Category Archives: Harassment
DHHS has ousted and taken over Cardinal Innovations!
And may I just say – Finally! Thank you, Sec. Cohen.
Cardinal is/was the largest of seven managed care organizations (MCOs) that was given the task to manage Medicaid funds for behavioral health care recipients. These are Medicaid recipients suffering from developmental disabilities, mental health issues, and substance abuse; these are our population’s most needy. These MCOs are given a firehose of Medicaid money; i.e., tax dollars, and were entrusted by the State of North Carolina, each individual taxpayer, Medicaid recipients, and the recipients’ families to maintain an adequate network of health care providers and authorize medically necessary behavioral health care services. Cardinal’s budget was just over $682 million in 2016. Instead, I have witnessed, as a Medicaid and Medicare regulatory compliance litigator, and have legally defended hundreds of health care providers who were unlawfully terminated from the MCOs’ catchment areas, refused a contract with the MCOs, accused of owing overpayments to the MCOs for services that were appropriately rendered. To the point that the provider catchment areas are woefully underrepresented (especially in Minority-owned companies), recipients are not receiving medically necessary services, and the MCOs are denying medically necessary services. The MCOs do so under the guise of their police power. For years, I have been blogging that this police power is overzealous, unsupervised, unchecked, and in violation of legal authority. I have blogged that the MCOs act as the judge, jury, and executioner. I have also stated that the actions of the MCOs are financially driven. Because when providers are terminated and services are not rendered, money is not spent, at least, on the Medicaid recipients’ services.
But, apparently, the money is spent on executives. This past May, State Auditor Beth Wood wrote a scathing performance audit regarding Cardinal’s lavish spending on CEO pay as well as on expensive Christmas parties and board retreats, charter flights for executives and “questionable” credit card purchases, including alcohol. All of that, her report said, threatened to “erode public trust.” Cardinal’s former CEO Richard Topping made more than $635,000 in salary this year. On Monday (November 21, 2017), DHHS escorted Topping and three other executives out the door. But they did not walk away empty handed. Topping walked away with a $1.7 million severance while three associates left with packages as high as $740,000 – of taxpayer money!
This overspending on salaries and administration is not new. Cardinal has been excessively spending on itself since inception. This has been a long term concern, and I congratulate Sec. Cohen for having the “cojones” to do something about it. (I know. Bad joke. I apologize for the French/Spanish).
In 2011, Cardinal spent millions of dollars constructing its administrative facility.
According to Edifice, the company that built Cardinal Innovations’ grand headquarters, starting in 2011, Cardinal’s building is described as:
“[T[his new three-story, 79,000-square-foot facility is divided into two separate structures joined by a connecting bridge. The 69,000-square-foot building houses the regional headquarters and includes Class A office space with conference rooms on each floor and a fully equipped corporate board room. This building also houses a consumer gallery and a staff cafe offering an outdoor dining area on a cantilevered balcony overlooking a landscaped ravine. The 10,000-square-foot connecting building houses a corporate training center. Computer access flooring is installed throughout the facility and is supported by a large server room to maintain redundancy of information flow.” How much did that cost the Medicaid recipients in Cardinal’s catchment area? Seem appropriate for an agent of the government spending tax money for luxurious office space? Shoot, my legal office is not even that nice. And I don’t get funded by tax dollars!
In 2015, I wrote:
On July 1, 2014, Cardinal Innovations, one of NC’s managed care organizations (MCOs) granted its former CEO, Ms. Pam Shipman, a 53% salary increase, raising her salary to $400,000/year. In addition to the raise, Cardinal issued Ms. Shipman a $65,000 bonus based on 2013-2014 performance.
Then in July 2015, according to the article in the Charlotte Observer, Cardinals paid Ms. Shipman an additional $424,975, as severance. Within one year, Ms. Shipman was paid by Cardinal a whopping $889,975. Almost one million dollars!!!!
Now, finally, DHHS says Cardinal Innovations “acted unlawfully” in giving its ousted CEO $1.7 million in severance, and DHHS took over the Charlotte-based agency. It was a complete oust. One journalist quoted Cardinal as saying, “DHHS officials arrived at Cardinal “unexpectedly and informed the executive leadership team that the department is assuming control of Cardinal’s governance.”” Unexpected they say? Cardinal conducted unexpected audits all the time on their providers. But, the shoe hurts when it’s on the other foot.
The MCOs are charged with the HUGE fiscal and moral responsibility, on behalf of the taxpayers, to manage North Carolina and federal tax dollars and authorize medically necessary behavioral health care services for Medicaid recipients, our population’s most needy. The MCOs in NC are as follows:
- Vaya Health
- Partners Behavioral Health Management
- Cardinal Innovations (formerly)
- Trillium Health Resources
- Alliance Behavioral Health Care
- Sandhills Center
The 1915 (b)(c) Waiver Program was initially implemented at one pilot site in 2005 and evaluated for several years. Two expansion sites were then added in 2012. The State declared it an immediate success and requested and received the authority from CMS to implement the MCO project statewide. Full statewide implementation is expected by July 1, 2013. The MCO project was intended to save money in the Medicaid program. The thought was that if these MCO entities were prepaid on a capitated basis that the MCOs would have the incentive to be fiscally responsible, provide the medically necessary services to those in need, and reduce the dollars spent on prisons and hospitals for mentally ill.
