Monthly Archives: February 2014

NC Health Agency Mapping Medicaid Overhaul Plan

By EMERY P. DALESIO, Associated Press

RALEIGH, N.C. (AP) — Gov. Pat McCrory’s health agency on Wednesday planned to unveil its latest version of ideas on how to change North Carolina’s $13 billion Medicaid health care system for about 1.7 million poor and disabled people.

The state Department of Health and Human Services was scheduled to present its framework for revamping Medicaid to an advisory group set up by McCrory. The plan could get some touch-ups before it’s presented to state lawmakers next month. The Legislature is expected to take up the proposed changes beginning in May.

It’s been almost a year since McCrory and state health Secretary Aldona Wos proposed largely privatizing management of Medicaid while keeping ultimate responsibility in state hands. About $3.5 billion of the shared state and federal program’s cost is paid by state taxpayers.

McCrory and Republican legislative leaders have blamed spiraling Medicaid costs left by preceding Democratic administrations for not providing teachers and state workers with raises last year. But Medicaid has also proved tough to manage under the GOP’s watch.

McCrory has said overhauling Medicaid is at the top of his legislative agenda and “may be the toughest battle” with lawmakers cool to earlier ideas to pay managed-care organizations a set fee and force them to work out how to deliver care within that budget.

The North Carolina Medical Society — which represents about 12,500 physicians and physician assistants in the state — the North Carolina Hospital Association, and other advocates for medical professionals and consumers have proposed a more conservative shifting of the risk for cost overruns.

The groups proposed expanding the more than 20 accountable care organizations already operating across North Carolina. The small networks of physicians or hospitals are paid by Medicaid for each procedure they perform. Organizations that meet savings and treatment goals get to keep a portion of the savings generated. If patient costs exceed standards, it must share losses with the state.

Problems in North Carolina’s Medicaid program have persisted for years and haven’t quit since McCrory took office last year and installed Wos as DHHS secretary.

A decision by the agency to delay recalculating Medicaid patient eligibility for three months could cost the state up to $2.8 million. Lawmakers have criticized the agency for not reporting those costs while they were developing the state budget last summer.

A group of North Carolina doctors filed a class-action lawsuit last month after flawed computer programs severely delayed payments they were due for treating Medicaid patients. The lawsuit alleges that managers at DHHS and its contractors were negligent in launching NCTracks, a nearly $500 million computer system intended to streamline the process of filing Medicaid claims and issuing payments.

The lawsuit alleged NCTracks’s software was riddled with thousands of errors that led to delays of weeks and sometimes months before doctors and hospitals received payment. That forced some medical practices to borrow money to meet payroll and others to stop treating Medicaid patients, the lawsuit said.

Earlier this month, DHHS announced it would spend up to $3.7 million on no-bid, personal service contracts with two firms that would advise the agency on running the Medicaid program. Internal McCrory administration memos released to The News & Observer of Raleigh describe understaffed and underskilled workers in the Medicaid division needing emergency help.

Health audit appears to have mistakenly flagged claims, AG says

Health audit appears to have mistakenly flagged claims, AG says.

A Dose of Truth: If an MCO Decides Not to Contract With You, YOU DO HAVE RIGHTS!

It has come to my attention that the managed care organizations (MCOs) are spreading non-truths.  As to appeal rights and rights, in general, of a Medicaid provider.  You may not hear the truth elsewhere, but you will hear the truth here.

Supposedly, the truth shall set you free. If this is true, then why do so many people lie? I believe that people’s desire for money, power, status, greed and/or others to look at them with respect are the some of the catalysts of many lies.

Of course, our old friend Aesop told many tales of the virtue of honesty.  My favorite is the “Mercury and the Woodman.”

A Woodman was felling a tree on the bank of a river, when his axe,
glancing off the trunk, flew out of his hands and fell into the water.
As he stood by the water’s edge lamenting his loss, Mercury appeared
and asked him the reason for his grief. On learning what had happened,
out of pity for his distress, Mercury dived into the river and,
bringing up a golden axe, asked him if that was the one he had lost.
The Woodman replied that it was not, and Mercury then dived a second
time, and, bringing up a silver axe, asked if that was his. “No,
that is not mine either,” said the Woodman. Once more Mercury dived
into the river, and brought up the missing axe. The Woodman was
overjoyed at recovering his property, and thanked his benefactor
warmly; and the latter was so pleased with his honesty that he made
him a present of the other two axes. When the Woodman told the story
to his companions, one of these was filled with envy of his good
fortune and determined to try his luck for himself. So he went and
began to fell a tree at the edge of the river, and presently contrived
to let his axe drop into the water. Mercury appeared as before, and,
on learning that his axe had fallen in, he dived and brought up a
golden axe, as he had done on the previous occasion. Without waiting
to be asked whether it was his or not, the fellow cried, “That’s mine,
that’s mine,” and stretched out his hand eagerly for the prize: but
Mercury was so disgusted at his dishonesty that he not only declined
to give him the golden axe, but also refused to recover for him the
one he had let fall into the stream.

