Monthly Archives: May 2013
New CMS Proposal Will Reduce Hospitals’ DSH Allotments: Less Incentive for Hospitals to Treat the Uninsured
The Centers of Medicare and Medicaid (CMS) put forth a new proposal setting forth aggregate reductions to state Medicaid disproportionate share hospital (DSH) allotments from 2014 – 2020.
First of all, what is DSH? (DSH) are payments to hospitals that serve a significantly disproportionate number of low-income patients; eligible hospitals are referred to as DSH hospitals. (Click here for a link to DSH hospitals in NC). States receive an annual DSH allotment to cover the costs of DSH hospitals that provide care to low-income patients that are not paid by other payors, such as Medicare and Medicaid. For example, in fiscal year 2011, North Carolina received $295,314,187.00 in DSH allotments. Almost 300 billion in allotments would make any hospital less reluctant to treat the uninsured.
Think of DSH this way, in North Carolina, according to a recent article in the News and Observer, we have approximately 1.5 million uninsured in NC, roughly 1 out of every 5 NC residents. When a person without health insurance gets sick, they cannot go to the doctor (since they do not have doctor because of not having insurance). Instead, the uninsured are forced to go to the emergency room.
Now think of hospitals as a business, which is what they are. We all would like to think that hospitals are there for everyone. That everyone is welcome in a hospital. (At least, I would like to think that). However, the reality is that hospitals are a business. Each procedure, each test, each exam costs a certain amount of money. If the person receiving the service cannot pay, what incentive does a hospital have to continue to service the person?
Well, there ARE federal requirements to treat. For example, under the Emergency Medical Treatment and Labor Act (EMTALA), part of the 1985 Consolidated Omnibus Reconciliation Act (COBRA), a hospital cannot turn away or unnecessarily discharge any uninsured person with an emergency condition. Anyone who shows up in a hospital emergency room will be screened to determine the severity of his or her condition. If the condition is deemed an emergency, the hospital is obligated to stabilize the patient. But for non-emergency conditions, what incentives do hospitals have to continue treatment for non-emergency condition? Hence, the DSH payments.
Going back to CMS’ proposed DSH reductions, the thought process behind these aggregate reductions is (in my opinion): Because of Medicaid expansion under the Affordable Care Act (ACA), more people with be insured by Medicaid and less uninsured people will be admitting themselves into ERs. In other words, if a state opted to expand Medicaid, then, supposedly, more people are insured; thus the hospitals need less DSH.
But what about the states that did not opt to expand Medicaid (i.e., North Carolina)?
CMS’ proposal sets forth 5 factors to determine each state’s DSH allotments. Whether the state expanded Medicaid will be considered. The proposal states, in pertinent part:
“Consequently, hospitals in states implementing the new coverage group [Medicaid expansion] that serve Medicaid patients may experience a deeper reduction in DSH payments than they would if all states were to implement the new coverage group.”
Here are the official statutory factors:
- Factor 1 – Low DSH Adjustment Factor (LDF)
- Factor 2 – Uninsured Percentage Factor (UPF)
- Factor 3 – High Volume of Medicaid Inpatients Factor (HMF)
- Factor 4 – High Level of Uncompensated Care Factor (HUF)
- Factor 5 – Section 1115 Budget Neutrality Factor (BNF)
The proposal also provides an illustrative chart of potential reductions. Here’s the warning: “Table 1 and the values contained therein are provided only for purposes of illustrating the application of the DHRM and the associated DSH reduction factors described in this proposed rule to determine each states’ DSH allotment reduction for FY 2014. Note that these values do not represent the final DSH reduction amounts for FY 2014.”
Here’s the illustrative chart: (which can also be found here since the below picture is so small…or I need new contacts)
So how much will North Carolina hospitals’ DSH allotments go down under this CMS proposal?