Sadly, as we have seen, fire hoses of tax dollars catalyze greed.
Presumably, in the goal of financial wealth, Cardinal Innovations, and, maybe, expectantly the other MCOs, have sacrificed quality providers being in network and medically necessary services for Medicaid recipients, Cardinal has terminated provider contracts. And for what? Luxurious office space, high salaries, private jets, and a fat savings account.
I remember a former client from over 5 years ago, who owned and ran multiple residential facilities for at-risk, teen-age boys with violent tendencies and who suffered severe mental illness. Without cause, Alliance terminated the client’s Medicaid contract. There were no alternatives for the residents except for the street. We were able to secure a preliminary injunction preventing the termination. But for every one of those stories, there are providers who did not have the money to fight the terminations
Are there legal recourses for health care providers who suffered from Cardinal’s actions?
The million dollar question.
In light of the State Auditor’s report and DHHS’ actions and public comments that it was usurping Cardinal’s leadership based on “recent unlawful actions, including serious financial mismanagement by the leadership and Board of Directors at Cardinal Innovations,” I believe that the arrows point to yes, with a glaring caveat. It would be a massive and costly undertaking. David and Goliath does not even begin to express the undertaking. At one point, someone told me that Cardinal had $271 million in its bank account. I have no way to corroborate this, but I would not be surprised. In the past, Cardinal has hired private, steeply-priced attorney regardless that its funds are tax dollars. Granted, now DHHS may run things differently, but without question, any legal course of action against any MCO would be epically expensive.
Putting aside the money issue, potential claims could include (Disclaimer: this list is nonexhaustive and based on a cursory investigation for the purpose of my blog. Furthermore, research has not been conducted on possible bars to claims, such as immunity and/or exhaustion of administrative remedies.):
- Breach of fiduciary duty. Provider would need to demonstrate that a duty existed between providers and MCO (contractual or otherwise), that said MCO breached such duty, and that damages exist. Damages can include actual loss and if intent is proven, punitive damages may be sought.
- Unfair and Deceptive Trade Practices. Providers would have to prove three elements: (1) an unfair or deceptive act or practice; (2) in or affecting commerce; (3) which proximately caused the injury to the claimant. A court will first determine if the act or practice was “in or affecting commerce” before determining if the act or practice was unfair or deceptive. Damages allowed are actual damages, plus treble damages (three times the actual damages).
- Negligence. Providers would have to show (1) duty; (2) breach; (3) cause in fact; (4) proximate cause; and (5) damages. Actual damages are allowed for a negligence claim.
- Breach of Contract. The providers would have to demonstrate that there was a valid contract; that the providers performed as specified by the contract; that the said MCO failed to perform as specified by the contract; and that the providers suffered an economic loss as a result of the defendant’s breach of contract. Actual damages are recoverable in a breach of action claim.
- Declaratory Judgment. This would be a request to the Court to make a legal finding that the MCO failed to follow certain Medicaid procedures and regulations.
- Violation of Article I, NC Constitution (legal and contractual right to receive payments for reimbursement claims due and payable under the Medicaid regulations.
To name a few…
In the 1968 Presidential campaign, Richard Nixon stated that “new leadership will end the war” in Vietnam. Also, in a 1968 interview, Nixon said he had “no magic formula” or “gimmick” for ending the Vietnam War. Then, in his memoirs, Nixon stated he never claimed to have such a plan. This is called a broken election promise.
Sadly, Richard Nixon’s broken election promise was not the first, nor would it be the last. We have become used to politicians making election promises and breaking those same promises which got them elected once they are in office.
“If you like your doctor, you can keep your doctor. If you like your health care plan, you can keep your health care plan.”
“Read my lips: no new taxes.”
Over the last few years, I have written ad nausem about accountability and proper supervision when it comes to the Managed Care Organizations (MCOs) in North Carolina. The other day, I was reviewing some pertinent federal regulations and came across this:
§ 438.52 Choice of MCOs, PIHPs, PAHPs, and PCCMs.
• General rule. Except as specified in paragraphs (b) and (c) of this section, a State that requires Medicaid beneficiaries to enroll in an MCO, PIHP, PAHP, or PCCM must give those beneficiaries a choice of at least two entities.
Obviously, North Carolina is not adhering to the above-referenced requirement.
Pull up the Waiver. In order to offer Medicaid enrollees only one MCO or other such entity, North Carolina would have had to request a waiver of 42 CFR § 438.52.If you rely on Medicaid for behavioral health care and live in Wake County, you have no choice but to rely on the provider network of only entity, Alliance Behavioral Health (Alliance), to receive services. For example, you do not get to choose between Alliance’s provider network and Eastpointe Behavioral Healthcare’s (Eastpointe) provider network. Staying with the same theoretical hypothesis, if your provider was not anointed with the gift of being in Alliance’s network, then you do not get to stay with your provider.
