Monthly Archives: November 2017

Hostile Takeover: Cardinal Usurped by DHHS! Any Possible Relief to Providers for Misconduct?

DHHS has ousted and taken over Cardinal Innovations!

And may I just say – Finally! Thank you, Sec. Cohen.

Cardinal is/was the largest of seven managed care organizations (MCOs) that was given the task to manage Medicaid funds for behavioral health care recipients. These are Medicaid recipients suffering from developmental disabilities, mental health issues, and substance abuse; these are our population’s most needy. These MCOs are given a firehose of Medicaid money; i.e., tax dollars, and were entrusted by the State of North Carolina, each individual taxpayer, Medicaid recipients, and the recipients’ families to maintain an adequate network of health care providers and authorize medically necessary behavioral health care services. Cardinal’s budget was just over $682 million in 2016. Instead, I have witnessed, as a Medicaid and Medicare regulatory compliance litigator, and have legally defended hundreds of health care providers who were unlawfully terminated from the MCOs’ catchment areas, refused a contract with the MCOs, accused of owing overpayments to the MCOs for services that were appropriately rendered. To the point that the provider catchment areas are woefully underrepresented (especially in Minority-owned companies), recipients are not receiving medically necessary services, and the MCOs are denying medically necessary services. The MCOs do so under the guise of their police power. For years, I have been blogging that this police power is overzealous, unsupervised, unchecked, and in violation of legal authority. I have blogged that the MCOs act as the judge, jury, and executioner. I  have also stated that the actions of the MCOs are financially driven. Because when providers are terminated and services are not rendered, money is not spent, at least, on the Medicaid recipients’ services.

But, apparently, the money is spent on executives. This past May, State Auditor Beth Wood wrote a scathing performance audit regarding Cardinal’s lavish spending on CEO pay as well as on expensive Christmas parties and board retreats, charter flights for executives and “questionable” credit card purchases, including alcohol. All of that, her report said, threatened to “erode public trust.” Cardinal’s former CEO Richard Topping made more than $635,000 in salary this year. On Monday (November 21, 2017), DHHS escorted Topping and three other executives out the door. But they did not walk away empty handed. Topping walked away with a $1.7 million severance while three associates left with packages as high as $740,000 – of taxpayer money!

This overspending on salaries and administration is not new. Cardinal has been excessively spending on itself since inception. This has been a long term concern, and I congratulate Sec. Cohen for having the “cojones” to do something about it. (I know. Bad joke. I apologize for the French/Spanish).

In 2011, Cardinal spent millions of dollars constructing its administrative facility.

cardinaloutside

cardinal4 Break Room

cardconference Conference Room

According to Edifice, the company that built Cardinal Innovations’ grand headquarters, starting in 2011, Cardinal’s building is described as:

“[T[his new three-story, 79,000-square-foot facility is divided into two separate structures joined by a connecting bridge.  The 69,000-square-foot building houses the regional headquarters and includes Class A office space with conference rooms on each floor and a fully equipped corporate board room.  This building also houses a consumer gallery and a staff cafe offering an outdoor dining area on a cantilevered balcony overlooking a landscaped ravine.  The 10,000-square-foot connecting building houses a corporate training center. Computer access flooring is installed throughout the facility and is supported by a large server room to maintain redundancy of information flow.” How much did that cost the Medicaid recipients in Cardinal’s catchment area? Seem appropriate for an agent of the government spending tax money for luxurious office space? Shoot, my legal office is not even that nice. And I don’t get funded by tax dollars!

In 2015, I wrote:

On July 1, 2014, Cardinal Innovations, one of NC’s managed care organizations (MCOs) granted its former CEO, Ms. Pam Shipman, a 53% salary increase, raising her salary to $400,000/year. In addition to the raise, Cardinal issued Ms. Shipman a $65,000 bonus based on 2013-2014 performance.

Then in July 2015, according to the article in the Charlotte Observer, Cardinals paid Ms. Shipman an additional $424,975, as severance. Within one year, Ms. Shipman was paid by Cardinal a whopping $889,975. Almost one million dollars!!!!

I have been blogging about MCO misconduct for YEARS. Seeblog, blog, blog, blog, and blog.

Now, finally, DHHS says Cardinal Innovations “acted unlawfully” in giving its ousted CEO $1.7 million in severance, and DHHS took over the Charlotte-based agency. It was a complete oust. One journalist quoted Cardinal as saying, “DHHS officials arrived at Cardinal “unexpectedly and informed the executive leadership team that the department is assuming control of Cardinal’s governance.”” Unexpected they say? Cardinal conducted unexpected audits all the time on their providers. But, the shoe hurts when it’s on the other foot.

