Category Archives: Innocent Until Proven Guilty

Hospital May Lose Its Medicare Contract, Threatens CMS

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 –

  1. The services must be organized under the direction of a qualified member of the medical staff;
  2. The services must be integrated with other departments of the hospital;
  3. 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.

  1. The emergency services must be supervised by a qualified member of the medical staff.
  2. 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…

Health Care Fraud Liability: With Yates Fired – What Happens to the Memo?

“You’re fired!” President Trump has quite a bit of practice saying this line from The Apprentice. Recently, former AG Sally Yates was on the receiving end of the line. “It’s not personal. It’s just business.”

The Yates Memo created quite a ruckus when it was first disseminated. All of a sudden, executives of health care agencies were warned that they could be held individually accountable for actions of the agency.

What is the Yates Memo?

The Yates Memo is a memorandum written by Sally Quillian Yates, former Deputy Attorney General for the U.S. Dept. of Justice, dated September 9, 2015.

It basically outlines how federal investigations for corporate fraud or misconduct should be conducted  and what will be expected from the corporation getting investigated. It was not written specifically about health care providers; it is a general memo outlining the investigations of corporate wrongdoing across the board. But it is germane to health care providers.

See blog.

January 31, 2017, Sally Yates was fired by Trump. So what happens to her memo?

With Yates terminated, will the memo that has shaken corporate America that bears her name go as well? Newly appointed Attorney General Jeff Sessions wrote his own memo on March 8, 2017, entitled “Memorandum for all Federal Prosecutors.” it directs prosecutors to focus not on corporate crime, but on violent crime. However, investigations into potential fraud cases and scrutiny on providers appear to remain a top priority under the new administration, as President Donald Trump’s proposed budget plan for fiscal year 2018 included a $70 million boost in funding for the Health Care Fraud and Abuse Control program.

Despite Sessions vow to focus on violent crimes, he has been clear that health care fraud remains a high priority. At his confirmation, Sessions said: “Sometimes, it seems to me, Sen. Hirono, that the corporate officers who caused the problem should be subjected to more severe punishment than the stockholders of the company who didn’t know anything about it.” – a quote which definitely demonstrates Sessions aligns with the Yates Memo.

By law, companies, like individuals, are not required to cooperate with the Justice Department during an investigation.  The Yates Memo incentivizes executives to cooperate. However, the concept was not novel. Section 9-28.700 of the U.S. Attorneys’ Manual, states: “Cooperation is a potential mitigating factor, by which a corporation – just like any other subject of a criminal investigation – can gain credit in a case that otherwise is appropriate for indictment and prosecution.”

Even though Trump’s proposed budget decreases the Department of Justice’s budget, generally, the increase in the budget for the Health Care Fraud and Abuse Control program is indicative of this administration’s focus on fraud, waste, and abuse.

Providers accused of fraud, waste, or abuse suffer extreme consequences. 42 CFR 455.23 requires states to suspend Medicaid reimbursements upon credible allegations of fraud. The suspension, in many instances, lead to the death of the agency – prior to any allegations being substantiated. Just look at what happened in New Mexico. See blog. And the timeline created by The Santa Fe New Mexican.

When providers are accused of Medicare/caid fraud, they need serious legal representation, but with the suspension in place, many cannot afford to defend themselves.

I am “all for” increasing scrutiny on Medicare/caid fraud, waste, and abuse, but, I believe that due process protection should also be equally ramped up. Even criminals get due process.

The upshot regarding the Yates Memo? Firing Yates did not erase the Yates Memo. Expect Sessions and Trump to continue supporting the Yates Memo and holding executives personally accountable for health care fraud – no more hiding behind the Inc. or LLC. Because firing former AG Yates, did nothing to the Yates Memo…at  least not yet.

Former mental health providers take fight over Medicaid funds to lawmakers

Loyal followers will remember the behavioral health care debacle that happened in New Mexico in June 2013. See blog and blog and blog. Basically, the State of New Mexico accused 15 behavioral health care companies of credible allegations of fraud and immediately froze all the companies’ Medicaid reimbursements. These 15 companies comprised 87.5% of New Mexico’s behavioral health providers. The companies were forced to close their doors. Hundreds of people lost their jobs. Hundreds of thousands of Medicaid recipients no longer received their medically necessary mental health and substance abuse services. It really was and is such a sad tragedy.

