Category Archives: Appeal Rights
What if you had to appeal traffic citations through the police officer who pulled you over before you could defend yourself before an impartial judge? That would be silly and a waste of time. I could not fathom a time in which the officer would overturn his/her own decision.
“No, officer, I know you claim that I was speeding, but the speed limit on Hwy 1 had just increased to 65. You were wrong when you said the speed limit was 55.”
“Good catch, citizen. You’re right; I’m wrong. Let’s just rip up this speeding ticket.”
Not going to happen.
The same is true when it comes to decisions by the Department of Health and Human Service (DHHS) to sanction or penalize a Medicaid provider based on alleged provider abuse (otherwise known as documentation errors). If DHHS determines that you owe $800,000 because your service notes are noncompliant, I am willing to bet that, upon its own reconsideration, the decision will be upheld. Asking for reconsideration review from the very same entity that decided the sanction or penalty is akin to doing something over and over and expecting different results (definition of insanity?).
But – are informal reconsideration reviews required by law to fight an adverse decision before you may appear before an administrative law judge?
The reason that you should care whether the reconsideration reviews are required by law is because the process is time consuming, and, often, the adverse determination is in effect during the process. If you hire an attorney, it is an expensive process, but one that you will not (likely) win. Generally, I am adverse to spending time and money on something that will yield nothing.
Before delving into whether reconsideration reviews are required by law, here is my caveat: This issue has not been decided by our courts. In fact, our administrative court has rendered conflicting decisions. I believe that my interpretation of the laws is correct (obviously), but until the issue is resolved legally, cover your donkey (CYA), listen to your attorney, and act conservatively.
Different laws relate to whether the adverse decision is rendered by the DHHS or whether the adverse decision is rendered by a managed care organization (MCO). Thus, I will divide this blog into two sections: (1) reconsiderations to DHHS; and (2) reconsiderations to an MCO.
Appealing DHHS Adverse Determinations
When you receive an adverse decision from DHHS, you will know that it is from DHHS because it will be on DHHS letterhead (master of the obvious).
10A NCAC 22F .0402 states that “(a) Upon notification of a tentative decision the provider will be offered, in writing, by certified mail, the opportunity for a reconsideration of the tentative decision and the reasons therefor. (b) The provider will be instructed to submit to the Division in writing his request for a Reconsideration Review within fifteen working days from the date of receipt of the notice. Failure to request a Reconsideration Review in the specified time shall result in the implementation of the tentative decision as the Division’s final decision.”
As seen above, our administrative code recommends that a Medicaid provider undergo the informal reconsideration review process through DHHS to defend a sanction or penalty before presenting before an impartial judge at the Office of Administrative Hearings (OAH). I will tell you, having gone through hundreds upon hundreds of reconsideration reviews, DHHS does not overturn itself. The Hearing Officers know who pay their salaries (DHHS). The reconsideration review ends up being a waste of time and money for the provider, who must jump through the “reconsideration review hoop” prior to filing a petition for contested case.
Historically, attorneys recommend that provider undergo the reconsideration review for fear that an Administrative Law Judge (ALJ) at OAH would dismiss the case based on failure to exhaust administrative remedies. But upon a plain reading of 10A NCAC 22F .0402, is it really required? Look at the language again. “Will be offered” and “the opportunity for.” And what is the penalty for not requesting a reconsideration review? That the tentative decision becomes final – so you can petition to OAH the final decision.
My interpretation of 10A NCAC 22F .0402 is that the informal reconsideration review is an option, not a requirement.
Now, N.C. Gen. Stat. 150B-22 states that “[i]t is the policy of this State that any dispute between an agency and another person that involves the person’s rights, duties, or privileges, including licensing or the levy of a monetary penalty, should be settled through informal procedures. In trying to reach a settlement through informal procedures, the agency may not conduct a proceeding at which sworn testimony is taken and witnesses may be cross-examined. If the agency and the other person do not agree to a resolution of the dispute through informal procedures, either the agency or the person may commence an administrative proceeding to determine the person’s rights, duties, or privileges, at which time the dispute becomes a “contested case.””
It is clear that our State’s policy is that a person who has a grievance against an agency; i.e., DHHS, attempts informal resolution prior to filing an appeal at OAH. Notice that N.C. Gen. Stat. 150B-22 is applicable to any dispute between “an agency and another person.” “Agency” is defined as “an agency or an officer in the executive branch of the government of this State and includes the Council of State, the Governor’s Office, a board, a commission, a department, a division, a council, and any other unit of government in the executive branch. A local unit of government is not an agency.”
Clearly, DHHS is an “agency,” as defined. But an MCO is not a department; or a board; or a commission; or a division; or a unit of government in the executive branch; or a council. Since the policy of exhausting administrative remedies applies to DHHS, are you required to undergo an MCO’s reconsideration review process?