The MCOs are charged with the HUGE  fiscal and moral responsibility, on behalf of the taxpayers, to manage North Carolina and federal tax dollars and authorize medically necessary behavioral health care services for Medicaid recipients, our population’s most needy. The MCOs in NC are as follows:

  1. Vaya Health
  2. Partners Behavioral Health Management
  3. Cardinal Innovations (formerly)
  4. Trillium Health Resources
  5. Eastpointe
  6. Alliance Behavioral Health Care
  7. Sandhills Center

The 1915 (b)(c) Waiver Program was initially implemented at one pilot site in 2005 and evaluated for several years. Two expansion sites were then added in 2012. The State declared it an immediate success and requested and received the authority from CMS to implement the MCO project statewide. Full statewide implementation is expected by July 1, 2013. The MCO project was intended to save money in the Medicaid program. The thought was that if these MCO entities were prepaid on a capitated basis that the MCOs would have the incentive to be fiscally responsible, provide the medically necessary services to those in need, and reduce the dollars spent on prisons and hospitals for mentally ill.

Sadly, as we have seen, fire hoses of tax dollars catalyze greed.

Presumably, in the goal of financial wealth, Cardinal Innovations, and, maybe, expectantly the other MCOs, have sacrificed quality providers being in network and medically necessary services for Medicaid recipients, Cardinal has terminated provider contracts. And for what? Luxurious office space, high salaries, private jets, and a fat savings account.

I remember a former client from over 5 years ago, who owned and ran multiple residential facilities for at-risk, teen-age boys with violent tendencies and who suffered severe mental illness. Without cause, Alliance terminated the client’s Medicaid contract. There were no alternatives for the residents except for the street. We were able to secure a preliminary injunction preventing the termination. But for every one of those stories, there are providers who did not have the money to fight the terminations

Are there legal recourses for health care providers who suffered from Cardinal’s actions?

The million dollar question.

In light of the State Auditor’s report and DHHS’ actions and public comments that it was usurping Cardinal’s leadership based on “recent unlawful actions, including serious financial mismanagement by the leadership and Board of Directors at Cardinal Innovations,” I believe that the arrows point to yes, with a glaring caveat. It would be a massive and costly undertaking. David and Goliath does not even begin to express the undertaking. At one point, someone told me that Cardinal had $271 million in its bank account. I have no way to corroborate this, but I would not be surprised. In the past, Cardinal has hired private, steeply-priced attorney regardless that its funds are tax dollars. Granted, now DHHS may run things differently, but without question, any legal course of action against any MCO would be epically expensive.

Putting aside the money issue, potential claims could include (Disclaimer: this list is nonexhaustive and based on a cursory investigation for the purpose of my blog. Furthermore, research has not been conducted on possible bars to claims, such as immunity and/or exhaustion of administrative remedies.):

  • Breach of fiduciary duty. Provider would need to demonstrate that a duty existed between providers and MCO (contractual or otherwise), that said MCO breached such duty, and that damages exist. Damages can include actual loss and if intent is proven, punitive damages may be sought.
  • Unfair and Deceptive Trade Practices. Providers would have to prove three elements: (1) an unfair or deceptive act or practice; (2) in or affecting commerce; (3) which proximately caused the injury to the claimant. A court will first determine if the act or practice was “in or affecting commerce” before determining if the act or practice was unfair or deceptive. Damages allowed are actual damages, plus treble damages (three times the actual damages).
  • Negligence. Providers would have to show (1) duty; (2) breach; (3) cause in fact; (4) proximate cause; and (5) damages. Actual damages are allowed for a negligence claim.
  • Breach of Contract. The providers would have to demonstrate that there was a valid contract; that the providers performed as specified by the contract; that the said MCO failed to perform as specified by the contract; and that the providers suffered an economic loss as a result of the defendant’s breach of contract. Actual damages are recoverable in a breach of action claim.
  • Declaratory Judgment. This would be a request to the Court to make a legal finding that the MCO failed to follow certain Medicaid procedures and regulations.
  • Violation of Article I, NC Constitution (legal and contractual right to receive payments for reimbursement claims due and payable under the Medicaid regulations.

To name a few…

EHR Incentive Payments: If the Practice is Accepting Them, There Better Be a Legal Assignment Contract!

Under the Medicare EHR incentive program, CMS makes incentive payments to individual providers, not to practices or groups. The same is true for Medicaid. According to CMS, the incentive payment is based on the provider’s meaningful use of the EHRs and does not constitute reimbursement for the expenses incurred in establishing EHRs. Prior to actual receipt of an incentive payment, a recipient may assign the payment to a third party, typically, the practice group of which the recipient is a member.