The moral of the story is “Honesty is the best policy.”

But is it?  In our world, we do not have fairies, Roman gods, good witches, fairy godmothers, wood sprites, or wizards to hold us accountable for our lies.  If George Washington never admitted that he chopped down the cherry tree, no wood nymph would have appeared, angered by his lie, only to throw his ax into the Potomac.

So who holds us accountable for lies?

As a Christian, I believe that I will be held accountable in my afterlife.  But, without getting too profound and soapbox-ish, I mean who…NOW…presently…in our lives…holds us accountable for lies?

Obviously, when we were children, our parents held us accountable.  Oh boy…the worst thing for me to hear growing up was for my father to say, “I am so disappointed in you.” 

What about the MCOs? Who or what holds the MCOs accountable? And what is this non-truth that the MCOs may or may not be telling providers that has spurred me to write this blog?

Recently, many MCOs have (1) terminated contracts with providers; (2) refused to renew contracts with providers; and (3) conducted desk reviews and interviews of providers only to decide to not contract with many providers; thus leaving many small businesses to bankruptcy and closure…not to mention severing the relationships between the Medicaid recipients and their providers.

It has come to my attention that, when the MCO is asked by a provider whether the provider can have a reconsideration review or whether the provider has any appeal rights as to the MCO’s adverse decision, that the MCOs are telling providers, “No.”  As in, you have no appeal rights as to the MCOs decision to not contract with you. 

This is simply not true.

There are so few providers in NC willing to accept Medicaid because of the administrative burden of Medicaid regulations and the already low reimbursement rates.  To then have the audacity to “willy nilly” or at its own whim subjectively decide that it [the MCO] does not want to contract with you and then tell you that its “willy nilly” or subjective whim cannot be challenged legally eats at the heart of this country’s core values.  Do we not applaud small business owners?  Do we not applaud those small business owners dedicated to serving the population’s most needy?  Do we not promote due process?  Do we not promote truth, justice and the American way?

Or are those promotions clouded when it comes to money, power, status, greed, and desire for respect?

So, I say to you [providers who have been denied a Medicaid contract with an MCO despite having a contract with the Department of Health and Human Services (DHHS) to provide Medicaid services throughout the state of North Carolina], YOU HAVE RIGHTS

You do not need to merely accept the decision of the MCO.  You do not need to simply close up shop…fire your staff…and try a new career.  You have a choice to fight…legally.

But you DO need to know a few things.

First, lawyers are expensive. Period and without question.  So whatever law firm you hire, understand that the cost will more than you ever expected.  (Please understand that I am not advocating you to hire my firm.  Parker Poe and Poyner Spruill both have fantastic attorneys in this area.  Just hire someone knowledgable.)  It’s even a good idea to have consultations with more than one firm.  Find an attorney you trust.

Second, call your liability insurance.  There is a chance that your liability insurance will cover all, or a portion of, your attorneys’ fees.  But do not allow your insurance company tell you whom to hire.  Because this area is specialized there are few attorneys well-versed.  Again, go to the firms I mentioned above.

Thirdly, you may not win.  While the success rate is extremely high, there are some clients who are simply not going to win.  For example, if your documentation is so poor.  Or, for example, you really are not a great provider.  Remember, the MCOs do have a point to try to only contract with great providers.  I only disagree with the way in which the MCOs are deciding to not contract with providers.  It seems “willy nilly” and subjectively arbitrary.  But, depending on your exact circumstances, you do have a chance of success.

Fourth, you will have to testify.  I know it is scary, but I can think of very few circumstances during which the provider would not testify.  The judge needs to hear your story….why you should be allowed to continue to provide Medicaid services.

Fifth, the lawsuit will not shield you from future issues with the MCO.  Until DHHS decides to actually supervise the MCOs properly (or maybe even after that), the MCOs seem to wield the power.

So why even fight legally?  You certainly aren’t guaranteed success.  It will certainly cost you a pretty penny. 