Now, more than 3 years later, the consequences of that payment suspension still haunts those providers. Once they were exonerated of fraud by the Attorney General, the single state entity, Human Services Department (HSD), is now accusing them – one by one – of alleged overpayments. These alleged overpayments are extrapolated. So 10 claims for $600 turns into $2 million. See blog.

I will leave Saturday the 30th of July to fly to Albuquerque, NM, to defend one of those behavioral health care providers in administrative court. The trial is scheduled to last two weeks.

Below is a great article from today’s The Santa Fe New Mexican about this:

By: Justin Horwath
ALBUQUERQUE — Executives of three former mental health agencies told state lawmakers Wednesday that they are still fighting the state’s determination that they overbilled Medicaid, and they are expected to repay millions of dollars, even after they have been cleared of criminal wrongdoing.

“Three years after the fact, and we are still plodding through this,” Shannon Freedle, who was an executive with the now-defunct Teambuilders Counseling Services in Santa Fe, told lawmakers on the Health and Human Services Committee during a hearing in Albuquerque. He was referring to allegations in June 2013 against 15 mental health providers that led to a statewide Medicaid service shake-up.

Along with Freedle, executives of the Santa Fe-based Easter Seals El Mirador and Albuquerque-based Hogares Inc. testified about the New Mexico Human Services Department’s continued claims of Medicaid overpayments long after the state Attorney General’s Office announced it found no evidence that any of the providers had committed fraud and many of the firms have shut down.

Some of the providers, meanwhile, say the state’s former Medicaid claims contractor, OptumHealth New Mexico, still owes them millions of dollars in back payments for treating patients before the shake-up. A group of behavioral health providers, including Teambuilders, Easter Seals and Hogares, filed a lawsuit against OptumHealth in state District Court in June. OptumHealth also faces at least three other lawsuits filed this year, accusing it of Medicaid fraud.

State Rep. Bill O’Neill, D-Albuquerque, called the Human Services Department’s actions “outrageous on so many levels.”

Rep. Christine Trujillo, also an Albuquerque Democrat, called for the resignation of Human Services Department Cabinet Secretary Brent Earnest and for “criminal charges to be pressed because this isn’t human error anymore — this is actually criminal behavior.” She is the second member of the committee to call for Earnest to step down.

No Republicans on the bipartisan committee were at the presentation.

Earlier Wednesday — at a news conference in Albuquerque promoting the Martinez administration’s efforts to tackle New Mexico’s drug abuse epidemic — Gov. Susana Martinez made a rare public comment about the decision in June 2013 to freeze Medicaid payments to the 15 mental health providers on allegations they had defrauded Medicaid, the state and federal program that provides health care to low-income residents. The state brought in five Arizona firms to replace the New Mexico providers, but three of them have since left the state, citing financial losses

Martinez said the decision to freeze the Medicaid payments “was recommended by the federal government.”

“But the patients were continued to be serviced and their services were not interrupted,” she said, “unless they decided on their own that they wanted to not continue.”

Asked to clarify Martinez’s statement about the federal government’s role in the Medicaid payment freeze, Michael Lonergan, the governor’s spokesman, said in an email that Martinez was “referencing federal law, which calls for the state to suspend payments and investigate any credible allegations of fraud.”

Federal law gave the state the option to freeze Medicaid payments but didn’t require it.

Kyler Nerison, a spokesman for the Human Services Department, defended the agency’s efforts to pursue the return of funds allegedly overpaid to the former Medicaid providers, saying in an email that the “Attorney General’s limited review of the agencies that had their payments suspended found thousands of cases of billing errors and other regulatory violations.

“Medicaid dollars should be used to help the people who need it most, and if these politicians want to turn a blind-eye to that kind of waste and abuse, that’s solely on them,” Nerison said. “The Human Services Department will continue working to recoup the misspent and overbilled Medicaid dollars as we continue to help more New Mexicans than ever before in both Medicaid and behavioral health services.”

Freedle said he will attend a Human Services Department hearing next week to contest the agency’s claim that Teambuilders owes the state $2.2 million. At issue is the agency’s use of extrapolation to determine the figure of the alleged overbilling. The agency pointed to 12 allegedly errant claims Teambuilders had made to OptumHealth requesting Medicaid reimbursements worth a total of $728.

But Freedle said the Human Services Department used overpayments found in a small sample of claims and multiplied the amount by 3,000 to determine overbilling over a longer period of time, without proving such billing errors occurred. An investigation by the Attorney General’s Office, which found no evidence of criminal fraud, also found a smaller error rate.