“If you like your doctor, you can keep your doctor. If you like your health care plan, you can keep your health care plan.”
Similar to President Barack Obama’s contention quoted above, we made similar promises to the Center for Medicare and Medicaid Services (CMS). Our promises are found within our Waivers. We have two Waivers, one for the developmentally disabled population and one for the mentally ill/substance abuse population. Each Waiver waives certain federal exceptions. However, in lieu of the federal requirements, we make certain promises to CMS. In order to waive 42 CFR § 438.52, we made certain promises to CMS in order to circumvent the necessary provisions of 42 CFR § 438.52.
The State sought a waiver of section 1902(a)(4) of the Act:
“The State seeks a waiver of section 1902(a)(4) of the Act, which requires States to offer a choice of more than one PIHP or PAHP per 42 CFR 438.52. Please describe how the State will ensure this lack of choice of PIHP or PAHP is not detrimental to beneficiaries’ ability to access services.”
Here are our promises:
“Under these circumstances, the State does not believe that making only one plan available in each geographic area of the State will negatively impact recipients’ access to care.”
“The LMEs have decades of experience locating and developing services for consumers with MH/IDD/SAS needs, and over the years, have built strong and collaborative working relationships with the providers of these services.”
“These providers support this initiative and consumers have at least as much choice in individual providers as they had in the non-managed care environment.”
“Enrollees will have free choice of providers within the PIHP serving their respective geographic area and may change providers as often as desired. If an individual joins the PIHP and is already established with a provider who is not a member of the network, the PIHP will make every effort to arrange for the consumer to continue with the same provider if the consumer so desires.”
“If you like your doctor, you can keep your doctor. If you like your health care plan, you can keep your health care plan.”
My two personal favorites among the State’s promises to CMS are: (1) “consumers have at least as much choice in individual providers as they had in the non-managed care environment;” and (2) the PIHP will make every effort to arrange for the consumer to continue with the same provider if the consumer so desires.”
These promises, in reality, are utter horsefeathers.
Over and over my provider clients come to me because one of the MCOs has terminated their Medicaid contract, usually for absolutely no valid reason. Over and over my provider clients tell me that their consumers are devastated by the news that they may lose their provider. I have had consumers contact me to beg me to help the provider. I have had consumers appear in court stating how much they want that particular provider. I have had provider clients cry in my office because their consumers are so upset and regressing because of the news that they may have to find another provider.
Yet, we have promised CMS that consumers have just as much choice in providers than when there was no managed care.
In the words of Dorothy from the Wizard of OZ, “You ought to be ashamed of yourself. Frightening him like that when he came to you for help.”
Similarly, our Medicaid recipients go to their providers for help. They create relationships…trust…bonds. And the MCOs are terminating these very providers, most for invalid and erroneous reasons, and, certainly, without the consideration of our promise to CMS.
But, remember, we are told the PIHPs will make every effort to keep the consumer with the chosen provider…
It would be interesting to do a public records request as to how many providers have been terminated by the MCOs in the last 2 years. Because, even if only 1 provider were terminated in the past 2 years and its consumers still wanted to go to that particular provider, then our State has broken its promise.
Apparently, due to my outspoken positions, DHHS will no longer honor my public records requests, which I think is absolutely preposterous. I am, still, a paying taxpayer last time I checked, which is every pay-day when I only get 60% of my wages. If any of you would submit this public records request, please forward it to me. I would be grateful for the information.
A colleague sent the following article to me this morning. When I first read it, I was thrilled, because I have been beseeching the North Carolina legislators to demand accountability of the Department of Health and Human Services (DHHS), Division of Medical Assistance (DMA) for the sake of health care providers who accept Medicaid in NC (especially behavioral health care providers).
So few providers accept Medicaid as is. But with the Medicaid system in such a downward spiral, more providers decide to NOT accept Medicaid every day. Providers just don’t want to deal with the harassment (not to mention the low reimbursement rates).
According to this News and Observer article below, “black legislators” are demanding accountability from DHHS.
Again, my first response was, thank goodness, at least someone is. But when I talked to my husband about this, he asked, “Why are just the black legislators demanding accountability? Where are the white legislators? Where are the other ethnicities?”
Providers across NC are having their Medicaid contracts erroneously terminated or not renewed. Providers are going out of business. Providers are not accepting Medicaid. Medicaid recipients are being denied medically necessary services. Medicaid recipients are unable to find providers willing to accept Medicaid. Especially in behavioral health. What will it take for people to care? A Columbine?
Is this a “black” problem? A “white” problem? A Republican or Democrat problem?
NO! It is a North Carolina problem.
So, bravo, members of the Legislative Black Caucus!!! Bravo for being a leader. But I hope your leadership causes all legislators, no matter the color or party-affiliation, to question DHHS.