According to the Kaiser Foundation, North Carolina’s hospitals’ DSH payments will be reduced by $500 million in FY 2014, $600 million in FYs 2015-2016, $1.8 billion in FY 2017, $5 billion in FY2018, $5.6 billion in FY2019, and $4 billion in FY 2020.
Possible consequences?
Hospitals Treat Less Uninsured: It is only logical that if a hospital will no longer be allotted as much money to treat uninsured patients, the hospitals will want to treat less uninsured. One possible way a hospital could legally limit the number of uninsured is to determine less conditions as an “emergency condition.” Obviously, what constitutes an “emergency condition” has some subjective wiggle-room.
Less Hospitals Opt to be DSH Hospitals: If the amount of money is so greatly reduced so as NOT to provide an incentive for a hospital to treat uninsured, some hospitals may opt to not meet the standard of a DSH hospital.
More Transfers for the Uninsured: If hospitals are not receiving the incentive to treat uninsured, hospitals may transfer the uninsured patients to other hospitals in instances in which the hospital would not transfer an insured patient.
You can provide your comments to CMS regarding this proposed DSH reduction.
Send comments to: Centers for Medicare & Medicaid Services, Department of Health and Human Services, Attention: CMS-2367-P, Mail Stop C4-26-05, 7500 Security Boulevard, Baltimore, MD 21244-1850
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!
Common Medicare Billing Errors Found in Hospitals: Analogous to Medicaid?
Concurrent with the onslaught of Medicaid audits by North Carolina, Department of Health and Human Service (DHHS), Division of Medical Assistance (DMA), the federal HHS Office of Inspector General (OIG) is conducting its own Medicare audits. While, obviously, Medicare and Medicaid target different populations, many of the federal regulations are analogous. So I thought it would be prudent to point out some common errors HHS is finding in hospital billing as to Medicare.
According to the Report on Medicare Compliance (RMC), (to which, I am sure, everyone reading this blog subscribes), the three most common errors the OIG auditors are finding are as follows:
- Emergency Department (ED) admission source codes for psychiatric admissions
- Lupron (HCPCS code J1950)
- Tooth extractions (HCPCS D7140)
- Lymphocyte donor cell infusions (CPT 38242)
Obviously, the common errors for Medicaid billing may be different. For example, I know that Medicaid auditors are specifically reviewing records for short inpatient stays at hospitals; whereas any issue with records for short stays was not included by the RMC as a common error.
However, that said, I would be willing to bet the ED admission code errors for psychiatric admissions would be just as common in Medicaid as Medicare.
Most of the errors for admissions’ codes relate to inner-transfer of patients within the hospital (such as Patient X came in complaining of A, but gets transferred to be treated for D).
Remember, though, keep this audit stuff in perspective. The amount of documents that an auditor must review is enormous. Some providers are going through multiple audits at the same time. The auditors, generally, give short turnaround times for the providers to gather the documents and send the documents to the auditor, sometimes 10-15 days. (I have seen 5 days a couple of times). So, now imagine the sheer volume of documents, the complexity of the Medicaid policies and rules, and the amount of human error on the part of the auditor…add those together for an unattractive sum.
Just by way of example, RMC stated that a hospital last year received 3,400 medical-records requests (That is not the number of records that were requested; that is the number of records request. Each records request could be many records). This hospital’s records requests were increased last year from 1800 in 2011.
So, while the auditors are looking for document errors in millions of records, make sure the auditor is not making errors in reviewing the millions of documents.
Status Update on NC Medicaid Audits
Health care providers that accept Medicaid in North Carolina are under fire. Since North Carolina is one of 7 states undergoing massive, federally-Medicaid audits, all providers, from speech therapists to dentists to psychiatrists to hospitals to nursing homes to radiologists are ALL under fire. Yet, many providers who are reading this are thinking, “I haven’t been audited yet. Maybe I’m safe.” My answer? Maybe your particular service has not yet been audited. Most providers have not yet undergone the intense scrutiny of today’s Medicaid audits by a third-party contractor, but it is only because the state has yet to get to that specific health care service. Believe me, these audits have only just begun…
To date, the state (by and through its contracted companies) is knee-deep in audits for behavioral health providers. Also, dentists, speech therapist (if you don’t group speech therapists in with behavioral health), and durable medical equipment providers have just been added to audit list.