Appealing an MCO Adverse Determination
When you receive an adverse decision from an MCO, you will know that it is from an MCO because it will be on the MCO’s letterhead (master of the obvious).
There is a reason that I am emphasizing the letterhead. It is because DHHS contracts with a number of vendors. For example, DHHS contracts with Public Consulting Group (PCG), The Carolina Center for Medical Excellence (CCME), HMS, Liberty, etc. You could get a letter from any one of DHHS’ contracted entities – a letter on their letterhead. For example, you could receive a Tentative Notice of Overpayment on PCG letterhead. In that case, PCG is acting on behalf of DHHS. So the informal reconsideration rules would be the same. For MCOs, on the other hand, we obtained a Waiver from the Center for Medicare and Medicaid Services (CMS) to “waive” certain rules and to create the MCOs. Different regulations apply to MCOs than DHHS. In fact, there is an argument that N.C. Gen. Stat. 150B-22 does not apply to the MCOs because the MCOs are not an “agency.” Confusing, right? I call that job security.
Are you required to undergo the MCO’s internal reconsideration review process prior to filing a petition for contested case at OAH?
Your contract with the MCO certainly states that you must appeal through the MCO’s internal process. The MCO contracts with providers have language in them like this:
Dispute Resolution and Appeals: “The CONTRACTOR may file a complaint and/or appeals as outlined in the LME/PIHP Provider Manual promulgated by LME/PIHP pursuant to N.C. Gen. Stat. 122C-151.3 and as provided by N.C. Gen. Stat. Chapter 108C.”
I find numerous, fatal flaws in the above section. Whoever drafted this section of the contract evidently had never read N.C. Gen. Stat. 122C-151.3, which plainly states in subsection (b) “This section does not apply to LME/MCOs.” Also, the LME/PIHP does not have the legal authority to promulgate – that is a rule-making procedure for State agencies, such as DHHS. The third fatal flaw in the above section is that the LME/MCO Provider Manual is not promulgated and certainly was not promulgated not pursuant to N.C. Gen. Stat. 122C-151.3, does not apply to LME/MCOs.
Just because it is written, does not make it right.
If N.C. Gen. Stat. 150B-22 does not apply to MCOs, because MCOs are not an agency, then the State policy of attempting to resolve disputes through informal methods before going to OAH does not apply.
There is no other statute or rule that requires a provider to exhaust an MCO’s internal review process prior to filing a petition for contested case.
What does that mean IN ENGLISH??
What it means is that the MCOs contract and provider manual that create an informal one or two-step reconsideration process is not required by law or rule. You do not have to waste your time and money arguing to the MCO that it should overturn its own decision, even though the reconsideration review process may be outlined in the provider manual or your procurement contract.
OAH has agreed…and disagreed.
In Person-Centered Partnerships, Inc. v. NC DHHS and MeckLINK, No. 13 DHR 18655, the court found that “[n]either the contractual provisions in Article II, Section 5.b of the Medicaid Contract nor MeckLINK’s “Procedures for implementation of policy # P0-09 Local Reconsideration Policy” states that reconsideration review is mandatory and a prerequisite to filing a contested case.”
In another case, OAH has held that, “[c]ontract provisions cannot override or negate the protections provided under North Carolina law, specifically the appeal rights set forth in N.C. Gen. Stat. Chapter 108C. Giesel, Corbin on Contracts § 88.7, at 595 (2011) (When the law confers upon an individual a right, privilege, or defense, the assumption is that the right, privilege or defense is conferred because it is in the public interest. Thus, in many cases, it is contrary to the public interest to permit the holder of the right, privilege, or defense to waive or to bargain it away. In these situations, the attempted waiver or bargain is unenforceable.”)” Essential Supportive Services, LLC v. DHHS and its Agent Alliance Behavioral Healthcare, No. 13 DHR 20386 (NCOAH) (quoting Yelverton’s Enrichment Services, Inc., v. PBH, as legally authorized contractor of and agent for N.C. Department of Health and Human Services, 13-CVS-11337, (7 March 2014)).
However, most recently, OAH ruled in the opposite way. A provider was terminated from an MCO’s catchment area, and we immediately filed a preliminary injunction to cease the termination. As you can see from the above-mentioned cases, OAH had not considered the reconsideration review mandatory. But, this time, the Judge found that the “contractual provision in [the MCO’s] contract with Petitioner, which provides for a local reconsideration review, is a valid and binding provision within the contract.”
So, again, the law is as clear as two and two adding up to five.
For now, when you are disputing an adverse determination by an MCO requesting a reconsideration review before going to OAH is a good CYA.
Going back to the traffic example at the beginning of the blog, my husband was pulled for speeding a few weeks ago. I was surprised because, generally, he does not speed. He is a usually conscientious and careful driver. When the officer came to his window, he was genuinely confused as to the reason for the stop. In his mind, he was driving 73 mph, only 3 miles over the speed limit. In fact, he had the car on cruise control. Turns out he confused the sign for HWY 70, as a speed limit sign. The speed limit was actually 55 mph.