Here is the article:
Leading black legislators are calling on the head of the Department of Health and Human Services to explain delays in Medicaid payments to providers, problems getting food stamps to the needy, and agency employee raises.
Members of the Legislative Black Caucus said at a news conference Wednesday that they were not receiving timely and accurate information about activities in the department. Their news conference came a few hours after DHHS distributed information touting the department’s accomplishments.
DHHS spokesman Ricky Diaz said the agency provides legislators with regular updates and will continue to do so.
The department has been under scrutiny for the past few months for personnel decisions and problems with expensive computer systems.
The department included on its list of accomplishments the Medicaid payment system called NC Tracks. The system continues to frustrate some providers who have trouble getting paid for patient care.
The lawmakers, all Democrats, sent their letter to Dr. Aldona Wos, the department’s secretary, and Gov. Pat McCrory. The letter was full of questions about NC Tracks and NC FAST, another computer system, which handles food assistance. The letter also asked questions about personnel matters.
The department has a personal services contract with Joe Hauck, a vice president in Wos’ husband’s firm, that has paid Hauck more than $228,000 for about eight months of work as an adviser.
Rep. Garland Pierce, a Scotland County Democrat and president of the Black Caucus, referred to the Hauck contract as one of the “questionable decisions made by her that almost call her integrity into question.”
Wos sent an email to a small group of legislators last week saying Hauck has done important work for the department. Black Caucus members said the email should have been widely distributed.
Legislators also questioned salaries and raises given to new staff and long-time top administrators.
Diaz explained that Wos walked into a department without a leadership team or a succession plan. She had to find top people quickly, he said.
“We have attracted talent to the department to take on these challenges,” Diaz said. Meanwhile, the agency has cut its payroll $23 million, he said.
Lawmakers said they need accurate information from DHHS because health care providers ask them when the agency’s computer problems will be fixed and because low-income people are going hungry.
Sen. Earline Parmon, a Winston-Salem Democrat, said she was on a conference call with Wos and others in the department about two weeks ago, where they offered a “glowing perspective” on the computer systems.
“A few minutes later, I got information that everything they told us was not factual,” Parmon said. “First of all, we need for them to sit with us and admit that there are problems.”
The legislators’ letter included a report from the Triangle Business Journal that said for the week ending Aug. 23, the department missed three of four targets for approved Medicaid claims and had a backlog of more than 90,000 items.
Diaz noted that the system has processed 29 million claims and paid out $1.4 billion.
The department told the public there would be a 60- to 90-day rough patch once NC Track started running, Diaz said.
“Those who are trained come to realize the benefits of it,” he said.
I am finally back home in North Carolina from beautiful New Mexico. If you ever forget how large America is, fly across country for one day and come back. I think I ate 12 packets of Delta peanuts, and I know I spent over $8 for a hamburger at the Atlanta airport during a layover (How do they sleep at night charging that much for a hamburger?!). But…WOW!!…did I learn some eye-opening, Medicaid information.
It is without question that, recently, North Carolina providers that accept Medicaid have undergone serious, over-zealous scrutiny and audits. Even more so than normal. And, even more so, behavioral health care providers are undergoing increased scrutiny with the implementation of the Managed Care Organizations (MCOs).
But what I saw in New Mexico that has happened to 15 behavioral health care providers (BHP) in New Mexico, which served 87% of the NM Medicaid recipients, would make any American cringe.
Let me set the stage:
These BHP have been in business for a very long time without issue. OptumHealth (Optum) is one of the acting MCOs in New Mexico (NM). Analogous to our Alliance, EastPointe, or East Carolina Behavioral Health. From my understanding, sometime in January 2013, Optum contacted the NM single state entity that manages Medicaid. (In NC, the single state entity is the Department of Health and Human Services (DHHS), Division of Medical Assistance (DMA); in NM, it is Human Services Department (HSD)). Optum alleged that 15 BHP were committing abhorrent billing practices.
According to the representative for HSD, HSD decided to contract with Public Consulting Group (PCG) to conduct an independent audit to determine whether Optim’s allegations had merit. So, in Jan or Feb. 2013, HSD contracted with PCG to conduct the independent audit on the 15 BHP. The PCG Executive Summary of its audit was published in February 2013.
You can find the entire Executive Summary here.
PCG found, in pertinent part:
I know, hard to read. Anyway, PCG found over $36 million in overpayments to these 15 providers.
At first blush, one would think, “Holy cow! These providers were overpaid $36 million!” But hold on…how many providers here in NC have undergone a PCG audit, only to find that PCG’s audit was erroneous, the extrapolation was inflated, and many noncompliance claims were actually compliant?
See NC Medicaid Extrapolation Audits: How Does $100 Become $100,000? Check for Clusters! Or Overinclusive NC Medicaid Recoupments and the Provider “Without Fault” Defense. Or NC Medicaid RACs Paid to Find Errors By Providers, No Incentive to Find Errors By DMA. Or The Exaggeration of the Tentative Notice of Overpayments.