Patsy Romero, CEO of Easter Seals El Mirador, and Nancy Jo Archer, who was the CEO of Hogares, broke down in tears as they described the Human Services Department’s “fair hearing process.”

“That’s really and truly an oxymoron,” Archer said.

Medicare Fraud: Do MCOs Have Accountability Too?

Dr. Isaac Kojo Anakwah Thompson, a Florida primary care physician, was sentenced in July 2016 to 4 years in prison and a subsequent two years of supervised release. Dr. Thompson pled guilty to health care fraud.  He was further ordered to pay restitution in the amount of $2,114,332.33. Ouch!! What did he do?

According to the Department of Justice, Dr. Thompson falsely reported that 387 of his clients suffered from ankylosing spondylitis when they did not.

Question: How does faking a patient’s disease make a physician money???

Answer: Hierarchal condition category (HCC) coding. Wait, what?

Basically, Medicare Advantage assigns HCC coding to each patient depending on the severity of their illnesses. Higher HCC scores equals substantially higher monthly capitation payments from Medicare to the managed care organization (MCO). In turn, the MCO will pay physicians more who have more extremely sick patients (higher HCC codes).

Ankylosing spondylitis is a form of arthritis that causes inflammation and damage at the joints; eventually, the inflamed spinal joints can become fused, or joined together so they can’t move independently. It’s a rare disease, affecting 1 in 1000 people. And, importantly, it sports a high HCC code.

In this case, the Office of Inspector General (OIG) found it odd that, between 2006-2010, Dr. Thompson diagnosed 387 Medicare Advantage beneficiaries with ankylosing spondylitis and treated them with such rare disease. To which, I say, if you’re going to defraud the Medicare system, choose common, fabricated diseases (kidding – it’s called sarcasm – I always have to add a disclaimer for people with no humor).

According to the Department of Justice, none or very few of Dr. Thompson’s 387 consumers actually had ankylosing spondylitis.

My issue is as follows: Doesn’t the managed care organization (MCO) share in some of the punishment? Shouldn’t the MCO have to repay the financial benefit it reaped from Dr. Thompson?? Shouldn’t the MCO have a duty to report such oddities?

Let me explain:

In Florida, Humana acted as the MCO. Every dollar that Dr. Thompson received was funneled through Humana. Humana would pay Dr. Thompson a monthly capitation fee from Medicare Advantage based on his patient’s hierarchal condition category (HCC) coding. Increasing even just one patient’s HCC code means more bucks for Dr. Thompson. Remember, according to the DOJ, he increased 387 patients’ HCC codes.

Dr. Thompson reported these diagnoses to Humana, which in turn reported them to Medicare. Consequently, Medicare paid approximately $2.1 million in excess capitation fees to Humana, approximately 80% of which went to Dr. Thompson.

In this case, it is reasonable to expect that Humana had knowledge that Dr. Thompson reported abnormally high HCCs for his patients. For comparison, ankylosing spondylitis has an HCC score of 0.364, which is more than an aortic aneurysm and three times as high as diabetes. Plus, look at the amount of money that the MCO paid Dr. Thompson. Surely, it appeared irregular.

What, if anything, is the MCO’s duty to report physicians with an abnormally high number of high HCC codes? If you have knowledge of someone committing a crime and you do nothing, isn’t that called aiding and abetting?

With the publication of the Yates memo, I expect to see CMS holding MCOs and other state agencies accountable for the actions of its providers. Not to say that the MCOs should actively, independently investigate Medicare/caid fraud, but to notify the Human Services Department (HSD) if abnormalities exist, especially if as blatant as one doctor with 387 patients suffering from ankylosing spondylitis.

The Yates Memo: It May Be the Second Coming for Individual Executives

The Yates memo? Sadly, we aren’t talking about William Butler Yates, who is one of my favorite poets:

TURNING and turning in the widening gyre
The falcon cannot hear the falconer;
Things fall apart; the centre cannot hold;
Mere anarchy is loosed upon the world,
The blood-dimmed tide is loosed, and everywhere
The ceremony of innocence is drowned;
The best lack all conviction, while the worst
Are full of passionate intensity.
Surely some revelation is at hand;
Surely the Second Coming is at hand…Part of The Second Coming

Ok, so maybe it is a little melodramatic to compare the Yates memo from the Office of the Deputy Attorney General to the end of the world, the drowning of innocence, and The Second Coming, but I made analogies in past blogs that had stretched and, dare I say, hyberbolized the situation.

What is the Yates memo?

The Yates memo is a memorandum written by Sally Quillian Yates, Deputy Attorney General for the U.S. Dept. of Justice, dated September 9, 2015.