Maybe the answer for you is to not fight.  Only you can make that decision.  But I hope someone holds the MCOs accountable for telling providers that the providers have no recourse…no appeal rights…for the MCOs simply not contracting with the provider.

Because if honesty is the best policy, the MCOs’ policies leave much to be desired. Someone needs to throw their axes into the Potomac!

The Medicaid Investigations Division: Facing the Department of Justice’s Fraud Unit

Blog post written by Camden Webb, guest blogger and partner at Williams Mullen. (He is also the attorney that filed the NCTracks lawsuit with me).

profile image

It’s a heart-stopping moment, but it happens regularly: A Medicaid provider, who never had any problems with the State of North Carolina, receives a letter from the North Carolina Attorney General’s Medicaid Investigations Division, or “MID”, informing her that she is the subject of an investigation of Medicaid billing practices. The MID’s core mission is to investigate and prosecute health care fraud committed by Medicaid providers. If you receive a letter from MID, it is an extremely serious matter and can instantly change everything you. You need to know what MID is, how you might become the subject of an investigation, and what to do if you are.

What is MID? MID is a subdivision of the North Carolina Department of Justice that is tasked primarily with investigating Medicaid fraud. MID has two main divisions, civil and criminal. The civil division investigates cases in which a provider may have made a false statement in order to obtain reimbursement payments. The civil division uses special powers granted by the North Carolina False Claims Act to investigate providers, determine if there is enough evidence to show a false statement resulting in reimbursement payments from Medicaid, and thereafter file a civil lawsuit to recover the money.

MID’s criminal division employs prosecutors whose job is to investigate, file criminal charges against, and convict providers who have intentionally and willfully obtained reimbursement payments under false pretenses. The MID website itself describes Medicaid fraud to include circumstances in which providers intentionally bill Medicaid for services not actually provided, use an improper procedure code to bill for a higher priced service when a lower priced service was provided, bill for non-covered services by describing the services as covered services, misrepresent a patient’s diagnosis and symptoms and bill Medicaid for a service that is medically unnecessary, or falsifies medical records. Any such acts could result in criminal prosecution.

As a responsible Medicaid provider, you might conclude that you would never have to worry about an MID investigation. After all, MID is tasked with investigating fraud, and the vast majority of providers honestly and lawfully provide services and submit reimbursement requests for those services. However, the new reality in Medicaid is that many honest providers can and do find themselves dealing with an MID investigation. A prime example, which happens frequently, is when DHHS finds a “credible allegation of fraud” regarding the provider. One would conclude that a “credible allegation of fraud” would be limited to hard evidence that a provider intentionally obtained reimbursements based on false information or some other bad act. However, the Medicaid regulations define a “credible allegation of fraud” to include the results of claims data mining. In other words, a “credible allegation of fraud” can be based simply on a computer analysis of a provider’s billings to Medicaid, and this has indeed been the basis of DHHS’ referral of cases to MID for investigation. For this reason, a number of honest providers have indeed found themselves the subject of an MID investigation, having to contend with the difficulty that such an investigation brings.

There are several key things that providers must know about an MID investigation. If you find yourself the subject of such an investigation, keep the following in mind:

• The first and most important: get a lawyer. The stakes in an MID investigation are extremely high, to include the potential for conviction of a crime. Proceeding without advice of counsel is very risky. Everyone who is subject of an investigation has substantial and important rights, but it takes an expert in this area of the law (and not necessarily me or my firm) to competently advise someone who is the subject of an MID investigation.

Always remember that the State’s investigators and lawyers only work for the State. MID is staffed with competent, dedicated investigators and attorneys, and my dealings with them show that they are straightforward people. However, their job is to investigate fraud, and if you are the subject of an investigation, they have received information indicating that you may have committed fraud. You therefore should exercise caution when speaking with them, you are under no obligation to answer questions, and you certainly are under no such obligation without first hiring an attorney.

Ensure that all your records are properly preserved. Part of MID’s investigation will certainly be a request to inspect and copy your records related to Medicaid billing, such as patient files, employee timesheets, records relating to claims submissions, and contracts with service providers. Any loss of such records will have to be explained, and if a loss occurs after a provider has received notice of an investigation, the provider could be accused of having destroyed records. It is therefore crucial that you preserve your records, both the ones on paper and the electronic data containing relevant information.

Do not discuss the investigation or your Medicaid billing practices with anyone except your lawyer. Because you are the subject of an investigation that is based on information that may indicate you committed fraud, you must be careful about what you say. If you discuss matters with anyone but your lawyer, those persons could be compelled to testify about what you said, and it is not uncommon for someone to misquote, misunderstand, or otherwise misreport what someone has said. Speaking only with your lawyer is the safest course.

