Category Archives: NCGS 108C

The Doctrine of Exhaustion of Administrative Remedies and Medicare/caid Providers

medicaidlaw-nc

What is the doctrine of exhaustion of administrative remedies?  And why is it important?

If you are a Medicaid or Medicare provider (which, most likely, you are if you are reading this blog), then knowing your administrative remedies is vital.  Specifically, you need to know your administrative remedies if you receive an “adverse determination” by the “Department.”  I have placed “adverse determination” and the “Department” in quotation marks because these are defined terms in the North Carolina statutes and federal regulations.

What are administrative remedies? If you have been damaged by a decision by a state agency then you have rights to recoup for the damages.

However, just like in the game of Chess, there are rules…procedures to follow…you cannot bring your castle out until the pawn in front of it has moved.

Similarly, you cannot jump to NC Supreme Court without beginning at the lowest court.

What is an adverse determination?

In Medicaid…

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Another Win for the Good Guys! Gordon & Rees Succeeds in Overturning Yet Another Medicaid Contract Termination!

Getting placed on prepayment review is normally a death sentence for most health care providers. However, our health care team here at Gordon Rees has been successful at overturning the consequences of prepayment review. Special Counsel, Robert Shaw, and team recently won another case for a health care provider, we will call her Provider A. She had been placed on prepayment review for 17 months, informed that her accuracy ratings were all in the single digits, and had her Medicaid contract terminated.

We got her termination overturned!! Provider A is still in business!

(The first thing we did was request the judge to immediately remove her off prepayment review; thereby releasing some funds to her during litigation.  The state is only allowed to maintain a provider on prepayment review for 12 months).

Prepayment review is allowed per N.C. Gen. Stat. 108C-7.  See my past blogs on my opinion as to prepayment review. “NC Medicaid: CCME’s Comedy of Errors of Prepayment Review“NC Medicaid and Constitutional Due Process.

108C-7 states, “a provider may be required to undergo prepayment claims review by the Department. Grounds for being placed on prepayment claims review shall include, but shall not be limited to, receipt by the Department of credible allegations of fraud, identification of aberrant billing practices as a result of investigations or data analysis performed by the Department or other grounds as defined by the Department in rule.”

Being placed on prepayment review results in the immediate withhold of all Medicaid reimbursements pending the Department of Health and Human Services’ (DHHS) contracted entity’s review of all submitted claims and its determination that the claims meet criteria for all rules and regulations.

In Provider A’s situation, the Carolinas Center for Medical Excellence (CCME) conducted her prepayment review. Throughout the prepayment process, CCME found Provider A almost wholly noncompliant. Her monthly accuracy ratings were 1.5%, 7%, and 3%. In order to get off prepayment review, a provider must demonstrate 70% accuracy ratings for 3 consecutive months. Obviously, according to CCME, Provider A was not even close.

We reviewed the same records that CCME reviewed and came to a much different conclusion. Not only did we believe that Provider A met the 70% accuracy ratings for 3 consecutive months, we opined that the records were well over 70% accurate.

Provider A is an in-home care provider agency for adults. Her aides provide personal care services (PCS). Here are a few examples of what CCME claimed were inaccurate:

1. Provider A serves two double amputees. The independent assessments state that the pateint needs help in putting on and taking off shoes. CCME found that there was no indication on the service note that the in-home aide put on or took off the patients’ shoes, so CCME found the dates of service (DOS) noncompliant. But the consumers were double amputees! They did not require shoes!

2. Provider A has a number of consumers who require 6 days of services per week based on the independent assessments. However, many of the consumers do not wish for an in-home aide to come to their homes on days on which their families are visiting. Many patients inform the aides that “if you come on Tuesday, I will not let you in the house.” Therefore, there no service note would be present for Tuesday. CCME found claims inaccurate because the assessment stated services were needed 6 days a week, but the aide only provided services on 5 days.  CCME never inquired as to the reason for the discrepancy.

3. CCME found every claim noncompliant because the files did not contain the service authorizations. Provider A had service authorizations for every client and could view the service authorizations on her computer queue. But, because the service authorization was not physically in the file, CCME found noncompliance.

Oh, and here is the best part about #3…CCME was the entity that was authorizing the PCS (providing the service authorizations) and, then, subsequently, finding the claim noncompliant based on no service authorization.

Judge Craig Croom at the Office of Administrative Hearings (OAH) found in our favor that DHHS via CCME terminated Provider A’s Medicaid contract arbitrarily, capriciously, erroneously, exceeded its authority or jurisdiction, and failed to act as accordingly to the law. He ruled that DHHS’ placement of Provider A on prepayment review was random

Because of Judge Croom’s Order, Provider A remains in business. Plus, she can retroactively bill all the unpaid claims over the course of the last year.

Great job, Robert!!! Congratulations, Provider A!!!

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…

General Assembly in Full Swing: What Medicaid Bills Are On the Agenda??

