Category Archives: NCGS 108C-5
Prior To Means BEFORE: An Amendment to N.C. Gen. Stat 108C-5(i) and Renovating the Leaning Tower of Pisa
The way it works with our three, separate branches of government is that if the court system determines that a statute should be interpreted as ‘A,’ and the legislative branch does not appreciate the way in which the statute was interpreted, then, during the next session, the legislative branch can pass a bill into law that specifically states that the statute is ‘B’ (provided the statutes are consistent with the constitution).
Take the leaning Tower of Pisa. It was built on unsteady ground and within 10 years of its construction, the builders knew it would lean…much like many of our Medicaid and Medicare laws. A beautiful tower, on paper, may not work in real life and on unsteady ground. But once the tower is erected, renovations can occur that will stop the tower from falling over (supposedly, the leaning Tower of Pisa is now stable).
Similarly, when a new law is enacted, no one can predict whether the law will work in real life or be effective in the manner for which it was intended.
N.C. Gen. Stat. 108C-5 was enacted in 2011 and allows the Department of Health and Human Services (DHHS) to audit a small sample of a health care provider’s medical records and extrapolate the error rate against the universe of all of the provider’s records. For example, HMS, one of NC’s hired auditors, asks a Hospital X for all 99222, 99219 and 99235 codes, that is, initial hospital encounter codes, for the period of time of January 1, 2010 – January 1, 2011. After HMS reviews a sample of those medical records, it determines that Hospital X is miscoding at an error rate of 45% (a conclusion which is ALWAYS likely to be wrong, from my experience) for an actual overpayment amount (from just that particular record sample) of $100,000.00. N.C. Gen. Stat. 108C-5 allows HMS to extrapolate the actual overpayment over a universe all of the Hospital’s records for ‘x’ number of years, to reach an alleged overpayment amount of $4,000,000.00 for the audited time period
It really is ridiculous. For example, one of my clients, a behavioral health care provider, who works very hard for his clients, received from the auditor an alleged notice of overpayment of $640,441.00. My associate, Robert Shaw, reviewed the exact same documents that the auditors reviewed and determined that the audit was erroneous. Robert didn’t even have to take it to court. After he drafted correspondence to the auditing company with explanations of why the audit was incorrect, the auditing company admitted that almost every single one of its conclusions was in error, and agreed to accept $258.20 for one claim.
Going back to N.C. Gen. Stat. 108C-5, subsection (i) used to state, “Prior to extrapolating the results of any audits, the Department shall demonstrate and inform the provider that (i) the provider failed to substantially comply with the requirements of State or federal law or regulation or (ii) the Department has credible allegation of fraud concerning the provider.”
Using the plain language of the statute, in court, I would often argue in defense of a health care provider that the extrapolation should be thrown out because DHHS would send a Tentative Notice of Overpayment (TNO) that included the extrapolated amount in the same correspondence in which DHHS was “demonstrating and informing” the health care provider that either: (i) the provider failed to substantially comply with the requirements of State or federal law or regulation or (ii) the Department has a credible allegation of fraud concerning the provider. N.C. Gen. Stat. 108C-5 clearly states that the demonstration and informing should be given to the health care provider prior to extrapolating.
The DHHS attorney would argue that my argument would create absurd results in that DHHS could demonstrate and inform the provider in one correspondence, then one minute later send the extrapolation. The judges at the Office of Administrative Hearings (OAH) agreed with me to a point. They agreed that the first extrapolation should be thrown out because DHHS did not demonstrate and inform prior to extrapolating.
However, when a provider receives an extrapolation, the first level of appeal is an informal reconsideration review within DHHS, Division of Medical Assistance (DMA). The hearing officers are hired by DHHS and do not, generally, have legal backgrounds; although I can think of one exception. After the reconsideration review, DHHS, through its hired vendor, conducts another extrapolation, which usually does not usually result in a severe decrease in alleged overpayment.