• Finally, be patient with the process. Being the subject of an MID investigation is stressful and frustrating, but MID currently is backlogged with a huge number of cases. This means that it will take time for the investigation to conclude. Expert counsel can help you through this process, but recognize that it will take a long time for it to conclude.

North Carolina Has a New Medicaid Director!!! Careful, It’s a Hot Seat!

Dr. Robin Gary Cummings was named the new state Medicaid director today.

Dr. Cummings, a former cardiovascular surgeon, had been serving as the Acting State Health Director.  He ceased pursuing surgery in 2004.

Interestingly, if you go the NC American Indian Health Board (found here), according to the website, Dr. Cummings is currently serving as the Medical Director for Community Care of the Sandhills. Obviously, Community Care of the Sandhills (CCS) is one of 14 non-profit organizations participating in the Community Care of NC (CCNC).   CCS is covers Medicaid for Harnett, Hoke, Lee, Montgomery, Moore, Richmond, and Scotland counties. 

However, when you go to CCS’ website, and click on “staff,” then, using the drop-down box, click on “leadership,” the Medical Director is Dr. William Stewart.  So, obviously, Dr. Cummings has served in the past as the Medical Director for CCS.

After a bit more research, it appears that Dr. Cummings left CCS this past July 2013, when Sec. Wos appointed Dr. Cummings as the Acting State Health Director in lieu of Dr. Laura Gerald’s resignation.  If you remember, Dr. Gerald’s resignation was unexpected and Sec. Wos gave no reason for Dr. Gerald’s resignation.  Sec. Wos announced that Dr. Cummings would be taking Dr. Gerald’s place the very same day that Sec. Wos announced the resignation of Dr. Gerald.

So my question is this:

Why was Dr. Gerald replaced immediately by Dr. Cummings as the Acting State Health Director, while Carol Steckel resigned back in September 2013 and is being replaced by Dr. Cummings 4 1/2 months after Steckel’s resignation?

We haven’t had a State Medicaid Director (officially) for 4 1/2 months.  Sandy Terrell stepped up as the temporary Medicaid Director.  And we know Sec. Wos and team has been actively searching for new Medicaid Director.

In fact, the February 11, 2014, agenda (today) for the Joint Legislative Oversight Committee on Health and Human Services shows as its 11th topic, “Ideas to Address Staffing Concerns and Update on Medicaid Director Search.”  Which tells me that there was little to no forewarning as to the appointment of Dr. Cummings.

Why?

It would be one thing if, after 4 1/2 months, Sec. Wos announced that the new State Medicaid Director was ____, someone from outside NC with excellent experience.  She didn’t want to announce that _____ was coming to NC prematurely because it was confidential and ____ did not want the public to know prior to a final decision.

But Cummings?

He has been working in NC Medicaid since 2004.  He has served as the Acting State Health Director.  Obviously, he was not hard to find.  Obviously, Sec. Wos had contact with Dr. Cummings way back in September 2013.  So why not appoint Dr. Cummings as the State Medicaid Director back in September 2013?  Why wait 4 1/2 months?  And announce his appointment the same day as the February 11, 2014, Joint Legislative Oversight Committee on Health and Human Services meeting?  It just seems odd…

Maybe he refused the appointment back in September 2013.  Maybe it took Sec. Wos 4 1/2  months to convince him to take the challenge.  Because, come on, folks, Dr. Cummings has just elected to place himself in one of the hottest public seats in the state…and I mean scorching!  Remember my blog: “Wanted: North Carolina Medical Director: Transparent and Open!”

Regardless the reason for the delay, it is encouraging that we have a new State Medicaid Director.  I am sure Dr. Cummings is fully aware of the current disarray of the NC Medicaid system.  So, even knowing the turmoil of our current Medicaid system and how daunting his task will be, Dr. Cummings still chose to accept the appointment to the State Medicaid Director position.  And, for that, I say “Bravo!”  And “Good luck!”  And “We really hope you are successful!”

But, gracious, that seat will be hot!

NC Medicaid: Freedom of Choice of Providers? Why Bother? Providers Are Fungible!…Right?

I found some interesting language in the 1915(b) Waiver last week (well, interesting to me).

What is the 1915(b) Waiver? In the simplest of terms, with the 1915(b) Waiver, NC has asked the federal government for an exception to certain mandatory statutes.  In order to request the exception or “waiver” of certain federal statutes, NC had to draft our 1915(b) Waiver and promise the federal government that, despite the fact that NC is not following certain federal statutes, that certain things about Medicaid will not change.  Even though we may have waived the federal statute requiring it.

