Category Archives: Associations

Licensing and Tax Implications of Telemedicine; Will the Regulations Inhibit Telemedicine’s Ability to Thrive?

My husband and I recently decided to try new insurance. It is always hard to change from what you know, so we were a bit hesitant. But the insurance costs under half of what we were paying, and it seemed that nothing was covered with our old insurance. So we took the leap. The absolute best thing about our new insurance is that we have 24/7 access to a physician for prescriptions. For example, I was ill last week, so at about midnight on Tuesday, I called the 24/7 hotline for anti-nausea medicine. A doctor called me within 30 minutes, listened to my complaints, and I had a prescription to be picked from my local Costco within minutes. Obviously, I waited to pick up my prescription the next day when Costco opened, but you see my point. Technology is amazing and scary. Had I preferred, I could have opted to talk to my tele-doctor through Facetime, but, quite frankly, I doubt he would have enjoyed that image of me sick with vomit in my hair. But if my issue were a rash or a questionable mole, Facetime would have worked.

There I am – last Tuesday – at midnight, talking to my new tele-doctor. I don’t even know his name. Most likely, next time I call the 24/7 hotline I will talk to someone else. I may never speak to my prescribing provider again. Nor would I know if I did.

But it worked. It was efficient. Oh, and did I say “free?” We pay a monthly premium and the cost of the prescription was $9.75, but no cost of a doctor visit. I didn’t have to drive to an office. I spoke to the doctor while laying on bed. This is telehealth.

I found myself wondering why doesn’t every health insurance implement this system of free access to a doctor 24/7, the ability to get a prescription at any time, and at nominal cost?? Medicare and Medicaid recipients would benefit highly from telehealth.

And I wondered so much (and couldn’t sleep) that I decided to research. My Melatonin works less and less as time passes. I guess I am getting resistant.

The tele-doctor that wrote me a prescription for anti-nausea was not a North Carolinian. I know this for a fact because when I said to tele-doctor, “I cannot believe that you work at midnight.” He said, “Oh, it’s only 9:00 here.” Based on his sentence, I deduced that tele-doctor was somewhere on the west coast. (I could be a PI).

How could tele-doctor write me a prescription when I live in North Carolina and he lives in CA, OR, or WA? Does he have to be licensed in NC to prescribe to me? And what about the tax implications on providing a medical service in a different state?

One thing that I need to make clear for my readers is that this blog is made possible by the standoff in our U.S. Congress that failed to pass legislature regarding telemedicine in its 2017-2018 session, the first week of August 2018. The opioid bill (which is what it has been dubbed) was to boost telemedicine by breaking down state law barriers disallowing telemedicine or imposing high taxes on telemedicine, which inhibits its growth. In case you are curious, Massachusetts has been named the worst state in which to perform telemedicine. Apparently, Massachusetts has many laws suppressing the advancement of telemedicine.

According to (hopefully not fake) news, what ultimately sunk this year’s wide-ranging health bill was a philosophical disagreement over the funding of community hospitals, which, apparently is a hot topic to debate between the Senate and the House.

As for the telemedicine elements of the failed bill, word on the street is that it could return in a standalone bill come January. Consult your horoscope or 8-ball for more information.

Telemedicine – How Does It Work Legally?

The World Health Organization’s has defined telemedicine as “The delivery of healthcare services, where distance is a critical factor, by all healthcare professionals using information and communication technologies for the exchange of valid information for diagnosis, treatment and prevention of disease and injuries, research and evaluation, and for the continuing education of healthcare providers, all in the interests of advancing the health of individuals and their communities.”

The type of telemedicine in which I participated is considered “real time telemedicine.” I had a consultation with no delay in communication at a distance.

While real estate tax is relatively simple, other taxes are not. Sales and use taxes, income taxes, and business privilege taxes are complex because of the interstate commerce issues. If my tele-doctor lives in CA and provides taxable services to me in North Carolina, does California or North Carolina benefit from the tax? Is the tax due where the provider lives or the consumer? And, BTW, Dr. Tele-health did not ask my location or state of residence. How will he do his taxes?

One of the pinnacle, legal cases that speaks to jurisdictional issues, such as interstate tax issues, is the Supreme Court case, International Shoe Co. V. Washington (I hated this case in law school). According to International Shoe:

  • A state may only impose a tax if it has a substantial nexus to the persons and transactions that would be subject to tax. (Now you see why I hate this case. What is substantial nexus? This case creates a riddle.) Oh, and it gets better.
  • The tax must be a fairly apportioned to reduce the prospect of double taxation.
  • A state cannot adapt a tax that discriminates against interstate commerce.
  • Any tax must be fairly related to services provided by the state. (Can you hear the Charlie Brown teacher reciting this?)

Wait, what?

Because we are the United States of America and believe in States remaining sovereign over its own people, unsurprisingly, the tax laws in every state differ – dramatically.

Telemedicine providers need to be cautious of income tax, unrelated business income tax, sales and use tax, sales tax, and use tax and be knowledgable about the state-by-state  licensing requirements for telehealth. Most states require that a physician is licensed in the state where their patient is located, which presents a problem for telehealth. Some states have exceptions carved out for telehealth.

Here is the Cliffnotes version:

Income Tax

The telehealth professional will be paid, and income will be reported to the IRS on a 1099. Most states have income tax, but some do not. Alaska, Florida, Nevada, South Dakota, Texas,Washington and Wyoming do not have income tax.

Even more complicated for the telehealth providers, is the question of whether the “source” of the income received by the surgeon is the country or state where the provider is located or the country or state where the patient is located. You can see why this is an important issue to the state, which wants to collect the most income tax possible, and to the physician, who doesn’t want to pull a Martha Stewart.

The current IRS definition of “patient” originated in 1968. The current definition of a “patient” contemplates a bricks-and-mortar structure at which patients receive treatment. Even though the IRS’ definition of “patient” is prehistoric, there have been several subsequent private letter rulings (PLRs) permitting the term “patient” to extend to recipients of services conducted by providers, even though performed at a variety of locations.

Unrelated Business Income (UBI)

The IRS defines UBI as income from a trade or business that is regularly carried on by a tax-exempt organization and that is not substantially related to the organization’s exempt purpose.

To date, the IRS has not issued any guidance or rulings regarding telemedicine UBI, specifically. For now, tax-exempt healthcare organizations participating in telemedicine are subject to the IRS rules and principles that apply more broadly to UBI and healthcare activities – some of which, frankly, don’t neatly fit, and some of which require careful documentation to avoid triggering UBI status.

One problem with UBI (like income tax) is the IRS’ definition of “patient.” The IRS’ definition does not contemplate telemedicine because the setting is not traditional.

In PLR 8122013, a tax-exempt hospital was not liable for UBI tax on its provision of laboratory services to patients of private physicians because such services contributed importantly to meeting the health needs of the community. In discussing Rev. Rul. 68-376, the IRS noted: “[I]t is important that the Service take cognizance of the changes in health care delivery brought about by modern technology. For example, the technology is now in place for a hospital to monitor the results of an electrocardiogram attached to a patient who is 80 miles away. The point is that who is legitimately considered a patient of a hospital today is not necessarily the same as 12 years ago, when the cited revenue ruling was published.” This shows, at the very least, that the IRS understands the definition of “patient” needs to be updated, even if no steps are taken to do so.