We did not appeal the decision.
Hospital is shocked to learn that its Medicare contract with Health and Human Services may be terminated by April 16, 2017. Medicaid services may also be adversely affected. The hospital was notified of the possible Medicare contract termination on March 27, 2017, and is faced with conceivably losing its Medicare contract within a month of notification. Legal action cannot act fast enough – unless the hospital requests an emergency temporary restraining order, motion to stay, and preliminary injunction and files it immediately upon learning that its Medicare contract is terminated.
The Center for Medicare and Medicaid Services (CMS) threatened Greenville Memorial Hospital, part of Greenville Health System, in South Carolina, that Medicare reimbursements will cease starting April 16, 2017. According to CMS, Memorial’s emergency department is not compliant with Medicare regulations.
A public notice in the Greenville News says: “Notice is hereby given that effective April 15, 2017, the agreement between GHS Greenville Memorial Hospital, 701 Grove Road, Greenville, S.C. 29605 and the Secretary of Health and Human Service, as a provider of Hospital Services and Health Insurance for the Aged and Disabled Program (Medicare) is to be terminated. GHS Greenville Memorial Hospital does not meet the following conditions of participation. 42 CFR 482.12 Governing Body, 42 CFR 482.13 Patients’ Rights and 42 CFR 482.23 Nursing Services.”
“The Centers for Medicare and Medicaid Services has determined that GHS Greenville Memorial Hospital is not in compliance with the conditions of coverage. The Medicare program will not make payment for hospital services to patients who are admitted after April 16, 2017.”
The findings came after an onsite audit was conducted on March 13, 2017. Memorial was notified of the report on March 27, 2017.
Memorial must have submitted a corrective action plan by April 3, 2017, but it has not been released.
The emergency department at Memorial treats about 300 patients per day. An employee of Memorial estimates that the termination would lose net revenue from Medicare and Medicaid could potentially reach around $495 million. Greenville Memorial received $305 million in Medicare funding and $190 million from Medicaid in the most recent fiscal year, accounting for nearly six in 10 patients, officials said.
While CMS and Memorial refuse to discuss the details of the alleged noncompliance, CMS’ public notice cites three CFR cites: 42 CFR 482.12 Governing Body, 42 CFR 482.13 Patients’ Rights and 42 CFR 482.23 Nursing Services.
42 CFR 482.12 requires that hospitals have governing bodies and plans to follow Medicare regulations. Subsection (f) specifically requires that if a hospital has an emergency department that the hospital must follow 42 CFR 482.55 “Conditions of Participation,” which states that “The hospital must meet the emergency needs of patients in accordance with acceptable standards of practice.
(a) Standard: Organization and direction. If emergency services are provided at the hospital –
- The services must be organized under the direction of a qualified member of the medical staff;
- The services must be integrated with other departments of the hospital;
- The policies and procedures governing medical care provided in the emergency service or department are established by and are a continuing responsibility of the medical staff.
(b) Standard: Personnel.
- The emergency services must be supervised by a qualified member of the medical staff.
- There must be adequate medical and nursing personnel qualified in emergency care to meet the written emergency procedures and needs anticipated by the facility.”
The Memorial audit stemmed from a March 4, 2017, death of Donald Keith Smith, 48, who died as a result of traumatic asphyxiation. After an altercation, the patient was placed on a gurney, supposedly, face-down. South Carolina’s Department of Health and Environmental Controls Site Survey Agency investigated the hospital after the death and the audit found that hospital security officers improperly restrained Smith, strapping him face down to a gurney during an altercation, rendering him unable to breathe. The death was ruled a homicide.
Memorial terminated the security officers involved in the death.
Now the hospital is faced with its own potential death. The loss of Medicare and, perhaps, Medicaid reimbursements could financially kill the hospital. Let’s see what happens…
You are a provider, and you accept Medicare and Medicaid. You find out that the person with whom you contracted to provide extraction services for your dental patients has been upcoding for the last few months. -or- You discover that the supervisory visits over the past year have been less than…well, nonexistent. -or- Or your licensed therapist forgot to mention that her license was revoked. What do you do?
What do you do when you unearth a potential, past overpayment to you from Medicare or Medicaid?
Number One: You do NOT hide your head!
Do not be an ostrich. First, being an ostrich will have a direct correlation with harsher penalties. Second, you may miss mandatory disclosure deadlines, which will lead to a more in-depth, concentrated, and targeted audits by the government, which will lead to harsher penalties.
As for the first (harsher penalties), not only will your potential, monetary penalties leap skyward, but knowledge (actual or should have had) could put you at risk for criminal liability or false claims liability. As for increased, monetary penalties, recent Office of Inspector General (OIG) information regarding the self disclosure protocol indicates that self disclosure could reduce the minimum multiplier to only 1.5 times the single damages versus 2-10 times the damages without self disclosure.