According to the February 2013 NC Medicaid Bulletin, starting at the end of February/beginning of March, HMS (our 2nd RAC vendor) will perform post-pay audits on:
- inpatient hospital claims;
- outpatient hospital claims;
- long-term care claims;
- laboratory claims;
- x-ray claims; and
- specialized outpatient therapy claims.
As it is only May, the full consequences of these audits that were only started at the end of February are not yet known.
From the actual beginning of a post-payment audit until the Tentative Notice of Overpayment, a few months pass. Concurrently, the Carolinas Center of Medical Excellence (CCME) is conducting prepayment reviews.
From experience, once placed on prepayment review, a health care provider will try (to no avail) to remove itself from prepayment review for 6 months before having its Medicaid contract terminated. Usually, at the point of termination, I get called.
So, I figure, with the time period lapse for both post and prepayment audits, I have until August-ish until the providers that provide the above-referenced services need me.
I guess my message is:
Do not think for one second that because your particular type of health care service has not been audited yet, that your particular type of service is safe. The audits are coming. It’s just a matter of when.
NC Medicaid Audits: Are There Legal Grounds to Recoup Monetary Damages?
Speaking Engagement! 05.11.2013 12:00pm — 2:00pm (Lunch will be provided) To register, please contact referral@ahbpsych.com.
3326 Chapel Hill Blvd, Suite D, Durham, NC
Presented by: Williams Mullen and AHB Psychological Services
Providers of Medicaid Behavioral Health Services:
Have you been placed on Pre-Payment Status and been unable to meet the standards to get off of Pre-payment Status?
Have you been told that you are Not in Good Standing with DMA and have been unable to receive assistance restoring your standing?
Have you been wrongly denied access to one of the new MCO provider networks?
Have you been told that your Medicaid number is being terminated or has been terminated?
Have your Medicaid payments been wrongly suspended?
Have these actions resulted in loss of income, your business closing, emotional stress, or other negative consequences?
If so, please join us!
Guest Speaker will be Attorney Knicole C. Emanuel of Williams Mullen Law Firm. Ms. Emanuel focuses her practice on Medicaid Law and has assisted providers in navigating Medicaid investigations and audits.
Lunch will be provided so please RSVP by Thursday, May 9th at 5pm to referral@ahbpsych.com.
RACs Medicaid Audits Scrutinize Short, Inpatient Hospital Stays
Found a great article on RAC audits on hospitals, specifically short hospital inpatient stays, written by Julie Knudson. Fantastic!
Here is a glimpse of what is to come in North Carolina…
Overinclusive NC Medicaid Recoupments and the Provider “Without Fault” Defense
“It is one thing to believe in witches, and quite another to believe in witch-smellers.” G.K. Chesterton
Similarly to the Salem witch trials in Salem, Massachusetts between February 1692 and May 1693, there has become a sort of mass hysteria surrounding Medicaid fraud. While, obviously, Medicaid fraud needs to be found and fully prosecuted, who is to determine whether document noncompliance is fraud? Or harmless and inadvertent error? The witch-smellers? Good gracious, who can honestly tell me that they understand every aspect of Medicaid billing, including all of the federal statutes germane to Medicaid, and all the terms within DMA Polices and what exactly the terms mean? Medicaid is esoteric stuff. Surely, providers deserve some leniency as to inadvertent errors.