So the Administrative Law Judges (ALJs) held that the subsequent extrapolations…the extrapolations after receiving the TNO which provides the provider notice, are legit…that the TNOs satisfy the requirement of DHHS to demonstrate and inform the provider prior to extrapolating
Well, long story short, DHHS did not like having to defend itself for not providing sufficient notice prior to extrapolating.
Enter Session Law 2014-100, otherwise known as the sneaky Appropriations Bill that appropriates more than our budget.
Session Law 2014-100 revises N.C. Gen. Stat 108C-5(i) to state “(i) Prior to extrapolating the results of any audits, the Department shall demonstrate and inform the provider that (i) the provider failed to substantially comply with the requirements of State or federal law or regulation or (ii) the Department has a credible allegation of fraud concerning the provider. Nothing in the subsection shall be construed to prohibit the Department from identifying the extrapolated overpayment amount in the same notice that meets the requirements of this subsection.”
See the difference? Poof! The leaning Tower of Pisa is renovated!
Session Law 2014-100 retroactively became effective July 31, 2014. So, going forward, I can no longer argue that the TNO is not sufficient notice in order to throw out the first extrapolation.
However, I do have more arguments as to how DHHS is not complying with N.C. Gen. Stat. 108C-5 in an effort to throw out the extrapolation. There is more than one way to skin a cat! In fact, I am waiting for a decision from an ALJ on an innovative argument I made the last week.
Perhaps the leaning Tower of Pisa will lean a little more in the future despite the renovations…
Public Consulting Group (PCG) is one of the contracted entities conducting Medicaid post-payment audits in North Carolina. I’ve heard rumors that NC Department of Health and Human Services (DHHS) is not renewing PCG’s contract, although I have found no evidence to corroborate this rumor.
Regardless, right now, PCG is here and the Medicaid post-payment audits continue. And PCG continues to extrapolate. For more information as to the extrapolations, see my blog: How Does $100 Become $100,000? Check for Clusters!
But is PCG legally allowed to extrapolate? Oh, of course it is allowed to legally extrapolate!! The contract between DHHS and PCG allows PCG to extrapolate, right? But…what if….the extrapolations are not being conducted legally?
N.C. Gen. Stat. 108C-5 states, in pertinent part:
“(i) Prior to extrapolating the results of any audits, the Department shall demonstrate and inform the provider that (i) the provider failed to substantially comply with the requirements of State or federal law or regulation or (ii) the Department has credible allegation of fraud concerning the provider.
Prior to extrapolating, the Department must demonstrate and inform…
Of all the Tentative Notices of Overpayment (TNO) that I have seen, the actual TNO states the extrapolated amount and states that the audit is extrapolated because “(1) the provider failed to substantially comply with the requirements of State or federal law or regulation or (ii) the Department has credible allegation of fraud concerning the provider.” There is no more detail. The TNO literally regurgitates the statutory language into the TNO. Does that constitute “demonstrating”? Better yet, if a provider receives the information that “(1) the provider failed to substantially comply with the requirements of State or federal law or regulation or (ii) the Department has credible allegation of fraud concerning the provider” CONCURRENTLY with receipt of the extrapolated amount, does that notice meet the statutory criteria of PRIOR TO?
Question #1: Does regurgitating the statutory language meet the requirement that the State demonstrate the noncompliance?
Question #2: Does the Department sending the reason for the extrapolation concurrently with the extrapolation meet the statutory requirement to inform the provider prior to extrapolating?
Let’s start with Question #1…
Last night I was checking my daughter’s homework. She had to read an article on Abraham Lincoln. Then she had to answer reading comprehension questions about the article. One question was something like, “What is this article primarily about?” The article discussed the Civil War, Lincoln, the Gettysburg Address, Lincoln’s top hat, Lincoln’s assassination and Lincoln’s gravesite. My daughter answered “B: Abraham Lincoln’s presidency.” (Which was wrong).