The reality is that most PCG audits (at least the ones I have reviewed) are erroneous.
At the end of the day, the provider does NOT owe the over-inflated amount PCG claims. So, with the knowledge that many (all that I have seen) of PCG’s audits are erroneous, let me get back to my story.
Based on PCG’s audit, HSD determined that credible allegations of fraud existed and immediately suspended the Medicaid payments for all 15 providers.
But…get this…HSD provided zero appeal rights. The providers were unable to appeal the State’s decision to suspend the Medicaid payments. And even worse, PCG and the State refused to give the providers the data compiled by PCG that, supposedly, demonstrated the credible allegations of fraud. So the providers could not even defend themselves against the audit results because the providers were not allowed to see the audit results. To this day, the providers do not know what documents PCG audited or what the purported noncompliance is.
This would be similar to me accusing you of embezzling money from my company, but never showing you what proof I have. Firing you for embezzlement and calling the police. The police arresting you based on my accusation, but you never get a day in court or even the proof to defend yourself.
In America, really? Where is the due process?
The Fourteenth Amendment of the U.S. Constitution states, in pertinent part:
All persons born or naturalized in the United States, and subject to the jurisdiction thereof, are citizens of the United States and of the State wherein they reside. No State shall make or enforce any law which shall abridge the privileges or immunities of citizens of the United States; nor shall any State deprive any person of life, liberty, or property, without due process of law; nor deny to any person within its jurisdiction the equal protection of the laws.
I mean, come on, due process is a benchmark of our country. As American as cheeseburgers and the 4th of July…
Yet, these 15 providers in New Mexico received no due process.
During the Tuesday, September 3, 2013, New Mexico behavioral health subcommittee, Larry Heyek, the HSD Deputy General Counsel, cited the authority for HSD’s preliminary investigation as 42 C.F.R. 455.14, which states that:
“If the agency receives a complaint of Medicaid fraud or abuse from any source or identifies any questionable practices, it must conduct a preliminary investigation to determine whether there is sufficient basis to warrant a full investigation.”
Interestingly enough, the C.F.R. section preceding 455.14 requires due process.
42 CFR 455.13 states:
The Medicaid agency must have—
Yet, the State of New Mexico, based on PCG’s audit, infringed on the legal rights of all 15 providers and no provider was afforded due process of law.
So what happened to these 15 providers due to the PCG audit? Did HSD attempt a recoupment of the $36 million? Did HSD terminate the 15 providers’ Medicaid contract? A plan of correction?
HSD went to Arizona, hired 3-5 (not sure on the number) large, health care providers to take over the 15 providers’ companies. Literally, these Arizona companies have gone to the 15 providers’ buildings and have either purchased the buildings or leased the buildings and the 15 providers no longer exist (realistically…legally, the companies still exist). Staff was fired. Medicaid recipients were not serviced.
Talk about a hostile takeover!!!
But, here is the kicker….
HSD, supposedly, hired PCG to conduct an independent audit on the 15 providers. Yet, Thomas Aldrich, a manager at PCG, testified at the NM subcommittee’s meeting that Mr. Aldrich (PRIOR to conducting the “independent” audit) flew with Secretary Sidonie Squier, and others, to Arizona to vet health care providers to take over the 15 NM providers.
PRIOR to the audit!!!!
Secretary Squier did not know whether Optum’s allegations of abhorrent billing practices had merit. Yet, she and Mr. Aldrich flew to Arizona, on NM Medicaid dollars, and sought out Arizona companies that could take over the 15 NM providers. BEFORE any proof of truly abhorrent billing.
BEFORE the providers could defend themselves.
Imagine the State of North Carolina coming and taking over your company. Imagine you have no due process. Imagine you don’t even understand the charges with which the State is charging you.
Now imagine that the scenario is reality…in New Mexico.
Oh, BTW, Thomas Aldrich, the manager at PCG, testified in front of the NM behavioral health committee that he is in charge of two major projects: (1) the New Mexico audit; and (2) the North Carolina audits.
As you know, I traveled to New Mexico earlier this week to testify before the New Mexico subcommittee for behavioral health about Public Consulting Group (PCG) Medicaid audits in North Carolina. Interestingly, I learned that Thomas Aldrich, a manager at PCG, is in charge of two projects: (1) the New Mexico audit; and (2) the North Carolina audits. Hmmmmm….and the plot thickens….oh, what a tangled web we weave…
More to come tonight…. (I’m still trying to catch up for the days I was gone).
By James Staley
By Steve Terrell
“Medicare RAC Program A BURDEN,” Providers Tell Senate Committee…Wait Until They See the Medicaid RAC Program!
“Waste neither time nor money, but make the best use of it.” Benjamin Franklin
Recently, the Senate Finance Committee met and discussed the burden of Medicare Recover Audit Contractors (RACs) audits on health care providers. For a full video of the hearing, click here. Chairman Baucas began the committee with Benjamin Franklin’s quote. The implication? RACs are wasting both.