Fraud is an intentional deception made for personal gain or to damage another individual or entity. How can an inadvertent error constitute fraud? If I accidentally write the wrong date on a legal bill, can my client point out the error and refuse to pay due to document noncompliance? (The answer is NO, people)
Yet it seems as though the North Carolina RACs auditors are of the mindset that any error, however small and insignificant, causes noncompliance and the reimbursement for services rendered must be recouped. According to the AHIMA website, the RAC Program’s purpose is to reduce improper Medicare/Medicaid payments and implement actions to prevent future improper payments. But who defines “improper?” Is there an element of intent?
I guess I would also be of the mindset that all errors constitute noncompliance if I were paid 12.8% of what I recouped, too.
So what defenses do providers have? Back in Salem in 1692-1693, the accused witches would plea, “No. I am not a witch.” Providers are claiming, “No. My documents are compliant.” But when the accusor has more power than the accused, the accused plea of, “I did not do it,” falls on deaf ears.
I have found a number of defenses for the health care provider. One such defense is the provider “without fault” defense. The provider “without fault” defense is just one of many defenses, and all defenses should be used, but here is an explanation of the provider “without fault” defense:
42 U.S.C. 1395pp states, in pertinent part,
Conditions prerequisite to payment for items and services notwithstanding determination of disallowance:
Where:
…
2) both such individual and such provider of services or such other person, as the case may be, did not know, and could not reasonably have been expected to know, that payment would not be made for such items or services under such part A or part B of this subchapter
then to the extent permitted by this subchapter, payment shall, notwithstanding such determination, be made for such items or services (and for such period of time as the Secretary finds will carry out the objectives of this subchapter), as though section 1395y(a)(1) and section 1395y(a)(9) of this title did not apply and as though the coverage denial described in subsection (g) of this section had not occurred. (emphasis added)
The U.S. Court of Appeals described 42 U.S.C. 1395pp as “the statutory section [that] allows a [health care provider] to obtain a waiver of liability for overpayment receipt when coverage is later denied and the individual beneficiary of the [health care provider] “did not know, and could not reasonably have been expected to know, that payment would not have been made for such [services]”…” MacKenzie Med. Supply, Inc. v. Leavitt, 506 F.3d 341, (4th Cir. 2007).
The MacKenzie case dealt with a durable medical equipment provider. The case actually did not end well for the DME provider based on the provider relying on Certificates of Medical Necessity as a sole basis for medical necessity.
There has not been a ton of case law in which the provider asserted this “no fault” defense, so we really do not know the limitations or breadth of the defense. But, the “no fault” defense should definitely be in the arsenal of defenses for the providers undergoing recoupment actions. Let’s say, one arrow in the quiver of defenses.
Going back to the original quote:
“It is one thing to believe in witches, and quite another to believe in witch-smellers.” G.K. Chesterton
I am sure that the witch-smellers back in 1692-1693 had a personal investment in finding witches. I mean, who wants to live in the same community with a witch that could possibly put a spell on you? Similarly the RACs have personal investments in the way of monetary incentives to cite noncompliance.
One way in which the citizens of Salem determined whether someone was a witch was the “Touch Test.” If the accused witch touched the victim while the victim was having a fit, and the fit then stopped, that meant the accused was the person who had afflicted the victim. Yet as ridiculous and asinine as the Touch Test sounds, people believed the witch-smellers. Even lawyers and judges believed the witch-smellers.
But because of the mass hysteria of the witch hunts, the witch-smellers were believed.
Today’s mass hysteria of Medicaid fraud is allowing the RACs to be overinclusive when determining noncompliance. The state has asserted that, if there is grey area, the state errs on the side of the provider.
From what I have seen, I believe that the state errs on the side of the providers as much as I believe in the “Touch Test” to determine witchcraft.
ECBH Questioned at Town Hall Meeting: Why Are You Denying So Many Services??
East Carolina Behavioral Health (ECBH), one of North Carolina’s 10 MCOs had to defend itself at a local Mental Health Town Hall Meeting in Greenville, NC.