It’s that time of year again. The legislators are back in town. Moral Mondays resume. And all eyes are on the General Assembly. But, this is the short session, and the General Statutes limit the powers of legislative law-making in the short session.

For those of you who do not know how our General Assembly (GA) works and the difference between the short and long sessions, let me explain:

In odd-numbered years, the GA meets in January and continues until it adjourns. There is no requirement as to the length of the long session, but it is normally about 6 months. In the long session, everything is fair game. New laws or changes to the existing laws can be proposed in long sessions for all of the subjects on which the GA legislates.

The short session reconvenes every even-numbered year and typically lasts 6 weeks. Last year the long session adjourned July 26, 2013, and the GA reconvened May 14, 2014.

There are limits as to what measures may be considered in the short session. In fact, at the end of the long session, the GA passed Resolution 2013-23, which states exactly what topics/bills may be considered in the short session.

So…the question is: What Medicaid bills may be considered during this short session?

H0674
H0867
H0320

Now there are of course, exceptions. For example, any bill that directly and primarily affects the State Budget can be introduced. Obviously, a Medicaid bill could, arguably, directly and primarily affect the budget.

The bills I enumerated above, however, are the bills that are allowed to be considered in the short session because they constitute a crossover bill, that is, these bills were passed one house and were received in the other during last year’s long session and are considered “still alive” for consideration during the current short session.

So what do these Medicaid bills propose?

House Bill 674 could be a game changer for Medicaid providers. The bill, which passed the House last year with a vote of 116-0, would direct the Program Evaluation Division to study the contested case process in regards to Medicaid providers. There are 3 key components in this study according to the bill:

1. The Division must review the procedures for a contested case hearing under NCGS 150B and determine whether there is a way to streamline the process and decrease backlog.
2. The Division must consider alternative methods of review other than the contested cases.
3. The Division must review NCGS 108C-12 to determine whether any amendments to the law would improve the cost-effectiveness and efficiency of the Medicaid appeal process. (NCGS 108C-12 is the statute that allows providers to appeal adverse decisions to the Office of Administrative Hearings (OAH)).

Whew. The Program Evaluation Division would have its work cut out for it if the bill passes!

House Bill 674 was received by the Senate on May 5, 2013, and it passed its first reading.

House Bill 867 is named “An Act to Allow for the Movement of Certain Medicaid Recipients,” and it purports to allow those recipients with an 1915(c) Innovations Waiver slot to move about the State and for the slots to be recognized uniformly across the State. This way a person with an Innovations Waiver would not need to re-apply in another county if he or she moves there. However, for those served by the managed care organizations (MCOs), residency is determined by the county in which the recipient currently resides.

Then we come to House Bill 320. See my blog,”HB320: The Good News and the Bad News for NC Medicaid Providers.”

House Bill 320 mainly speaks to Medicaid recipient appeals, but imbedded within the language is one tiny proposed change to NCGS 108C-1. Just an itty, bitty change.

NCGS 108C-1 provides the scope of 108C (which applies to providers) and currently reads, “This Chapter applies to providers enrolled in Medicaid or Health Choice.”

If House Bill 320 passes, NCGS 108C-1 will read, “This Chapter applies to providers enrolled in Medicaid or Health Choice. Except as expressly provided by law, this Chapter does not apply to LME/MCOs, enrollees, applicants, providers of emergency services, or network providers subject to Chapter 108D of the General Statutes.”

What????

If House Bill 320 passes, what, may I ask, will be a Medicaid provider’s appeal options if NCGS 108C does not apply to MCOs? And would not the new scope of NCGS 108C-1 violate the State Plan, which explicitly gives OAH the jurisdiction over any contracted entity of the Department of Health and Human Services (DHHS)?  See my blogs on MCOs: “NC MCOs: The Judge, Jury and Executioner,” and “A Dose of Truth: If an MCO Decides Not to Contract With You, YOU DO HAVE RIGHTS!

I also wonder, if House Bill 320 passes, what effect this revision to NCGS 108C-1 will have. Arguably, it could have no effect because of the above-mentioned language in the State Plan, the 4th Circuit Court of Appeals case that determined that MCOs are agents of the state, and the fact that the Department is defined in 108C-2 to include any of its legally authorized agents, contractors, or vendors.

On the other hand, in every single lawsuit that I would bring on behalf of a provider against an MCO, I would have another legal obstacle to overcome. The MCO’s attorney would invariably make the argument that OAH does not have jurisdiction over the MCO because the scope of 108C has been changed to exclude the MCOs. They have been arguing already that OAH lacks jurisdiction over the MCOs since NCGS 108D was passed, but to no avail.

Needless to say, the MCO lobbyists will be pushing hard for H 320 to pass. H 320 passed its 3rd reading on May 15, 2013, by a vote of 114-0, and the Senate received it on May 16, 2013.