Category Archives: Mental Health Problems

Darkness Surrounds MCO Mergers: Are Closed Meetings for MCOs Legal?

Recently, Eastpointe Human Services’ board voted unanimously to consolidate with Cardinal Innovations Healthcare, which would make the merged entity the managed care organization (MCO) overseeing 1/3 of NC’s Medicaid, behavioral health services – 32 counties, in all.

The Board’s decision is subject to the approval of the Secretary, but Eastpointe hopes to consolidate by July 1st.

Whether a consolidation between Eastpointe and Cardinal is good for Medicaid recipients and/or our community, I have no opinion.

But the reason that I have no opinion is because the negotiations, which all deal with public funds, have occurred behind closed doors.

Generally, it is our public policy that public bodies’ actions are to be conducted openly. This is why you can stroll on over to our courthouse and watch, virtually, any case be conducted.  There are rare cases in which the court will “seal” or close the record, such as to protect privileged health information or the identity of children.  Our public policy that strongly encourages open sessions for public entities exists for good reason.  As tax payers, we expect full disclosure and transparency as to how our tax dollars are being used.  In a way, all tax paying NC residents are shareholders of NC.  Those who spend our tax dollars owe us a fiduciary duty to manage our tax dollars in a reasonable and responsible manner, and we should be able to attend all board meetings and review all meeting minutes. The MCOs are the agents of the single state entity, Department of Health and Human Services (DHHS), charged with managing behavioral health care for the Medicaid and state-funded population suffering with mental health/developmentally disabled /substance abuse (MR/DD/SA) issues.  As an agent of the state, MCOs are public entities.

But, as I am researching the internet in search of Eastpointe and Cardinal board meeting minutes, I realize that the MCOs are initiating closed meetings and quoting N.C. Gen. Stat. § 143-318.11, ” Closed sessions” as the  basis for being able to conduct closed sessions.  And the number of closed sessions that I notice is not a small number.

The deliberations of a merger between two MCOs are highly important to the public. The public needs to know whether the board members are concerned about improving quality and quantity of care. Whether the deliberations surround a more inclusive provider network and providing more services to those in need. Whether the deliberations consider using public funds to create playgrounds or to fund more services for the developmentally disabled. Or are the board members more concerned with which executives will remain employed and what salaried are to be compensated?

You’ve heard of the saying, “Give him an inch and he’ll take a mile?”  This is what is going through my mind as I review the statute allowing public bodies to hold closed sessions.  Is the statute too open-ended? Is the closed session statute a legal mishandling that unintentionally, and against public policy, allows public meetings to act privately? Or are the MCOs misusing the closed session statute?

So I ask myself the following:

1. Is N.C. Gen. Stat. § 143-318.11 applicable to MCOs, or, in other words, can the MCOs conduct closed sessions? and, if the answer to #1 is yes, then

2. Are the MCOs overusing or misusing its ability to hold closed sessions? If the answer to #3 is yes, then

3. What can be done?

These are the three questions I will address in this blog.

Number one:

Is N.C. Gen. Stat. § 143-318.11 applicable to MCOs, or, in other words, can the MCOs conduct closed sessions?

According to the statute, “”public body” means any elected or appointed authority, board, commission, committee, council, or other body of the State, or of one or more counties, cities, school administrative units, constituent institutions of The University of North Carolina, or other political subdivisions or public corporations in the State that (i) is composed of two or more members and (ii) exercises or is authorized to exercise a legislative, policy-making, quasi-judicial, administrative, or advisory function.”

The MCOs are bodies or agents of the state that are composed of more than 2 members and exercises or is authorized to exercise administrative or advisory functions to the extent allowed by the Waivers.

I determine that, in my opinion, N.C. Gen. Stat. § 143-318.11 is applicable to the MCOs, so I move on to my next question…

Number two:

 Are the MCOs overusing or misusing its ability to hold closed sessions?

As public policy dictates that public bodies act openly, there are enumerated, statutory reasons that a public body may hold a closed session.

