Hello, 2014! And Hello 3% Decrease in Medicaid Reimbursements (But Call the Decrease “Shared Savings”)

Tomorrow is the first Medicaid checkwrite for 2014 (and its my birthday too).  Happy New Year! Happy birthday!! (I’m turning 29 for the 10th year).  For New Years, my husband and I had a very quiet evening eating crab legs at home. Yum! I am sure many of you made New Years resolutions…work harder…lose weight…get paid 3% less….WHAT?

With the first Medicaid checkwrite tomorrow, due to Session Law 2013-360, many health care providers will receive 3% less in Medicaid reimbursements.  You will receive a 3% cut if you are the following types of providers:

  • Inpatient hospital.
  • Physician, excluding primary care until January 1, 2015.
  • Dental.
  • Optical services and supplies.
  • Podiatry.
  • Chiropractors.
  • Hearing aids.
  • Personal care services.
  • Nursing homes.
  • Adult care homes.
  • Dispensing drugs.

(This is the exact list as found in Session Law 2013-360.  I am well aware that the list is grammatically-challenged, but I did not write it).  Both the federal government and NC are calling this 3% withholding “Shared Savings Plan with Provider.” 

How is this “shared savings with providers” when the government is withholding money from providers??? Sure, supposedly, there will  be a “pay for performance payment” to some providers, but most providers will just be reimbursed 3% less.

How is this fair?  How is this “shared savings?” 

Here’s an example:

Say I work at Harris Teeter and my manager comes up to me and says, “Hey, Knicole, Harris Teeter is really concerned with our overhead costs.  Salaries seem to be a big cost, and we want to “share the savings” with you.  So we are going to cut your pay by 3%.  If we, subjectively, determine, at the end of the year, that you are working hard and saving us money, then we will give you a performance reward.  It will not be all the money we retained, but it will be some amount.  This way Harris Teeter profits off the interest of the 3% we retain all year, plus the amount we never give you.”

Folks, the above example is called a decrease in pay and a swift kick in the bottom.  It is not “shared savings.”

In DHHS’ shared savings scheme, the money will go to:

“The Department of Health and Human Services shall use funds withheld from payments for drugs to develop with Community Care of North Carolina (CCNC) a program for Medicaid and Health Choice recipients based on the ChecKmeds NC program. The program shall include the following:

  1. At least 50 community pharmacies by June 30, 2015.
  2. At least 500 community pharmacies in at least 70 counties by June 30, 2016.
  3. A per member per month (PMPM) payment for care coordination and population health services provided in conjunction with CCNC.
  4. A pay for performance payment.”

Session Law 2013-360.

According to the Centers for Medicare and Medicaid Services (CMS), “[a] shared savings methodology typically comprises four important concepts: a total cost of care benchmark, provider payment incentives to improve care quality and lower total cost of care, a performance period that tests the changes, and an evaluation to determine the program cost savings during the performance period compared to the benchmark cost of care and to identify the improvements in care quality.”

Employers chop salaries all the time in order to maximize profit.  Back in 2011, Sony proposed 11% salary cuts for executives due to such a terrible fiscal year.  But guess what is different between Sony’s 11% cut and Medicaid’s 3%?  I know…I know…a lot….but what difference am I thinking about?

Sony sought shareholder approval.

I guess you can make the argument that the General Assembly sought voter approval because our citizens voted for all the legislators in the General Assembly.  But I think that argument is weak.  No legislator ran his or her campaign on: “Vote for Me! If you are a Medicaid provider, I plan to decrease your salary by 3%!”

Better yet, with the Sony salary cut, executives had the option to seek employment elsewhere.  What is a Medicaid provider’s option? Move?  Not take Medicaid? (Sadly, I see this as a more viable option).

On a legal note, I question the constitutionality of our new shared savings plan.  Wouldn’t the decrease of 3% in Medicaid reimbursements be considered an unlawful taking without due process.  In essence, could one argue that the decrease of 3% in Medicaid reimbursements is just a way for the State to decrease Medicaid reimbursements without going through the proper lawful process?

Then again, maybe we won’t need to worry about the 3% decrease at all…given NCTracks’ track record, it is plausible that NCTracks will not be able to adjust the Medicaid reimbursements by 3%.

About kemanuel

Medicare and Medicaid Regulatory Compliance Litigator

Posted on January 6, 2014, in Administrative Costs, Adult Care Homes, Adult Care Homes that Accept Medicaid, Budget, Chiropractors, CMS, CSC, Dental Medicaid Providers, Dentistry Services, Division of Medical Assistance, Doctors, Federal Government, Federal Law, General Assembly, Health Care Providers and Services, Hearing Aids, Hospital Medicaid Providers, Hospitals, Inpatient Hospital Stays, Lawsuit, Legal Analysis, Legislation, Medicaid, Medicaid Billing, Medicaid Budget, Medicaid Costs, Medicaid Funds, Medicaid Providers, Medicaid Reimbursements, Medicaid Services, NC, NC DHHS, NCTrack Glitches, NCTracks, NCTracks Billing Issues, North Carolina, Nursing Homes, Optical Services, Personal Care Services, Podiatry, Rate Reductions, Reduction in Medicaid Payments, Reductions and tagged , , , , , , , , , , , , , , , , , , , , , , . Bookmark the permalink. 2 Comments.

  1. The Medicaid 3 percent so called “shared savings” is ridiculous! Shared savings my foot, and with the cut how do they think a provider will really save them any money with PCS to be able to get back some of that 3 percent? A PCS provider will save them money by quitting. The most ridiculous thing they have come up with yet! I am with a small provider and we already save the client in several hours of services per year, because as a nurse, I do not charge for the time for my Supervisory or Admission visits. The measly amount they will pay for the R.N.’s time as you know is exactly what the CNA gets per hour and then you have to subtract that amount of time from the clients allotted hours per month.. I don’t bill for my time and this comes out of the overhead and lets the client have their full amount of allotted hours for the month as well as their aide gets to work the time. Geeze I think they just want us all to quit providing In Home Care is the purpose and underlying motive of DHHS or maybe they just want us all to work for free. Guess they don’t want to deal with so many IN Home Care companies. Well between audits and cuts DHHS is succeeding in killing providers for services. Already 2 small companies that have been in existence for several years in our area has stopped providing services the last of December. I would like to know how many companies throw in the towel with this last straw! Wonder how much DHHS was paiding CCME per client per year? Now how much do they pay each Liberty R.N. doing an I.A. per hour and Liberty per client per year? I bet it is a lot more than 12.72 per hour and of course subtract any mileage associated with that. I appreciate your Blog Nicole, you go girl! We need a class action resistance movement.

  2. oops spelled your name wrong Knicole I’m so sorry but was really into my thoughts there.

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