As for the second (missing deadlines), your penalties will be exorbitantly higher if you had or should have had actual knowledge of the overpayments and failed to act timely. Should the government, despite your lack of self disclosure, decide to audit your billings, you can count on increased scrutiny and a much more concentrated, in-depth audit. Much of the target of the audit will be what you knew (or should have) and when you knew (or should have). Do not ever think: “I will not ever get audited. I am a small fish. There are so many other providers, who are really de-frauding the system. They won’t come after me.” If you do, you will not be prepared when the audit comes a’knocking on your door – and that is just foolish. In addition, never underestimate the breadth and scope of government audits. Remember, our tax dollars provide almost unlimited resources to fund thousands of audits at a time. Being audited is not like winning the lottery, Your chances are not one in two hundred million. If you accept Medicare and/or Medicaid, your chances of an audit are almost 100%. Some providers undergo audits multiple times a year.
Knowing that the definition of “knowing” may not be Merriam Webster’s definition is also key. The legal definition of “knowing” is more broad that you would think. Section 1128J(d)(4)(A) of the Act defines “knowing” and “knowingly” as those terms are defined in 31 U.S.C. 3729(b). In that statute the terms “knowing” and “knowingly” mean that a person with respect to information—(i) has actual knowledge of the information; (ii) acts in deliberate ignorance of the truth or falsity of the information; or (iii) acts in reckless disregard of the truth or falsity of the information. 31 U.S.C. 3729(b) also states that knowing and knowingly do not require proof of specific intent to defraud.
Number Two: Contact your attorney.
It is essential that you have legal counsel throughout the self disclosure process. There are simply too many ways to botch a well-intended, self disclosure into a casus belli for the government. For example, OIG allows three options for self disclosure; however, one option requires prior approval from OIG. Your counsel needs to maintain your self disclosure between the allowable, navigational beacons.
Number Three: Act timely.
You have 60-days to report and pay. Section 1128J(d)(2) of the Social Security Act requires that a Medicare or Medicaid overpayment be reported and returned by the later of (1) the date that is 60 days after the date on which the overpayment was identified or (2) the date any corresponding cost report is due, if applicable. See blog.
If you have a Medicare issue, please continue to Number Four. If your issue is Medicaid only, please skip Number Four and go to Number Five. If your issue concerns both Medicare and Medicaid, continue with Number Four and Five (skip nothing).
Number Four: Review the OIG Self Disclosure Protocol (for Medicare).
OIG publishes a Self Disclosure Protocol. Read it. Print it. Frame it. Wear it. Memorize it.
Since 2008, OIG has resolved 235 self disclosure provider cases through settlements. In all but one of these cases, OIG released the disclosing parties from permissive exclusion without requiring any integrity measures. What that means is that, even if you self disclose, OIG has the authority to exclude you from the Medicare system. However, if you self disclose, may the odds be ever in your favor!
Number Five: Review your state’s self disclosure protocol.
While every state differs slightly in self disclosure protocol, it is surprising how similar the protocol is state-to-state. In order to find your state’s self disclosure protocol, simply Google: “[insert your state] Medicaid provider self disclosure protocol.” In most cases, you will find that your state’s protocol is less burdensome than OIG’s.
On the state-side, you will also find that the benefits of self disclosure, generally, are even better than the benefits from the federal government. In most states, self disclosure results in no penalties (as long as you follow the correct protocol and do not hide anything).
Number Six: Draft your self disclosure report.
Your self disclosure report must contain certain criteria. Review the Federal Registrar for everything that needs to be included.
It is important to remember that you are only responsible for self disclosures going back six years (on the federal side).
Mail the report to:
330 Independence Avenue, Room 5527
Washington, DC 20201
Or you can self disclose online at this link.
Class Action Lawsuit Alleges Right to Inpatient Hospital Stays: Hospitals Are Damned If They Do…and Don’t!
Hospitals – “Lend me your ears; I come to warn you, not to praise RACs. The evil that RACs do lives after them; The good is oft interred with their appeals; So let it be with lawsuits.” – Julius Caesar, with modifications by me.
A class action lawsuit is pending against U.S. Health and Human Services (HHS) alleging that the Center for Medicare and Medicaid Services (CMS) encourages (or bullies) hospitals to place patients in observation status (covered by Medicare Part B), rather than admitting them as patients (covered by Medicare Part A). The Complaint alleges that the treatments while in observation status are consistent with the treatments if the patients were admitted as inpatients; however, Medicare Part B reimbursements are lower, forcing the patient to pay more out-of-pocket expenses without recourse.
The United States District Court for the District of Connecticut refused to dismiss the class action case on February 8, 2017, giving the legal arguments within the Complaint some legal standing, at least, holding that the material facts alleged warrant investigation.
