NC Medicaid and Constitutional Due Process

Due process.  What is due process? We hear the phrase due process constantly in the media, in movies, in everyday vernacular…but what is “due process?” And is due process germane to Medicaid contracts?

Due process is part of our Constitution’s fabric.  Thomas Jefferson, one of our founding fathers, drafted the passage in the Declaration of Independence that states “all men are created equal…” there are “unalienable rights…” including “life, liberty and the pursuit of happiness.”  He influenced the Due Process Clauses of the Fifth and Fourteenth Amendments, which provide that no person shall be deprived of “life, liberty, or property without due process of law.”

For a definition of due process, I am going to utilize the wonderful website of “Wikipedia.” Few websites have such a broad-defining ability and its definition of due process and the importance thereof is great:

“The Fifth and Fourteenth Amendments to the United States Constitution each contain a Due Process Clause. Due process deals with the administration of justice and thus the Due Process Clause acts as a safeguard from arbitrary denial of life, liberty, or property by the Government outside the sanction of law.[1] The Supreme Court of the United States interprets the Clauses however more broadly because these clauses provide four protections: procedural due process (in civil and criminal proceedings), substantive due process, a prohibition against vague laws, and as the vehicle for the incorporation of the Bill of Rights.”

Legally, the key components to due process is “denial of life, liberty or property.”  In order to trigger due process, you have to prove that whatever is being taken from you is a denial of “life” “liberty” or “property.”  For example, if you argue that a policeman cannot take your license from you without due process, the answer is, yes he or she can because driving is a privilege, not a right.

So is a Medicaid contract a right? Or a property right? A property right that requires due process prior to termination?

There are a number of ways to argue this.  Of course, one argument is, no, a Medicaid contract is a privilege not a right. I’m sure that the Division of Medical Assistance (DMA) would argue the former.  However, I disagree.  I also think that federal law would disagree (if it could speak).

In order to receive federal funding for Medicaid, North Carolina is required to submit a State Plan under Title XIX of the Social Security Act.  The State Plan defines the scope of Medicaid and presents “promises” to which NC agrees to adhere.  Part of the State Plan is adhering to all pertinent federal statutes, regulations, as well as  including adherence to the Constitution of the United States.

Our State Plan states, in pertinent part, that it promises that “The State has an adequate appeal process in place for entities to appeal any adverse determination by the Medicaid RACs.”

Yet, N.C. Gen. Stat. 108C-7 states, in pertinent part, “[t]he decision to place or maintain a provider on prepayment claims review does not constitute a contested case under Chapter 150B of the General Statutes. A provider may not appeal or otherwise contest a decision of the Department to place a provider on prepayment review.”

How does our State Plan promise an appeal process while the NC Gen. Stat. states no appeal is allowed? It would appear to me that the State Plan and NC Gen. Stat. 108C-7 are at odds.

Let’s set the stage:

The RACs are the Recovery Audit Contractors that manage the audits and exploration of prepayment reviews for a health care provider. In North Carolina, the RACs are the Carolinas Center for Medical Excellence (CCME), Public Consulting Group (PCG, and HP Enterprises (HP).

Prepayment reviews are reviews on certain types of claims that historically result in high rates of improper payments. These reviews will focus on seven states with high populations of fraud- and error-prone providers (FL, CA, MI, TX, NY, LA, IL) and four states with high claims volumes of short inpatient hospital stays (PA, OH, NC, MO) for a total of 11 states.

While on prepayment review, the health care provider may not be reimbursed for Medicaid services rendered until “the provider achieves three consecutive months with a minimum seventy percent (70%) clean claims rate.” (See N.C. Gen. Stat. 108C-7(f)).

Those withholdings of Medicaid reimbursements, I argue, meet the standard of “property.” I would also argue that the withholding of Medicaid funds without due process constitutes “illegal state action” (see below) if the provider can prove that the prepayment review is conducted erroneously.

Theoretically prepayment reviews are designed to catch Medicaid fraud.  In reality, the prepayment reviews are overbroad and threatening the very existence of quality health care providers.

So, are the RACs’ withholding of Medicaid reimbursements for services rendered a deprivation of “life, liberty or property?”

In the Supreme Court case, Wilder v. Virginia Hospital Association, in 1990, the Supreme Court held that providers also had a private cause of action under Section 1983 against illegal state action.

Arguably, North Carolina’s implementation and enforcement of N.C. Gen. Stat. 108C-7 that refuses providers a right to appeal would be an illegal state action according to federal law.

Agree? Just haven’t had a chance to challenge 108C-7 yet.  There are so many arguments against its constitutionality.  But due process is one argument.

Posted on April 22, 2013, in DHHS, Division of Medical Assistance, Federal Law, Fraud, Health Care Providers and Services, Legal Analysis, Legislation, MCO, Medicaid, Medicaid Appeals, Medicaid Contracts, Medicaid Fraud, NCGS 108C-7, North Carolina, Provider Medicaid Contracts, RAC, Termination of Medicaid Contract and tagged , , , , , , , , , , . Bookmark the permalink. 2 Comments.

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