Sales and Use Tax

Sales and use taxes are typically imposed upon tangible personal property. Medical services provided in a traditional face-to-face setting would not trigger any sales and use tax issues. However, many states have adopted legislation that defines some intangible items to be treated like tangible personal property. For example, the data transmission component of telemedicine services could be subject to sales and use tax, which would mean that my “free” telehealth consult could have a tax implication of which I was unaware.

Sales Tax

If a provider renders health care services to someone in a foreign state, that provider may be liable to collect sales tax. Quite recently, I noticed this issue, not with telehealth, but with the internet sales of durable medical equipment. Providers who sell equipment, prescriptions, or vitamins over the internet need to be mindful of cross-state, sales tax.

The potential sales tax arises from the data transmission component of telemedicine. For example, in New Jersey, the sales tax expressly exempts services of of a physician. Juxtapose Connecticut, which has an administrative ruling that the provision of medical records through an online service is a taxable service.

Licensing Issues

This issue – cross-state licensing issues – really deserves a blog of its own. I will discuss this issue with the author of this blog. Much like an attorney, physicians and other health care providers have to be licensed in the state in which they practice.Most states require that a physician is licensed in the state where their patient is located.  Telehealth challenges states’ borders. Some states have attempted to solve this problem by creating a limited telemedicine license for which out-of state physicians can apply. However, this solution doesn’t exist in all states.

The Federation of State Medical Boards (FSMB), is a non-profit representing more than 70 medical and osteopathic boards. It also has about 17 states as members. FSMB is a proponent of allowing physicians to practice beyond state lines.

Partly due to the efforts of FSMB, approximately nineteen states have passed legislation to adopt the Interstate Medical Licensure Compact, which allows physicians to obtain a license to practice medicine in any Compact state through a simplified application process. The state medical boards retain their licensing and disciplinary authority, but agree to share information for licensing purposes.

The state boards of medicine recognize that standard of care is also largely a state-by-state analysis, sometimes even a community-by-community expectation. Some states, such as California, passed policy requiring the standard of care in telemedicine services to be the same as if providing the service in person.

All in all, I was happy with my very first telehealth experience. I do recognize, however, that there are legal barriers preventing telehealth and regulatory risks for the health care providers to contemplate before jumping on the telehealth boat. But, as a consumer…I’m hooked!

 

 

COA Dismisses AHA 340B Lawsuit!

The 340B drug program is a topic that needs daily updates. It seems that something is happening constantly. Like a prime time soap opera or The Bachelor, the 340B program is all the talk at the water cooler. From lawsuits to legislation to executive orders – there is no way of knowing the outcome, so we all wait with bated breath to watch who will hold the final rose.

On Tuesday, July 17, 2018, the metaphoric guillotine fell on the American Hospital Association (AHA) and on hospitals across the country. The Court of Appeals (COA) dismissed AHA’s lawsuit.

The Background 

On November 1, 2017, the US Department of Health and Human Services released a Final Rule implementing a payment reduction for most covered outpatient drugs billed to Medicare by 340B-participating hospitals from the current Average Sales Price (ASP) plus 6% rate to ASP minus 22.5%, which represents a payment cut of almost 30%.

Effective January 1, 2018, the 30% slash in reimbursement rates became reality, but only for locations physically connected to participating hospitals. CMS is expected to broaden the 30% reduction to all 340B-participating entities in the near future.

What is the 340B drug program? The easiest explanation for the 340B program is that government insurance, Medicare and Medicaid, do not want to pay full price for medicine. In an effort to reduce costs of drugs for the government payors, the government requires that all drug companies enter into a rebate agreement with the Secretary of the Department of Health and Human Services (HHS) as a precondition for coverage of their drugs by Medicaid and Medicare Part B. If a drug manufacturer wants its drug to be prescribed to Medicare and Medicaid patients, then it must pay rebates.

The Lawsuit

The American Hospital Association (“AHA”) filed for an injunction last year requesting that the US District Court enjoin CMS from implementing the 340B payment reduction. On the merits, AHA argues that the HHS’s near-30% rate reduction constitutes an improper exercise of its statutory rate-setting authority.

The US District Court did not reach an opinion on the merits; it dismissed the case, issued December 29, 2017, based on lack of subject matter jurisdiction. The District Court found that: Whenever a provider challenges HHS, there is only one potential source of subject matter jurisdiction—42 U.S.C. § 405(g). The Medicare Act places strict limits on the jurisdiction of federal courts to decide ‘any claims arising under’ the Act.

The Supreme Court has defined two elements that a plaintiff must establish in order to satisfy § 405(g). First, there is a non-waivable, jurisdictional requirement that a claim for benefits shall have been “presented” to the Secretary. Without presentment, there is no jurisdiction.

The second element is a waivable requirement to exhaust administrative remedies. I call this legal doctrine the Monopoly requirement. Do not pass go. Go directly to jail. Do not collect $200. Unlike the first element, however, a plaintiff may be excused from this obligation when, for example, exhaustion would be futile. Together, § 405(g)’s two elements serve the practical purpose of preventing premature interference with agency processes, so that the agency may function efficiently and so that it may have an opportunity to correct its own errors, to afford the parties and the courts the benefit of its experience and expertise, and to compile a record which is adequate for judicial review. However, there are ways around these obsolete legal doctrines in order to hold a state agency liable for adverse decisions.

Following the Dec. 29, 2017, order by the District Court, which dismissed the lawsuit on jurisdictional grounds, the plaintiffs (AHA) appealed to the U.S. Court of Appeals (COA), which promptly granted AHA’s request for an expedited appeal schedule.

In their brief, AHA contends that the District Court erred in dismissing their action as premature and that their continued actual damages following the Jan. 1 payment reduction’s effective date weighs heavily in favor of preliminary injunctive relief. More specifically, AHA argues that 30% reduction is causing irreparable injury to the plaintiffs “by jeopardizing essential programs and services provided to their communities and the vulnerable, poor and other underserved populations, such as oncology, dialysis, and immediate stroke treatment services.”

By contrast, the government’s brief rests primarily on jurisdictional arguments, specifically that: (1) the Medicare Act precludes judicial review of rate-setting activities by HHS; and (2) the District Court was correct that no jurisdiction exists.

Oral arguments in this appeal were May 4, 2018.

AHA posted in its newsletter that the COA seemed most interested in whether Medicare law precludes judicial review of CMS’ rule implementing the cuts. AHA says it hopes a ruling will be reached in the case sometime this summer.

In a completely different case, the DC District Court is contemplating a request to toll the time to file a Section 340B appeal.

AHA v. Azar, a case about RAC audits and the Medicare appeal backlog. During a March 22, 2018, hearing, the COA asked AHA to submit specific proposals that AHA wishes the COA to impose and why current procedures are insufficient. It was filed June 22, 2018.