The issue of admitting patients versus keeping them in observation has been a hot topic for hospitals for years. If you recall, Recovery Audit Contractors (RACs) specifically target patient admissions. See blog and blog. RAC audits of hospital short-stays is now one of the most RAC-reviewed issues. In fiscal year 2014, RACs “recouped” from hospitals $1.2 billion in allegedly improper inpatient claims. RACs do not, however, review outpatient claims to determine whether they should have been paid as inpatient.
On May 4, 2016, CMS paused its reviews of inpatient stays to determine the appropriateness of Medicare Part A payment. On September 12, 2016, CMS resumed them, but with more stringent rules on the auditors’ part. For example, auditors cannot audit claims more than the six-month look-back period from the date of admission.
Prior to September 2016, hospitals would often have no recourse when a claim is denied because the timely filing limits will have passed. The exception was if the hospital joined the Medicare Part A/Part B rebilling demonstration project. But to join the program, hospitals would forfeit their right to appeal – leaving them with no option but to re-file the claim as an outpatient claim.
With increased scrutiny, including RAC audits, on hospital inpatient stays, the class action lawsuit, Alexander et al. v. Cochran, alleges that HHS pressures hospitals to place patients in observation rather than admitting them. The decision states that “Identical services provided to patients on observation status are covered under Medicare Part B, instead of Part A, and are therefore reimbursed at a lower rate. Allegedly, the plaintiffs lost thousands of dollars in coverage—of both hospital services and subsequent skilled nursing care—as a result of being placed on observation status during their hospital stays.” In other words, the decision to place on observation status rather than admit as an inpatient has significant financial consequences for the patient. But that decision does not affect what treatment or medical services the hospital can provide.
While official Medicare policy allows the physicians to determine the inpatient v. observation status, RAC audits come behind and question that discretion. The Medicare Policy states that “the decision to admit a patient is a complex medical judgment.” Ch. 1 § 10. By contrast, CMS considers the determination as to whether services are properly billed and paid as inpatient or outpatient to be a regulatory matter. In an effort to avoid claim denials and recoupments, plaintiffs allege that hospitals automatically place the patients in observation and rely on computer algorithms or “commercial screening tools.”
In a deposition, a RAC official admitted that if the claim being reviewed meets the “commercial screening tool” requirements, then the RAC would find the inpatient status is appropriate, as long as there is a technically valid order. No wonder hospitals are relying on these commercial screening tools more and more! It is only logical and self-preserving!
This case was originally filed in 2011, and the Court of Appeals overturned the district court’s dismissal and remanded it back to the district court for consideration of the due process claims. In this case, the Court of Appeals held that the plaintiffs could establish a protected property interest if they proved their allegation “that the Secretary—acting through CMS—has effectively established fixed and objective criteria for when to admit Medicare beneficiaries as ‘inpatients,’ and that, notwithstanding the Medicare Policy Manual’s guidance, hospitals apply these criteria when making admissions decisions, rather than relying on the judgment of their treating physicians.”
HHS argues that that the undisputed fact that a physician makes the initial patient status determination on the basis of clinical judgment is enough to demonstrate that there is no due process property interest at stake.
The court disagreed and found too many material facts in dispute to dismiss the case.
Significant discovery will be explored as to the extent to which hospitals rely on commercial screening tools. Also whether the commercial screening tools are applied equally to private insureds versus Medicare patients.
Significant discovery will be explored on whether the hospital’s physicians challenge changing a patient from inpatient to observation.
Significant discovery will be explored as to the extent that CMS policy influences hospital decision-making.
Hospitals need to follow this case closely. If, in fact, RAC audits and CMS policy is influencing hospitals to issue patients as observation status instead of inpatient, expect changes to come – regardless the outcome of the case.
As for inpatient hospital stays, could this lawsuit give Medicare patients the right to appeal a hospital’s decision to place the patient in observation status? A possible, future scenario is a physician places a patient in observation. The patient appeals and gets admitted. Then hospital’s claim is denied because the RAC determines that the patient should have been in observation, not inpatient. Will the hospitals be damned if they do, damned if they don’t?
In the meantime:
Hospitals and physicians at hospitals: Review your policy regarding determining inpatient versus observation status. Review specific patient files that were admitted as inpatient. Was a commercial screening tool used? Is there adequate documentation that the physician made an independent decision to admit the patient? Hold educational seminars for your physicians. Educate! And have an attorney on retainer – this issue will be litigated.
“No person shall be held to answer for a capital or otherwise infamous crime unless on presentment or indictment of a grand jury, except in cases arising in the land or naval forces, or in the militia, when in actual service in time of war or public danger; nor shall any person be subject for the same offense to be twice put in jeopardy of life or limb; nor shall be compelled in any criminal case to be a witness against himself, nor be deprived of life, liberty, or property without due process of law; nor shall private property be taken for public use without just compensation.” U.S. Constitution, 5th Amendment (emphasis added).
