Category Archives: Associations

Texas Medical Society Sues CMS Over 600% Spike in Administrative Fees

Feb 6

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The Texas Medical Association (TMA) is challenging a 600% hike in administrative fees for seeking federal dispute resolution in the No Surprises Act (NSA) situations. The association seeks relief by filing a fourth lawsuit in the U.S. District Court for the Eastern District of Texas. The Texas Medical Society is the largest state medical society in the nation, even though it is the 2nd largest State followed by Alaska, representing more than 57,000 physicians and medical student members.

The hike only applies to out-of-network physicians or provider and a health plan payor. These situations occur when emergency services are provided by a doctor or health care provider outside of the patient’s insurance network or when out-of-network services are provided at an in-network facility.

The federal agencies set the initial administrative fee at $50 and announced in October 2022 it would remain at $50 for 2023. Two months later the agencies announced a 600% hike in the fee to $350 beginning in January 2023, “due to supplemental data analysis and increasing expenditures in carrying out the Federal IDR process since the development of the prior 2023 guidance.”

The steep jump in fees will dramatically curtail many physicians’ ability to seek arbitration when a health plan offers insufficient payment for care.

The reason that I know the TX Medical Society filed this lawsuit, because it just happened, is because I joined ASMAC, which is the American Society of Medical Association Counsel. It’s an amazing association comprised of Presidents of State medical associations all of whom are lawyers trying to protect physicians. Kelly Walla is the Vice President and General Counsel for the Texas Medical Association, and she circulated an email letting us know. She was a week late in circulating the email because, apparently, the power has been out in Austen.

The association claims that the new uptick in administrative fees violates the notice and comment requirements. I do have a personal question – if the association is successful and gets the fee requirement eradicated due to notice and comment violations, wouldn’t TX just reinstitute the hike in fees, but allow comments next time? If we really ask ourselves, do the comments matter? Who looks at them and do they carry any weight?

Since this hike only applies to out-of-network providers, I wonder if, in TX, the networks are closed. Closed networks means that, supposedly, the network has enough providers and it’s not accepting more providers. What network has “enough providers?” If the law states that everyone has the freedom to pick their provider of choice or “access to care,” then a closed network would fly in the face of that prospect. I have been successful in fighting “closed networks” in the past and gaining access to that “closed network.”

Going back to Texas, the rules include establishing the nonrefundable administrative fee all parties must pay to enter the federal independent dispute resolution (IDR) process in the event of a payment disagreement between an out-of-network physician or provider and a health plan in circumstances covered by the law. The suit lists two radiology groups as plaintiffs: the Texas Radiological Society and Houston Radiology Associated. These groups bill small value claims, so they will be particularly hurt because most claims billed are less than $350, according to the suit. Apparently, the Emergency Department Practice Management Association supports the association’s lawsuit. CMS’ reasoning for the hike is the backlog.  But, making independent dispute resolution more expensive, when doctors have a right to IDR, in my opinion, is counterintuitive. Get more arbitrators. Don’t heighten your fences.

Posted in Access to Care, Associations, CMS, Employee Issues, Federal Law, Health Care Providers and Services, Knicole Emanuel, Legal Analysis, Medicaid, Medicare, Medicare Appeal Process, Medicare Attorney, Provider Appeals of Adverse Decisions for Medicare and Medicaid

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Don’t Like the Reimbursement Rates? Maybe Litigation Is the Answer!

Jan 3

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The Medicare and Medicaid reimbursement rates are a disgrace to health care providers nationwide. The low reimbursement rates are the reason why so many providers refuse to accept Medicare and/or Medicaid patients. Yet, with the pandemic, it is estimated that 100 million people will be on Medicaid by next year. Having a Medicaid card to wave around is useless if providers refuse to accept it.

Hospitals in Nebraska are not putting up with it – and they should not put up with it! Not only can hospitals NOT turn away any person; thus being forced to accept Medicaid and Medicare … and uninsured patients, but the overhead for a hospital is astronomical.

Saying more than half of the state’s hospitals are operating in the red, the Nebraska Hospital Association is calling for a 9.6% increase to Medicaid reimbursement rates this year, and 7.7% next year, after seeing a 2% bump each of the last two years.