What if I told her she was wrong, but never explained why? I believe the conversation would go something like this: “You’re wrong.” “Why?” “Because you’re wrong.” “But WHY am I wrong.” “Because you are wrong.”
In the above scenario, I informed my daughter that she was wrong. But I failed to demonstrate how or why she was wrong.
Similarly, N.C. Gen. Stat. requires that the Department demonstrate and inform the provider that the provider failed to substantially comply with the requirements of State or federal law or regulation or that the Department has credible allegation of fraud concerning the provider.
Inform + Demonstrate = Statutory compliance
So, does PCG demonstrate and inform the providers that the provider failed to substantially comply with the requirements of State or federal law or regulation or that the Department has credible allegation of fraud concerning the provider, simply by restating the identical language in the TNO?
“Why?” “Because you’re wrong.”
Ok, how about Question #2…?
How important is something to occur prior to versus concurrently? I mean, at least it is done, right? Who cares whether the action is done prior to or concurrently?
Think of skydiving. I tell you to be sure to put on your parachute prior to jumping. Instead you hold your parachute, leap out of the plane, and attempt to put on your parachute contemporaneously as jumping. With the amount of air resistance you encounter after you jump, you are unable to get the parachute secured and you die.
Let’s look at a less grotesque example…Think about eating…I tell you to open your mouth prior to inserting the piece of chocolate cake into your mouth. Instead you insert the piece of chocolate cake into your mouth while you concurrently open your mouth. Sure, you get some cake into your mouth, but the majority of the chocolate cake is smeared all over your face.
Can PCG send you one letter saying you are non-compliant while concurrently informing you of the extrapolated amount? Or is that a bit like squashing chocolate cake into your face?
Are PCG’s Extrapolated Medicaid Audits in Violation of State Statute?
According to a report in the “Mason Conservative,” Virginia Democrat delegate candidate, Kathleen Murphy, stated, during a debate, that the government should force physicians to accept Medicaid.
After reading that, how many of you shuddered from horror?
I think we can all agree that we need more physicians to accept Medicaid. We simply do not have enough physicians to meet the needs of all our Medicaid recipients. Not enough physicians equals not enough quality health care to our most needy. In particular, rural areas suffer most from the lack of physicians who accept Medicaid.
According to Forbes magazine, “Right now, the United States is short some 20,000 doctors, according to the Association of American Medical Colleges. The shortage could quintuple over the next decade, thanks to the aging of the American population — and the aging and consequent retirement of many physicians. Nearly half of the 800,000-plus doctors in the United States are over the age of 50.” I’m sure Forbes would have found even more shortage had it researched the rural areas.
But is the answer to force doctors to accept Medicaid?
A week or so ago I saw my primary care physician. I’ve seen my primary care doctor for years. (We will call him Dr. Bob). He’s a native North Carolinian, just like I. So he knew me in college, law school, and for the past 13 years of my legal career, both pre-baby and post-baby. Until a week or so ago, I always knew Dr. Bob accepts Medicaid as a form of insurance. I liked that he did.
Per our normal routine, Dr. Bob asks about my husband, my daughter, and my job. But, usually he is extremely interested in “all-things-Medicaid.” He normally asks the status of reimbursement rates, my opinion on the current administration, my perception of the trend at my job (who was getting audits, who may be getting audits soon, etc.), and other various Medicaid-related issues.
But, at my visit, Dr. Bob fails to ask about the current events of Medicaid. And I, being I, just started talking about Medicaid. He interrupts me and says, “Knicole, I made a difficult decision since I have seen you last.”
Retirement….change in profession???
Retirement…closing his practice???
Instead, Dr. Bob says, “I’ve decided to no longer accept Medicaid.” (My jaw is agape).
My first instinct is, “What? But you CARE! How could you?”
My second instinct is, “I get it. Medicaid is a hassle.”
My third instinct is to actually ask HIM why HE made this decision. (My first couple instincts are usually the wrong route).