Amy Brown, who works at Arc of North Carolina, which is a company-advocate for people suffering from mental illness and/or developmental disabilities, finally asked what so many providers and recipients have been asking for months:
WHY ARE SERVICES GETTING DENIED????
For the news video, click here.
“It appears that there is a growing trend of families being denied services,” Brown, who works at the Arc of North Carolina, told the panel.
Brown, like other families who have shared their story with 9 On Your Side, is frustrated with East Carolina Behavioral Health – the organization that manages local providers.
She says the processes ECBH requires to approve services for the mentally ill is long, tedious and ineffective.
“For those families that are willing to fight it out and go through the appeals process, it’s very frustrating, it’s very long,” Brown says.
ECBH, or any MCO, that denies medically necessary services, are denying Medicaid services for the most needy.
But, believe me, this is NOT isolated to ECBH. ECBH serves Beaufort, Bertie, Camden, Chowan, Craven, Currituck, Dare, Gates, Hertford, Hyde, Jones, Martin, Northampton, Pamlico, Pasquotank, Perquimans, Pitt, Tyrrell & Washington counties. But medically necessary services are being denied outside the above-mentioned counties.
Not only are medically necessary services being denied, but quality, competent health care providers are being DENIED Medicaid contracts or the Medicaid contracts are being rescinded.
People, listen, if a health care provider resides in Beaufort county, NC, that health care provider, in order to provide mental health services to the Medicaid population must contract with ECBH in order to provide services. There is no other option. The provider cannot, for example, just contract with a different MCO, to provide mental health services within Beaufort county. ECBH is the only option in Beaufort county for a Medicaid contract in behavioral health. So, if ECBH, arbitrarily decides that it does not want to contract with Provider X, for whatever reason, Provider X cannot provide mental health services to Medicaid recipients within Beaufort county and be reimbursed for services rendered. Period.
And this is happening. Providers, who have been providing mental health services to Medicaid recipients for, sometimes, years and years, and who have, some, hundreds of Medicaid recipients, are being denied a Medicaid contract with ECBH, and other MCOs, are not receiving the reimbursement for services rendered for themselves and their staff, and are being forced to close their doors or no longer accept Medicaid patients.
The MCOs, including ECBH, seem to be pushing mental health care providers away from Medicaid, resulting in Medicaid recipients not receiving desperately-needed mental health services.
And here I thought mental health is such an important topic…
It’s easy to proclaim that you care about providers and recipients and you want Medicaid recipients to receive quality health care, but it’s a whole other thing to actually determine if the WAY the system is IMPLEMENTED is broken. Maybe it’s not the Medicaid system that is broken; maybe it is the implementation of the system.
George Bernard Shaw said, “People who say it cannot be done should not interrupt those who are doing it.”
NC Medicaid Providers: Does Your Insurance Cover Legal Fees for Regulatory Audits??
I must confess…I do not know much about health care providers’ liability insurance. I just haven’t had to deal with liability insurance many times.
But, a client has recently informed me that their liability insurance will compensate them for 100% of my attorney fees that pertain to my representation germane to their regulatory audit. If this is true, then I have many clients that need to have a chat with their insurance companies.
Please understand…I have NOT read the small print with this insurance coverage. I do NOT know the ins and the outs of this insurance, or, even, whether it will actually, truly cover 100% of attorneys fees.
But, IF there is a possibility of your insurance company covering attorneys fees, what is there to lose?
This is all I know:
Alleged insurance that covers legal fees for regulatory audits? “APA Plus.”
From what I understand, if you pay an extra $15/month, the insurance will cover legal fees associated with regulatory audits, up to $50,000.
Again, please understand, this is hearsay, and I have read no insurance contract. The ONLY reason I am blogging about an issue that I do not have verification of its veracity is because if, and only if, there is even a 1% chance that your insurance company will cover legal fees, this could be such a burden off your shoulders during such a stressful time anyway.
What does it hurt to try?