The Hospital Association has never demanded this high of a rate increase. Inflation has significantly impacted the costs for Nebraska hospitals. The association says drug costs are up 35%, labor costs are up 20%, supplies are up 15-20%, and food and utilities are up 10%. Overall, it says inflation is up more than 20% per patient compared to the pre-pandemic level. The cost of labor has spiked, especially during the pandemic when emergency room nurses were in such short supply and such demand. Some hospitals were forced to pay nurses $10k a week! Traveling nurses became a “thing,” which allowed nurses to jump around hospitals for the best pay. In no way, I am not campaigning for lower salaries for nurses. Nurses are essential. However, the reimbursement rates are supposed to reflect society’s needs.

The Nebraska Hospital Association is completely in the right to sue for higher reimbursement rates. I commend them. I beseech more association groups to do the same. The dental, pediatric, primary care, home health, long term care facilities, behavioral health care, and other associations across the country should follow suit.

The legal argument is clear. Under §1902(a)(30)(A) of the Social Security Act, State Medicaid programs must ensure that provider payments are “consistent with efficiency, economy, and quality of care and are sufficient to enlist enough providers” to provide access to care and services comparable to those generally available. On November 2, 2015, CMS issued a regulation (42 CFR Part 447) under this authority requiring State Medicaid programs to demonstrate that their Medicaid fee-for-service (FFS) non-waiver payment rates ensure sufficient access to care. See blog.

Hospitals lose money on Medicare and Medicaid patients. Considering the legal requirement of reimbursement rates to be consistent with efficiency, economy, and quality of care, I am shocked that MORE associations haven’t litigated this issue. Perhaps the providers within these associations, who pay high yearly memberships, should demand that associations fund this type of litigation.

I have no doubt that the cost of litigation dissuades most associations from making the expensive decision to litigate for better rates. But isn’t litigating for higher reimbursement rates the job of the associations? The cost would be prohibitive for single provider facilities. And, aren’t we always more strong when we band together?

Posted in Access to Care, Associations, Budget, CMS, Federal Government, Federal Law, Health Care Providers and Services, Hospitals, Increase in Medicaid Spending, Knicole Emanuel, Lawsuit, Legal Analysis, Legal Remedies for Medicaid Providers, Long Term Care Facilities, Medicaid, Medicaid Attorney, Medicaid Providers, Medicaid Reimbursements, Medicare, Medicare and Medicaid Provider Audits, Medicare Attorney, North Carolina Medicaid Rules, Regulations, Policies, and Statutes, Physicians, Primary Care, Provider Appeals of Adverse Decisions for Medicare and Medicaid

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Auditing Medicare Advantage Organizations – About Time!

May 23

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The American Hospital Association (“AHA”) is asking the Department of Justice (DOJ) to look into health insurance companies that routinely deny patients access to care and payments to providers. I’d like a task force as well. This is exactly the problem I have witnessed with managed care organizations or MCOs. In traditional Medicare and Medicaid, MCOs are prepaid and make profit by denying consumers medical care, terminating provider contracts, and not paying providers for care rendered. Congress created the same scenario with Medicare Advantage. Individuals can elect coverage through private insurance plans. While MA has been wildly successful and popular, the AHA is complaining that too many people are getting denied services.

            An OIG report that was published in April cites MAOs as denying services for beneficiaries. We are always talking about providers getting audited, it is about time that the companies that are gateways for providers getting reimbursed and beneficiaries getting medically necessary services are likewise audited for denying services. It seems ironic that providers are audited for potentially billing for too many services and these gateway, third party reimbursement companies are audited for providing too few services – or denying too many prior authorizations. But if the MCO or MAO deny medical services, then the money that would have been paid to the provider stays in their pocket.

            The OIG report found that many MAOs delay or deny services despite those services meeting Medicare prior authorization criteria, approximately 13-18%. Almost a 20% wrongful denial rate. When these MAOs get tax payer money for a Medicare beneficiary and deny services those tax dollars stay in the MAO’s pockets.

            Supposedly MAOs approve the vast majority of requests for services and payment, they issue millions of denials each year, and OIG’s audit of MAOs has highlighted widespread and persistent problems related to inappropriate denials of services and payment. As enrollment in Medicare Advantage continues to grow, MAOs play an increasingly critical role in ensuring that Medicare beneficiaries have access to medically necessary covered services and that providers are reimbursed appropriately.

            According to the OIG report, MAOs denied prior authorization and payment requests that met Medicare coverage rules by: (1) using MAO clinical criteria that are not contained in Medicare coverage rules; (2) requesting unnecessary documentation; and (3) making manual review errors and system errors.

            Personally, I am fed up with these private, insurance companies denying services and keeping our tax dollars. It is about time the insurance companies are audited.