A public body may hold a closed session only when a closed session is required:

  1. “To prevent the disclosure of information that is privileged or confidential pursuant to the law of this State or of the United States, or not considered a public record within the meaning of Chapter 132 of the General Statutes.
  2. To prevent the premature disclosure of an honorary degree, scholarship, prize, or similar award.
  3. To consult with an attorney employed or retained by the public body in order to preserve the attorney-client privilege between the attorney and the public body, which privilege is hereby acknowledged. General policy matters may not be discussed in a closed session and nothing herein shall be construed to permit a public body to close a meeting that otherwise would be open merely because an attorney employed or retained by the public body is a participant. The public body may consider and give instructions to an attorney concerning the handling or settlement of a claim, judicial action, mediation, arbitration, or administrative procedure. If the public body has approved or considered a settlement, other than a malpractice settlement by or on behalf of a hospital, in closed session, the terms of that settlement shall be reported to the public body and entered into its minutes as soon as possible within a reasonable time after the settlement is concluded.
  4. To discuss matters relating to the location or expansion of industries or other businesses in the area served by the public body, including agreement on a tentative list of economic development incentives that may be offered by the public body in negotiations, or to discuss matters relating to military installation closure or realignment. Any action approving the signing of an economic development contract or commitment, or the action authorizing the payment of economic development expenditures, shall be taken in an open session.
  5. To establish, or to instruct the public body’s staff or negotiating agents concerning the position to be taken by or on behalf of the public body in negotiating (i) the price and other material terms of a contract or proposed contract for the acquisition of real property by purchase, option, exchange, or lease; or (ii) the amount of compensation and other material terms of an employment contract or proposed employment contract.
  6. To consider the qualifications, competence, performance, character, fitness, conditions of appointment, or conditions of initial employment of an individual public officer or employee or prospective public officer or employee; or to hear or investigate a complaint, charge, or grievance by or against an individual public officer or employee. General personnel policy issues may not be considered in a closed session. A public body may not consider the qualifications, competence, performance, character, fitness, appointment, or removal of a member of the public body or another body and may not consider or fill a vacancy among its own membership except in an open meeting. Final action making an appointment or discharge or removal by a public body having final authority for the appointment or discharge or removal shall be taken in an open meeting.
  7. To plan, conduct, or hear reports concerning investigations of alleged criminal misconduct.
  8. To formulate plans by a local board of education relating to emergency response to incidents of school violence or to formulate and adopt the school safety components of school improvement plans by a local board of education or a school improvement team.
  9. To discuss and take action regarding plans to protect public safety as it relates to existing or potential terrorist activity and to receive briefings by staff members, legal counsel, or law enforcement or emergency service officials concerning actions taken or to be taken to respond to such activity.”

Option 1 clearly applies, in part, to privileged health information (PHI) and such.  So I would not expect that little Jimmy’s Medicaid ID would be part of the board meeting issues, and, thus, not included in the minutes, unless his Medicaid ID was discussed in a closed session.

I cannot fathom that Option 2 would ever be applicable, but who knows?  Maybe Alliance will start giving out prizes…

I would assume that Option 3 is used most frequently.  But notice:

“General policy matters may not be discussed in a closed session and nothing herein shall be construed to permit a public body to close a meeting that otherwise would be open merely because an attorney employed or retained by the public body is a participant.”

Which means that: (1) the closed session may only be used to talk about specific legal strategies and not general policies.  For example, arguably, an MCO could hold a closed session to consult with its attorney whether to appeal a specific case, but not to discuss whether, generally, the MCO intends to appeal all unsuccessful cases.

and

(2) the MCO cannot call for a closed session “on the fly” and only because its attorney happens to be participating in the board meeting.

As I am rifling through random board meeting minutes, I notice the MCO’s attorney is always present.  Now, I say “always,” but did not review all MCO meeting minutes. There may very well be board meetings at which  the attorneys don’t attend. However, the attorney is present for the minutes that I reviewed.

Which begs the question…Are the MCOs properly using the closed sessions?

Then I look at Options 4, and 5, and 6, and 7, and 8, and 9…and I realize, Geez, according to one’s interpretation, the statute may or may not allow almost everything behind closed doors. (Well, maybe not 9).  But, seriously, depending on the way in which each Option is interpreted, there is an argument that almost anything can be a closed session.