For example, in our 1915(b) Waiver, NC asks to waive Medicaid recipients’ “freedom of choice of provider” provision.  As in, federal statute requires the states to allow a Medicaid recipient to have the freedom to choose whatever or whomever provider that recipient desires.  (Kind of like…”You like your doctor? You can keep your doctor!”)

Well, NC had to waive the freedom of choice of provider because the MCOs in NC are jurisdictional.  For example, if Dr. Norwood provides Medicaid services in Durham, there is no reason that she should have to contract with Smokey Mountain Center (SMC).  And because Dr. Norwood does not contract with SMC, a Medicaid recipient cannot choose to receive services from Dr. Norwood, which, obviously, limits Medicaid recipients’ freedom of choice of provider.

The thinking behind the waiver of Medicaid recipients’ freedom of choice of provider is that (in my opinion), realistically, even if we did not waive the provision mandating the freedom of choice of provider, how likely is it that a Medicaid recipient residing in Asheville would choose to receive services from a Medicaid provider in Durham, NC? Most likely, the Medicaid recipients in Asheville have never heard of the Medicaid providers in Durham.  So…waive the freedom of choice….it’s harmless.

However, in order for the feds to allow this waiver of the freedom of choice of provider, NC had to promise something.

Our promise is found in the 1915(b) Waiver.  The language of our promise reads, ”

1915(b)

Why is this important?

Because it is not true.  Our promise that we made to the federal government in order for the federal government to allow us to implement our managed care system for our mental health, substance abuse, and developmentally disabled population is not true.

“These providers support this initiative and consumers have at least as much choice in individual providers as they had in the pre-reform non-managed care environment.”

If the Waiver were Pinocchio, its nose would be circling the earth.

It reminds me of my grandma.  Grandma is the sweetest, most wonderful grandma in the world.  She and my grandpa lived in a home in Cary, NC for over five decades.  When grandpa passed and grandma’s health began to decline, grandma decided to sell her home and move into an assisted living facility.  Well, grandma’s home was near and dear to all 5 children’s hearts, as well as all 15+ grandchildren’s hearts (I know…I have a huge family).  I, personally, had so many wonderful memories there (fishing in the lake behind the house, playing pool and ping-pong in the basement, climbing up and down the laundry chute acting as if it were a secret passage way, and grandpa’s amazing tomato sandwiches, gumbo and cornbread).

Anyway, the point is that when grandma sold the house, there was a stipulation in the contract.  The buyer promised to not bulldoze the house and build a new home.  You see, this neighborhood was old…one of the oldest in Cary.  So the homes were built in the 70s.  It had become “posh” to buy an older home in this neighborhood because the lots were so large and the location was so great and to simply flatten the old house for a new one.

Well, grandma wouldn’t have it.  There was too much nostalgia in the home for some buyer to bulldoze the home.  So the contract to sell the house stipulated that the buyer would not bulldoze the house.  So grandma sold the home.

And the buyer bulldozed the home.

Of all the low-down, dirty tricks!!! To lie in a contract to my grandma! Needless to say, grandma was very upset.  She felt that a piece of her life vanished, which, obviously, it did.

Well, grandma has a number of attorneys in the family (including me).  So grandma’s kids began to talk about a lawsuit.  But grandma said that even if she sued the buyer that it would not bring back the house.  Money could not replace the memories at grandma’s house.

If I am remembering correctly, this new house was built 5-6 years ago. Maybe more.  I pass the neighborhood all the time.  To date, I still have not driven to see the house that replaced grandma’s house.  I don’t think I could take it.

What is worse than lying to a grandmother about her home?

In my opinion? Lying to the feds about the freedom of choice of Medicaid provider that our Medicaid recipients have here in NC.  Talk about a vulnerable population…our most needy citizens, but add to the vulnerability mental health issues, substance abuse issues, and/or developmentally disablement.  And, now, let’s lie about their freedom of choice.

So where am I getting my allegation that Medicaid recipients do not have “at least enough choice in individual providers as they had in pre-reform non-managed care?”

Normally I only blog as to facts that I can corroborate with some research.  However, this blog may not be corroborated by any independent research.  My allegation is based on my own experience as a Medicaid attorney, conversations with my clients, emails that I have received from providers across the state, memos I have read from the MCOs, and the very real fact that the MCOs are terminating (or not renewing) hundreds of provider contracts across the state.