In it proposal, AHA pointed out that HHS is needlessly causing hospitals to file thousands of protective appeals by refusing to toll the time for hospitals to file appeals arising out of the reduction in reimbursement that certain 340B hospitals. In order to avoid potential arguments from the government that 340B hospitals that do not administratively appeal the legality of a reduced rate will be time barred from seeking recovery if the court holds that the reduction in payments is unlawful, AHA proposed that the Secretary agree to toll the deadline for such appeals until resolution of the 340B litigation—an arrangement that would preserve the 340B hospitals’ right to full reimbursement in the event the 340B litigation is not successful. HHS has refused to toll the time, meaning that Section 340B hospitals will have to protect their interests in the interim by filing thousands upon thousands of additional claim appeals, which will add thousands upon thousands of more appeals to the current ALJ-level backlog.

The Decision

In a unanimous decision, three judges from the COA sided with HHS and ruled the hospitals’ suit was filed prematurely because hospitals had not formally filed claims with HHS because they were not yet experiencing cuts.

Basically, what the judges are saying is that you cannot ask for relief before the adverse action occurs. Even though the hospitals knew the 30% rate reduction would be implemented January 1, 2018, they had to wait until the pain was felt before they could ask for relief.

The lawsuit was not dismissed based on the doctrine of exhaustion of administrative remedies. The Decision noted that in some cases plaintiffs might be justified in seeking judicial review before they have exhausted their administrative remedies, but that wouldn’t be the solution here.

Hindsight is always 20-20. I read the 11 page decision. But I believe that AHA failed in two ways that may have changed the outcome: (1) Nowhere in the decision does it appear that the attorneys for AHA argued that the subject matter jurisdiction issue was collateral to the merits; and (2) The lawsuit was filed pre-January 1, 2018, but AHA could have amended its complaint after January 1, 2018, to show injury and argue that its comments were rejected (final decision) by the rule being implemented.

But, hey, we will never know.

Letter to HHS: RAC Audits “Have Absolutely No Direct Impact on the Medicare Providers” – And I Spotted Elvis!

Recovery audits have absolutely no direct impact on the Medicare providers working hard to deliver much needed healthcare services to beneficiaries.

And Elvis Presley is still alive! Oh, and did you know that Bill Clinton never had an affair on Hillary? (since when has her name become one word, like Prince or Beyonce?)

This sentence was written in a March 6, 2018, correspondence from The Council for Medicare Integrity to HHS Secretary Alex Azar.

“Recovery auditing has never been an impediment to the delivery of healthcare services nor is it an intrusion in the physician-patient relationship.” – Kristin Walter of The Council for Medicare Integrity. BTW, Ms. Walter, health care has a space between the two syllables.

The purpose of this letter that was sent from the The Council for Medicare Integrity to Secretary Azar was to request an increase of prepayment reviews for Medicare providers. For those of you so blessed to not know what a prepayment review, prepayment review is a review of your Medicare (or Caid) claims prior to being paid. It sounds reasonable on paper, but, in real life, prepayment review is a Draconian, unjust, and preposterous tool aimed at putting healthcare providers out of business, or if not aimed, is the unknown or accidental outcome of such a review. If placed on prepayment review, your Medicare or Medicaid reimbursements are 100% cut off. Gone. Like the girl in that movie with Ben Affleck, Gone Girl Gone, and, like the girl, not really gone because it’s alive – you provided services and are owed that money – but it’s in hiding and may ruin your life. See blog.

Even if I were wrong, which I am not, the mere process in the order of events of prepayment review is illogical. In the interest of time, I will cut-and-paste a section from a prior blog that I wrote about prepayment review:

In real-life, prepayment review:

  • The auditors may use incorrect, inapplicable, subjective, and arbitrary standards.

I had a case in which the auditors were denying 100% ACTT services, which are 24-hour mental health services for those 10% of people who suffer from extreme mental illness. The reason that the auditor was denying 100% of the claims was because “lower level services were not tried and ruled out.” In this instance, we have a behavioral health care provider employing staff to render ACTT services (expensive), actually rendering the ACTT services (expensive), and getting paid zero…zilch…nada…for a reason that is not required! There is no requirement that a person receiving ACTT services try a lower level of service first. If the person qualifies for ACTT, the person should receive ACTT services. Because of this auditor’s misunderstanding of ACTT, this provider was almost put out of business.

Another example: A provider of home health was placed on prepayment review. Again, 90 – 100% of the claims were denied. In home health, program eligibility is determined by an independent assessment conducted by the Division of Medical Assistance (DMA) via Liberty, which creates an individualized plan of care. The provider submitted claims for Patient Sally, who, according to her plan, needs help dressing. The service notes demonstrated that the in-home aide helped Sally dress with a shirt and pants. But the auditor denies every claim the provider bills for Sally (which is 7 days a week) because, according to the service note, the in-home aide failed to check the box to show she/he helped put on Sally’s shoes. The auditor fails to understand that Sally is a double amputee – she has no feet.

Quis custodiet ipsos custodes – Who watches the watchmen???

  • The administrative burden placed on providers undergoing prepayment review is staggering.

In many cases, a provider on prepayment review is forced to hire contract workers just to keep up with the number of document requests coming from the entity that is conducting the prepayment review. After initial document requests, there are supplemental document requests. Then every claim that is denied needs to be re-submitted or appealed. The amount of paperwork involved in prepayment review would cause an environmentalist to scream and crumple into the fetal position like “The Crying Game.”

  • The accuracy ratings are inaccurate.

Because of the mistakes the auditors make in erroneously denying claims, the purported “accuracy ratings” are inaccurate. My daughter received an 86 on a test. Given that she is a straight ‘A’ student, this was odd. I asked her what she got wrong, and she had no idea. I told her to ask her teacher the next day why she received an 86. Oops. Her teacher had accidentally given my daughter an 86; the 86 was the grade of another child in the class with the same first name. In prepayment review, the accuracy ratings are the only method to be removed from prepayment, so the accuracy of the accuracy ratings is important. One mistaken, erroneously denied claim damages the ratings, and we’ve already discussed that mistakes/errors occur. You think, if a mistake is found, call up the auditing entity…talk it out. See below.

  • The communication between provider and auditor do not exist.

Years ago my mom and I went to visit relatives in Switzerland. (Not dissimilar to National Lampoon’s European Vacation). They spoke German; we did not. We communicated with pictures and hand gestures. To this day, I have no idea their names. This is the relationship between the provider and the auditor.

Assuming that the provider reaches a live person on the telephone:

“Can you please explain to me why claims 1-100 failed?”

“Don’t you know the service definitions and the policies? That is your responsibility.”

“Yes, but I believe that we follow the policies. We don’t understand why these claims are denied. That’s what I’m asking.”

“Read the policy.”

“Not helpful.”

  • The financial burden on the provider is devastating.

If a provider’s reimbursements are 80 – 100% reliant on Medicaid/care and those funds are frozen, the provider cannot meet payroll. Yet the provider is expected to continue to render services. A few years ago, I requested from NC DMA a list of providers on prepayment review and the details surrounding them. I was shocked at the number of providers that were placed on prepayment review and within a couple months ceased submitting claims. In reality, what happened was that those providers were forced to close their doors. They couldn’t financially support their company without getting paid.

_______________________________

Back to the current blog

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So to have The Council for Medicare Integrity declare that prepayment review has absolutely no impact on Medicare providers is ludicrous.