It basically outlines how federal investigations for corporate fraud or misconduct should be conducted  and what will be expected from the corporation getting investigated. It was not written specifically about health care providers; it is a general memo outlining the investigations of corporate wrongdoing across the board. But it is germane to health care providers.

By far the most scary and daunting item discussed within the Yates memo is the DOJ’s interest in indicting individuals within corporations as well as the corporate entities itself, i.e., the executives…the management. Individual accountability.

No more Lehman Brothers fallout with former CEO Dick Fuld leaving the catastrophe with a mansion in Greenwich, Conn., a 40+ acre ranch in Sun Valley, Idaho, as well as a five-bedroom home in Jupiter Island, Fla.  Fuld may have or may not have been a player in the downfall of Lehman Brothers. But the Yates Memo was not published back in 2008.

The Yates Memo outlines 6 steps to strengthen audits for corporate compliance:

  1. To be eligible for any cooperation credit, corporations must provide to the DOJ all relevant facts about individuals involved in corporate misconduct.
  2. Both criminal and civil corporate investigations should focus on individuals from the inception of the investigation.
  3. Criminal and civil attorneys handling corporate investigations should be in routine communication with one another.
  4. Absent extraordinary circumstances, no corporate resolution will provide protection from criminal or civil liability for any individuals.
  5. Corporate cases should not be resolved without a clear plan to resolve related individual cases before the statute of limitations expires and declinations as to individuals in such cases must be memorialized.
  6. Civil attorneys should consistently focus on individuals as well as the company and evaluate whether to bring suit against an individual based on considerations beyond that individual’s ability to pay.

So why write about now – over 6 months after it was disseminated?

First, since its dissemination, a few points have been clarified that were otherwise in question.

About a month after its publication, U.S. Assistant Attorney General Leslie Caldwell emphasized the Yates memo’s requirement that corporations must disclose all relevant facts regarding misconduct to receive cooperation credit. Caldwell went so far to say that companies must affirmatively seek relevant facts regarding misconduct.

For example, Hospital X is accused of Medicare fraud, waste, and abuse (FWA) in the amount of $15 million. The Yates memo dictates that management at the hospital proactively investigate the allegations and report its findings to the federal government. The memo mandates that the hospital “show all its cards” and turn itself in prior to making any defense.

The problem here is that FWA is such a subjective determination.

What if a hospital bills Medicare for inplantable cardioverter defibrillator, or ICD, for patients that had coronary bypass surgery or angioplasty within 90 days or a heart attack within 40 days? What if the heart attack was never documented? What if the heart attack was so minor that it lasted under 100 milliseconds?

The Medicare National Coverage Determinations are so esoteric that your average Medicare auditor could very well cite a hospital for billing for an ICD even when the patient’s heart attack lasted under 100 milliseconds.

Yet, according to the Yates memo, the hospital is required to present all relevant facts before any defense. What if the hospital’s billing person is over zealous in detecting mis-billings? The hospital could very well have a legal defense as to why the alleged mis-billing is actually compliant. What about a company’s right to seek counsel and defend itself? The Yates memo may require the company to turn over attorney-client privilege.

The second point that has been clarified since the Yates’ memo’s publication came from Yates herself.

Yates remarks that there will be a presumption that the company has access to identify culpable individuals  unless they can make an affirmative showing that the company does not have access to it or are legally prohibited from producing it.

Why should this matter? It’s only a memo, right?

Since its publication, the DOJ codified it into the revised U.S. Attorneys’ Manual, including the two clarifying remarks. Since its inception, the heads of companies have been targeted.

A case was brought against David Bostwick, the founder, owner and chief executive officer of Bostwick Laboratories for  allegedly provided incentives to treating physicians in exchange for referrals of patients who would then be subjected to these tests.

When the pharmaceutical company Warner Chilcott was investigated for health care fraud prosecutors also went after W. Carl Reichel, the former president, for his alleged involvement in the company’s kickback scheme.

Prior to the Yates’ memo, it was uncommon for health care fraud investigations to  involve criminal charges or civil resolutions against individual executives.

The Second Coming?

It may feel that way to executives of health care companies accused of fraud, waste, and abuse.

Audits “Breaking Bad” in New Mexico: Part II

By: Edward M. Roche, the founder of Barraclough NY LLC, a litigation support firm that helps healthcare providers fight against statistical extrapolations.