The first ten amendments to the U.S. Constitution, or, the Bill of Rights, were written by James Madison (for whom my daughter Madison was named).
Our managed care organizations (MCOs) and the government take the irritating position that providers have no right to be a Medicaid provider. And, often they quote the NC Administrative Code, which states that “All provider contracts with the North Carolina State Medicaid Agency are terminable at will. Nothing in these Regulations creates in the provider a property right or liberty right in continued participation in the Medicaid program.” 10A NCAC 22F .0605. However, as every attorney knows, when there is a rule, there is an exception. And when there is a rule, case law overrides it.
Despite 10A NCAC 22F .0605, a intelligent judge found that “Alliance contends that [the provider] has no right to be a Medicaid provider and therefore this Court cannot find that [the provider]’s rights have been substantially violated by its decision. Alliance also argues that [the provider]’s rights are solely contractual in nature and once the contract expired, the [provider] had no rights.
This contested case is not merely a contract case as Alliance contends. This contested case is about Alliance’s almost total disregard for Federal and State laws and regulations and its own policies. Based on the evidence, the process for the RFP seems almost like it began on a whim—ostensibly to fix problems that had no basis in fact. The result was a flawed RFP in which providers which might otherwise be comparable were treated differently, based in significant part on a subjective review.” Carolina Comm. Support Serv., Inc. v. Alliance Behavioral Healthcare, 14 DHR 1500, April 2, 2015.
So how can you have a property right in a Medicaid contract when the NCAC states that the contracts are terminable at will?
“In determining whether a property interest exists a Court must first determine that there is an entitlement to that property. Cleveland Bd. of Educ. v. Loudermill, 470 U.S. 532 (1985). Unlike liberty interests, property interests and entitlements are not created by the Constitution. Instead, property interests are created by federal or state law and can arise from statute, administrative regulations, or contract. Bowens v. N.C. Dept. of Human Res., 710 F.2d 1015, 1018 (4th Cir. 1983). Under North Carolina case law, the Fourth Circuit Court of Appeals has determined that North Carolina Medicaid providers have a property interest in continued provider status. Bowens, 710 F.2d 1018. In Bowens, the Fourth Circuit recognized that North Carolina provider appeals process created a due process property interest in a Medicaid provider’s continued provision of services, and could not be terminated “at the will of the state.” The court determined that these safeguards, which included a hearing and standards for review, indicated that the provider’s participation was not “terminable at will.” Id. The court held that these safeguards created an entitlement for the provider, because it limits the grounds for his termination such that the contract was not terminable “at will” but only for cause, and that such cause was reviewable. The Fourth Circuit reached the same result in Ram v. Heckler, 792 F.2d 444 (4th Cir. 1986) two years later. Since the Court’s decision in Bowen, a North Carolina Medicaid provider’s right to continued participation has been strengthened through the passage of Chapter 108C. Chapter 108C expressly creates a right for existing Medicaid providers to challenge a decision to terminate participation in the Medicaid program in the Office of Administrative Hearings. It also makes such reviews subject to the standards of Article 3 of the APA. Therefore, North Carolina law now contains a statutory process that confers an entitlement to Medicaid providers. Chapter 108C sets forth the procedure and substantive standards for which OAH is to operate and gives rise to the property right recognized in Bowens and Ram. Under Chapter 108C, providers have a statutory expectation that a decision to terminate participation will not violate the standards of Article 3 of the APA. The enactment of Chapter 108C gives a providers a right to not be terminated in a manner that (1) violates the law; (2) is in excess of the Department’s authority; (3) is erroneous; (4) is made without using proper procedures; or (5) is arbitrary and capricious. To conclude otherwise would nullify the General Assembly’s will by disregarding the rights conferred on providers by Chapter 108C. This expectation cannot be diminished by a regulation promulgated by the DMA which states that provider’s do not have a right to continued participation in the Medicaid program because under the analysis in Bowen the General Assembly created the property right through statutory enactment.” Carolina Comm. Support Serv, Inc., at 22.
Again – how can you have a property right in a Medicaid contract when the NCAC states that the contracts are terminable at will? The answer is – You have a property right in your Medicaid contract. The state or MCOs cannot arbitrarily terminate your contract – regardless what they say. Know your rights!!
Happy New Year, readers!!! A whole new year means a whole new investigation plan for the government…
The Department of Health and Human Services (HHS) Office of Inspector General (OIG) publishes what is called a “Work Plan” every year, usually around November of each year. 2017 was no different. These Work Plans offer rare insight into the upcoming plans of Medicare investigations, which is important to all health care providers who accept Medicare and Medicaid.
For those of you who do not know, OIG is an agency of the federal government that is charged with protecting the integrity of HHS, basically, investigating Medicare and Medicaid fraud, waste, and abuse.