For the sake of argument, let’s say I am right.  That Medicaid recipients do not have at least the same freedom of choice of provider as pre-MCOs.  What then?

If I am right, this is the situation in which we find ourselves today.  So what is happening today?

As the MCOs determine that fewer providers are needed within a catchment area, the MCOs are refusing to contract with “redundant and unnecessary” providers.  But are these providers really unnecessary?  Really redundant?  Are we to believe that mental health providers are fungible?  Meaning that one provider is just as good as the next…that nothing makes some provider “stick out?”  Are providers fungible like beach balls are fungible?

Let’s test that theory.

Abby is a suicidal teenager.  She has suffered from schizophrenia with auditory hallucinations since she was a child.  For the last six years, Abby has seen Dr. Norwood.  It took some time, but, eventually, Abby began to trust Dr. Norwood.  Dr. Norwood has developed a close relationship with Abby, even telling Abby to call her 24 hours a day, 7 days a week if she is in crisis.  Dr. Norwood resides in Durham, so Alliance Behavioral Healthcare (Alliance) is her MCO, and Dr. Norwood provides Abby with outpatient behavioral therapy (OBT).  But, in addition to the weekly therapy, Dr. Norwood also provides Abby with a sense of security.  Abby knows that, if needed, Dr. Norwood would be there for here under any circumstances.  In addition, Abby trusts Dr. Norwood because she is a female.  Abby has an intense distrust of males.  When Abby was 9, her step-father raped her over and over until child protective services stepped in, but not before Abby suffered 8 broken bones and has lost the ability to reproduce forever.

Then, Alliance held its RFPs a couple of months ago.  It’s “tryout.”

And Dr. Norwood was not awarded a contract with Alliance.  Dr. Norwood has no idea why Alliance did not award her a contract.  Only that, according to Alliance, Alliance has sufficient number of providers providing OBT within its catchment area and Dr. Norwood’s services are no longer needed.

Because mental health care providers are fungible, right?

Who cares whether Abby receives services from Dr. Norwood? She can get the same exact services from a large corporation…we will call it “Triangle Counseling.” (BTW: If a Triangle Counseling really exists, I apologize.  This is a fictitious company made up for my example).  Triangle Counseling employs 25+ psychiatrists and 30+ counselors.  When a Medicaid recipient is referred to Triangle, Triangle assigns a psychiatrist and a counselor to the recipient.  Oh, and if, for some reason, the Medicaid recipients needs crisis help outside business hours, Triangle provides “tele-care” so the Medicaid recipient can speak to a computer screen on which a person can be seen by a counselor.

Abby is now hospitalized.  Dr. Norwood filed bankruptcy, lost her 30 year+ career, and is receiving monetary support from the state.

I ask you, if Alliance (or any other MCO) has terminated even one provider, hasn’t that MCO restricted Medicaid recipients’ freedom of choice of provider beyond what was contemplated by the Waiver?  Is the clause in our Waiver that “freedom of choice of provider will be the same as before the implementation of MCOs?,” truthful?  What if the MCO has terminated 10 provider contracts?  50?  100? 

Yet, in order to implement the MCO system, we promised the federal government in our 1915(b) Waiver that “consumers have at least as much choice in individual providers as they had in the pre-reform non-managed care environment.”

Fact or fiction?

Are providers fungible?  Because my grandma knows from experience, houses sure are not.

Black and Blue Medicaid Budgets, the ACA, and the Fear of the Unknown…

“The oldest and strongest emotion of mankind is fear, and the oldest and strongest kind of fear is fear of the unknown”  H.P. Lovecraft, “Supernatural Horror in Literature.”  I completely agree.  The unknown scares me way more than the known.

The unknown is what creates fear, right?  For example, my husband is scared of heights.  It is not the “heights” per se that scare him.  He says that when he is high up, he gets an abnormal and understandably disturbing sense to throw himself off the ledge.  He is scared, not of heights, but of his reaction to heights.  Similarly, remember when I had an anxiety attack while I repelled (fell without any control) down the 22-story Wells Fargo building to raise money for the Special Olympics?  To see my disastrous descend off of the Wells Fargo building, see my blog: “The Future of Managed Care in Medicaid and the Fear of the Unknown.”

But unknowns to a Medicaid budget can be disastrous.

For those of you who live in North Carolina, you probably got some snow last Wednesday.  I live in Raleigh, and we got about 3 inches.  My law firm was actually closed Wednesday. While I have to say that it takes a lot of snow to close a law firm (I mean, come on, think of how much money we lost by having a non-productive day.  Luckily, I work for a firm that cares more about the safety of its employees than the bottom line), I do live in the South.  And snow scares us (actually, not snow per se (we aren’t actually scared of the little white flakes), but the fear of the unknown…what can happen because of snow?)

