“Not In Good Standing” With DMA: Analogous to Santa Clause’s “Naughty” List?

Lately, I have heard the phrase NOT “in good standing” with DMA too often.  Whenever I hear not “in good standing,” I have this image of the movie “Fred Clause.”  Remember when Vince Vaughn, who is playing Santa’s younger brother, is asked to stamp the children’s Christmas list with “naughty” or “nice?”  At first, he stamps the lists correctly…or per Santa’s orders.  Then Fred Clause gets angry and stamps every Christmas list “Nice.”  Well, being NOT “in good standing” with DMA is like being on the “naughty” list for Santa Clause, especially when Santa, as in the movie “Fred Clause,” contracts out Santa’s very important job to a third-party, Fred Clause, who begins to determine “naughty” and “nice” completely arbitrarily and without due consideration to the individual child’s facts or circumstances.

If you are reading this and thinking….”NOT “in good standing?”…I’ve never heard of such a thing….,” then take a moment, think about all the ways you are blessed (BTW: not knowing what “not in good standing” is one of those blessings).  Take a moment and pat yourself and your team/staff on the back.

If you are reading this and thinking… “Yeah!…What the heck is NOT “in good standing?”…is there such a thing…is this legal?” Then this blog is for you.

What IS not “in good standing?”

Well, we know the consequences are drastic.  If you are found to be “not in good standing,” the MCOs refuse to contract with you or terminate an already existing Medicaid contract.  DMA terminates your Medicaid contract.  You are not reimbursed for Medicaid services rendered.  In drastic cases, you are forced to close your business.  Go bankrupt.  Fire all staff. And never service Medicaid recipients again.

And for all those above-referenced consequences…all because “You are not in good standing with DMA.” What???? What is “not in good standing with DMA?” Is that like getting an ‘F’ in drafting PCPs? Or a ‘C’ in treatment plans? Maybe a B- in service notes?

What IS “in good standing?”

According to the Division of Medical Assistance (DMA) website, “[t]he N.C. Medicaid Program recognizes the need to promote access to care by enrolling all providers in a timely manner and is committed to ensuring the provision of quality care for our citizens. The enrollment process includes credentialing, endorsement, and licensure verification to ensure that all providers are in good standing in the community.”  (emphasis added).

To me, “good standing in the community” means: (1) not committing criminal acts; (2) maybe..being a good neighbor; (3) charitable services; (4) not littering; (5) helping stray animals get back to their owners…

But, obviously, “in good standing” means something completely different to DMA.  So, I looked for a definition. And looked.  I found the July 2012 Medicaid Bulletin that states:

Clarification of the Division of Health Service Regulation Good Standing Status   

The N.C. Division of Health Service Regulation (DHSR) has provided clarification on its definition of good standing status. Effectively immediately, DHSR good standing status is associated with a facility – not an entire agency or an individual associated with an agency or facility. DHSR determines whether facility is in good standing based on current and active administrative actions against the facility.

Actions included in the determination that a facility is not in Good Standing include:

  • Active Type A or Imposed Type B, based on Provider Penalty Tracking Database [criteria in NCGS 122C-23(e1) – non-compliance in Article 3, Client Rights].
  • Current Intent to Revoke – Intent to Revoke is active and has not been rescinded.
  • Active Suspension of Admissions – Suspension of Admissions has not been lifted
  • Active Summary Suspension – Summary Suspension was issued and has not been lifted.
  • Active Notice of Revocation – Notice of Revocation is current, and may be in appeal.
  • Revocation in Effect – Notice of Revocation was issued and the final outcome is that the license for this facility has been revoked and is no longer active.

Local Management Entities-Managed Care Organizations (LME-MCOS) will receive a Good Standing Notice to help determine which agencies under the 1915 b/c waiver have received a determination of good standing from the DHSR. If a facility is not in good standing, LME-MCOs can withhold a decision about whether to contract with the specific facility for 90 days. During this 90-day period, LME-MCOs can check back with DHSR to determine if any resolution or changes to the action have occurred prior to making a final decision.