Now, I will admit that the RAC (and other acronyms) prepayment and post payment review programs have successfully recovered millions of dollars of alleged overpayments. But these processes must be done right, legally. You can’t just shove an overzealous, for-profit, audit company out the door like an overweight kid in a candy store. Legal due process and legal limitations must be required – and followed.

Ms. Walter does present some interesting, yet factually questionable, statistics:

  • “Over the past 5 years alone, Medicare has lost more than $200 billion taxpayer dollars to very preventable billing errors made by providers.”

Not quite sure how this was calculated. A team of compliance auditors would have had to review hundreds of thousands of medical records to determine this amount. Is she referring to money that has been recovered and the appeal process afforded to the providers has been exhausted? Or is this number how much money is being alleged has been overpaid? How exactly were these supposed billing errors “very preventable?” What does that mean? She is either saying that the health care providers could have prevented the ostensible overbillings – or – she is saying that RAC auditors could have prevented these purported overbillings by increased prepayment review. Either way … I don’t get it. It reminds me of Demi Moore in A Few Good Men, “I object.” Judge states, “Overruled.” Demi Moore pleads, “I strenuously object.” Judge states, “Still overruled.” “Very preventable billing errors,” said Ms. Walters. “Still overruled.”

  • “Currently, only 0.5 percent of Medicare claims are reviewed, on a post-payment basis, for billing accuracy and adherence to program billing rules. This leaves 99.5 percent of claims immune from any checks and balances that would ensure Medicare payments are correct.”

Again, I am curious as to the mathematic calculation used. Is she including the audits performed, not only by RACs, but audits by ZPICs, CERTS, MACs, including Palmetto, Noridian and CGS, federal and state Program Integrities, State contractors, MFCUs, MICs, MCOs, PERMs, PCG, and HHS? Because I can definitely see that we need more players.

  • “The contrast between Medicare review practices and private payers is startling. Despite the dire need to safeguard Medicare dollars, CMS currently allows Recovery Audit Contractors (RACs) to review fewer than 30 Medicare claim  types (down from 800 claim types initially) and has scaled back to allow a review of a mere 0.5 percent of Medicare provider claims after they have been paid. Considered a basic cost of doing business, the same providers billing Medicare comply, without issue, with the more extensive claim review requirements of private health insurance companies. With Medicare however, provider groups have lobbied aggressively to keep their overpayments, putting intense pressure on CMS to block Medicare billing oversight.”

Did I wake up in the Twilight Zone? Zombies? Let’s compare Medicare/caid to private health care companies.

First, let’s talk Benjamins (or pennies in Medicare/caid). A study was conducted to compare Texas Medicare/caid reimbursement rates to private pay. Since everything is bigger in Texas, including the reimbursement rates for Medicare/caid, I figured this study is demonstrative for the country (obviously each state’s statistics would vary).

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According to a 2016 study by the National Comparisons of Commercial and Medicare Fee-For-Service Payments to Hospitals:

  • 96%. In 2012, average payments for commercial inpatient hospital stays were higher than Medicare fee-for-service payments for 96% of the diagnosis related groups (DRGs) analyzed.
  • 14%. Between 2008 and 2012, the commercial-to-Medicare payment difference had an average increase of 14%.
  • 86%. Longer hospital stays do not appear to be a factor for higher average commercial payments. During this period, 86 percent of the DRGs analyzed had commercial-to-Medicare average length-of-stay of ratios less than one.

The “basic cost of doing business” for Medicare/caid patients is not getting appropriate reimbursement rates.

The law states that the reimbursements rates should allow quality of care. Section 30(A) of the Medicare Act requires that each State “provide such methods and procedures relating to the utilization of, and the payment for, care and services available under the plan (including but not limited to utilization review plans as provided for in section 1396b(i)(4) of this title) as may be necessary to safeguard against unnecessary utilization of such care and services and to assure that payments are consistent with efficiency, economy, and quality of care and are sufficient to enlist enough providers so that care and services are available under the plan at least to the extent that such care and services are available to the general population in the geographic area.” (emphasis added).

Second, billing under Medicare/caid is much more complex than billing third-party payors, which are not required to follow the over-regulated, esoteric, administrative, spaghetti sauce that mandates providers who accept Medicare and/or Medicaid (a whole bunch of independent vegetables pureed into a sauce in which the vegetables are indiscernible from the other). The regulatory burden required of providing Medicare and/or Medicaid services does not compare to the administrative and regulatory burden associated with private pay, regardless of Ms. Walter’s uncited and unreferenced claims that “the more extensive claim review requirements [are with the] private health insurance companies.” We’re talking kumquats to rack of lamb (are kumquats cheap)?

Third, let’s discuss this comment: “provider groups have lobbied aggressively.” RAC auditors, and all the other alphabet soup, are paid A LOT. Government bureaucracy often does not require the same “bid process” that a private company would need to pass. Some government contracts are awarded on a no-bid process (not ok), which does not create the best “bang for your buck for the taxpayers.”

I could go on…but, I believe that you get the point. My readers are no dummies!

I disagree with the correspondence, dated March 6, 2018, from The Council for Medicare Integrity to HHS Secretary Alex Azar is correct. However, my question is who will push back against The Council for Medicare Integrity? All those health care provider associations that “have lobbied aggressively to keep their overpayments, putting intense pressure on CMS to block Medicare billing oversight.”?

At the end of the day (literally), I questioned the motive of The Council for Medicare Integrity. Whenever you question a person’s motive, follow the money. So, I googled “who funds The Council for Medicare Integrity? Unsurprisingly, it was difficult to locate. According to The Council for Medicare Integrity’s website it provides transparency with the following FAQ:

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Again, do you see why I am questioning the source of income?

According to The Council for Medicare Integrity, “The Council for Medicare Integrity is a 501(c)(6) non-profit organization. The Council’s mission is to educate policymakers and other stakeholders regarding the importance of healthcare integrity programs that help Medicare identify and correct improper payments.

As a 501(c)(6) organization, the Council files IRS Form 990s annually with the IRS as required by law. Copies of these filings and exemption application materials can be obtained by mailing your request to the Secretary at: Council for Medicare Integrity, Attention: Secretary, 9275 W. Russell Road, Suite 100, Las Vegas, Nevada 89148. In your request, please provide your name, address, contact telephone number and a list of documents requested. Hard copies are subject to a fee of $1.00 for the first page and $.20 per each subsequent page, plus postage, and must be made by check or money order, payable to the Council for Medicare Integrity. Copies will be provided within 30 days from receipt of payment. These documents are also available for public inspection without charge at the Council’s principal office during regular business hours. Please schedule an appointment by contacting the Secretary at the address above.

This website serves as an aggregator of all the verifiable key facts and data pertaining to this important healthcare issue, as well as a resource center to support the provider community in their efforts to comply with Medicare policy.”

I still question the funding (and the bias)…Maybe funded by the RACs??

New Revisions to Stark Law: Beware the “Per-Click Lease” – Maybe?

Scenario: You have an arrangement with your local hospital. You are a urologist and your practice owns a laser machine. You lease your laser machine to Hospital A, and your lease allows you to receive additional, but fair market value, money depending on how often your machine is used. Legal?