In the first article in this series, we covered how a new governor of New Mexico recently came into power and shortly thereafter, all 15 of the state’s nonprofit providers for behavioral health services were accused of fraud and replaced with companies owned by UnitedHealthcare.

When a new team is brought in to take over a crisis situation, one might expect that things would improve. The replacement companies might be presumed to transfer to New Mexico newer and more efficient methods of working, and patient services would become better and more efficient. Out with the old, in with the new. The problem in New Mexico is that this didn’t happen – not at all.

The corporate structure in New Mexico is byzantine. UnitedHealth Group, Inc. is a Minnesota corporation that works through subsidiaries, operating companies and joint ventures to provide managed healthcare throughout the United States. In New Mexico, UnitedHealth worked through Optum Behavioral Health Solutions and United Behavioral Health, Inc. OptumHealth New Mexico is a joint venture between UnitedHealthcare Insurance Company and United Behavioral Health, according to the professional services contract signed with the State of New Mexico.

And that’s not all. OptumHealth is not the company providing the services. According to the contract, It was set up to act as a bridge between actual providers of health services and a legal entity called the State of New Mexico Interagency Behavioral Health Purchasing Collaborative. This Collaborative combines together 16 agencies within the state government.

OptumHealth works by using subcontractors to actually deliver healthcare under both Medicaid and Medicare. Its job is to make sure that all claims from the subcontractors are compliant with state and federal law. It takes payment for the claims submitted and then pays out to the subcontractors. But for this service, OptumHealth takes a 28-percent commission, according to court papers.

This is a nice margin. A complaint filed by whistleblower Karen Clark, an internal auditor with OptimumHealth, indicated that from October 2011 until April 2012, OptumHealth paid out about $88.25 million in Medicaid funds and got a commission of $24.7 million. The payments went out to nine subcontractors. Clark claimed that from Oct. 1, 2011 until April 22, 2013, the overall payouts were about $529.5 million, and the 28-percent commission was about $148.3 million.

In spite of the liberal flow of taxpayer money, things did not go well. Clark’s whistleblower suit, filed in the U.S. District Court for the District of New Mexico, claimed that OptumHealth knew of massive fraud but refused to investigate. Clark says she was eventually fired after she uncovered the malfeasance. It appears that even after learning of problems, OptumHealth kept billing away, eager to continue collecting that 28-percent commission.

Clark’s complaint details a number of problems in New Mexico’s behavioral health sector. It is a list of horrors: there were falsified records, services provided by unlicensed providers, use of improper billing codes, claims for services that never were provided, and many other problems. Allegedly, many client files contained no treatment plans or treatment notes, or even records of what treatments had been provided and s services billed for times when offices were closed. The suit also claims that some services were provided by probationers instead of licensed providers, and a number of bills were submitted for a person who was outside the United States at the time.

The complaint further alleges that one provider received $300,000 in payments, but had submitted only $200,000 worth of claims. When Clark discovered this she allegedly was told by her supervisor at OptumHealth that it was “too small to be concerned about”. It also is alleged that a) insight-oriented psychotherapy was billed when actually the client was being taught how to brush their teeth; b) the same services were billed to the same patient several times per month, and files were falsified to satisfy Medicaid rules; c) interactive therapy sessions were billed for patients who were non-verbal and unable to participate; d) individual therapy was claimed when group therapy was given; e) apart from Medicaid, other sources allegedly were billed for exactly the same services; and f) developmentally disabled patients were used to bill for group therapy from which they had no capacity to benefit. Clark also stated that investigations of one provider for false billing were suspended because they were “a big player in the state”.

Other alleged abuse included a provider that submitted claims for 15-20 hours per day of group therapy for 20 to 40 children at a time, and for numerous psychotherapy services never provided. The complaint also describes one individual provider that supposedly worked three days per week, routinely billing Medicaid for twelve 30-minute individual psychotherapy sessions; 12 family psychotherapy sessions; 23 children in group therapy; and 32 children in group interactive psychotherapy each day.

A number of other abuses are detailed in the complaint: a) some providers had secretaries prescribing medication; b) one provider claimed that it saw 30 patients each 90 minutes per day for psychotherapeutic treatment; c) some individuals allegedly submitted claims for 30 hours per day of treatment; and d) some facilities had no credentialed psychotherapist at any of its facilities. Remember that all of these subcontractors are providing behavioral (psychiatric and psychological) services. Clark found that others submitted bills claiming the services were performed by a medical doctor, but there were none at their facility.

