find Errors By DMA

I’ve always known that the Recovery Audit Contractors (RACs) in North Carolina are conducting these Medicaid audits inappropriately and without complying with NC Medicaid rules and regulations. But are the RACs compensated in a way that encourages the RACs to find overpayments to providers and not underpayments. (Did you even know that RACs are instructed to find underpayments too???? I mean, what a joke!! Please, providers, let me know if any of y’all have received a Tentative Notice of Underpayment!).

Anyway, what is a RAC?

RAC’s are private companies that have contracted with the State purpose is to reduce improper Medicare payments and implement actions to prevent future improper payments.

In North Carolina, the RACs are Public Consulting Group (PCG), Carolinas Centers for Medical Excellence (CCME), and, new to the RAC system, HP Enterprises (HP).

According to the federal agency Center for Medicare and Medicaid Services (CMS), the RACs receive MORE compensation if the RACs find noncompliance and LESS compensation for finding instances in which the State  UNDER-paid a health care provider.

If the RAC finds noncompliance (as in the provider owes money back to the State), the RAC is paid on contingency. Now every state does not pay the same contingency rate to the RACs. The federal government allows some variation.  But the chart below represents the percentage of the money recouped by the health care provider that the RAC receives as payment.

Contingency Fee Percentages – Overpayments: Data Table

State Percentage
Alabama1 12.5
Arizona 12.5
Colorado 11
Connecticut 9.3
Georgia 12.5
Indiana 10.5
Iowa2 12.5
Kansas3 17
Kentucky 12.5
Mississippi 9.49
Missouri 12
MEAN 10.94
Nevada 8.75
New Hampshire4 11.5
New Jersey 11.5
New Mexico 10.5
New York 5.25
North Carolina 11.5
North Dakota 9.95
Ohio 10
Oregon 9.4
Pennsylvania5 11.57
South Carolina 11.9
Tennessee 12
Virginia 9.3
Washington 9.9

So North Carolina is paying the RACs 11.5% of all money recouped by health care providers for “noncompliant documents.”  For example, if PCG determines that Provider X owes $500,000.00 to DMA  because of noncompliant paperwork, PCG is paid $57,500.00. Nice to know that we pay over the mean.

Now, what about these alleged UNDER-payments? As in, the RAC determines that the State did not pay the providers enough…

Again, this varies state to state. North Carolina pays the RACs a flat fee of $100.00 for finding underpayments. One hundred dollars.

I find myself almost at a loss of words.

Imagine you are the CEO of PCG. As CEO, you are concerned about the profit of the company. Would you tell your employees to investigate OVER-payments? Or UNDER-payments?
I still would LOVE to hear from any provider who has received a Tentative Notice of Underpayment.


Medicaid Director Carol Steckel’s Sad, But Accurate Statement Causes Confusion

Just because you do not want to hear a truthful statement, the statement is no less accurate. For example, I do not want to hear that NCSU lost in the first round of the NCAA.  But my desire to not hear that statement does not  render the fact that NCSU lost in the first round of the NCAA  inaccurate.

In recent interviews, Ms.  Steckel has stated some accurate statements about our current state of Medicaid. The statements are not what people want to hear. But the fact that people do not want to hear these truths, does not render Ms. Steckel’s statements inaccurate.

Over the weekend I read an editorial, which caused me to realize that Ms. Steckel’s statements were causing confusion. I wanted to shed some light.  The editorial read, in pertinent part,

“Gov. Pat McCrory’s new state Medicaid director recently gave a troubling rationale for the governor’s refusal to expand Medicaid to 500,000 poor North Carolinians:

“If I gave 700,000 people who don’t have health care coverage a Medicaid card in North Carolina, do you really think they would get healthier?” Carol Steckel asked.

Her statement seemed to imply that she thinks the program she directs is incapable of helping the people who would have been added to the rolls. She said low-income people without Medicaid cards can go to federally qualified health centers, which are focused on primary care and receive billions of dollars to offer sliding-scale fees.

