Termination of a Provider’s Medicaid Contract May Result in Homeless, Mentally Ill Adolescents

A client came to me, we will call him John, and explained that his company X had been placed on prepayment review by the Carolinas Center of Medical Excellence (CCME) 6 months prior.  Like every other health care provider that is placed on prepayment review, he thought… “That’s fine. My documents comply with all applicable Medicaid rules and regulations….This will be easy greasey.”

6 months later, he is sitting in my office with a Notice of Termination of Company X’s Medicaid contract.

CCME had audited Company X’s Outpatient Behavorial Therapy (OBT) services, found the documentation noncompliant and terminated the Medicaid contract.

Problem is, Company X does not only provide OBT.  Company X runs residential services for children and adults (mostly adolescents) with severe mental illnesses. Meaning, Company X provides these children and adults with a home, 24-hour care, food, essentials, and therapy.

The residential services were not found out of compliance.  Only the OBT.  I asked John what the percentage of OBT services Company X providers compared to the residential, and he said that OBT was a very small percentage.  OBT is the daytime therapy for the all the residents of Company X.

I asked him what would happen if the Notice of Termination of Medicaid contract went into effect.

“I would have to close my doors.”

Me: “What would happen to your clients?”

“Some would go back to the families that couldn’t care for them initially. Others, I don’t know. All the residential providers that I know of around us have gone under for whatever reason.”

Me: (In shock): “They would be homeless?”

“Many, yes.”

Folks, do not freak out yet. We  have filed a Temporary Restraining Order (TRO) and Preliminary Injunction against the Department of Health and Human Services (DHHS) disallowing DHHS from terminating the Medicaid contract of Company X until a full hearing can be heard.  The TRO was granted.  Our hearing to plead our case for the Preliminary Injunction is tomorrow.

Will keep you posted.


About kemanuel

Medicare and Medicaid Regulatory Compliance Litigator

Posted on March 6, 2013, in CCME, Division of Medical Assistance, Health Care Providers and Services, Medicaid, Mental Health, Mental Illness, NC DHHS, North Carolina, Outpatient Behavioral Health, Residential Services, Termination of Medicaid Contract and tagged , , , , , , , . Bookmark the permalink. Leave a comment.

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