NC: One Head Chef in the Medicaid Kitchen is Enough!

Today the United States Court of Appeals for the 4th Circuit opined that “One head chef in the Medicaid kitchen is enough.” (This may be the first time I’ve laughed out loud at a federal court’s decision due to true humor).

The case caption is K.C., a minor child by and through his mother and next friend, Africa H., M.S., a minor child Plaintiff-Intervenor v. Pamela Shipman, in her official capacity as Area Director of Piedmont Behavioral Health Care Mental Health, (and the rest of the caption…) (We will call the case “K.C. v. PBH“).

Let me set the stage:

Plaintiffs-Appellees: a class of Medicaid beneficiaries who suffer from severe developmental disabilities

Defendants-Appellants: PBH, one of 10 MCOs in the State contracted with DMA to manage behavioral health services for Medicaid recipients in certain counties

Issue: Does 42 U.S.C. 1396a(a)(5), which requires Medicaid to be managed by a single state entity, prohibit PBH from appealing a district court’s entry of preliminary injunction when DMA did not join the appeal?

In the vernacular: Can PBH appeal any Medicaid issue without its “boss” or principal being a party?

Hmmmmm….maybe that was not as “in the vernacular” as I thought. Let me try again: Can the MCOs decide anything about Medicaid unilaterally without DMA?

I’m trying, people.

Anyway, the short answer is, “No.”

42 U.S.C. 1396a(a)(5) requires Medicaid to be managed by a single state entity. The 4th District calls this requirement the “single state agency requirement.”

Why is it SO important that a single state agency manage Medicaid that the federal government dictates the same? “To avoid a lack of accountability for the appropriate operation of the program.” Hillburn v. Maher, 795 F.2d 252, 261 (2nd Cir. 1986).

Lack of accountability???? Hmmmmm…How many of my blogs have been devoted to the lack of accountability of the MCOs?

The Hillburn Court stated that, “a single state entity may not diminish[] or alter[] its Medicaid responsibilities based on the action or inaction of other state offices or agencies.”; i.e., DMA cannot divorce itself from the duties of Medicaid merely by contracting out to a private company….or, i.e., DMA is on the hook for whatever happens in Medicaid regardless the player.

As to accountability of the MCOs, here are some of my favorite quotes from K.C. v. PBH:

  • “that agency cannot evade federal requirements by deferring to the actions of other entities.”
  • “PBH is forbidden to “change or disapprove any administrative decision” made by the NCDHHS pursuant to…”
  • “If important litigation decisions made by a single state agency were not “administrative decisions” protected from challenge by another agency, the resulting inefficiency and turmoil would be profound.”
  • “The result of PBH’s interpretation would be a constant state of confusion in the litigation process in which parties (and judges) must not only attempt to argue (or decide) the merits of each case, but where they must first identify which of multiple state entities is even speaking with the state’s final authority.”
  • The single state entity requirement “prohibits precisely what PBH aims to achieve in this appeal: to place itself in the driver’s seat and call the shots on how the state’s Medicaid is to be administered in the face of a clearly contradicted decision by the NCDHHS.”

Read the last two quotes again.  To me, these quotes sound as if PBH is NOT in the driver seat, that DMA is in the driver seat, and that DMA has complete control over the Medicaid system. Maybe I’m wrong. But that’s what it sounds like to me.

It’s been a long time, but I remember my early college philosophy classes, beginning with Logic 101: PBH is not in the driver seat.  PBH is an MCO.  Thus, no MCO is in the driver seat.

K.C. v. PBH also held, “there is no dispute that PBH is an agent of the NCDHHS due to its contract…”

No dispute? In every case I have right now, the MCO (whichever MCO it is) is arguing that it is an independent contractor, not an agent.  Apparently, there is no dispute…I am right 🙂 .

PBH cannot evade a preliminary injunction that continues to run against NCDHHS.  See pages 15-16 of K.C v. PBH (This is SO not the Bluebook style of quoting sources…Sorry).

Granted this decision came out today, but I am counting the seconds until Monday when OAH opens up, so we can implement the beauty of this decision.

One head chef in the Medicaid kitchen is enough!

About kemanuel

Medicare and Medicaid Regulatory Compliance Litigator

Posted on May 10, 2013, in Accountability, Agency, Behavioral health, Division of Medical Assistance, Federal Law, Health Care Providers and Services, Jurisdiction, Legal Analysis, Legislation, MCO, Medicaid, NC DHHS, North Carolina and tagged , , , , , , , , , , , . Bookmark the permalink. 3 Comments.

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