What Ms. Steckel actually said was accurate.  Let me explain:

Our Medicaid system currently serves approximately 1.5 million North Carolinians. Today, Medicaid recipients have difficulty finding health care providers. One-third of physicians and other providers refuse to accept Medicaid patients. Reasons? Oh the list would be longer than the Great Wall of China, but here are a few reasons:

1.  Low reimbursement rates.  Essential to Medicaid is physician participation. Yet, Medicaid only pays approximately 60% of the total charge to a health care provider providing Medicaid services. For example, if a doctor charges $100/office visit, Medicaid would pay the physician $60. Therefore, most physicians refuse to accept Medicaid. In fact, in rural areas of North Carolina, where the percentage of Medicaid recipients is greatest, there can be a ratio of 200:1 Medicaid recipient to physicians accepting Medicaid. For some rural North Carolinians, the Medicaid card in their hand is worthless; people cannot find physicians accepting Medicaid. This scarcity of Medicaid providers becomes even more of an issue when it comes to dentists. A recent nationwide study indicated that over 60% of dentists refuse to accept Medicaid. The percentage grows if the dentist is a specialist.

2. Harassing audits.  North Carolina is conducting Medicaid audits on health care providers.  The problem is that these audits are being conducted improperly.  The results of the improper audits are health care providers going out of business, feeling harassed, and being forced to discharge clients.

3. Dealing with the government. Enough said.

4. Dealing with the Managed Care Organizations (MCOs). Enough said.

Now, going back to Ms. Steckel’s quote, due to the above 4 reasons and many,  many more reasons, health care providers are quickly ceasing Medicaid work.  Some providers are deciding to no longer accept Medicaid voluntarily. Some providers are being squeezed out of the system by Alliance, Smoky Mountain, Piedmont Behavioral Health or other MCOs.  Some providers are having Medicaid contracts wrongfully terminated by the State. But, regardless the reason, LESS health care providers are accepting Medicaid.

With the amount of health care providers accepting Medicaid going down, the amount of Medicaid recipients is NOT going down.  What does that mean?

It means that MORE Medicaid recipients cannot find quality health care.  MORE Medicaid recipients are being turned away from their providers they had been using for, sometimes, years.  MORE Medicaid recipients are going untreated and ignored because:


Ms. Steckel’s quote, “If I gave 700,000 people who don’t have health care coverage a Medicaid card in North Carolina, do you really think they would get healthier?”

Is a sad, but accurate statement.

Does a NC Medicaid card treat Medicaid recipients? No. The health care providers treat people.  Without health care providers, people cannot receive health care.

Think logically, if, currently, our Medicaid system cannot serve the 1.5 million Medicaid recipients  it supposedly serves, what would have happened if NC handed 700,000 MORE people Medicaid cards? The Medicaid cards would have been worth the price of the paper on which it was printed.

Ms. Steckel was right. Medicaid cards do not treat people. Health care providers treat people.

Ms. Steckel’s statement did not imply that today’s Medicaid system could not handle additional Medicaid recipients. I think she explicitly stated that our Medicaid system could not handle 700,000 more recipients. And a Medicaid card would be worthless.

Recent Order Stays DMA’s Withholding of Medicaid Reimbursements

Yes, these lawsuits actually can be won.

With the amount of North Carolina health care providers that accept Medicaid:

(1) undergoing prepayment reviews,

(2) suffering from withheld Medicaid reimbursements by the Managed Care Organizations (MCOs), Recoupment Auditing Companies (RACs), or the Division of Medical Assistance (DMA) (for the sake of simplicity, I will refer to any entity as DMA, since all companies are working at the direction of DMA), and

(3) barely making payroll because of the Medicaid reimbursements.

I wanted to shed a ray of hope for those health care providers.  (The same ray of hope applies to):

  • Prepayment Reviews
  • Tentative Notices of Overpayment
  • Termination of Medicaid Contracts
  • Rescissions of Medicaid contracts

The erroneous actions of DMA CAN be stopped!!!

All over North Carolina, health care providers are fighting the erroneous actions of DMA in order to keep the providers’ doors open for the Medicaid recipients.

An Order signed by an Administrative Law Judge (ALJ) at the Office of Administrative Hearings (OAH) a few months ago ORDERS DMA (the Respondent in this case) to STOP withholding Medicaid reimbursements.


NOW THEREFORE, based upon the forgoing findings of fact and conclusions of law it is hereby decided that the Respondent’s decision to suspend Petitioner’s Medicaid payments should be and is REVERSED.

This particular decision was drafted out of case # 12 DHR 02162.