Posted in Alleged Overpayment, Associations, False Claims Act, Federal Government, Fraud, Health Care Providers and Services, Knicole Emanuel, Managed Care, Medicaid, Medicaid Appeals, Medicaid Attorney, Medicaid Recipients, Medicare, Medicare Administrative Contractor, Medicare and Medicaid Provider Audits, Medicare Appeal Process, Medicare Attorney, RAC Audits

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Termination Underway for Virginia Medicaid Behavioral Health Care Providers!

Sep 19

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As Virginia Medicaid behavioral health care providers are being terminated, the question remains, is it legal?

Virginia behavioral health care providers that accept Medicaid are under statewide blanket fire.

Without warning or provocation, the Managed Care Organizations (MCOs) recently began a mass firing, terminating all Medicaid behavioral health care providers “without cause.” Since the terminations involved multiple MCOs that were not ostensibly connected by business organization, involving providers across the state, it became immediately clear that the MCOs may have planned the terminations together.

Why are the MCOs doing this, you might ask? If you were charged with managing a firehose of Medicaid dollars, would you rather deal with 100 small providers or two large providers? This appears to be discrimination based on size.

Thankfully, for the behavioral healthcare providers of Virginia, they had an association, which is run by a tenacious woman with energy like the Energizer Bunny and passion like a tsunami. Caliber Virginia is the association heading the defense.

This is not my first rodeo with large-scale litigation regarding Medicare or Medicaid. I represented four behavioral healthcare providers in the New Mexico debacle through the administrative process. I have brought class-action lawsuits based on the computer software program implemented by the state to manage Medicaid funds. I have been successful in federal courts in obtaining federal injunctions staying terminations of Medicaid provider contracts.

Since I was contacted by Caliber Virginia, I have reviewed multiple contracts between providers and MCOs, termination letters, and federal and state law, listened to the stories of the providers that are facing imminent closure, and brainstormed legal theories to protect the providers.

I came up with this – these MCOs cannot terminate these providers “without cause.” In fact, these MCOs cannot terminate these providers without good reason.

Under numerous Supreme Court holdings, most notably the Court’s holding in Board of Regents v. Roth, the right to due process under the law only arises when a person has a property or liberty interest at stake.

In determining whether a property interest exists, a Court must first determine that there is an entitlement to that property. Unlike liberty interests, property interests and entitlements are not created by the Constitution. Instead, property interests are created by federal or state law, and can arise from statute, administrative regulations, or contract.

Specifically, the Fourth Circuit Court of Appeals has determined that North Carolina Medicaid providers have a property interest in continued provider status. In Bowens v. N.C. Dept. of Human Res., the Fourth Circuit recognized that the North Carolina provider appeals process created a due-process property interest in a Medicaid provider’s continued provision of services, and could not be terminated “at the will of the state.” The Court determined that these due process safeguards, which included a hearing and standards for review, indicated that the provider’s participation was not “terminable at will.” The Court held that these safeguards created an entitlement for the provider, because it limits the grounds for termination, only for cause, and that such cause was reviewable. The Fourth Circuit reached the same result in Ram v. Heckler two years later. I foresee the same results in other appellate jurisdictions, but definitely again within the Fourth Circuit.

Since Ram, North Carolina Medicaid providers’ rights to continued participation has been strengthened through the passage of Chapter 108C. Chapter 108C expressly creates a right for existing Medicaid providers to challenge a decision to terminate participation in the Medicaid program in the Office of Administrative Hearings (OAH). It also makes such reviews subject to the standards of Article 3 of the Administrative Procedure Act (APA). Therefore, North Carolina law now contains a statutory process that confers an entitlement to Medicaid providers. Chapter 108C sets forth the procedure and substantive standards for which OAH is to operate, and gives rise to the property right recognized in Bowens and Ram. Similarly, the Virginia law provides an appeal process for providers to follow in accordance with the Virginia Administrative Process Act.  See VA Code § 32.1-325 and 12 VAC 30-121-230.

In another particular case, a Medicare Administrative Contractor (MAC) terminated a provider’s ability to deliver four CPT® codes, which comprised of over 80 percent of the provider’s bailiwick, severely decreasing the provider’s funding source, not to mention costing Medicare recipients’ access to care and choice of provider.

The MAC’s contention was that the provider was not really terminated, since they could still participate in the network in ways. But the company was being terminated from providing certain services.

The Court found that the MAC’s contention that providers have no right to challenge a termination was without merit. And, rightfully so, the Court stated that if the MAC’s position were correct, the appeals process provided by law would be meaningless. This was certainly not the case.