Want to hold a closed session to discuss why the CEO should receive a salary of $400,000? N.C. Gen. Stat. § 143-318.11(5)(ii).

Want hold a closed session to discuss the anonymous tip claim that provider X is committing Medicaid fraud? N.C. Gen. Stat. § 143-318.11(7).

Want to hold a closed session to discuss how an MCO can position itself to take over the world? N.C. Gen. Stat. § 143-318.11(4).

In an atmosphere in which there is little to no supervision of the actions of the MCOs, who is monitoring whether the MCOs are overusing or misusing closed sessions?

Number three:

What can you do if you think that an MCO is holding closed sessions over and above what is allowed by N.C. Gen. Stat. § 143-318.11?

According to N.C. Gen. Stat. § 143-318.16A, “[a]ny person may institute a suit in the superior court requesting the entry of a judgment declaring that any action of a public body was taken, considered, discussed, or deliberated in violation of this Article. Upon such a finding, the court may declare any such action null and void. Any person may seek such a declaratory judgment, and the plaintiff need not allege or prove special damage different from that suffered by the public at large.”

Plus, according to N.C. Gen. Stat. § 143-318.16A, “[w]hen an action is brought pursuant to G.S. 143-318.16 or G.S. 143-318.16A, the court may make written findings specifying the prevailing party or parties, and may award the prevailing party or parties a reasonable attorney’s fee, to be taxed against the losing party or parties as part of the costs. The court may order that all or any portion of any fee as assessed be paid personally by any individual member or members of the public body found by the court to have knowingly or intentionally committed the violation; provided, that no order against any individual member shall issue in any case where the public body or that individual member seeks the advice of an attorney, and such advice is followed.”

 In sum, if you believe that an MCO is conducting a closed session for a reason not enumerated above, then you can institute a lawsuit and request attorneys’ fees if you are successful in showing that the MCO knowingly or intentionally committed the violation.

We should also appeal to the General Assembly to revise, statutorily, more narrowly drafted closed session exceptions.

Managed Care – Eight Reasons Why MCOs Smell Like Pre-Minced Garlic

When it comes to the managed care organizations (MCOs) in NC, something smells rancid, like pre-minced garlic. When I first met my husband, Scott, I cooked with pre-minced garlic that comes in a jar. I figured it was easier than buying fresh garlic and dicing it myself. Scott bought fresh garlic and diced it. Then he asked me to smell the fresh garlic versus the pre-minced garlic. There was no contest. Next to the fresh garlic, the pre-minced garlic smelled rancid. That is the same odor I smell when I read information about the MCOs – pre-minced garlic in a jar.

garlic minced-garlic

In NC, MCOs are charged with managing Medicaid funds for behavioral health care, developmentally disabled, and substance abuse services. When the MCOs were initially created, we had 13. These are geographically situated, so providers and recipients have no choice with which MCO to interact. If you live in Sandhills’ catchment area, then you must go through Sandhills. If you provide services in Cardinal’s catchment area, then you must contract with Cardinal – even though you already have a provider participation agreement with the State of NC to provide Medicaid services in the State of NC.

Over the years, there has been consolidation, and now we have 7 MCOs.

newestmco

From left to right: Smoky Mountain (Duke blue); Partners Behavioral Health (Wake Forest gold); Cardinal Innovations Healthcare (ECU purple); Sandhills (UNCC green); Alliance Behavioral Healthcare (mint green); Eastpointe (Gap Khaki); and Trillium (highlighter yellow/green).

Recently, Cardinal (ECU purple) and Eastpointe (Gap khaki) announced they will consolidate, pending authorization from the Secretary of DHHS. The 20-county Cardinal will morph into a 32-county, MCO giant.

Here is the source of the rancid, pre-minced, garlic smell (in my opinion):

One – MCOs are not private entities. MCOs are prepaid with our tax dollars. Therefore, unlike Blue Cross Blue Shield, the MCOs must answer to NC taxpayers. The MCOs owe a duty of financial responsibility to taxpayers, just like the state government, cities, and towns.