The Senate Finance Committee got it right! The Committee stated that the Medicare RAC program creates an excessive administrative burden on health care providers and results in the denial of legitimate claims. Two representatives from separate health care organizations spoke to the Senate Finance Committee hearing. Bipartisan panel leadership also expresses concern about burdens RACs place on providers. The Medicare RAC program is designed to detect and recover improper Medicare payments.
Chairman Baucas gave an example of immense administrative burden by describing the efforts of Kalispell Regional Hospital, a small regional hospital in Montana, undertaken in response to the Medicare RAC audits. According to Chairman Baucas, Kalispell has spent over $1 million on RAC compliance, hired 3 additional staff members to exclusively concentrate on RAC audits, and devoted a total of 8 staff members to RACs. It was estimated that 8600 hours/year of Kalispell’s internal staff is devoted to RAC audits.
Charles Pierce, the Chief Financial and Information Officer of Kalispell, complained of 3 main problems with the RAC audits:
2. Overzealousness, and
3. The fact that there is no penalty on RACs for getting the audits wrong.
Other complaints included that the RACs request the same documents over and over, the same issues are audited multiple times, and the same patients were audited multiple times. Another complaint was that the cost of appeal lies on the health care providers, not the RACs.
When the representative spoke on behalf of the RACs, Mr. Rolf, the rep stated that CMS had audited the RACs accuracy and all RACs had accuracy rates over 90%. I thought, maybe he meant CCME, not CMS.
Does this not sound like the RAC program in North Carolina for Medicaid? This Senate Finance Committee meeting may as well have been held in Raleigh, NC state and discussing Medicaid RACs.
How did these particular providers get heard by Washington? Why did Washington listen to these providers’ complaints about Medicare records?
Answer? Generally, these are hospital providers and have both more influence and money than the average individual provider in North Carolina.
In NC, the Medicaid RACs are damaging (so far) behavioral health providers, dentists, and durable medical equipment providers. The RACs are expanding now to audit short-term, inpatient hospital stays, x-rays, long-term care and laboratories.
By federal statute, the RACs are not to place undue burden on providers. Yet, both Medicare and Medicaid providers are undergoing severe administrative burden because of the RACs.
Going back to the Senate Finance Committee, the RAC rep, Mr. Rolf, also seemed to indicate that the Administrative Law Judges (ALJs) did not have the clinical knowledge to review these RAC audits. Mr. Rolf, I respectfully disagree (not that all ALJs do not have the clinical knowledge, but the inference that clinical knowledge is needed). When we have lawsuits regarding a car wreck, do we have an accident reconstruction expert as the judge? Plus, these RAC audits have less to do with clinical criteria and more to do with the RAC auditors simply mis-applying the administrative policies. Besides, if we are going to compare clinical knowledge, let’s compare the RAC auditors’ clinical knowledge to that of the actual provider rendering the services.
Two Senators on the Committee touched on two very important issues that I want to highlight:
Senator Enzi stated that he was concerned that the RACs are compensated by contingency fees. Mr Rolf stated that the RACs are paid equally for overpayments AND underpayments. I am not sure what particular RAC Mr Rolf was representing, but in NC, our RACs are paid a contingency fee for OVERpayments and a flat fee of $100 for UNDERpayments.
Senator Isakson stated, “There is a fine line between recovering payments that are clearly improper and questioning the judgment call made by a professional at a particular moment of time.” What standard are these auditors using?
Mr Rolf explained that the auditor uses, in part, “Clinical Review Judgment,” basically the medical opinion if the auditor during the review. Hmmmmmm…so many interesting issues.
I have been asked over and over by providers, do we have recourse? How can we fight back against the Medicaid RAC harassment. Besides running for governor, winning, and conducting a complete overhaul of the Medicaid RAC system, my only suggestion is a lawsuit. The problem with lawsuits is that lawsuits are expensive. The Medicaid RACs are causing financial stress on providers already. For a provider to fund a legal battle against the RACs, that provider must have excess money.
This is one reason we are trying to band a group of health care providers together to fight against the harassment. But, as of now, we are concentrating on behavioral health care providers. Interested? Click here to register. Or contact me directly with questions. [Warning: That was a legal advertisement. Please do not click if you are not interested in the lawsuit. Also, feel free to go to any other attorney]
But until we have changes in the Medicaid RAC audits, at least the Senate Finance Committee is investigating Medicare RACs…you got to start somewhere.
What is the legal process?
How long does it take?
How much does it cost?
What is the likelihood of success?
If I win, what will happen?
These are probably the most FAQ by providers who have either been placed on prepayment review or been through prepayment review, only to have their Medicaid contracts terminated at the end of six months.
First, what is prepayment review?
If you are an old hat to this blog, then skip this section. Most likely, you already know what the dreaded term “prepayment review” means. If you are a newbie, prepayment review is a status. A bad status. A status created by the Department of Health and Human Services (DHHS). In essence, prepayment review means that, for 6 months, you must have all claims evaluated by a third-party prior to being paid. You can render medically necessary services (for which you obtained prior authorization) and the third-party could decide that you do not deserve to be reimbursed. You can go 6 months without reimbursement, but provide services and pay your staff, then have your Medicaid contract terminated erroneously and because of the subjective and incorrect opinion of the third-party contractor.