The MAC’s contention that it operates a “closed network” and thus can terminate a provider at its sole discretion was also not supported by the law. No MAC or MCO can cite to any statute, regulation, or contract provision that gives it such authority. The statutory definition of “closed network” simply delineates those providers that have contracted with the Local Management Entity (LME) MCOs to furnish services to Medicaid enrollees. The MAC was relying on its own definition of “closed network” to exercise complete and sole control and discretion, which is without foundation and/or any merit. Nothing in the definition of “closed network” indicates that MACs or MCOs have absolute discretion to determine which existing providers can remain in the closed network.

It is well-settled law that there is a single state agency responsible for Medicare and Medicaid: The Centers for Medicare & Medicaid Services (CMS). Case law dictates that the responsibility cannot be delegated away. A supervisory role, at the very least, must be maintained.

On the Medicaid level, 42 CFR § 438.214, titled “Provider Selection,” requires the state to ensure, through a contract, that each MCO PIHP (Prepaid Inpatient Health Plan) “implements written policies and procedures for selection and retention of providers.”) A plain reading of the law makes clear that MCOs that operate a PIHP are required to have written policies and procedures for retention of providers. Requiring policies and procedures would be pointless if they are not followed.

The Medicare Provider Manual and any the provisions of a request for proposal (RFP) must be adhered to, pursuant to the federal regulation and the state contracts. To the extent that Alliance’s policy states that it can decide not to retain a provider for any reason at its sole discretion, such a policy does not conform with federal law or the state requirements.

On the Medicare level, 42 U.S.C. § 405(h) spells out the judicial review available to providers, which is made applicable to Medicare by 42 U.S.C. § 1395ii. Section 405(h) aims to lay out the sole means by which a court may review decisions to terminate a provider agreement in compliance with the process available in § 405(g). Section 405(g) lays out the sole process of judicial review available in this type of dispute. The Supreme Court has endorsed the process, for nearly two decades, since its decision in Shalala v. Illinois Council on Long Term Care, Inc., holding that providers are required to abide by the provisions of § 405(g) providing for judicial review only after the administrative appeal process is complete.

The MACs and the MCOs cannot circumvent federal law and state requirements regarding provider retention by creating a policy that allows them to make the determination for any reason in its sole discretion. Such a provision is tantamount to having no policies and procedures at all.

If you or someone you know is being terminated in Virginia, please contact me – kemanuel@potomasclaw.com, or Caliber Virginia – calibervaed@gmail.com.

Caliber Virginia, formerly known as the Association for Community-Based Service Providers (ACBP), was established in 2006 to provide support, resources, and information with a united, well-informed and engaged voice among the community-based behavioral and mental health service providers of the Commonwealth. Caliber Virginia represents organizations that provide health and human services and supports for children, adults, and families in the areas of mental health, substance use disorders, developmental disabilities, child and family health and well-being, and other related issue areas.  Its member providers deliver quality health and human services to over 500,000 of Virginia’s residents each year. Caliber Virginia promotes equal opportunity, economic empowerment, independent living, and political participation for people with disabilities, including mental health diagnoses.

Programming Note:

Listen to Knicole Emanuel’s live reporting on this story Monday, Sept. 23, 2019, on Monitor Monday, 10-10:30 a.m. EST.

First published on RACMonitor

Posted in Access to Care, Administrative Remedies, Associations, Behavioral health, CPT Codes, Federal Government, Federal Law, Freedom of Choice of Provider, Health Care Providers and Services, Injunctions, Knicole Emanuel, Lawsuit, Legal Analysis, Legal Remedies for Medicaid Providers, Managed Care, Medicaid, Medicaid Advocate, Medicaid Appeals, Medicaid Attorney, Medicaid Contracts, Medicaid Providers, Medicaid Recipients, Medicaid Services, Medicare and Medicaid Provider Audits, Mental Health, Mental Illness, Preliminary Injunctions, Provider Appeals of Adverse Decisions for Medicare and Medicaid, Supreme Court, TRO, US Supreme Court

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Hospital Association Joins Lawsuit to Enjoin “Psychiatric Boarding”

Jan 9

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New Hampshire hospitals have joined the American Civil Liberties Union (ACLU) in a lawsuit against the State of New Hampshire over the boarding of mental health patients in hospital emergency rooms.