Two – Cardinal CEO, Richard Topping, is paid $635,000, plus he has a 0 to 30 percent bonus potential which could be roughly another $250,000, plus he has some sort of annuity or long-term package of $412,000 (with our tax dollars).

Three – Cardinal is selling or has sold the 26 properties it owns or owned (with our tax dollars) to lease office space in the NASCAR Plaza office tower in uptown Charlotte for $300 to $400 per square foot plus employee parking (with our tax dollars).

Four – Cardinal charges 8% of public funds for its administrative costs. (Does that include Topping’s salary and bonuses?) How many employees are salaried by Cardinal? (with our tax dollars).

Five – The MCOs are prepaid. Once the MCOs receive the funds, the funds are public funds and subject to fiscal scrutiny. However, the MCOs keep whatever funds that it has at the end of the fiscal year. In other words, the MCOs pocket any money that was NOT used to reimburse a provider for a service rendered to a Medicaid recipient. Cardinal – alone – handles around $2.8 billion in Medicaid funding per year for behavioral health services. The financial incentive for MCOs? Terminate providers and reduce/deny services.

Six – MCOs are terminating providers and limiting access to care. In my law practice, I am constantly defending behavioral health care providers that are terminated from an MCO catchment area without cause or with erroneous cause. For example, an agency was terminated from their MCO because the agency had switched administrative offices without telling the MCO. The agency continued to provide quality services to those in need. But, because of a technicality, not informing the MCO that the agency moved administrative offices, the MCO terminated the contract. Which,in turn, puts more money in the MCO’s pocket; one less provider to pay.  Is a change of address really a material breach of a contract? Regardless – it is an excuse.

Seven – Medicaid recipients are not receiving medically necessary services. Either the catchment areas do not have enough providers, the MCOs are denying and reducing medically necessary services, or both. Cardinal cut 11 of its state-funded services. Parents of disabled, adult children write to me, complaining that their services from their MCO have been slashed for no reason….But the MCOs are saving NC money!

Eight – The MCOs ended 2015 with a collective $842 million in the bank. Wonder how much money the MCOs have now…(with our tax dollars).

Rancid, I say. Rancid!

CEO of Cardinal Gets a Raise – With Our Tax Dollars!

You could hear the outrage in the voices of some of the NC legislators (finally, for the love of God – our General Assembly has taken the blinders off their eyes regarding the MCOs) at the Joint Legislative Oversight Committee on Medicaid and NC Health Choice on Tuesday, December 6, 2016, when Cardinal Innovations‘, a NC managed care organization (MCO) that manages our Medicaid behavioral health care in its catchment area, CEO, Richard Topping, stated that his salary was raised this year from $400,000 to $635,000with our tax dollars. (Whoa – totally understand if you have to read that sentence multiple times; it was extraordinarily complex).

Senator Tommy Tucker (R-Waxhaw) was especially incensed. He said, “I received minutes from your board, Sept. 16 of 2016, they made that motion, that your 2017 comp package, they raised your salary from $400,000 to $635,000, they gave you a 0 to 30 percent bonus potential which could be roughly another $250,000 and also you have some sort of annuity or long-term package of $412,000,” said Sen. Tommy Tucker.

FINALLY!!! Not the first time that I have blogged about the mismanagement (my word) of our tax dollars. See blog. And blog.

Sen. Tucker was not alone.

Representative Dollar was also concerned. But even more surprising than our legislators stepping up to the plate and holding an MCO accountable (MCOs have expensive lobbyists – with our tax dollars), the State’s Department of Health and Human Services (DHHS) Secretary Rick Brajer was visibly infuriated. He spoke sharply and interrogated Topping as to his acute income increase, as well as the benefits attached.