A new Final Ruling from the Centers for Medicare and Medicaid Services (CMS) provides murky guidance.

CMS finalized the 2017 Medicare Physician Fee Schedule (PFS) rule, which took effect on January 1, 2017. There have been few major revisions to the Stark Law since 2008…until now. The Stark Law is named for United States Congressman Pete Stark (D-CA), who sponsored the initial bill in 1988. Politicians love to name bills after themselves!

Absent an exception, the Stark Law prohibits a physician from referring Medicare patients for certain designated health services (“DHS”), for which payment may be made under Medicare, to any “entity” with which the physician (or an immediate family member) has a “financial relationship.” Conversely, the statute prohibits the DHS-furnishing entity from filing claims with Medicare for those referred services.

Despite the general prohibition on potentially self-interested referrals, the Stark Law permits Medicare referrals by physicians to entities in which they have a financial interest in certain limited circumstances. But these circumstances are limited and must be followed precisely and without deviation.

These exceptions are created by legally excluding some forms of compensation agreements and ownership interests from the definition of “financial relationship,” thus allowing both the relationships and the referrals. See 42 U.S.C. § 1395nn(b)-(e).

One of such exceptions to the Stark Law is the equipment lease exception.

This equipment lease exception to Stark law allows a financial relationship between physicians and hospitals for the lease of equipment, only if the lease (1) is in writing; (2) assigns the use of the equipment exclusively to the hospital; (3) lasts for a term of at least one year; (4) sets rental charges in advance that are consistent with fair market value and “not determined in a manner that takes into account the volume or value of any referrals or other business generated between the parties”; (5) satisfies the standard of commercial reasonableness even absent any referrals; and (6) meets “such other requirements as the Secretary may impose by regulation as needed to protect against program or patient abuse.”

For example, like the scenario above, a urology group owns and leases a laser machine to Hospital A. As long as the lease meets the criteria listed above, the urologists may refer Medicare patients to Hospital A to their hearts’ content – even though the urologists benefit financially from their own referrals.

However, what if the monetary incentive is tied to the amount the machine is actually used – or the “per-click lease?”

In a court case decided in January 2015, Council for Urological Interests v. Burwell, a D.C. circuit court decided that CMS’ ban on per-click leases was unreasonable.

In CMS’ Final Ruling, effective January 1, 2017, CMS again re-issued the per-click lease ban. But CMS’ revised ban appears to be more parochial in scope. CMS states that it “did not propose and [is] not finalizing an absolute prohibition on rental charges based on units of service furnished” and that “[i]n general, per-unit of service rental charges for the rental of office space or equipment are permissible.” As CMS had previously stated, the per-click ban applies only “to the extent that such charges reflect services provided to patients referred by the lessor to the lessee.”

Considering how unclear the Final Rule is – We are banning per-click leases, but not absolutely – expect lawsuits to clarify. In the meantime, re-visit your equipment leases. Have your attorney review for Stark compliance – because for the first time since 2008, major amendments to Stark Law became effective January 1, 2017.

Federal Court Orders HHS to Eliminate Medicare Appeal Backlog!

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.

Medicaid Auditors, Nitpicky Nonsense, and Journalistic Mistakes

In my experience with regulatory audits of health care providers, which is substantial, the auditors have zero incentive to perform audits conservatively…or even properly, if I am being completely honest. The audit companies themselves are for-profit entities with Boards of Directors, sometimes with shareholders, and definitely with executives who are concerned with the corporate bottom lines. The actual auditors are salaried employees (or contractors) who are given an audit checklist, which may or may not be correct) and instructions as to which companies to audit.

Think about it – you are hired as an auditor…what happens if you come back to your boss, saying, “Nope. I found no documentation errors.”I liken it to me hiring a housekeeper and that housekeeper showing up at my house and saying, “Your house is so clean. There is nothing for me to clean.” First of all, for those who know me, you know that no housekeeper would ever say that my house did not to be cleaned, but that is neither here nor there. The analogy remains. No employee or hired contractor will tell you that you do not need to hire him or her because he or she is not needed. It is only human nature and logic. Will a dog trainer tell you that your dog is fully trained? Will a personal trainer tell you are perfectly fit? Will a rug maker tell you that you don’t need a rug? Will an auditor tell you that your documents are perfect? If so, they would render themselves obsolete.

Disagree with my opinions on this blog all you want, but if you disagree with the principle that an employee will not argue himself or herself out of a job, then you are living in a fantasy land made up of rainbows and gummy bears.

So let’s begin with the basic logical principles: 2+2=4 and auditors have incentives to find errors.

Now, knowing the basic, underlying fact that auditors have incentives to locate documentation errors, an article was recently published entitled, “Audit says home health care companies overbilled Mass. Medicaid by $23m.” While I am not in a position to critique a journalist’s writing, I disagree with the broad, overreaching statements found in this article. While the article claims that 9 home health companies owe the State of Massachusetts $23 million, my guess is that (if the companies hire a competent attorney) the companies do not owe such a large amount. In my experience, there are many legal defenses to safeguard against allegations in an audit.

The follow-up article may be entitled, “Audit of Home Health Agencies Found to Be Erroneous.”

Here is the first paragraph of that article claiming home care agencies overbilled Medicaid for $23 million:

“The state’s Medicaid program was routinely billed for home health care services that were never provided or were not medically necessary. Providers submitted documents with missing dates and signatures. Sometimes basic information like a patient’s medical history was nowhere to be found.”

Let’s dissect.

First sentence: “The state’s Medicaid program was routinely billed for home health care services that were never provided or were not medically necessary.”

I call bull feces on this one. First, the audit, which is the topic of this article, only audited 9 home health agencies. Unless only 10 home health agencies exist in Massachusetts, an audit of 9 agencies can hardly be considered “routinely billing” Medicaid.

Second, who is making these determinations that the home health services are not medically necessary??? Considering that, in order to render home health services, the provider must obtain prior authorization that the services are medically necessary, I find it a hard pill to swallow that the rendered services are not medically necessary. These are prior authorized services!!

Third, providing home health services is anything but routine. Life happens. The assertion that home health care services were never provided fails to take into consideration – life. For example, a home health aide could present at the client’s home at the regularly scheduled time, but the consumer’s son is present. The son brought McDonald’s, in which case, the aide may render all services, but does not prepare a meal for the client. Or, perhaps, the consumer’s plan states that the aide must bathe the consumer. But the consumer recently had surgery and cannot take a bath or shower for a certain amount of time. In the above examples, services were not rendered, that is true, but did some sort of aberrant billing or fraud occur? I would argue, no.

Second sentence: “Providers submitted documents with missing dates and signatures.”

This sentence is also troubling. Let’s say that a consumer requires home health services and receives prior authorization. The home health aide renders the services. In the subsequent documentation, the home health aide forgets to date the service note. There is no question that the home health services were needed. There is no question that the services were rendered. There is only a missing date written on the service note. Does this circumstance warrant a 100% recoupment for a minor documentation error? If you answer, yes, you may have a fulfilling career as a Medicaid auditor in your future. You also may believe that a documentation error as egregious as a missing date should warrant tearing up the provider’s Medicaid contract and burning it. You may also hate puppy dogs and ice cream.