In November 2018, the ACLU filed a class action lawsuit in NH federal court asking the court to order the cease of the practice of “psychiatric boarding,” in which mental health patients are held sometimes against their will and without due process in hospital emergency rooms throughout New Hampshire as they await admission to the state psychiatric hospital, often for weeks at a time. This is not only a New Hampshire problem. This is a problem in every state. The hospitals want the practice abolished because, in most cases of severe mental illness, the patient is unemployed and uninsured. There are not enough psychiatric beds to hold the amount of mentally ill consumers.

Many psychiatric patients rely on Medicaid, but due to the Institution for Mental Disease (IMD) exclusion, Medicaid does not cover the cost of care for patients 21 to 64 years of age (when Medicare kicks in) at inpatient psychiatric or addiction treatment facilities with a capacity greater than 16 beds. This rule makes it difficult for states to fund larger inpatient psychiatric hospitals, which further exacerbates the psychiatric boarding crisis.

The emergency rooms (ER) have become the safety net for mental health. The two most common diagnoses at an ER is alcohol abuse and suicidal tendencies. There has been a sharp increase in ER visits for the people suffering from mental health issues in the recent years. Are we as a population growing more depressed?

It is very frustrating to be in a hospital without the allowance to leave. But that is what psychiatric boarding is – patients present to an ER in crisis and because there is no bed for them at a psychiatric hospital, the patient is held at the hospital against their will until a bed opens up. No psychiatric care is rendered at the ER. It is just a waiting game, which is not fun for the people enduring it.

I recently encountered a glimpse into how it feels to be stuck at a hospital without the ability to leave. On a personal level, although not dealing with mental health but with hospitals in general, I recently broke my leg. I underwent surgery and received 6 screws and a plate in my leg. Around Christmas I became extremely ill from an infection in my leg. After I passed out at my home due to an allergic reaction to my medication which caused an epileptic seizure, my husband called EMS and I was transported to the hospital. Because it was the day after Christmas, the staff was light. I was transported to a hospital that had no orthopedic surgeon on call. (Akin to a mental health patient presenting at an ER – there are no psychiatric residents at most hospitals). Because no orthopedic surgeon was on call, I was transported to a larger hospital and underwent emergency surgery for the infection. I stayed at the hospital for 5 of the longest days of my life. Not because I still needed medical treatment, but because the orthopedic surgeon had taken off for vacation between Christmas and New Year’s. Without the orthopedic’s authorization that I could leave the hospital I was stuck there unless I left against medical advice. Finally, at what seemed to be at his leisurely time, the orthopedic surgeon came back to work the afternoon of January 1, 2019, and I was able to leave the hospital… but not without a few choice words from yours truly. I can tell you without any reservation that I was not a stellar patient those last couple days when I felt well enough to leave but there was no doctor present to allow it.

I imagine how I felt those last couple days in the hospital is how mentally ill patients feel while they are being held until a bed at a psychiatric unit opens up. It must be so frustrating. It certainly cannot be ameliorating any presenting mental health condition. In my case, I had no mental health issues but once I felt like I was being held against my will, mental health issues started to arise from my anger.

A shortage of psychiatric inpatient beds is a key contributing factor to overcrowded ERs across the nation. Between 1970 and 2006, state and county psychiatric inpatient facilities in the country cut capacity from about 400,000 beds to fewer than 50,000.

A study conducted by Wake Forest University found that ER stays for mental health issues are approximately 3.2 times longer stays than for physical reasons.

ER visits rose by nearly 15% between 2006 and 2014, according to the Healthcare Cost and Utilization Project. Over the same time period, ER visits associated with mental health and substance abuse shot up by nearly 44%.

Hopefully if the NH Hospital Association is successful in its lawsuit, other states will follow suit and file a lawsuit. I am not sure where the mentally ill will go if they do not remain at the ER. Perhaps this lawsuit and others that follow will force states to change the current Medicaid laws that do not allow mental health coverage for those over 21 years old. With the mental health and physical health Americans with Disabilities’ parity laws, I do not know why someone hasn’t challenged the constitutionality of the IMD exclusion.

Posted in Access to Care, Americans with Disabilities, Associations, Behavioral health, Constitutional Claim, Federal Government, Federal Law, Health Care Providers and Services, Hospital Medicaid Providers, Hospitals, Knicole Emanuel, Lawsuit, Legislation, Medicaid, Medicaid Advocate, Medicaid Attorney, Medicaid Providers, Medicaid Recipients, Medicaid Reimbursements, Medicaid Services, Medicare, Medicare Audits, Mental Health, Mental Health Problems, Mental Illness, North Carolina

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AHA Obtains a Permanent Injunction against HHS!!! Raises the Price of Drugs!