And in one of the most stunning abuses imaginable, one provider allegedly diagnosed all of their patients as having autism. Clark believes this was done because it allowed billing under both medical and mental health billing codes.

These are only a few of the apparent problems we see in New Mexico’s behavioral services.

You would think that once all of this had been brought to light, then public authorities such as the state’s Attorney General’s office would be eager to investigate and begin to root out the abusers. But that isn’t what happened.

James Hallinan, a spokesman for that office, stated that “based on its investigation, the Office of the Attorney General determined it would be in the best interest of the State to decline to intervene in the case.”

While it was making this decision, Clark’s allegations remained under court seal. But now they can be shown.

Note:

(*) Hallinan, James, spokesman for Attorney General’s office, quoted by Peters, J. and Lyman, A. Lawsuit: $14 million in new Medicaid fraud ignored in botched behavioral health audits, January 8, 2016, NM Political Report, URL: http://nmpoliticalreport.com/26519/lawsuit-optumhealth-botched-audits-of-nm-providers/ accessed March 22, 2016.

This article is based on US ex rel. Karen Clark and State of New Mexico ex rel. Karen Clark and Karen Clark, individually vs. UnitedHealth Group, Inc., United Healthcare Insurance Company, United Behavioral Health, Inc., and OptumHealth New Mexico, Complaint for Damages and Penalties, United States District Court for the District of New Mexico, No. 13-CV-372, April 22, 2013 held under court seal until a few weeks ago.

New Federal Legislation Proposed to Increase Due Process for Health Care Providers!

Every once in a blue moon, I am actually happy with the actions of our government. One of these rare occasions occurred on March 17, 2016. Happy St. Patty’s Day!

On March 17, 2016, Senior Senator John Thune from South Dakota introduced S.2736: A bill to require consideration of the impact on beneficiary access to care and to enhance due process protections in procedures for suspending payments to Medicaid providers.

How many times have I blogged about the nonexistence of due process for Medicaid providers??? I cannot even count. (Well,I probably could count, but it take quite some time). My readers know that I have been complaining for years that the federal regulations consider Medicaid provider guilty until proven innocent. See blog. And blog.

Well, finally, someone in Congress has taken notice.What is really cool is that my team at my law firm Gordon & Rees was asked to provide some input for this bill…pretty cool! Although I have to say, everything that we proposed is not included in the proposed bill. Apparently, some of our suggestions were too “pro provider” and “didn’t stand a chance to be passed.” Who would have thought? Baby steps, I was informed.

The bill, if enacted, would require the Secretary of Health and Human Services (HHS) to revise the Code of Federal Regulations, specifically the Title 42 of the CFR.

Currently, 42 CFR 455.23 reads: “the State Medicaid agency must suspend all Medicaid payments to a provider after the agency determines there is a credible allegation of fraud for which an investigation is pending under the Medicaid program against an individual or entity unless the agency has good cause to not suspend payments or to suspend payment only in part.” (emphasis added). Rarely has a state agency found “good cause” to not suspend payments. In fact, quite the opposite. I have seen state agencies use this regulation harshly and with intent to put providers out of business.

S.2736 would revise the above-mentioned language and require that a state agency take certain steps to ensure due process for the provider prior to implementing a suspension in payments.

Prior to implementing a payment suspension, this proposed bill would require the state agency to:

  • Consult with the Medicaid fraud unit for the state and receive written confirmation of such a consultation; and
  • Certify that the agency considered whether beneficiary access would be jeopardized or whether good cause exists, in whole or in part (according to the new, proposed manner of determining good cause)

We all know that the above bullet points supply more protection than we have now.

Furthermore, there are protections on the back end.

After a suspension is implemented, at the beginning of each fiscal quarter, the state Medicaid agency must:

  • certify to the Secretary that it has considered whether the suspension of payments should be terminated or modified due to good cause (as modified by S.2736); and
  • if no good cause is found, furnish to the provider the reasons for such determination.

S.2736 allow requires the agency to disclose the specific allegations of fraud that is being investigated (after a reasonable amount of time) and to evaluate every 180 days whether good cause exists to lift the suspension. Regardless, good cause not to continue the suspension will be deemed to exist after 18 months (with some other qualifying details).

According to a government track website, this bill has a 8% chance of getting past committee. And a 3% chance of being enacted.

The stats on all bills’ “pass-ability,” is that only 15% of bills made it past committee and only about 3% were enacted in 2013–2015.

So call your Congressman or woman! Support S.2736! It’s not perfect, but it’s better!!!