My answer is no. There are less drastic measures to be implemented other than a 100% recoupment – for example, a plan of correction could be required.

Third sentence: “Sometimes basic information like a patient’s medical history was nowhere to be found.”

I have major issues with this sentence. Ever hear of the saying, “You only get what you ask for?” All health care providers, including home health care providers, maintain massive amounts of documentation, whether it be electronic or paper. Furthermore, one client file could have years and years of documentation. When an auditor comes to an agency, the auditor normally presents with a list of consumer names and dates of service.

For example, the auditor wants to review the documentation for Barack Obama, date of service 11/8/12. The provider hands over the service note, the plan of care, the prior authorization, etc. Information not found on the documents provided to the auditor: place of birth, past drug use, including, marijuana and cocaine, smoking history, exercise regimen, marital status, immunizations, list of surgical procedures…you get the picture.

The article goes on to state, “Executives at all of the companies reached by the Globe said they are appealing the audit findings and chalked up most of the violations to minor paperwork issues that were overblown by state auditors.”

“There’s mistakes here, I understand that,” said Debra Walsh, administrator at Able Home Care. “[But] how did a missing address escalate to a sanction? That doesn’t make any sense.”

She’s right. It doesn’t make logical, reasonable, human sense. But it does make sense when you remember that the auditors are sent to the agencies with an audit checklist and a list of consumers with dates of service. If the checklist requires an address of the provider and the consumer to be present on the service note, regardless whether the regulations, rules or law require an address to be present on a service note, and there is no address present on the service note, then the auditor will find noncompliance. Strict adherence to the “Stepford Auditors’ Handbook” is required, not strict adherence to the law.

Looking at the sunny side – Most audit findings are easy-greasy to defend with legal arguments. Have you seen the TV show, “What Not To Wear?” The first, initial meeting of the targeted person on “What Not To Wear” is the original audit results “before a good legal defense.” It’s exaggerated, ugly, and quite shocking.

Then Stacy and Clinton come to the rescue and teach the scraggly, poorly-dressed individual fashion tips and the former frumpy individual is transformed into a fashionable chichi – or a much more palatable overpayment amount.

(In this analogy, my team and I are Stacy and Clinton. I will be Stacy).

One of my favorite examples of a “before” and “after” audit results is the following:

Before (frumpy individual):

""before2
After (fashionable chichi):
photo (3)
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Next time you see an article claiming that a health care provider overbilled the government for Medicare or Medicaid reimbursements, check and see whether the determination was appealed by the provider(s).

The appeal may demonstrate an entirely new perspective on such alleged overpayments than the original audit, because, remember, an auditor would not maintain a job if he or she found compliance.

A New Year and We Will “Ring In” Even Lower PCS Reimbursement Rates: Time for Litigation?

Merry Christmas, everyone!!! And Happy New Year!!

I hope everyone had a wonderful holiday! Personally, Christmas was wonderful for my family.  I actually took some days off.  And our 9-year-old girl received way too many presents.  Plus, I learned that we should be spending way less on her!! We bought her a new saddle, bridle and breast-strap for her horse, but, when asked what she received for Christmas, she tells everyone about the $2 marshmallow gun she received, not the saddle. Regardless, we were able to spend quality time together with my mom and dad and 2 sisters.  My husband Scott, however, got the flu and he has been in bed for the last few days…yuck! But he was healthy on Christmas.

We have been truly blessed this year, and I want to thank you all for reading my blog.

I received an email today from an owner of a home care agency that reminded me that, especially during the holidays, many people are struggling.  This home care agency owner, “we will call him Al,” informed me that he potentially will be closing his agency, which would put approximately 130 employees out of work. Al told me that his agency has been struggling over the past few years with the decrease in personal care services (PCS) reimbursement rate.

Al is not the only home care agency owner who has contacted me in the last few months bemoaning about the low PCS reimbursement rates.  The PCS reimbursement rates are set by legislature, most of the time in the budget bills.  For example, the General Assembly passed the budget this past year, which will decrease the PCS reimbursement rates by another 3% beginning January 1, 2015. (Happy New Years).

See below, which is from another blog post: “PCS Medicaid Reimbursement Rates Are TOO LOW to Maintain Adequate Quality of Care, in Violation of the Code of Federal Regulations!

“SECTION 12H.18.(b). During the 2013-2015 fiscal biennium, the Department of Health and Human Services shall withhold reduce by three percent (3%) of the payments … on or after January 1, 2014” (emphasis added).”

The PCS reimbursement rate became $13.88. Session Law 2014-100 was signed into law August 7, 2014; however, Session Law 2014-100 purports to be effective retroactively as of October 2013. (This brings into question these possible recoupments for services already rendered, which, in my opinion, would violate federal and state law, but such possible violations (or probable or currently occurring violations are a topic for another blog).

It is without question that the Medicaid reimbursement rate for PCS is too low. In NC, the PCS reimbursement rate is currently set at $13.88/hour (or $3.47/15 minutes). It is also without question that there is a direct correlation between reimbursement rates and quality of care.

Because Medicaid pays for approximately 67% of all nursing home residents and recipients of home health care in USA, the Medicaid reimbursement rates and methods are central to understanding the quality of care received by PCS services and the level of staffing criteria expected.

PCS for adults are not a required Medicaid service. As in, a state may opt to provide PCS services or not. As of 2012, 31 states/provinces provided PCS services for adults and 25 did not. Most notably, Florida, Virginia, and South Carolina did not provide PCS services for adults. See Kaiser Family Foundation website.

According to Kaiser Family Foundation, “For the personal care services state plan option, the average rate paid to provider agencies [across the nation] was $18.19 per hour in 2012, a slight increase from $17.91 per hour in 2011. In states where personal care services providers were paid directly by the state or where reimbursement rates were determined by the state, the average reimbursement rate was $16.31 per hour in 2012. Medicaid provider reimbursement rates are often set by state legislatures as part of the budget process.”

What can be done regarding these low PCS reimbursement rates in NC???

In order to change legislation, one of two avenues exist: (1) lobbying; or (2) litigation.

Over the past few years, while the PCS reimbursement rates have continued to decrease, the associations involved with home care organizations and long term care facilities (companies that provide PCS) have emphasized the lobbying aspect.  No litigation has been filed demanding a reasonable PCS reimbursement rate.

Obviously, the lobbying aspect has yielded less than desirable results.  Instead of increasing the PCS reimbursement rate, the General Assembly has continually decreased the rate.

When one line of attack does not work, you try another.

Maybe it is time for litigation.

Personal Care Services: Will the Fear of the “F” Word (Medicaid Fraud) Cause PCS in the Home to Be Eradicated???

In my career, I call it the “F” word:

Fraud.

Its existence and fear of existence drives Medicare and Medicaid policies.

It is without question that Medicare and Medicaid fraud needs to be eliminated.  In fact, for true Medicare and Medicaid fraud, I propose harsher penalties.  Think about what the fraudulent provider is doing…taking health care dollars from the elderly and poor without providing services.  Medicare and Medicaid recipients receive less medically necessary services because of fraudulent providers.