Jan 4

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Obtaining injunctions against the government is the best part of my job. I love it. I thrive on it. Whenever there is a reduction in Medicare/caid reimbursements rates, I secretly hope someone hires me to get an injunction to increase the reimbursement rates. But injunctions are expensive. So I am always happy whenever a provider obtains an injunction against the government, even if I were not hired to obtain it.

On December 27, 2018, Judge Rudolph Contreras, United States District Judge, ordered the Department of Health and Human Services (“HHS”) to increase the Medicare reimbursements rates for outpatient drugs under the 340B Drug Program. A permanent injunction!!!

In November 2017, HHS reduced the Medicare reimbursement rates for outpatient drugs acquired through the 340B Program from average sales price (“ASP”) plus 6% to ASP minus 22.5%. Medicare Program: Hospital Outpatient Prospective Payment and Ambulatory Surgical Center Payment Systems and Quality Reporting Programs, 82 Fed. Reg. 33,558, 33,634 (Jul. 20, 2017) (codified at 42 C.F.R. pt. 419).

HHS reduced Medicare reimbursements worth billions of dollars to private institutions. HHS has the authority to set Medicare reimbursement rates. But one should question a 30% reduction. Drug prices haven’t dropped.

Plaintiff – the American Hospital Association (AHA) – sued HHS when HHS cut outpatient pharmaceuticals by 30%. HHS contends that the rate adjustment was statutorily authorized and necessary to close the gap between the discounted rates at which Plaintiffs obtain the drugs at issue—through Medicare’s “340B Program”—and the higher rates at which Plaintiffs were previously reimbursed for those drugs under a different Medicare framework.

AHA asked the Court to vacate the HHS’ rate reduction, require HHS to apply previous reimbursement rates for the remainder of this year, and require HHS to pay Plaintiffs the difference between the reimbursements they have received this year under the new rates and the reimbursements they would have received under the previous rates.

HHS argued that AHA failed to exhaust its administrative remedies. See blog.

What is the 340B Drug Program?

In 1992, Congress established what is now commonly referred to as the “340B Program.” Veterans Health Care Act of 1992, Pub L. No. 102-585, § 602, 106 Stat. 4943, 4967–71. The 340B Program allows participating hospitals and other health care providers (“covered entities”) to purchase certain “covered outpatient drugs” from manufacturers at or below the drugs’ “maximum” or “ceiling” prices, which are dictated by a statutory formula and are typically significantly discounted from those drugs’ average manufacturer prices. See 42 U.S.C. § 256b(a)(1)–(2).3 Put more simply, this Program “imposes ceilings on prices drug manufacturers may charge for medications sold to specified health care facilities.” Astra USA, Inc. v. Santa Clara Cty., 563 U.S. 110, 113 (2011). It is intended to enable covered entities “to stretch scarce Federal resources as far as possible, reaching more eligible patients and providing more comprehensive services.” H.R. Rep. No. 102-384(II), at 12 (1992); see also Medicare Program: Hospital Outpatient Prospective Payment System and Ambulatory Surgical Center Payment Systems and Quality Reporting Programs (“2018 OPPS Rule”), 82 Fed. Reg. 52,356, 52,493 & 52,493 n.18 (Nov. 13, 2017) (codified at 42 C.F.R. pt. 419). Importantly, and as discussed in greater detail below, the 340B Program allows covered entities to purchase certain drugs at steeply discounted rates, and then seek reimbursement for those purchases under Medicare Part B at the rates established by OPPS.

HHS provided a detailed explanation of why it believed this rate reduction was necessary. First, HHS noted that several recent studies have confirmed the large “profit” margin created by the difference between the price that hospitals pay to acquire 340B drugs and the price at which Medicare reimburses those drugs. Second, HHS stated that because of this “profit” margin, HHS was “concerned that the current payment methodology may lead to unnecessary utilization and potential over-utilization of separately payable drugs.” It cited, as an example of this phenomenon, a 2015 Government Accountability Office Report finding that Medicare Part B drug spending was substantially higher at 340B hospitals than at non-340B hospitals. The data indicated that “on average, beneficiaries at 340B . . . hospitals were either prescribed more drugs or more expensive drugs than beneficiaries at the other non-340B hospitals in GAO’s analysis.” Id. at 33,633. Third, HHS expressed concern “about the rising prices of certain drugs and that Medicare beneficiaries, including low-income seniors, are responsible for paying 20 % of the Medicare payment rate for these drugs,” rather than the lower 340B rate paid by the covered hospitals.