As a health care blogger, I receive so many emails from blog readers, including parents of disabled children, who are not receiving the medically necessary Medicaid behavioral health care services for their developmentally disabled children. MCOs are denying medically necessary services. MCOs are terminating qualified health care providers. MCOs are putting access to care at issue. BTW – even if the MCOs only terminated 1 provider and stopped 1 Medicaid recipient from receiving behavioral health care services from their provider of choice, that MCO would be in violation of federal law access to care regulations.  But, MCOs are terminating multiple – maybe hundreds – of health care providers. MCOs are nickeling and diming health care providers. Yet, CEO Topping will reap $635,000+ as a salary.

The MCOs, including Cardinal, do not have assets except for our tax dollars. They are not incorporated. They are not private entities. They are extensions of our “single state agency” DHHS. The MCOs step into the shoes of DHHS. The MCOs are state agencies. The MCOs are paid with our tax dollars. Our tax dollars should be used (and are budgeted) to provide Medicaid behavioral health care services for our most needy and to be paid to those health care providers, who still accept Medicaid and provide services to our most vulnerable population. News alert – These providers who render behavioral health care services to Medicaid recipients do not make $635,000/year, or anywhere even close. The reimbursement rates for Medicaid is paltry, at best. Toppings should be embarrassed for even accepting a $635,000 salary. The money, instead, should go to increasing the reimbursements rates – or maintaining a provider network without terminating providers ad nauseum. Or providing medically necessary services to Medicaid recipients.

Rest assured, Cardinal is not the only MCO lining the pockets of its executives. While both Trillium and Alliance, other MCOs, pay their CEOs under $200,000 (still nothing to sneeze at). Alliance, however, throws its tax dollars at private, legal counsel. No in-house counsel for Alliance! Oh, no! Alliance hires expensive, private counsel to defend its actions. Another way our tax dollars are at work. And – my question – why in the world does Alliance, or any other MCO, need to hire legal counsel? Our State has perfectly competent attorneys at our Attorney General’s office, who are on salary to defend the state, and its agencies, for any issue. The MCOs stand in the shoes of the State when it comes to Medicaid for behavioral health. The MCOs should utilize the attorneys the State already employs – not a high-dollar, private law firm. These are our tax dollars!

There have been few times that I have praised DHHS in my blogs. I will readily admit that I am harsh on DHHS’ actions/nonactions with our tax dollars. And I am now not recanting any of my prior opinions. But, last Tuesday, Sec. Brajer held Toppings feet to the fire. Thank you, Brajer, for realizing the horror of an MCO CEO earning $635,000/year while our most needy population goes under-served, and, sometimes not served at all, with medically necessary behavioral health care services.

What is deeply concerning is that if Sec. Brajer is this troubled by actions by the MCOs, or, at least, Cardinal, why can he not DO SOMETHING?? Where is the supervision of the MCOs by DHHS? I’ve read the contracts between the MCOs and DHHS. DHHS is the supervising entity over the MCOs. Our Waiver to the federal government promises that DHHS will supervise the MCOs.

If the Secretary of DHHS cannot control the MCOs, who can?

The New White Collar Exemptions: The Final Rule, (an exception), and the Possible Consequences

On May 18, 2016, the US Department of Labor (DOL) announced the Final Rule amending the “white collar” overtime exemptions to increase the number of employees eligible for overtime, effective December 1, 2016. Got overtime? There is no phase-in; it is immediately effective on December 1st.

We all know that the Affordable Care Act (ACA) placed heavier burdens on employers with the employer mandate for employee health insurance. But, the burdens didn’t stop with the ACA!! Oh, no!  In 2014, President Obama signed an Executive Order directing the Department of Labor to update the regulations defining which white collar workers are protected by the Fair Labor Standards Act (FLSA) minimum wage and overtime standards. How else could we financially burden employers? We could mandate employers pay overtime to salaried workers!!! Oh, we already do? Let’s raise the overtime salary threshold exemptions so more employees receive overtime!!

aca-white-collar-highres

You ask, “How is the DOL Final Rule on white collar exemptions germane to my health care agency/practice?” Answer: Do you have employees? If yes, the Final Rule is applicable to you. If no, there is no need to read this blog (unless you are a salaried employee and want to receive more overtime).