When I ask him why he decided to no longer take Medicaid, his response is “I’m sick of people who are not physicians telling me what to do in my practice.”
I get it.
As a primary care physician, the bulk of his Medicaid work is conducting physicals (or what Medicaid calls, “preventative care”).
He says that he is ‘ok’ with the low reimbursement rates of Medicaid because he is able to offset the low reimbursement rates by accepting more privately insured patients (like me). He says he loves serving the Medicaid population. His issue lies in the administrative burden of accepting Medicaid versus accepting private insurance, including the regulatory audits, the way in which the regulatory audits are conducted, NCTracks debacles, and possible unannounced payment suspensions…to name a few. Dr. Bob explains that when he decides a procedure is “gender-and-age-appropriate,” inevitably, someone, from some, state-contracted company, will come back to him a couple of years later to recoup the Medicaid money because that (non-physician) auditor disagrees that the procedure he chose, as a physician, was “gender-and-age-appropriate.”
DMA Clinical Policy 1A-2 defines preventative care as, “An adult preventive medicine health assessment consists of a comprehensive unclothed physical examination, comprehensive health history, anticipatory guidance/risk factor reduction interventions, and the ordering of gender and age-appropriate laboratory and diagnostic procedures.” (emphasis added).
He describes an audit during which an auditor, who was not a physician, attempted to recoup a date of service (DOS), citing the reason as the procedure was not “gender-and-age-appropriate.” How can a non-physician decide what treatment is or is not “gender-and-age-appropriate?”
I’ve seen this before. In behavioral health care audits, an auditor with no substance abuse clinical background determines no medical necessity exists for a service for a Medicaid recipient suffering from substance abuse. In dental audits, an auditor without ever attending dental school, will determine that a partial implant is not medically necessary.
N.C. Gen. Stat. 108C-5 requires that, “[a]udits that result in the extrapolation of results must be performed and reviewed by individuals who shall be credentialed by the Department, as applicable, in the matters to be audited, including, but not limited to, coding or specific clinical issues.” (emphasis added).
Credentialed in the matters to be audited.
Is DHHS seriously credentialing non-physicians to audit physician? Non-dentists to audit dentists? Non-substance abuse clinical providers to audit substance abuse clinical providers?
I do not know whether DHHS is credentialing the auditors, but, in my experience, non-qualified auditors (in the field in which they are auditing) are conducting audits.
Going back to my original premise, are we going to force/require that physicians, in order to be physicians, to accept Medicaid, thus subjecting themselves to limitless and unannounced Medicaid audits? To force physicians to undergo the administrative burden that comes with Medicaid audits, not to mention the administrative burden to just follow Medicaid regulations? To force physicians to accept the quite possible possibility that the physician will need to defend him or herself against audits and incur steep attorneys’ fees?
In Dr. Bob’s case, he did accept Medicaid for years. Then, he consciously made the decision that he no longer wanted to be subject to the regulatory scrutiny that comes with accepting Medicaid. So, now, would we force Dr. Bob to undergo the very scrutiny he so loathes?
It would be similar to the State forcing all attorneys to accept clients at a discounted rate and accept the threat of audits. Or forcing accountants to accept clients at a discounted rate and accept the threat of audits. Or forcing a plumber to accept clients at a discounted rate and accept the threat of audits.
Don’t we, in the United States, have the economic freedom to own private property, thus, logically, allowing us the right to pursue private property?
“We hold these truths to be sacred & undeniable; that all men are created equal & independent, that from that equal creation they derive rights inherent & inalienable, among which are the preservation of life, & liberty, & the pursuit of happiness;…”
See the Declaration of Independence.
I understand that Ms. Murphy’s comment was just that…a comment at a debate. But her comment demonstrates that, while politicians understand there is a shortage of physicians who are willing to accept Medicaid, some politicians may believe that physicians should be forced to accept Medicaid.
But aren’t we all entitled to the economic freedom to pursue private property, happiness, and liberty?
Or is that all a ruse?