Just recently, in Charlotte, on April 9, 2014, V.F. Brewton, of Shelby, N.C., was sentenced to 111 months in prison, three years of supervised release and ordered to pay $7,070,426 in restitution to Medicaid and $573,392 to IRS. On April 8, 2014, co-defendant, R. S. Cannon, of Charlotte, was sentenced to 102 months in prison, three years court supervised release and ordered to pay $2,541,306 in restitution.  See press release.  Ouch!

On November 21, 2013, in Miami, Fla., Roberto Marrero, who ran Trust Care, was sentenced 120 months in prison.  From approximately March 2007 through at least October 2010, Trust Care submitted more than $20 million in claims for home health services. Medicare paid Trust Care more than $15 million for these fraudulent claims. Marrero and his co-conspirators have also acknowledged their involvement in similar fraudulent schemes at several other Miami health care agencies with estimated total losses of approximately $50 million. See article.  Ouch!

However, there are never the stories in the newspapers and media about all the services actually rendered to Medicare and Medicaid recipients by upstanding providers who do not commit fraud, but, instead, work very hard every day to stay up-to-date on regulations and policies and who do not reap much profit for the services provided.  I guess that doesn’t make good journalism.

I recently attended the Association for Home and Hospice Care (AHHC) conference in RTP, NC.  I met wonderful and non-fraudulent providers.  Each provider I met was passionate and compassionate about their job.  The only time money was brought up was to discuss the low reimbursement rates and the low profit margin for these providers.

In fact, one of the speakers even opined that, because of the alleged prevalence of fraud in home health care, the federal and state governments will continue to cut reimbursement rates for home health and hospice until over 50% of the agencies operate at a loss by 2017.  That is a dismal thought!  What happened to our right to pursue a career without intervention?

One provider informed me that, upon his or her information and belief, there is a chance that PCS, which is an optional program under Medicaid, may be wiped out in the near future by the General Assembly (PCS for home health and assisted living facilities, not the recipients covered by the Waiver).

What are personal care services (PCS)?

In the world of Medicaid and Medicare, there are a number of different types of PCS.  No, actually, I think it is more apropos to say there are a number of different PCS recipients in the world of Medicaid and Medicare.

First, the definition/eligibility requirements:

Personal Care Services (PCS) are available to individuals who have a medical condition, disability, or cognitive impairment and demonstrate unmet needs for, at a minimum three of the five qualifying activities of daily living (ADLs) with limited hands-on assistance; two ADLs, one of which requires extensive assistance; or two ADLs, one of which requires assistance at the full dependence level. The five qualifying ADLs are eating, dressing, bathing, toileting, and mobility.  See DMA website.

PCS are provided to developmentally disabled people under the 1915 b/c Waivers, people who reside in nursing homes and long-term assisted living facilities, and people who qualify to receive PCS in their homes.  For purposes of this blog, I am writing about the latter three types of recipients.  All 50 states allow PCS for qualified individuals, but the qualifications differ among the states.

In this day and age, the “F” word drives Medicaid and Medicare policies.  Without question Medicaid fraud exists.  Whether Medicaid fraud is as prevalent as some may believe, I am not sure.  I have certainly witnessed honest providers accused of Medicaid fraud.

And home health care providers are viewed by some, generally, as the providers who can most easily commit Medicaid fraud (with which I do not agree, but must concede that home health care is more difficult to monitor).  For example, a home health care provider goes to a person’s home and provides services.  Who would know whether the home health care provider was billing for services on days he or she did not go to the recipient’s house? Not the recipient, because the recipient has no idea for what dates the provider is billing.  Unlike an assisted living facility or nursing home that is easier to monitor and would have the documentation to show that the recipient actually lived in the facility.

Because of the alleged prevalence of fraud in home health care, apparently, (and with no independent verification on my part) some in North Carolina are questioning whether we should continue to reimburse PCS with Medicaid dollars, particularly as to home health.  But if we stopped reimbursing for PCS in the homes, what would be the alternative?  How would it affect North Carolinians? Would eliminating PCS save tax dollar money? Stop fraud?

When we evaluate the effects of whether to continue to reimburse for PCS with Medicaid dollars, we aren’t only talking about those served by PCS, but also the companies and all employees providing the home health.  In 2012 in NC, approximately 40,000 were employed in home health.

Why is home health care important (or is it?)? Should we allow the “F” word to erase PCS  in home health?

What is the alternative to home health?  Answer: (1) Assisted living facilities?  (2) Nursing homes? (3) A dedicated, family caregiver?  (4) Nothing?

While there are, I am sure, many reasons that PCS in home health care is vital to our community, for the purposes of this blog, I am going to concentrate on cost savings to the taxpayers.  Home health costs us (taxpayers) less money than other alternatives to home health.

Also, understand please that I am not advocating that everyone should receive home health instead of entering nursing homes or assisted living facilities.  Quite the contrary, as both nursing homes and assisted living facilities are essential to NC.  I am merely pointing out that all the services (home health, nursing homes, and assisted living facilities) are important.

What is the difference between assisted living and nursing homes?

An assisted living community provides communal living, usually with social activities, a cafeteria, laundry service, etc.  I always think of my grandma at Glenaire in Cary, NC.  She plays bridge, attends a book club, and even takes a computer course!  She actually joined Facebook a couple of years ago!

A nursing home, on the other hand, provides 24-hour supervision by a licensed or registered nursing staff.  Generally, the folks eligible to be admitted into an assisted living facility will be eligible to receive PCS (see the above definition/eligibility requirements).  So, logically, the clientele in an assisted living facility receiving PCS could, in some cases, also be eligible to receive PCS in their home.  Obviously a number of factors come into play to determine whether a person goes into an assisted living facility versus staying at home and receiving home health care: eligibility, family issues, money, condition of your home, money, desire for independence, money, health issues, and money.

Because of the level of supervision and skill required in a nursing home, a nursing home will be much more expensive than an assisted living facility.  Insomuch as the assisted living facility will be less expensive than a nursing home, home health care, because you are paying for your own room and board, will be cheaper than both.

The average national cost for an assisted living facility in 2012 was $3,550/month.  That’s $42,600/year.  The average cost for an assisted living facility in 2012 in NC was $2900/month.

The average cost for a nursing home in NC for a semi-private room is $73,913 and $82,125 for a private room.  That’s $225/day for a private room.  For that price, you could get a room at a Ritz Carlton! (albeit not in a touristy area).

You think nursing homes are expensive in NC? Don’t move to NY!! In NY, for a semi-private room it costs $124,100/year and $130,670/year for a private room ($358/day!). Florida is a bit more expensive that NC too.  In Florida, on average, a semi-private room in a nursing home costs $83,950 and a private room is approximately $91,615.

On the flip side, the average cost for a homemaker is $38,896.  A home health aide costs, on average, $40,040.

If, in fact, NC ceases to reimburse PCS in home health, many of the people residing in their homes and relying on Medicaid-covered PCS will be forced to leave their homes for, in some case, more expensive alternatives.

Though the odd contrast may not be easily seen, there is an argument that erasing PCS in the home may actually cost the tax payers more.  Not to mention that erasing PCS in home health would drive agencies bankrupt and staff jobless.