I also found an actual definition in DMA’s Endorsement Policy (from back in April 2011):

(11) “Good Standing – DHHS” means the same as defined in 10A NCAC 22P.0402.

(12) “Good Standing – LME” means the provider has a history of compliance with DMA Clinical Policy specific to service delivery and does not have an open Plan Of Correction (POC) with the LME. A POC must be timely submitted, approved, and implemented before the POC action can be closed. A POC is fully implemented when the POC is being followed and all out of compliance findings have been minimized or eliminated as determined by the LME in a maximum of two follow-up reviews. The POC action is closed when the provider receives the official notification from the LME stating the action is closed.

 Ok, so the definitions helped…a little.

So I went to 10A NCAC 22P.0402 (which can be found below, courtesy of Benchmarks):

10A NCAC 22P .0402 GOOD STANDING AND CONFLICTS OF INTEREST

(a) A provider is in good standing with the Division of Medical Assistance when all of the following conditions are met, regardless of any appeal filed by the provider or any stay of such action entered by the Office of Administrative Hearings:

(1) The provider or any entities which share the same Employee Identification Number (EIN) as the provider do not owe any outstanding (more than 30 days past due) accounts receivable to DMA or its designee, including Medicaid overpayments, recoupments, program reimbursements, cost settlements, cost assessments, penalties and interest. A provider that entered into an approved payment plan in accordance with Subchapter 22F and Chapter 108C of the North Carolina General Statutes is considered to be in good standing if the provider has not defaulted on the payment plan;

(2) The provider or any entities which share the same Employee Identification Number (EIN) as the provider have not been terminated, suspended, had its Medicaid payments withheld, or been placed on probation in the previous 12 month period;

(3) The provider or any entities which share the same Employee Identification Number (EIN) as the provider is not undergoing prepayment claims review;

(4) The owner(s) or managing employee(s) of the provider agency were not previously the owners or managing employee(s) of a provider agency which had its participation in the N.C. Medicaid program involuntarily terminated for any reason or owes an outstanding accounts receivable to DMA or its designee, irrespective of whether the provider agency is currently enrolled in the N.C. Medicaid program;

(5) The provider and its owners and managing employee(s) are not listed on the U.S. Health and Human Services Office of Inspector General Exclusion list;

(6) The provider, any entities which share the same Employee Identification Number (EIN) as the provider, or its corporate parent, have no unresolved tax or payroll liabilities owed to the U.S. or North Carolina Department of Revenue;

(7) The provider and its owner(s) or managing employee(s) or any entity sharing the same EIN as the provider have no unresolved payroll liabilities owed to the U.S. or North Carolina Department of Labor. Unresolved payroll liabilities owed to the N.C. Department of Labor is defined as:

(A) The provider or its owner(s) or managing employee(s) or any entity sharing the same EIN as the provider having one or more unpaid judgments for wages owed under Chapter 95, Article 2A, the North Carolina Wage & Hour Act, in which the N.C. Department of Labor or Commissioner of Labor is the Plaintiff; or

(B) If one or more of the owner(s) or managing employee(s) of the entity requesting good standing was the owner or managing employee of any other organization against whom the North Carolina Department of Labor has one or more unpaid judgments for wages owed under Chapter 95, Article 2A, the North Carolina Wage & Hour Act, in which the N.C. Department of Labor or Commissioner of Labor is the Plaintiff.

(8) The provider or any entities which share the same Employee Identification Number (EIN) as the provider have not abandoned or destroyed patient medical records or staff records in violation of federal or state law, rule or regulation;

(9) The owner(s) or managing employee(s) of the provider agency were not previously the owners or managing employee(s) of a provider agency which abandoned or destroyed patient medical records or staff records in violation of federal or state law, rule or regulation; and

(10) If incorporated or otherwise applicable, the provider has a current Certificate of Existence issued by the N.C. Secretary of State’s Office.