So let me look into my crystal ball and let you know which health care professionals may be audited by the federal government…
The 2017 Work Plan contains a multitude of new and revised topics related to durable medical equipment (DME), hospitals, nursing homes, hospice, laboratories.
For providers who accept Medicare Parts A and B, the following are areas of interest for 2017:
- Hyperbaric oxygen therapy services: provider reimbursement
- Inpatient psychiatric facilities: outlier payments
- Skilled nursing facilities: reimbursements
- Inpatient rehabilitation hospital patients not suited for intensive therapy
- Skilled nursing facilities: adverse event planning
- Skilled nursing facilities: unreported incidents of abuse and neglect
- Hospice: Medicare compliance
- DME at nursing facilities
- Hospice home care: frequency of on-site nurse visits to assess quality of care and services
- Clinical Diagnostic Laboratories: Medicare payments
- Chronic pain management: Medicare payments
- Ambulance services: Compliance with Medicare
For providers who accept Medicare Parts C and D, the following are areas of interest for 2017:
- Medicare Part C payments for individuals after the date of death
- Denied care in Medicare Advantage
- Compounded topical drugs: questionable billing
- Rebates related to drugs dispensed by 340B pharmacies
For providers who accept Medicaid, the following are areas of interest for 2017:
- States’ MCO Medicaid drug claims
- Personal Care Services: compliance with Medicaid
- Medicaid managed care organizations (MCO): compliance with hold harmless requirement
- Hospice: compliance with Medicaid
- Medicaid overpayment reporting and collections: all providers
- Medicaid-only provider types: states’ risk assignments
- Accountable care
Caveat: The above-referenced areas of interest represent the published list. Do not think that if your service type is not included on the list that you are safe from government audits. If we have learned nothing else over the past years, we do know that the government can audit anyone anytime.
If you are audited, contact an attorney as soon as you receive notice of the audit. Because regardless the outcome of an audit – you have appeal rights!!! And remember, government auditors are more wrong than right (in my experience).
When you have a Medicare appeal, it is not uncommon for the appeal process to last years and years – up to 3-6 years in some cases. There has been a backlog of approximately 800,000+ Medicare appeals (almost 1 million), which, with no change, would take 11 years to vet.
A Federal Court Judge says – that is not good enough!
Judge James Boasburg Ordered that the Medicare appeal backlog be eliminated in the following stages:
- 30% reduction from the current backlog by Dec. 31, 2017 (approximately a 300,000 case reduction within 1 year);
- 60% reduction from the current backlog by Dec. 31, 2018;
- 90% reduction from the current backlog by Dec. 31, 2019; and
- Elimination of the backlog of cases by Dec. 31, 2020;
A Medicare appeal has 5 steps. See blog. The backlog is at the Administrative Law Judge (ALJ) level – or, Level 3.
This backlog is largely attributable to the Medicare Recovery Audit Contractor (RAC) programs. In 2010, the federal government implemented the RAC program to recoup allegedly improper Medicare reimbursement payments. The RAC program (for both Medicare and Medicaid) has been criticized for being overly broad and burdensome and “nit picking,” insignificant paperwork errors. See blog.
While the RAC program has recovered a substantial sum of alleged overpayments, concurrently, it has cost health care providers an infinite amount of money to defend the allegations and has left Health and Human Services (HHS) with little funds to adjudicate the number of Medicare appeals, which increase every year. The number of Medicare appeals filed in fiscal year 2011 was 59,600. In fiscal year 2013, that number boomed to more than 384,000. Today, close to 1 million Medicare appeals stand in wait. The statutory adjudication deadline for appeals at the ALJ level is 90 days, yet the average Medicare appeal can last over 546 days.
The American Hospital Association (AHA) said – enough is enough!
AHA sued HHS’ Secretary Sylvia Burwell in 2014, but the case was dismissed. AHA appealed the District Court’s Decision to the Court of Appeals, which reversed the dismissal and gave the District Court guidance on how the backlog could be remedied.
Finally, last week, on December 5, 2016, the District Court published its Opinion and set forth the above referenced mandated dates for eliminating the Medicare appeal backlog.
While, administratively, the case was dismissed, the District Court retained “jurisdiction in order to review the required status reports and rule on any challenges to unmet deadlines.”
In non-legalese, the Court said “The case is over, but we will be watching you and can enforce this Decision should it be violated.”
This is a win for all health care providers that accept Medicare.
Knicole Emanuel Interviewed on Recent Success: Behavioral Health Care Service Still Locked in Overbilling Dispute with State
Last Thursday, I was interviewed by a reporter from New Mexico regarding our Teambuilders win, in which an administrative judge has found that Teambuilders owes only $896 for billing errors. Here is a copy of an article published in the Santa Fe New Mexican, written by Justin Horwath:
The true tragedy is that these companies, including Teambuilders, should not have been put out of business based on false allegations of fraud. Not only was Teambuilders cleared of fraud, but, even the ALJ agreed with us that Teambuilders does not owe $12 million – but a small, nominal amount ($896.35). Instead of having the opportunity to pay the $896.35 and without due process of law, Teambuilders was destroyed – because of allegations.