The Court found that Plaintiff – AHA – did not need to exhaust its administrative remedies because there was no administrative remedy to exhaust. HHS had ruled that 340B drugs were to be recompensed at 30% lower rates. There is no appeal route for a rule made. There is no reconsideration review of a rule made. Therefore, the Court found that exhaustion of administrative remedies would be futile because no administrative remedies existed.

But the most important finding the Court made was that the 30% reduction in Medicare reimbursement rates for 340B drugs was arbitrary, capricious and outside the Secretary’s legal scope. The Court made the brash decision to determine the reimbursement rate for 340B drugs was arbitrary, but could not decide a remedy.

A remedy for an erroneous rule is to strike the rule and have the government repay the 340B drug reimbursements at the amount that should have been paid. But the Court does not order this. Instead the Court asks for each side to brief what remedy they think should be used. They have 30 days to brief their side.

Posted in 340B Drug Program, Administrative code, Associations, Federal Government, Final Rulings, Health Care Providers and Services, HHS, Hospital Medicaid Providers, Hospitals, Increase in Medicaid Rates, Knicole Emanuel, Legal Remedies for Medicaid Providers, Legislation, Medicaid, Medicaid Advocate, Medicaid Appeals, Medicaid Attorney, Medicaid Providers, Medicare, Medicare and Medicaid Provider Audits, Medicare Attorney, Pharmacy, Provider Appeals of Adverse Decisions for Medicare and Medicaid

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Safety-Net Hospitals Penalized for Too Many Readmissions – Fair or Not Fair?

Oct 12

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Since 2012, Medicare has penalized hospitals for having too many patients end up back in their care within a month. Mind you, these re-admissions are not the hospitals’ fault. Many of the re-admissions are uninsured patients and who are without primary care. Without an alternative, they present back at the hospitals within 30 days. This penalty on hospitals is called the Hospital Readmissions Reduction Program (HRRP) and is not without controversy.

For example, if hospitals are not allowed to turn away patients for their lack of ability to pay, then penalizing the hospital for a readmission (who the hospital cannot turn away) seems fundamentally unfair. Imagine someone at the Center for  Medicare and Medicaid Services (CMS) yelling at you: “You cannot turn away any patients by law! But if you accept a patient for readmission, then you will be penalized!!” The logic is incongruous. The hospital is found in a Catch-22. Damned if they do; damned if they don’t.

The Emergency Medical and Treatment Labor Act (EMTLA) passed by Congress in 1986 explicitly forbids the denial of care to indigent or uninsured patients based on a lack of ability to pay. It also prohibits “patient dumping” a practice in which a hospital orders unnecessary transfers while care is being administered and prohibits the suspension of care once it is initiated.

Even non-emergent care is generally required, depending on the hospital. Public hospitals may not deny patient care based on ability to pay (or lack thereof). Private hospitals may, in non-emergency situations, deny or discontinue care.

The most recent HRRP report, which concentrated on Connecticut hospitals, which will penalize CT hospitals for too many readmissions starting October 1, 2018, shows: 27 of the 29 hospitals evaluated — or 93% — will be penalized in the 2019 fiscal year (Oct. 1, 2018 – Oct. 1, 2019) that began Oct. 1, according to a Kaiser Health News analysis of CMS data. $566 million in total penalties will be required, depending on the severity of the violations.

Here is the formula used to determine penalties for readmission within 30 days to a hospital:

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No hospital that was audited received the maximum penalty of 3%, but 9 CT hospitals will have their Medicare reimbursements reduced by 1% or more. They are: Waterbury Hospital at 2.19%, Bridgeport Hospital at 2.01%, Bristol Hospital at 1.91%, Manchester Memorial Hospital at 1.74%, Johnson Memorial Hospital in Stafford Springs at 1.71%, Midstate Medical Center in Meriden at 1.37%, St. Vincent’s Medical Center in Bridgeport at 1.21%, Griffin Hospital in Derby at 1.17%, and Yale New Haven Hospital at 1.03%.

There is controversy over the HRRP.

Observation status does not count.

Interestingly, what is not evaluated in the Hospital Readmission Reduction Program may be just as important, or more so, than what it is evaluated. -And what is not evaluated in the HRRP has morphed our health care system into a plethora of observation only admissions.

Patients who are admitted under observation status are excluded from the readmission measure. What, pray tell, do you think the result has been because of the observation status being excluded??

  • More in-patient admissions?
  • More observation status admissions?
  • No change?

If you guessed more observation status admissions, then you would be correct.