(b) A provider is in good standing with DMH/DD/SAS when all of the following conditions are met, regardless of any appeal filed by the provider or any stay of such action entered by the Office of Administrative Hearings:

(1) Any approved Plan(s) of Correction (POC) pending with the DMH/DD/SAS Accountability Team has been implemented by the provider and the action has been closed by DMH/DD/SAS. A POC is implemented when the POC is being followed and all out of compliance findings have been minimized or eliminated as determined by a maximum of two DMH/DD/SAS follow-up reviews. The POC action is closed when the provider receives the official notification from the DMH/DD/SAS Accountability Team stating the action is closed; and

(2) The provider has not had any endorsement or credentialing to provide an enhanced or child/adolescent residential treatment service involuntarily withdrawn by any Local Management Entity/Managed Care Organization, and upheld by the DMH/DD/SAS Appeals Panel, in the previous 12 month period.

(c) A provider is in good standing with the Division of Health Service Regulation if it meets the requirements for enrollment and licensure set forth in G.S. 122C-23 (e1), regardless of any appeal filed by the provider or any stay of such action entered by the Office of Administrative Hearings.

(d) The owners, operators, and managing employees of a CABHA may not be employed by, or on the Board of, any Local Management Entity (LME), Prepaid Inpatient Health Plan (PIHP), Managed Care Organization (MCO), accreditation agency, or for-profit hospital.

History Note: Authority G.S. 108A-54; 42 U.S.C. 1396a; 42 C.F.R. 431.51; S.L. 2009-451, Section 10.58(d); Temporary Adoption Eff. December 28, 2010.

 Ok, after reading all those definitions, I am sure you understand what NOT “in good standing” means, right? I mean, could it get any clearer?

Let’s break it down.  For the sake of simplicity, I will use 10A NCAC 22P.0402, for no other reason except, of all the definitions, this administrative code is actually codified.  First of all, 10A NCAC 22P.0402 is a bit confusing from the onset, as the code is drafted with conflicting negatives.  As in, a provider is “in good standing” if (a) the provider does NOT owe…. So I’ve tried to make the code a bit easier to read.

1. A provider is NOT “in good standing” if the provider owes any outstanding (more than 30 days past due) accounts receivable to DMA or its designee, including Medicaid overpayments, recoupments, program reimbursements, cost settlements, cost assessments, penalties and interest.

Ok, easy enough…if you owe money to DMA, you are not “in good standing.”  However, this is what disturbs me: the beginning of 10A NCAC 22P.0402 states regardless of any ongoing appeal or stay.  That language means that if you get a Tentative Notice of Overpayment (TNO) stating that you owe $500,000, but you disagree with the findings and appeal, despite the appeal, you are still NOT “in good standing.”

2. A provider is NOT “in good standing” if “the provider ha[s] [] been terminated, suspended, had its Medicaid payments withheld, or been placed on probation in the previous 12 month period.”

Again, easy enough to understand. But, again, I am disturbed by the fact that, according to the Code, even if you disagree with the termination or suspension, during any appeal, you will still be on the “naughty” list. 

Allow me to get on my soapbox for a moment (as if you have a choice).  You can get placed on prepayment review (for whatever reason), which automatically suspends all Medicaid reimbursements, CCME, or whatever 3rd-party entity can conduct a prepayment review improperly (not in actual accordance with DMA policies), and basically, botch your accuracy ratings to create an impossibility of reaching 70%…[Remember, this whole prepayment review process is not appealable according to NCGS 108C-7, which, I believe, is in direct violation of federal law] and the entire time during which your Medicaid reimbursements are suspended erroneously, you are considered NOT “in good standing,” which, we have already determined, has dire consequences.

My problem with the prepayment review process, in general, is that placing a provider on prepayment review with no due process is an obvious infringement on the legal rights of the persons involved.  Federal law does not allow a state to simply not allow a provider appeal rights. On the contrary, federal law makes it very clear in numerous places that an appeal process SHOULD be in place.  Yet NC does not allow a provider to appeal prepayment review status.