However, this blog is about the legal process of fighting your Medicaid contract termination, not the absurdity of the prepayment review process.
The legal process:
You determine that (a) you are wrongfully withheld Medicaid reimbursements while on prepayment review; or (b) your Medicaid contract has been terminated based on an erroneous prepayment review.
1. You hire counsel. (It does not have to be me. Just a knowledgeable Medicaid attorney).
2. The attorney files a Motion to Stay, Temporary Restraining Order, and Preliminary Injunction (TRO) against DHHS, DMA. The third-party auditor that conducted the prepayment review does not need to be named because the auditor is considered to be an agent of the state. In fact, whenever I have filed a TRO, DMA automatically brings a witness from the third-party auditor. If DMA did not, DMA would not be able to dispute my contention that the prepayment review was conducted erroneously.
3. NC Civil Rule of Procedure, Rule 65 governs injunctions (A TRO is legally considered an injunction. The difference is between a court of equity and a court of law).
4. Usually within 7-10 days, (barring some unforeseen hurdle) the Administrative Law Judge (ALJ) will either grant or deny the TRO.
It is important to note that not all ALJ’s procedural postures for TROs are identical. One ALJ may grant the TRO with no legal arguments heard from opposing counsel and schedule the Preliminary Injunction hearing in the near future. Another ALJ may require telephonic legal arguments prior to granting the TRO. Yet another ALJ may require legal arguments in person at the Office of Administrative Hearings (OAH).
5. Once the TRO is granted, status quo governs. In other words, the TRO allows you to have your Medicaid contract, service Medicaid recipients, and get reimbursed…just as if the prepayment review had never happened.
6. A TRO is VERY temporary. For the most part, if executed strictly according to Rule 65, a TRO is granted without hearing from the other side. Therefore, a preliminary injunction hearing must be scheduled as soon as possible. The ALJ does not want to burden an unheard party’s rights for too long without hearing that unheard party’s side.
7. Within a month or so after the grant of the TRO, a preliminary injunction hearing is scheduled. (This is normally conducted in one, full-day hearing…sometimes shorter if you have one particular Judge, because he or she has such a clear understanding of the facts).
8. At the preliminary injunction hearing, you must show: (1) likelihood of success on the merits; and (2) irreparable harm. Which means, in the vernacular, (1) that the prepayment review was conducted incorrectly (or your Medicaid reimbursements are being wrongly withheld); and (2) if the termination of your Medicaid contract is not stopped, then you would suffer great consequences.
9. If the ALJ grants the preliminary injunction, then that grant of relief maintains status quo until the full-blown hearing.
10. The full-blown hearing will be held, generally, over 6 months in the future. Which means that you will be able to render medically necessary services for Medicaid recipients and be reimbursed for services rendered until the final adjudication of the lawsuit.
Basically, once the TRO is filed, you could be “back to normal” or status quo within 7-10 days. That does not mean that the legal battle is over. In fact, once the TRO is granted and you are back to normal, the legal battle just begins. The legal battle can be a long, stressful and drawn-out process. But, at least, you are able to render medically necessary services and receive reimbursement.
As to cost, the legal process is expensive. Obviously, cost depends on the attorney that you hire, that hired attorney’s billable rate, and that hired attorney’s legal knowledge of Medicaid. Be sure to ask many questions prior to engaging any attorney. Anybody would hate to get an unexpectedly high bill.
Also, check with your liability insurance to determine whether your liability insurance will cover attorneys’ legal fees. Many times your liability insurance will cover regulatory audits.
Also, NCGS 6-19.1 allows a party defending against an agency decision to petition the court for attorneys fees within 30 days of final disposition of the case. Therefore, there is a possibility to have your attorneys’ fees reimbursed, but not until the very, very end of your case. You would be responsible for fronting the attorneys’ fees with a chance of not recovering your attorneys’ fees at the back-end.
As to likelihood of success, obviously, it depends on your particular facts. Was the third-party auditor really actually wrong in its audit denials? Does your documentation actually meet compliance requirements. Remember, just because the auditor believes that your documents are not compliant, does not mean your documents are actually noncompliant. But likelihood of success rests primarily in your facts/documents. Your attorney should be able to be more specific.
For those of you who have been on prepayment review or know someone else who has undergone prepayment review, this is for you.
Remember “A MidSummer’s Night Dream,” by William Shakespeare? The comedy of errors? Undergoing a Medicaid audit performed by the Carolinas Center of Medical Excellence (CCME) is much like the comedy of errors in “The MidSummer’s Night Dream.” (MSND) And much like the events in MSND, everyone involved wants to believe that the audit was just a dream/nightmare, but, sadly, this is real life.