Most hospitals have developed clinical decision units, which are typically short-stay observation areas designed to care for patients in less than 24-hours. The difference between inpatient and observation status is important because Medicare pays different rates according to each status. Patients admitted under observation status are considered outpatients, even though they may stay in the hospital for several days and receive treatment in a hospital bed. Medicare requires a three-day hospital inpatient stay minimum before it will cover the cost of rehabilitative care in a skilled nursing care center. However, observation stays, regardless of length, do not count toward Medicare’s requirement.

30-Day readmission period is arbitrary.

Why 30-days? If a patient is readmitted on the 30th day, the hospital is penalized. But if the patient is readmitted on Day 31, the hospital is not penalized. There just isn’t a lucid, common sense reason except that 30 is a nice, round number.

The HRRP disproportionately discriminates against hospitals that have high volume of uninsured.

HRRP does not adjust for socioeconomic status. This means that the HRRP may be penalizing hospitals, such as safety-net hospitals, that care for disadvantaged populations.

When other laws, unintentionally or intentionally, discriminate between socioeconomic status, often an association or group brings a class action lawsuit in federal court asking the judge to declare the law unconstitutional due to discrimination. Discrimination can be proven in court by how the law of supply or how the law is written.

Here, the 27 hospitals, which will be receiving penalties for fiscal year 2019, serve a high population of low income patients. The result of which hospitals are getting penalized is an indication of a discriminatory practice, even if it is unintentional.

The Upshot from Knicole:

These hospitals should challenge the HRRP legally. Reimbursements for services render constitute a property right. Usurping this property right without due process may be a violation of our Constitution. For $566 million…there should be a fair fight.

 

Posted in Appeal Rights, Associations, CMS, Connecticut Medicaid, Due process, Federal Government, Federal Law, Health Care Providers and Services, HHS, Hospital Medicaid Providers, Hospitals, Inpatient Hospital Stays, Knicole Emanuel, Lawsuit, Legal Analysis, Legislation, Medicaid, Medicaid Advocate, Medicaid Attorney, Medicaid Providers, Medicaid Services, Medicare, Medicare and Medicaid Provider Audits, Medicare Attorney, Medicare Reimbursement Rates, Provider Appeals of Adverse Decisions for Medicare and Medicaid, Skilled Nursing Visits

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

Aug 30

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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!

 

 

Posted in Access to Care, Associations, Federal Law, Final Rulings, Health Care Providers and Services, Knicole Emanuel, Legal Analysis, Legal Remedies for Medicaid Providers, Legislation, Medicaid, Medicaid Appeals, Medicaid Attorney, Medicaid Costs, Medicaid Providers, Medicaid Services, Medicare, Medicare Attorney, Physicians, Tax Dollars, Taxes, Taxpayers

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COA Dismisses AHA 340B Lawsuit!

Jul 17

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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.

Posted in 340B Drug Program, Administrative code, Administrative Costs, Administrative Remedies, Associations, DSH Hospitals, Federal Government, Federal Law, Final Rulings, Health Care Providers and Services, Hospital Medicaid Providers, Hospitals, Injunctions, Judicial Review, Jurisdiction, Knicole Emanuel, Lawsuit, Legal Analysis, Legislation, Medicaid, Medicaid Advocate, Medicaid Appeals, Medicaid Attorney, Medicaid Costs, Medicaid Providers, Medicare, Office of Medicare Hearings and Appeals, Pharmacy, Preliminary Injunctions, Provider Appeals of Adverse Decisions for Medicare and Medicaid

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

Mar 14

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“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

_______________________________

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).

Screen Shot 2018-03-13 at 5.04.30 PM

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:

Screen Shot 2018-03-13 at 8.08.54 PM

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??

Posted in "Single State Agency", Alleged Overpayment, Appeal Rights, Associations, CMS, CMS Proposal, Due process, Extrapolations, Federal Government, Federal Law, Health Care Providers and Services, HHS, HMS, Injunctions, Innocent Until Proven Guilty, Judicial Review, Knicole Emanuel, Lawsuit, Legal Analysis, Legal Remedies for Medicaid Providers, Legislation, Managed Care, Medicaid, Medicaid Attorney, Medicaid Audits, Medicare, Medicare Administrative Contractor, Medicare and Medicaid Provider Audits, Medicare Appeal Process, Medicare Attorney, Medicare Audits, Medicare RAC, Medicare Reimbursement Rates, Post-Payment Reviews, Preliminary Injunctions, Prepayment Review, RAC, RAC Audits, Regulatory Audits, Tax Dollars, Taxes, Taxpayers, TRO

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