 Because NC does not afford appeal rights for prepayment review, but the entire time a provider is on prepayment review the provider receives zero Medicaid reimbursements and the provider is considered not “in good standing,” both of which have drastic consequences for the provider, NC is, in essence, unilaterally deciding to usurp a provider’s property interest and a U.S. citizen’s right to life, liberty, and the pursuit of happiness without due process.

Yet, the entire time during which the provider is getting Constitutional deprivation to the detriment to the provider, the provider is not “in good standing” with DMA.

The process reminds me of the Don Henley song “Dirty Laundry:”

Kick ’em when they’re up
Kick ’em when they’re down
Kick ’em all around

Not to mention the fact that 42 C.F.R. 455.23 states:

 (a) Basis for suspension

(1) The State Medicaid agency must suspend all Medicaid payments to a provider after the agency determines there is a credible allegation of fraud for which an investigation is pending under the Medicaid program against an individual or entity unless the agency has good cause to not suspend payments or to suspend payment only in part; (2) The State Medicaid agency may suspend payments without first notifying the provider of its intention to suspend such payments; (3) A provider may request, and must be granted, administrative review where State law so requires.

Ok, going back to the definition and consequences of not “in good standing.”  The third subsection of 10A NCAC 22P.0402 reads:

3. A provider is NOT “in good standing” if “the provider is []undergoing prepayment claims review.

See #2.

 4.  A provider is NOT “in good standing” if the provider was “involuntarily terminated for any reason or owes an outstanding accounts receivable to DMA or its designee.”

Again, if the provider was involuntarily terminated based on a flawed prepayment review, then see #2.  If providers owes money, see #1.

5. A provider is NOT “in good standing” if the provider is NOT listed on the U.S. Health and Human Services Office of Inspector General (OIG) Exclusion list;

OIG has the authority to exclude individuals and entities from Federally funded health care programs.  One can only hope that those placed on the exclusion list is rightfully placed on the exclusion list,

6. A provider is NOT “in good standing” if the provider has any unresolved tax or payroll liabilities owed to the U.S. or North Carolina Department of Revenue;

Ok, I get it.  The IRS cannot be questioned (despite recent unveilings of misdeeds by the IRS). Death and taxes…

7.  A provider is NOT “in good standing” if the provider has any unresolved payroll liabilities owed to the U.S. or North Carolina Department of Labor.

Department of Labor is like the IRS…got it.

8.  A provider is NOT “in good standing” if the provider has abandoned or destroyed patient medical records or staff records in violation of federal or state law, rule or regulation;

Do not abandon or destroy records….Check.

9.  A provider is NOT “in good standing” if the owner(s) or managing employee(s) of the provider agency were previously the owners or managing employee(s) of a provider agency which abandoned or destroyed patient medical records or staff records in violation of federal or state law, rule or regulation; and

Do not own or manage a provider agency that previously abandoned or destroyed records….Check.

(10)  A provider is “in good standing” if the provider, incorporated or otherwise applicable, has a current Certificate of Existence issued by the N.C. Secretary of State’s Office.

Easy enough.

So, really, I do not take issue with the ENTIRE definition of what is not “in good standing.”  Only subsections 1-4. 

Like I said, the entire process reminds me of Vince Vaughn (the 3rd party contractor) angrily stamping all the children’s Christmas lists as “Nice.”  Except in the case of being not “in good standing,” Vince Vaughn (the 3rd party contractor) is angrily stamping all the lists as “Naughty.”

About kemanuel

Medicare and Medicaid Regulatory Compliance Litigator

Posted on June 11, 2013, in Behavioral health, CCME, DHHS, Division of Medical Assistance, Health Care Providers and Services, MCO, Medicaid, Medicaid Appeals, Medicaid Audits, Medicaid Contracts, Medicaid Recoupment, Mental Health, Mental Health Problems, Mental Illness, NCGS 108C-7, North Carolina, Not in Good Standing, Office of Inspector General, Post-Payment Reviews, Prepayment Review, Provider Medicaid Contracts, RAC Audits, Regulatory Audits, Tentative Notices of Overpayment, Termination of Medicaid Contract and tagged , , , , , , , , , , , , , , , . Bookmark the permalink. Leave a comment.

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