A few weeks ago snow was in the forecast (not on the ground) and my daughter’s school closed.  Seriously, there was no snow, yet my daughter’s school was cancelled..  And Tuesday evening, the night before the Great Blizzard of 2014, the grocery store was slammed with people buying milk and bread (just in case we are stuck in our homes for weeks and could be on the brink of starvation due to the 3 inches of snow).  My husband, being the good southerner that he is, keeps our water running all night to prevent freezing pipes.  He also covers the vents outside with towels.

Needless to say our house was prepared for the snow.

But there are always unknowns.  Especially when it comes to Medicaid budgets.

Our unknowns regarding the Great Blizzard of 2014?  (1) No sled; and (2) Skinny, unpadded sleds = a bruised body.

We woke up Wednesday to 3 inches of snow and no sled.  And our 8-year-old was aching to sled.  How do we not have a sled? Hello…we are from the south.  It snows here maybe every 3 years.  So we run to Ace Hardware, because, according to my husband, it is family owned and run.  Ace had 4 sleds left (obviously other southerners were quicker to think of sleds than we).  Three of the sleds were very thin.  Almost like a towel, but more stiff and made of plastic.  One of the remaining sleds was thicker…a tad thicker than a boogey board with two yellow handles on each side.  Of course, my daughter chose the thicker one, leaving me with the skinny, unpadded sled.

We drove to Shelley Lake at which there is a VERY steep, almost, straight-down hill.  Seriously, I had to climb up on my knees because I couldn’t stand without sliding backward.  And, due to the skinny, unpadded sled, as I shot down the hill, I felt every bump…every jolt…every drop….on my knees, elbows and belly.  But it was fun, so we kept at it!  My daughter yelled, “Best day ever!” (Which made me smile ear to ear).

My other unknown?  Skinny, unpadded sleds equal a sore body with black and blue knees and elbows after 4-5 hours  of sledding (and climbing up the steep hill).  Again, chalk it up to me being a southerner.  Literally, the last time I sledded was when Madison was 4…the Great Blizzard of 2010….and I didn’t have a skinny, unpadded sled then.

So here I am today, writing this, but unable to cross my legs or wear skirts above my knees or people would think that….hmmmm…..what would people think if they saw my swollen, bruised knees?  That I jumped up and down on my knees?  That something fell on my knees?  That I fell on my knees?  That someone beat me up…but only my knees?  It is an odd thing to have bruised knees.  They are very difficult to explain.

So too are Medicaid budgets.  And Medicaid expenditures.  Something always comes up.  There is always grey (or black and blue).  And they are very difficult to explain.

Think about it…we expect our legislature to come up with how much we will spend the future year based on the past.  The General Assembly does not have a crystal ball (that I know of).  Yet we expect the budget to be correct, and we expect to not exceed the budget.  Otherwise we are over the budget.  And bruised.

Last year, 2013, State Auditor Beth Wood stated that we had exceeded the State Medicaid budget by hundreds of millions of dollars for at least three years running.  She estimated that going over the Medicaid budget by so much money cost the tax payers $1.2 billion.  But how can you budget medical necessity for Medicaid recipients?

Well, NC is asking the feds for permission to decrease Medicaid spending by freezing Medicaid reimbursement rates.  We have approximately 10 or more requests to the Center for Medicare and Medicaid Services (CMS) to freeze the Medicaid reimbursement rates for a range of Medicaid services. 

How else do we try to decrease Medicaid spending?  By hiring some managed care organizations (MCOs) to manage behavioral health and placing the risk of going over budget on the MCOs.  Hello, people, rationally, how do you think that the risk-based model will be implemented by the MCOs.  Surely the MCOs will be happy to have lots of providers in their catchment areas and happy to have lots of recipients so the MCO can pay out lots of money and receive little-to-no profit.  And we live in Disneyland, and all the animals help us clean our homes!

The concept of MCOs managing behavioral health is not inherently bad.  The WAY in which NC implemented MCOs and the pay-structure IS inherently bad.  Even CMS agrees with me.  See my blog: “CMS Declares the Payment Structure for the MCOs Violates A-87…”So what Happens Now?”

So, besides freezing reimbursement rates and outsourcing risk, how else could we manage Medicaid costs?

DECREASE ADMINISTRATIVE COSTS.