All it takes is for the health care providers to stand up against DMA and prove that the Medicaid documents allegedly incorrect in the eyes of DMA are actually compliant. In other words, DMA’s withholding of Medicaid reimbursements is ERRONEOUS.

Supreme Court of the United States Holds NCGS §108A–57 Violates Federal Law!

Remember my post on March 14, 2013, stating that NCGS 108C-7 violates federal law? Well, obviously I wrote that blog without pursuing a legal case and without having a judge decide whether NCGS 108C-7 actually violates federal law.

But there may be some validity to my claim that 108C-7 violates federal law.

Yesterday the Supreme Court of the United States wrote an opinion regarding another North Carolina Medicaid statute: NCGS 108A-57.  Wos v. E.M.A.  In Wos v. E.M.A., the Supreme Court held that the NC Medicaid statute 108A-57 is pre-empted by the Supremacy Clause in the Constitution.

By way of background, the case originated from a mom and dad bringing a medical malpractice claim against the doctor and hospital that delivered their child, E.M.A.  E.M.A. suffered multiple serious injuries during birth, leaving her deaf, blind, and unable to sit, walk, crawl, or talk. She also suffers mental retardation and seizures.  Due to these birth injuries, Medicaid paid $1.9 in hospital costs, surgeries and health care on behave of E.M.A. In November 2006, the NC Court approved a settlement for $2.8 million.  If you think that the settlement seems low, it is low.  Apparently the settlement was based on the amount of malpractice insurance the defendants possessed.

A representative from Medicaid (DMA) informed the parents that Medicaid would seek reimbursement for the $1.9 million expended.

“E. M. A. and her parents then filed this action under Rev. Stat. §1979, 42 U. S. C. §1983, in the United States District Court for the Western District of North Carolina. They sought declaratory and injunctive relief, arguing that the State’s reimbursement scheme violated the Medicaid anti-lien provision, §1396p(a)(1) .”

After appeal after appeal and all the way up to the U.S. Supreme Court, North Carolina fought E.M.A. and her parents, saying that the State was entitled to Medicaid reimbursement as required under NCGS 108A-57.

The U.S. Supreme Court disagreed .

In the words of the Supreme Court (as to why the NC Statute was pre-empted):

“Instead, North Carolina has picked an arbitrary number—one-third—and by statutory command labeled that portion of a beneficiary’s tort recovery as representing payment for medical care. Pre-emption is not a matter of semantics. A State may not evade the pre-emptive force of federal law by resorting to creative statutory interpretation or description at odds with the statute’s intended operation and effect. ”

Interesting that the Supreme Court picked the word “arbitrary.”

In light of the Wos v. E.M.A. decision, I think it would be prudent to question other Medicaid statutes. Most likely other Medicaid statutes, similarly, violate federal law.  Maybe…..108C-7.

See my March 14, 2013, blog for my legal reasons that 108C-7 violates federal law.

Sequester to Squeeze Medicare Payments; CMS Announces New Participants in Community-Based Care Program

Sequester to Squeeze Medicare Payments; CMS Announces New Participants in Community-Based Care Program.

NC MCOs: The Judge, Jury and Executioner

If you have been following my blog, then you are aware of the trials and tribulations North Carolina mental health care providers are going through with the Division of Medical Assistance (DMA) and DMA’s lack of supervision of the Managed Care Organizations (MCOs).

It  is about to get worse.

On March 14, 2013, House Bill 320 was introduced. On March 18, 2013, the Bill passed its first reading.

Folks, if this Bill is passed, the consequences to mental health care providers accepting Medicaid and Medicaid recipients suffering mental illness will be catastrophic.

To read the proposed Bill in full, click here.

As currently written, House Bill 320 allows the MCOs to suspend Medicaid payments if the provider’s contract has been suspended or terminated. Guess who decided to suspend or terminate the Medicaid contracts? The MCOs. (Hence acting as a Judge)

The House Bill also allows the MCO to suspend the Medicaid reimbursements to ALL MEDICAID PROVIDER IDs ATTACHED TO THE SAME IRS EMPLOYEE ID NUMBER.  Literally, allowing the suspension to apply to all IRS Employee ID Numbers will put most health care providers out of business if the MCO arbitrarily decides to suspend the Medicaid contract.

The House Bill also instructs the MCOs to provide 30 days notice to the other IRS Employee ID Numbers, but NO APPEAL PROCESS.