Audits “Breaking Bad” in New Mexico

By: Ed Roche, founder of Barraclough NY LLC, a litigation support firm that helps healthcare providers fight against statistical extrapolations

It was published in RACMonitor.

Healthcare providers sometimes can get caught up in a political storm. When this happens, audits can be used as a weapon to help preferred providers muscle into a market. This appears to have happened recently in New Mexico.

Let’s go back in time.

On Sept. 14, 2010, Susana Martinez was in Washington, D.C. She was looking for campaign contributions to run for the governorship of New Mexico. She visited the office of the government lobbying division of UnitedHealth Group and picked up a check for $25,000.

The next day, Martinez published an editorial claiming that Bill Richardson’s administration in New Mexico was tolerating much “waste, fraud and abuse” in its Medicaid program. Eventually, she was elected as the 31st governor of New Mexico and took office Jan. 1, 2011.

According to an email trail, by the fall of 2012, Martinez’s administration was busy exchanging emails with members of the boards of directors of several healthcare companies in Arizona. During this same period, the Arizonans made a number of contributions to a political action committee (PAC) set up to support Martinez. At the same time, officers from New Mexico’s Human Services Department (HSD) made a number of unannounced visits to Arizona.

The lobbying continued in earnest. Hosted in part by UnitedHealth money, the head of HSD visited Utah’s premier ski resort, and the bill was paid for by an organization financed in part by UnitedHealth. The governor’s chief of staff was treated to dinner at an expensive steakhouse in Las Vegas. There is suspicion of other contacts, but these have not been identified. All of these meetings were confidential.

The governor continued to publicly criticize health services in New Mexico. She focused on 15 mental health providers who had been in business for 40 years. They were serving 87 percent of the mental health population in New Mexico and had developed an extensive delivery system that reached all corners of the state.

Martinez honed in on one mental health provider because the CEO used a private aircraft. He was accused of using Medicaid funds to finance a lavish lifestyle. None of this was true. It turned out that the owner had operations all over the state and used the plane for commuting, but it made for good sound bites to feed the press.

The state decided to raise the pressure against the providers. Public Consulting Group (PCG), a Boston-based contractor, was called in to perform an audit of mental health services. In addition to taking samples and performing analyses of claims, PCG was asked to look for “credible allegations of fraud.”

In legal terms, the phrase “credible allegations of fraud” carries much weight. Under the Patient Protection and Affordable Care Act, it can be used to justify punitive actions against a provider. It is surprising that only “allegations” are necessary, not demonstrated proof. The reality is that in practical terms, a provider can be shut down based on allegations alone.

In a letter regarding its work, PCG stated that “there are no credible allegations of fraud.” Evidently, that was the wrong answer. PCG was kicked out of New Mexico and not allowed to complete its audit. HSD took over.

The PCG letter had been supplied to HSD in a Microsoft Word format. In a stunning act, HSD removed the statement concluding that there were “no credible allegations of fraud.” HSD continued to use the PCG letter, but only in this altered form.

HSD continued to insist publicly that there were credible allegations of fraud. Since PCG had been kicked out before completing the audit, a HSD staff attorney took the liberty of performing several statistical extrapolations that generated a repayment demand of more than $36 million. During testimony, the attorney admitted that the extent of his experience with statistics was an introductory course he had taken years earlier in college.

Two years later, statistical experts from Barraclough NY LLC who are elected fellows of the American Statistical Association examined HSD’s work and concluded that it was faulty and unreliable. They concluded there was zero credibility in the extrapolations.

But for the time being, the extrapolations and audits were powerful tools. On June 24, 2013, all of the aforementioned 15 nonprofits were called into a meeting with HSD. All were accused of massive fraud. They were informed that their Medicaid payments were to be impounded. The money needed to service 87 percent of New Mexico’s mental health population was being cut off.

The next day, UnitedHealth announced a $22 million investment in Santa Fe. We have not been able to track down the direct beneficiaries of these investments. However, we do know that the governor’s office immediately issued a press release on their behalf.

The 15 New Mexico providers were being driven out of business. This had been planned well in advance. Shortly thereafter, the government of New Mexico, through HSD, [approved] issued $18 million in no-bid contracts to five Arizona-based providers affiliated with UnitedHealth. These are the same companies that had been contributing to the governor’s PAC.

These five Arizona companies then took over all mental health services for New Mexico. Their first step was to begin cutting back services. To give one example: patients with two hours therapy per week were cut back to 10 fifteen-minute sessions per year.It was the beginning of a mental health crisis in New Mexico.