Remember, I have no verification that our General Assembly would or would not eradicate PCS in the home environment.  It was mere speculation in a conversation.  But the conversation got me thinking about the delicate balance of Medicaid services in NC.  And how one abrupt and drastic change could change our health care system and capitalist ideas so quickly.

And, arguably, all because of the speculative “F” word.  What is that political phrase we heard so much in the last elections? Oh, yes, maybe we should use a scalpel, not an ax?

The Future of Managed Care in Medicaid and the Fear of the Unknown

The unknown.  No one likes the unknown.  Especially people, like me, who try so desperately to maintain control over our lives. 

But the future of Medicaid in North Carolina is unknown.  We have all heard Governor McCrory talk about expanding managed care to all Medicaid services, not just behavioral health care, but for all medical services.  Here in NC, our experience with managed care organizations (MCOs) has not been all sunshine and roses.  So, when we hear…let’s expand the MCO system to all Medicaid services, I am reminded of the feeling I had this past Saturday as I stood on the side of the Wells Fargo building, 30-stories up, facing background, with a harness and a helmet on, when the rappel guy said, “Ok…now lean back and let go…”

OK….so is anyone wondering how I managed rappelling down the 30-story Wells Fargo building downtown Raleigh this past Saturday in the name of Special Olympics North Carolina?

Answer: I DID NOT MANAGE WELL!!!

I do not kid you when I say that I thought that I would enjoy rappelling. I envisioned myself bouncing off the side of the building, laughing, and doing straddle jumps. I envisioned myself getting to the bottom with an adrenaline rush and an immediate need to sign-up for next year’s Over The Edge charity event.

So, what actually happened?  Picture this:

I am standing on the edge of a 30-story building.  I have 20 pounds of equipment attached all around my body.  I am donning a helmet and gloves.  I have never seen any of the equipment that is wrapped around my body.  The pro-rappellers are saying things like “rigger,” “descenders,” and “carabiners.”  They are obviously all hard-core, banging rapellers, which I, most certainly, am not.

In order to get on the ledge of the building, you have to climb up onto the ledge…as in, take your 2 arms and hoist your body up onto the ledge…sit down on your bum with your back to the 30-story view…and, then, completely stand up…. on a ledge… in order to lean back and jump off the building.

If you can envision preparing yourself for a jump off a 30-story building without your heart racing, then you are way cooler than I.

Ever heard the saying, “The first step is the hardest?”  Whoever said that had, obviously, rappelled off the Wells Fargo building.  Just prior to actually going over the edge, not only did my body have to battle the physical issues (shaking, breathing, and sweating), but my brain kicked into high gear.  I wanted to cry.  I cussed at the nice rappellers trying to comfort me.  My brain told me to give up and descend as we are meant to…via elevators.

The rappeller-volunteer said, “Lean back and let go!”

I cussed.  I screamed, “Get me off this building!!” to the nice rappeller-volunteers.  But, eventually (and, definitely, NOT gracefully) I started the descent down the building.  The entire way down, which, by the way, takes at least 15 minutes, I panicked; I hyperventilated; I prayed; I cussed; I tried to not spin; I made a very weak attempt of actually using the lever attached to my rope to make myself go down (No, I do not know the term for the apparatus); my muscles failed me….for 15 minutes.

Why?? Fear of the unknown.  I was in a completely new situation, and one in which I had no control.

Similarly, the unknowns of the future of Medicaid terrify providers, recipients, and advocates alike.  “Just lean back and let go!”

I am currently at the Association for Home and Hospice Care of North Carolina (AHHC) Leadership Convention in Wrightsville Beach.  (Which, BTW, is a great association).  The morning speaker, Scott Carbonara was fantastic.  He spoke about engaging fully in life, work, and family.

During lunch, I ended up sitting next to another attorney (unbeknownst to me at the time of sitting), who works for the National Council on Medicaid.

Another person who wants to talk about Medicaid sitting next to me during lunch? I felt like I drew the lucky straw.

Then she said that she helps implement managed care throughout the country.  She may as well have said that she teaches medical providers to refuse Medicaid and provide horrible services to Medicaid recipients.

You have to understand, if you have read my blogs, my opinion as to MCOs and mental health.

She must’ve read my horror on my face.  She said…”Oh, I know.  Most people do not have positive reactions when I explain my job.”

Me? I felt like I was standing on edge of the ledge with an unknown rappeller telling me to, “Lean back and let go!”  Trust me…

We proceeded to have a rather lengthy conversation.  I explained the effects of the MCOs on Medicaid recipients and behavioral health care providers here in NC. 

I explained to her that some MCOs are denying medically necessary assertive community treatment team services (ACTT) (a highly intense, 24-hour/day service for the most severely mentally ill) even when the recipients meet the continued stay criteria and do not meet discharge criteria.  I explained that the recipients who were undergoing discharge from ACTT were becoming hospitalized, incarcerated, homeless, and sometimes all of the above.

She was horrified.

“Why would the MCOs deny ACTT services if discharge criteria is not met?”  She said.  “It ends up costing more money, with the hospitalizations and incarcerations, than it would cost if the MCO actually authorized the mental health care needed.”  In other words, providing medically necessary services saves money, if you look at the totality of circumstances.

“Where is CMS?”

You win a prize! Ding! Ding! Ding!

I explained that our management of Medicaid services is bifurcated.  The MCOs are only in charge of behavioral health, not the total patient care.  The monetary incentive for the MCOs in NC is to provide the least expensive services to the least amount of Medicaid recipients through the least amount of Medicaid providers.

She said, “Well, the providers can choose to deal with the MCOs, right?”

Not in NC.  As the MCOs are jurisdictional, if the MCO in one county says that you cannot see your patients, another MCO in a different MCO may say otherwise.

She explained that her MCOs work completely differently.  (Here I was on the edge of the Wells Fargo building again).  We are just supposed to trust that other MCOs would act differently?

Then she told me why her MCOs would not act like our current MCOs.

In her MCO world, the MCOs manage ALL Medicaid services. If a recipient suffers high blood pressure, diabetes, and schizophrenia, the MCO handles all the recipients’ medical issues.  That MCO is in charge of the totality of the recipient’s care.  If the MCO denies ACTT services and the recipient is hospitalized, then the MCO has the burden of paying for that more expensive ER visit.  If the MCO denies ACTT services and the recipient is incarcerated without the proper care and medication, then that MCO has the burden of paying for all crisis care for the recipient that may occur from not receiving necessary services.  It costs less to provide proper care rather than let the recipient decompress and pay higher emergency costs. 

Hmmm…

She wanted to get a representative of one her MCOs to listen to my horror stories.  She tried to convince me that the MCOs she has worked with would approve all necessary services.  It’s just cheaper in the long run.

But, to me, there is fear of the unknown.

What if the MCOs she has worked with do NOT authorize services like she is describing??

How do we know that a new system would be better? I mean, we’ve all seen how great the new billing system NCTracks is…New is not always better.  Change is unknown, and the unknown is scary.

I guess we all have to ask ourselves: Is the current NC MCO system bad enough to warrant a change to the unknown?

When you are standing on top the 30-story building, and are told to “Lean back and let go…”

Do you?

Or do you take the elevators?