Meaning, if an MCO suspends a Medicaid contract (for any reason at all, correct or incorrect), that MCO can suspend all payments to all IRS Employee ID Numbers of the provider. Plus, the provider has zero appeal rights. (Hence acting as the jury).

Here is an example of how the MCOs tyranny actually works (This is a true story):

Provider X provides wonderful and needed mental health services to three rural counties.  MCO enters.  MCO audits.  MCO determines that provider had a high amount of document inaccuracy. Now, most people with little understanding of the Medicaid policies and procedures will think, “Hmmm, Well the provider’s documentation was poor. Certainly the providers should be expected to maintain proper records.” The problem is that the audits are not conducted appropriately.

For example, Provider X is cited for:

  • failing to have prior authorization for a service that does not require prior authorization;
  • failing to submit a Person-Centered Plan (PCP) when a PCP is not required;
  • failing to obtain consent for treatment when the consent was provided by the legal guardian and the auditor is confused because the last names do not match.

Post-audit, Provider X received notification that its Medicaid contract was terminated and all Provider X’s clients would need to be discharged.  Provider X repeatedly requested reasons for termination.  Provider X contacts multiple people at MCO and DMA asking, “Please explain how my documents were out of compliance!” DMA says, “Talk to MCO; it wasn’t me.” Provider X says, “DMA has your company listed as not in good standing; talk to DMA; it wasn’t me.”

Provider has no appeal rights.  Provider does not know an attorney or that this process is even wrong.

Sadly, Provider X discharges the 400+ mentally ill children from Provider X’s care, fires all staff, and closes its doors. (Hence acting as the executioner).

All because the MCO had the authority to run this provider out of business.

This story actually has already happened.  But it is my contention that the MCOs and DMAs actions are against the law, and, generally abhorrent.

However, if this House Bill becomes law, the actions described above will be legal.

Now some may question why the MCOs would discharge health care providers from its networks. Isn’t in everyone’s best interest to have health care providers for the mentally ill?  While the answer to most people, I believe, would be, yes, we need mental health providers, riddle me this:

An MCO receives its funds for each fiscal year at the beginning of the year.  Essentially, the MCO is prepaid for all its services it will eventually authorize.

In fact, in a Brief recently filed by an attorney for an MCO, the attorney wrote, “Under XXX’s waivers, XXX is designated as a Prepaid Inpatient Health Plan (PIHP), which means it accepts the risk for providing that care…This arrangement creates an incentive for XXX to provide the most efficient and cost-effective care. Any cost savings generated by XXX as a result of providing efficient and cost-effective care allow it to provide additional medical care for Medicaid beneficiaries enrolled in the plan.”

That Brief was written in an attempt to refuse medically necessary services to a profoundly mentally handicapped Medicaid recipient.  The recipient’s doctor wrote a letter informing the MCO that  the recipient required 24–hour care due to the recipient’s severe handicaps.

Yet, despite the affirmation that the recipient required 24-hour care, the MCO refused to provide that care, stating “efficiency and cost-effectiveness.

The attorney for XXX was correct though. The financial arrangement creates an incentive for the MCOs: to provide less services, to have fewer providers in the network, and to increase the revenue for the MCO.

The proposed House Bill also states that the health care providers have no appeal rights for prepayment review, and goes on to state that OAH has no jurisdiction over the MCOs.

The Office of Administrative Hearings (OAH) is the venue for complaints against state agencies and its agents.  This is put into place due to the overwhelming congestion in the public court systems.  Last month, in OAH, 15,000 Medicaid recipients appealed the denials.  Imagine if all complaints against MCOs had to go to superior court…

But more than the congestion in courts, by stating that OAH does not have jurisdiction over the MCOs, the General Assembly is stating that DMA does not have control over the MCOs. Essentially, DMA is foregoing all authority regarding Medicaid mental health.  By MCOs being in charge, our Medicaid mental health system becomes runs by private companies. DMA is no longer involved.

And the language of the proposed House Bill is not ambiguous.  It states, in part:

(c)        The venue for all legal actions concerning a dispute between an LME/MCO and a provider or applicant shall be in the superior court of the county in which the corporate office of the LME/MCO is located, unless the contract in effect between the LME/MCO and the provider or applicant specifies a different venue.