Medically necessary Medicaid services should not be decreased.  Reimbursement rates should be raised, not slashed.  Medicaid providers should have the incentive to accept Medicaid, not the converse.

Decreasing administrative costs accomplishes decreasing Medicaid expenditures without harming the medically necessary Medicaid services to Medicaid recipients.

On the national level, between 2010 and 2011, total Medicaid expenditures increased by 6.4%.  However, in 2012, the federal Health and Human Services Department (HHS) estimates that Medicaid expenditures will increase only 1.1%.  HHS opines that the slower growth of Medicaid expenditures is because of States’ efforts to limit growth in light of budget constraints and the knowledge that the States will be liable for more Medicaid recipients (if such state expands) after the temporary federal matching reimbursement under the Affordable Care Act (ACA).  In other words, we are spending less on Medicaid services.

Just to  get perspective on how important Medicaid is to our overall budget and tax dollars, total Medicaid spending in 2011 was $432.4 billion with the feds paying $275.1 billion or 64% and the states paying $157.3 billion or 36%.  That is a lot of tax dollars!

In 2011, nationally, administration costs increased from 2010 by 8.7%.  This increase in the highest percentage increase in administrative costs since 2003.

And North Carolina’s administrative spending is abnormally high.

Back in October 2013, our State Auditor Beth Wood was quoted saying, “The administrative spending for the state’s Medicaid program is 38 percent higher than the average of nine states with similarly sized Medicaid programs,” Wood maintained. “While those states on average have administrative costs of 4.5 percent, the state of North Carolina spent over 6 percent of its total budget on administrative cost. In real dollars that means that the state is spending $180 million more than the average of our peer states.”

$180 million more than peer states spent on administrative costs…not services to Medicaid recipients…not reimbusements to providers accepting Medicaid….just for administrative costs.

On a national level, Medicaid administrative costs are only expected to increase.

Over the next 10 years, Medicaid expenditures are projected to increase at an average annual rate of 6.4% and to reach $795.0 billion by 2021.  Average enrollment is projected to increase at an average annual rate of 3.4% over the next 10 years and to reach 77.9 million in 2021.  See CMS report.

 Because of the ACA , Medicaid expenditures are expected to increase by a total of $514 billion from 2012 through 2021.  See id.

Nationally, Medicaid spending on program administration totaled $20.2 billion in 2011—$11.4 billion in Federal expenditures and $8.9 billion in State spending.  See id.

Total Medicaid expenditures grew slightly faster in 2011 than in 2010, at a rate of 6.4 percent. Expenditures on benefits grew somewhat more slowly (6.3 percent) than in 2010, but administration expenditures increased at the fastest rate since 2003 (8.7 percent).  See id.

The point?

Each year we have more citizens who qualify for Medicaid.  Because of the ACA, we have the largest increase in the number of Medicaid recipients, quite possibly, ever in the history of Medicaid, except maybe during its inception.

Yet, the number of providers willing to accept Medicaid is not rising.  “The average rate of acceptance among family physicians, dermatologists, cardiologists, orthopedic surgeons and obstetrician/gynecologists in all 15 markets surveyed was 45.7 percent last year, according to data gathered from nearly 1,400 medical offices last year.”  “The 2014 survey showed a drop from 55.4 percent acceptance in 2009.”  See 2014 Survey by Merritt Hawkins.

Here is the formula:

More Medicaid recipients + Higher administrative costs + Fewer providers accepting Medicaid = Catastrophe? Medicaid recipients not receiving the medically necessary services? The cost of administrating Medicaid takes away from medically necessary services to Medicaid recipients?

Black and blue Medicaid budgets?

Here in NC, we have opted to not expand Medicaid.  However, not expanding does not equal less Medicaid recipients (obviously it means less than had we expanded), but regardless of expansion, the number of Medicaid recipients increase every year.  Just like our general population grows.

While NC has not expanded, NC has not cut Medicaid administrative costs.  Instead, we are freezing reimbursement rates and allowing the MCOs to cut mental health services and terminate providers.  Yet, our Medicaid population continues to grow, despite not expanding Medicaid.  More and more providers are opting to not accept Medicaid.

“North Carolina spent over 6 percent of its total budget on administrative cost. In real dollars that means that the state is spending $180 million more than the average of our peer states.”  Beth Wood.

“We exceeded the State Medicaid budget by hundreds of millions of dollars for at least three years running.”

So what will become of our Medicaid state budget?  Will our budget get black and blue from unexpected bumps in the road?  Do we have a sled that is too skinny and unpadded?

The worst fear is the fear of the unknown.