As of today, two of the Arizona providers have abandoned their work in New Mexico. A third is in the process of leaving. What is the result? Thousands of New Mexico mental health patients have been left with no services. Entire communities have been completely shut [cut] off. The most vulnerable communities have been hit the hardest.

Through litigation, the 15 original providers forced the New Mexico Attorney General to examine the situation. It took a long time. All of the providers now are out of business. The Attorney General reported a few weeks ago that there were never any credible allegations of fraud.

This should mean that the impounded money would be returned to the 15 providers. After all, the legal reason why it was impounded in the first place has been shown to be false. One would think that the situation could return to normal.

The original 15 should be able to continue their business, and hire back the more than 1,500 persons they had been forced to lay off. Once the impounded monies are returned to the providers, they will be able to pay their legal bills, which now add up to hundreds of thousands of dollars.

Unfortunately, that is not happening. HSD still is claiming that the $36 million extrapolation is due, and that actually, the providers owe the state money. The New Mexico government is not budging from its position. The litigation continues.

Meanwhile, New Mexico now is tied with Montana in having the highest suicide rate in the continental United States.

Documentation Errors Could Affect Your License to Practice!

Written by Robert Shaw, Partner at Gordon & Rees.

Readers of this blog know well what financial harm can come from documentation problems, particularly resulting from Medicare and Medicaid auditors. But just as significantly, these problems can affect your participation rights in federal programs, and could even affect your license to practice. A case in point is a recent decision from the North Carolina Court of Appeals about disciplinary action taken against a dentist.

In Walker v. North Carolina Board of Dental Examiners, the Court of Appeals, in an opinion filed today, addressed findings by auditors that the dentist had not properly documented “the reasons for prescribing narcotic pain medications for a number of patients in her treatment records.” Well, you might ask, What Does The Rule Say? There is in fact a rule on the records that dentists must keep, similar to the rules in most other health care specialties. It is the Record Content Rule in 21 N.C.A.C. 16T .101.

(By the way, now is a great time to review every rule that you must follow in order to keep proper records and to figure out what the legal requirements are. Many providers did this at one time but fail to keep up to speed on the latest rule changes, which gets them into trouble. Or, they keep records based on how someone taught them. But, that’s not a legal defense!)

The Court of Appeals found that Dr. Walker did NOT violate the Record Content Rule, which does not require documentation of the medical reasons for prescribing pain medication. So, the Board of Dental Examiners got it wrong by citing Dr. Walker for a violation of 21 N.C.A.C. 16T .101. That rule only requires that the dentist document “[n]ame and strength of any medications prescribed, dispensed or administered along with the quantity and date.”

But that was not the end of the matter. The Board also cited Dr. Walker for violating N.C. Gen. Stat. 90-41(a)(12), which provides that the Board of Dental Examiners “shall have the power and authority to . . . [i]nvoke . . . disciplinary measures . . . in any instance or instances in which the Board is satisfied that [a dentist] . . . [h]as been negligent in the practice of dentistry[.]” This is very broad power.

So, what is the standard to be applied under this general “negligent in the practice of dentistry” statute? At the disciplinary hearing, two expert witnesses (other North Carolina dentists) testified that “the applicable standard of care require[s] North Carolina dentists to not only record [the] prescription [of] controlled substances, but the reason for prescribing those medications.” This is, in effect, an unwritten standard of practice that dentists, at least according to these witnesses, should follow in North Carolina. Perhaps importantly, Petitioner acknowledged that she had participated in training programs that advised that dentists should record the reasons for medications that they prescribe. But nevertheless, this rule was not in the North Carolina Administrative Code, a clinical coverage policy, or other policy statement published by the Board (at least that was cited in the opinion).

The Court of Appeals affirmed that the Board had the authority to discipline the petitioner for failing to follow these general standards of care in North Carolina, based on testimony of two practicing North Carolina dentists!

What does this mean? It means that your licensing board could cite general record-keeping practices in your field as the basis for disciplinary action against you under a catch-all negligence standard. While each board is governed by its own set of rules and statutory authority, Walker v. North Carolina Board of Dental Examiners is a powerful reminder that record-keeping is serious business, and you could be legally obligated to follow standard practices in your field in addition to the legal maze of federal and state regulations and policies governing health care records.

Knicole Emanuel Speaks Out on WRAL: You Do Not Pee in a Cup at the Dentist!

WRAL Knicole

http://www.wral.com/dentists-left-holding-bills-for-services-to-pregnant-women/15311392/

Or click here.