For those of you that were not forced to read MSND in school or did not study Shakespeare in college, MSND portrays the events surrounding the marriage of the Duke of Athens, Theseus, and Hippolyta. These include the adventures of four young Athenian lovers and a group of six amateur actors, who are controlled and manipulated by the fairies who inhabit the forest in which most of the play is set. In my humble opinion, the best characters in MSND is Titania and Puck. Titania is the Queen of the fairies, who is estranged from her husband Oberon because Titania will not give her “changeling” to her husband. Oberon wants the “changeling” to use in battle, but Titania will not have it. Puck is the court jester, who creates a magic flower that, if struck on a person with Cupid’s arrow, will make the struck-person fall in love with whomever or whatever is first seen upon awakening.
So Oberon devises a plan to use the magic flower on Titania and, while she is awe-struck with whatever or whomever she loves, Oberon will take the “changeling.” Puck strikes Titania with the flower, using Cupid’s arrow, and she is fast asleep.
Meanwhile a group of people are creating a play. Nick Bottom, whose name Puck decides is another word for “jackass,” is one of the actors. While Bottom is rehearsing, Puck transforms Bottom’s head into a jackass’ head. Bottom has no idea and goes about his rehearsal with an ass head.
Titania wakes up, sees the ass-headed Bottom, and falls in love. While she is in love with the ass-headed Bottom, Oberon takes the changeling.
In CCME’s very own comedy of errors, CCME conducts prepayment reviews for the Division of Medical Assistance (DMA). But in this comedy of errors, the provider (Titania) has its Medicaid contract (changeling) that DMA (Oberon) wants. DMA (Oberon) sends CCME (Puck) to conduct a prepayment review (the magic flower) to get the Medicaid contract. The provider (Titania) becomes so confused and so frustrated with the process that, when she wakes up from the nightmare of prepayment review, she feels like an ass and has no Medicaid contract (changeling).
Here is CCME’s Comedy of Errors:
On August 6, 2012, Jane Doe receives her notice of prepayment review from CCME. Jane also receives CCME’s first requests for documents for Medicaid recipients for certain dates of services (DOS). In actuality, CCME requests hundreds of documents for multiple Medicaid recipients and multiple DOS, and, of course, Jane is given 15 days in which to comply. But, for the sake of this blog and simplicity, we are going to concentrate on one Medicaid recipient and 3 DOS.
On October 10, 2012, Jane receives a request for documents for Medicaid recipient X for DOS 9/20/12, 9/24/12, and 9/27/12.
Jane complies. She sends all the documents required to CCME. Remember, since August, Jane has not received any reimbursements for Medicaid, but Jane is expected to continue to service her clients, pay her staff, pay herself, and pay all overhead for her office without getting paid. I wonder how many other professions would put up with continuing to work without payment. I expect that if I went to the grocery store, put a bunch of food in my cart, and tell the cashier that I am not paying until the state government performed an audit of the quality of its food, that I would be arrested for shoplifting.
In November, Jane receives a “Final Document Request” for Medicaid recipient X and DOS 9/20, 9/24, and 9/27.
The only item CCME requests in the signature log of Jane’s staff for all 3 DOS. So, she sends in the signature log. Implicit in the Final Document Request is that, since CCME only requested a signature log, that CCME had all other necessary and required documents for these DOS.
In December (remember Jane still had not received any Medicaid payments since August), Jane receives a denial for DOS 9/20, 9/24, and 9/27. A denial means Jane does not get paid. According to the denial, DOS 9/20, 9/24, and 9/27 were denied because CCME did not have a treatment plan, signed authorization by the Medicaid recipient, or the service note. What????
1. Jane sent the treatment plan, the signed consent, and the service note back in October.
2. The Final Document Request only asked for the signature log. Why didn’t the Final Request request the treatment plan, signed consent, and service note?
The comedy of errors continue.
In January 2013, CCME sends another Request for Documents. Included in the list of required documents to be sent to CCME are documents for Medicaid recipient X for DOS 9/20, 9/24, and 9/27.
Jane thinks this is odd, but who is she to question the Medicaid auditor? Plus, if she calls CCME to point out the repetitive nature of the audit, she is just told to comply with the audit.
So she does. She re-sends all the required documents again.
A week later, she receives another request for DOS 9/27 for the same Medicaid recipient. She re-re-sends the documents.
In February, she receives denials for DOS 9/20, 9/24, and 9/27. A week later she receives the third denial for DOS 9/27.
A few days later, after calling CCME, getting transferred to 40 different people, and her repeated request for a copy of her compliance accuracy rate, CCME sends her accuracy rate to her. CCME determined that Jane’s accuracy rate is 1.25% (you have to get over 70% for 3 consecutive months to pass prepayment review). DMA terminates her Medicaid contract.
Due to the sequence of events, which I have called the comedy of errors, DMA (Oberon) successfully usurps Jane’s Medicaid contract (the changeling).
I doubt Shakespeare contemplated his “comedy of errors” template would be used in the Medicaid system. And Shakespeare’s version was much funnier.