This is a question of equity. Legally, the incentive payments are made to physicians not practice groups. But if the facility bears the burden of the price tag of the computer software, which price tags are not nominal, shouldn’t the facility receive the incentive payments? CMS has made it clear that the incentive payments are not intended to subsidize the price of the software program and updates. Instead, the incentive payments are intended to reward the use of such computer software.

The facilities, generally, pay for the EHR incentive program software programs. Some programs can be as high as $50,000/month. And updated regulatory compliance is not guaranteed. See blog. Plus, the practice group can be held liable for non-compliance issues found in the EHR technology. If the facility is audited and any non-compliance is under-covered, most physicians will be indemnified by the facility for any alleged overpayment, and the facility will be on the hook for any alleged overpayment (depending on the employment relationship). This increased burden on the practice group is why many physicians assign their incentive payments to the facilities. But it has to be done in a legally compliant manner.

Recently, however, I have been contacted by multiple health care facilities which have accepted the EHR incentive payments on behalf of its employed physicians, but did not have adequate, legal assignment contracts to receive the EHR incentives on behalf of the providers. These facilities relied on old, outdated, generic, employment contracts as the basis for the facilities accepting these payments on behalf of the physicians. Not having appropriate assignment contracts with the physicians can make the facilities liable to the physicians for the money accepted on their behalf.

Generic employee contracts that simply state that the facility can bill for and receive reimbursements on behalf of the physicians do not constitute adequate legal authority to accept EHR incentive payments on behalf of physician-employees.

Facilities, in order to legally accept the incentive payments on behalf of their employee-physicians must (1) determine whether their physicians are eligible professionals; and (2) execute a legally binding assignment contract.

Eligible Professionals (“EPs”) must first determine whether they are exactly that – eligible professionals.

Eligibility

Eligible professionals under the Medicare EHR Incentive Program include:

  • Doctor of medicine or osteopathy
  • Doctor of dental surgery or dental medicine
  • Doctor of podiatry
  • Doctor of optometry
  • Chiropractor

Who is an Eligible Professional under the Medicaid EHR Incentive Program?

Eligible professionals under the Medicaid EHR Incentive Program include:

  • Physicians (primarily doctors of medicine and doctors of osteopathy)
  • Nurse practitioner
  • Certified nurse-midwife
  • Dentist
  • Physician assistant who furnishes services in a Federally Qualified Health Center or Rural Health Clinic that is led by a physician assistant.

To qualify for an incentive payment under the Medicaid EHR Incentive Program, an eligible professional must meet one of the following criteria:

  • Have a minimum 30% Medicaid patient volume*
  • Have a minimum 20% Medicaid patient volume, and is a pediatrician*
  • Practice predominantly in a Federally Qualified Health Center or Rural Health Center and have a minimum 30% patient volume attributable to needy individuals

* Children’s Health Insurance Program (CHIP) patients do not count toward the Medicaid patient volume criteria.

Eligible for Both Programs?

Eligible professionals eligible for both the Medicare and Medicaid EHR Incentive Programs must choose which incentive program they wish to participate in when they register. Before 2015, an EP may switch programs only once after the first incentive payment is initiated. Most EPs will maximize their incentive payments by participating in the Medicaid EHR Incentive Program.

EPs can switch programs as often as they desire–until they receive their first payment. After receiving their first payment, they may only switch once between programs prior to 2015.

If you are part of a practice, each eligible professional may qualify for an incentive payment if each eligible professional successfully demonstrates meaningful use of certified EHR technology. Each eligible professional is only eligible for one incentive payment per year, regardless of how many practices or locations at which he or she provide services.

Hospital-based eligible professionals are not eligible for incentive payments. An eligible professional is considered hospital-based if 90% or more of his or her services are performed in a hospital inpatient (Place Of Service code 21) or emergency room (Place Of Service code 23) setting.

What language needs to be included in any assignment contracts?

recent study by the American Hospital Association (AHA) found federal programs, including meaningful use, have cost health systems and post-acute care (PAC) providers nearly $39 billion a year. Small practices in particular have been hit hard by the added costs and administrative burden brought on by changing regulations. Studies have shown that small, specialty, non-hospital, facilities have carried the brunt of the financial burden for the EHR requirements.

Under the Medicaid incentive program, an EP may reassign incentive payments to “an entity promoting the adoption of certified EHR technology.” This term is defined as:

State-designated entities that are promoting the adoption of certified EHR technology by enabling oversight of the business, operational and legal issues involved in the adoption and implementation of certified EHR technology or by enabling the exchange and use of electronic clinical and administrative data between participating providers, in a secure manner, including maintaining the physical and organizational relationship integral to the adoption of certified EHR technology by eligible providers.

The Assignment Contract

At a minimum, the assignment language should address the following issues:

(1) Is the EP assigning all or a portion of the incentive payments to the facility? Be specific.