One of our clients in New Mexico had an alleged Medicaid recoupment of over $12 million!! Actually, $12,015,850.00 – to be exact. (See below). After we presented our evidence and testimony, the Judge found that we owe $896.35. I call that a win!
In this case, the Human Services Department (HSD) in New Mexico had reviewed 150 random claims. Initially, HSD claimed that 41 claims out of 150 were noncompliant.
But, prior to the hearing, we saved over $10 million by pointing out HSD’s errors and/or by providing additional documentation.
And then the ALJ’s decision after we presented our evidence and testimony –
Boom! Drop the mike…
…………………………….not so fast…
……………………………………………..picking the mike back up…
You see, in New Mexico, the administrative law judges (ALJs) cannot render decisions. Look in the above picture. You see where it reads, “Recommendation?” That is because the ALJs in New Mexico can only render recommendations.
Because Medicaid has a “single state agency” rule; i.e., that only one agency may render discretionary decisions regarding Medicaid, and HSD is the single state agency in New Mexico charged with managing Medicaid, only HSD may render a discretionary decision. So in NM, the ALJ makes a recommendation and then the Secretary of HSD has the choice to either accept or reject the decision.
Guess whether HSD accepted or rejected the ALJ’s recommendation?
Now we will have to appeal the Agency’s Decision to overturn the ALJ recommendation.
Here, in NC, we obtained a waiver from the Centers of Medicare and Medicaid Services (CMS) to allow our ALJs to render Decisions. See blog.
I still consider this a win.
“Always follow the Golden Rule. Always treat others how you want to be treated.”
What is so great about following rules? Do we have to follow all rules? What if other people do not follow the rules? What if the rules contradict? Are some rules more important than others?
The answer is – it depends.
When you sign your provider procurement agreement with NC to provide Medicaid services, there is a sentence in it that says, something to the effect, “The provider agrees to follow all applicable state and federal rules, laws, and regulations.” Yet, I am constantly shocked how many providers are completely oblivious to what are the “applicable state and federal rules, laws, and regulations” (although it does keep me in business).
The fact is, however, not all rules are created equal.
First, what is the difference between a policy, a regulation, and a law?
A law must be followed. If you break the law, you are punished. A regulation also must be followed; however, regulations are created by state agencies through a rule-making process. Usually, the public may comment on proposed regulations prior to being enacted.
On the other hand, a rule (that has not been formally adopted by the State) is policy or guidance. For example, the DMA Clinical Coverage Policies are rules or guidance. The Policies are not promulgated; i.e., they have not undergone the official rule-making process. Don’t get me wrong – you should follow the DMA Clinical Coverage Policies. My point is that a violation of a Clinical Coverage Policy will not/should not warrant the same punishment as violating a regulation or law.
Let’s think about this in a “real-life” hypothetical.
You receive a notice of overpayment in the amount of $450,000.00 because, allegedly, your service notes are signed electronically and you do not have an electronic signature policy.
There is no law or regulation that dictates that you must have an electronic signature policy. It is best practice to have an electronic signature policy. The Medicaid Billing Guide suggests that you maintain an electronic billing policy.
N.C. Gen. Stat. 150B sets forth the rule-making process. Any policy or rule that has not undergone the official rule-making process is considered nonbinding interpretative statements. N.C. Gen. Stat. 150B-18 states that “[a]n agency shall not seek to implement or enforce against any person a policy, guideline, or other nonbinding interpretative statement…if the statement has not been adopted as a rule in accordance with this Article.” (emphasis added).
Because there is no law or regulation requiring you to have an electronic signature policy, the State cannot punish you for not having one. In other words, the State cannot hold you to arbitrary criteria unless that criteria was formally adopted in the rule-making process.
How do you know if a policy or rule has been formally adopted?
Any policy or rule that is formally adopted will have a legal citation. For example, N.C. Gen. Stat 150B is a formal law. 10A NCAC 27G .0104 is a formal regulation – it is part of our administrative code. NC DMA Clinical Coverage Policies and the Medicaid Billing Guide are comprised of nonbinding, interpretative statements, as well as law and regulations. Usually, when a law or regulation is cited in the Policies or Billing Guide the formal, legal citation is also provided, but not always. I know, it’s confusing, yet extremely important.
You cannot and should not be punished for violating suggestions, policy, or nonbinding, interpretative statements. You should not be punished for not “treating others how you would like to be treated.” – That is not a law.
It is important to know the distinction because, apparently, those in charge of our Medicaid program, at times, do not.