(d)        Notwithstanding any other law, OAH does not have jurisdiction over any dispute between an LME/MCO and a provider or applicant.

That’s strong language.

The MCO can suspend any Medicaid contract (Judge), deny any due process (Jury), and put any health care provider out of business (Executor) with zero repercussions on the MCOs.

Please, if you agree with me, contact your Representative in your district.  Someone told me one time that Representatives and Senators receive surprisingly few emails about specific Bills. So the Reps and Senators actually will read these emails. Please help raise awareness of the potential consequences of the House Bill 320.

Do not allow the MCOs to be the Judge, Jury and Executioner!



Medicaid Audits: Challenge the Findings, Not the Extrapolation Method!!

Recently I have had multiple health care provider clients coming to me complaining of the way another attorney was handling the cases (This blog is not a jab at any attorney. I am in no way trying to offend any attorney. I am merely trying to let providers understand the correct way to appeal to avoid undue attorneys’ fees and headache). Apparently, when the provider receives a Tentative Notice of Overpayment, other attorneys have appealed State’s extrapolation method, instead of appealing on the basis of an inaccurate audit.

Why is the basis for the appeal important?

Let me give you two reasons/examples:

1.  Reason #1: Appealing the extrapolation is an ambiguous procedure with little structure.

Example #1:  Health care provider X’s attorney, whom we will call Jimmy John, only because I am hungry and would like a Jimmy John sandwich, appealed X’s Tentative Notice of Overpayment based on the extrapolation over a year ago. Literally for the past year, Jimmy John and X have submitted documents to Program Integrity (PI), a division of the Division of Medical Assistance (DMA), which has sent the documents back stating the documents were not filled out correctly and informing X that the correct process is a self audit.  Herein lies the problem, appealing the extrapolation is an informal process with little rules, little deadlines and little appeal process.  There is no incentive for PI to make a decision quickly, and there does not seem to be a way to schedule an informal hearing.  There is just a lot of headache and paperwork back and forth.

That said, I have now contacted PI and asked that PI deny us, so I can pursue the appeal at the Office of Administrative Hearings (OAH).  I requested the denial months ago.  PI is waiting for authorization from the Attorney General’s office  to provide the denial.

Can you say beaurocracy?

2.  Reason # Two: It is plain easier to prove that whichever contractor conducted the audit made errors.

Example #2 comes from a recent Medicare lawsuit that did not end well for the health care provider.  Despite the fact the case is a Medicare case, it is analogous to this topic.  In case you want to read the entire case, here is the cite: Miniet v. Sebelius, WL 2930746 (S.D. Fla. July 18, 2012).

In summary, the U.S. Department of Health and Human Services (DHHS) hired a contractor to conduct Medicare audits.  The contractor determined that the Plaintiff in this case was overpaid over $2.3 million. The provider appealed based on the extrapolation method.  However, sadly, the provider tried to use the Medicare Act, which disallows the use of an extrapolation method unless there is a sustained or high level of payment error.  According to the Recoupment Audit Contractor (RAC) contracted by the federal government, the provider’s accuracy rate was 0%.  Based on the RAC’s accuracy rate, the court found that a  basis existed that allowed DHHS to use the extrapolation method to determine the $2.3 million overpayment.

The Florida state court stated that, “In her Motion for Summary Judgment, the Secretary maintains that administrative and judicial review are statutorily foreclosed with respect to whether the extrapolation should have been conducted because the Secretary, through the CMS contractor, found that the sample had a 100 percent payment error rate. The Secretary maintains that this constitutes an implicit determination that there was a sustained or high level of payment error and, as such, extrapolation was proper.” Miniet v. Sebelius, WL 2930746 (S.D. Fla. July 18, 2012).

The problem?

Most likely (if the federal RACs have any of the same issues that the North Carolina RACs have), the alleged accuracy rate was erroneous.  Therefore, most likely the court based its decision to uphold the recoupment based on an erroneous accuracy rate. Had the provider, instead, challenged the validity of the audit itself, I’m willing to bet the result would have been different.

So, health care providers fighting Tentative Notices of Overpayment, appeal the validity of the audit, not the extrapolation method.

Oh, and a reason #3: Who wants to argue over math and statistics? Most likely, you would have to hire a statistician expert witness, which only increases the litigation costs.

I’m sure there are more reasons, but those are the most obvious.