(2) Be clear on whether the facility or the EP must furnish the documentation necessary to establish meaningful use each year. In other words, denote who will be entering the data into the CMS or Medicaid website.

(3) Indicate whether the EP will consult with the facility  in order to determine which incentive program will yield the higher possible payments – or – whether the decision rests with the facility.

(4) The assignment language should state, accurately, whether the facility expects to be designated as an “entity promoting the adoption of certified EHR technology.”

(5) The contract should state, accurately, whether there is or will be a valid contractual arrangement allowing the facility to bill for the EP’s services. Basically, if there is already an employment contract in place, this assignment contract can act as an addendum or exhibit to the original employment contract.

(6) Define the term of assignment with a start date and an end date.

Only after the the facility determines that the physicians are eligible to receive the EHR incentive payments AND a valid assignment contract is executed, can the facility legally accept the incentive payments on behalf of its physicians. If the facility accepts the incentive payments and the physicians are not eligible, the facility will owe money to the government. If the facility accepts the incentive payments without an assignment contract, the physicians could demand the payments from the practice.

My Blog Named One of Nation’s Top 75 Health Care Blogs!

Recently, my blog was named one of the top 75 health care blogs in the nation!!! See here for all 75 blogs. Thank you to everyone who subscribes to this blog. I remember when I started the blog in 2012, I thought, “who in the world will find Medicare and Medicaid interesting?” Now, 5 years later, I have thousands of readers and national recognition. Who would’ve thought???

Top 75 BADGE

What if there are only 76 health care blogs in existence? Well, that would take the wind out of my sails.

Even if there are only 76 health care blogs in the nation, I am still humbled and grateful to be named one of the top 75 health care blogs.

Thank you!! And keep reading!

How Does OIG Target Provider Types for Audits and Who Needs to Worry?

Interestingly, how OIG and who OIG targets for audits is much more transparent than one would think. OIG tells you in advance (if you know where to look).

Prior to June 2017, the Office of Inspector General’s (OIG) OIG updated its public-facing Work Plan to reflect those adjustments once or twice each year. In order to enhance transparency around OIG’s continuous work planning efforts, effective June 15, 2017, OIG began updating its Work Plan website monthly.

Why is this important? I will even take it a step further…why is this information crucial for health care providers, such as you?

These monthly reports provide you with notice as to whether the type of provider you are will be on the radar for Medicare and Medicaid audits. And the notice provided is substantial. For example, in October 2017, OIG announced that it will investigate and audit specialty drug coverage and reimbursement in Medicaid – watch out pharmacies!!! But the notice also states that these audits of pharmacies for speciality drug coverage will not begin until 2019. So, pharmacies, you have over a year to ensure compliance with your records. Now don’t get me wrong… you should constantly self audit and ensure regulatory compliance. Notwithstanding, pharmacies are given a significant warning that – come 2019 – your speciality drug coverage programs better be spic and span.

Another provider type that will be on the radar – bariatric surgeons. Medicare Parts A and B cover certain bariatric procedures if the beneficiary has (1) a body mass index of 35 or higher, (2) at least one comorbidity related to obesity, and (3) been previously unsuccessful with medical treatment for obesity. Treatments for obesity alone are not covered. Bariatric surgeons, however, get a bit less lead time. Audits for bariatric surgeons are scheduled to start in 2018. Considering that 2018 is little more than a month away, this information is less helpful. The OIG Work Plans do not specific enough to name a month in which the audits will begin…just sometime in 2018.

Where do you find such information? On the OIG Work Plan website. Click here. Once you are on the website, you will see the title at the top, “Work Plan.” Directly under the title are the “clickable” subjects: Recently Added | Active Work Plan Items | Work Plan Archive.  Pick one and read.

You will see that CMS is not the only agency that OIG audits. It also audits the Food and Drug Administration and the Office of the Secretary, for example. But we are concerned with the audits of CMS.

Other targeted providers types coming up:

  • Telehealth
  • Security of Certified Electronic Health Record Technology Under Meaningful Use
  • States’ Collection of Rebates on Physician-Administered Drugs
  • States’ Collection of Rebates for Drugs Dispensed to Medicaid MCO Enrollees
  • Adult Day Health Care Services
  • Oversight of States’ Medicaid Information Systems Security Controls
  • States’ MCO Medicaid Drug Claims
  • Incorrect Medical Assistance Days Claimed by Hospitals
  • Selected Inpatient and Outpatient Billing Requirements

And the list goes on and on…

Do not think that if your health care provider type is not listed on the OIG website that you are safe from audits. As we all know, OIG is not the only entity that conducts regulatory audits. The States and its contracted vendors also audit, as well as the RACs, MICs, MACs, CERTs

Never forget that whatever entity audits you, YOU HAVE APPEAL RIGHTS!