The new, increased salary threshold for executives, administration, and professionals exemptions swells from $455/week to $913/week or $23,660/year to $47,476/year. The number for the ceiling is actually less than what was proposed by $800/week. These numbers are based on 40th percentile of full-time employees (salaried) in the lowest wage region, which happens to be the South. Don’t get your knickers in a knot.

Furthermore, the exemption for the highly compensated employee will jump from $100,000 to $134,004 (odd number). This number is $12,000 more than the proposed amount. Well, that just dills my pickle!

The Final Rule also requires that the salary threshold for executives, administration, and professionals be reviewed every three years in order to maintain the salary exemption comparable to the 40th percentile of full-time employees (salaried) in the lowest wage census region – the South.

Finally, the salary basis test will be amended to allow employers to use non-discretionary bonuses and incentive payments, such as commissions, to satisfy the requirements up to 10% of the salary threshold.

The allowance of non-discretionary bonuses and incentive payments was meant to soften the blow of the increased salary thresholds. That’s about as useless as a screen door on a submarine/a trapdoor on a canoe.

VERY IMPORTANT EXCEPTION

The Secretary of DOL issued a time-limited non-enforcement policy for providers of Medicaid-funded services for individuals with intellectual or developmental disabilities in residential homes and facilities with 15 or fewer beds. From December 1, 2016 to March 17, 2019, the Department will not enforce the updated salary thresholds.

BUT THE REST OF US BEWARE!!

Do your math!! If the 10% maximum allowance is exceeded, you could find yourself in a world of hurt! We are talking misclassification claims! Also, ensure you know the proper distinctions between discretionary and non-discretionary bonuses!

What likely consequences will arise from this Final Rule? There are a number of possibilities:

  1. Employers will raise employees’ salaries to the new levels;
  2. Employers will pay more overtime;
  3. Employers will convert the salaried employees to hourly;
  4. Employers will change benefits or other operation costs to compensate for the increased burden.

Well, that’s just lower than a snake’s belly in a wagon rut!

Medicaid Managed Care Organizations: They Ain’t No Jesus!

Many of my clients come to me because a managed care organization (MCO) terminated or refused to renew their Medicaid contracts. These actions by the MCOs cause great financial distress and, most of the time, put the health care provider out of business. My team and I file preliminary injunctions in order to maintain status quo (i.e., allow the provider to continue to bill for and receive reimbursement for services rendered) until an administrative law judge (ALJ) can determine whether the termination (or refusal to contract with) was arbitrary, capricious, or, even, authorized by law.

With so many behavioral health care providers receiving terminations, I wondered…Do Medicaid recipients have adequate access to care? Are there enough behavioral health care providers to meet the need? I only know of one person who could feed hundreds with one loaf of bread and one fish – and He never worked for the MCOs!

On April 25, 2016, the Centers for Medicare and Medicaid Services released its massive Medicaid and Children’s Health Insurance Program (CHIP) managed care final rule (“Final Rule”).

Network adequacy is addressed. States are required to develop and make publicly available time and distance network adequacy standards for primary care (adult and pediatric), OB/GYN, behavioral health, adult and pediatric specialist, hospital, pharmacy, and pediatric dental providers, and for additional provider types as determined by CMS.

Currently, 39 states and the District of Columbia contract with private managed care plans to furnish services to Medicaid beneficiaries, and almost two thirds of the 72 million Medicaid beneficiaries are enrolled in managed care.

Access to care has always been an issue. Our Code of Federal Regulations require adequate access to quality health care coverage for Medicaid/care recipients. See blog. And blog.

However, Section 30A of the Social Security Act, while important, delineates no repercussions for violating such access requirements. You could say that the section “has no teeth,” meaning there is no defined penalty for a violation. Even more “toothless” is Section 30A’s lack of definition of what IS an adequate network? There is no publication that states what ratio of provider to recipient is acceptable.

Enter stage right: Final Rule.

The Final Rule requires states to consider certain criteria when determining adequacy of networks in managed care. Notice – I did not write the MCOs are to consider certain criteria in determining network adequacy. I have high hopes that the Final Rule will instill accountability and responsibility on our single state entity to maintain constant supervision on the MCOs [insert sarcastic laughter].

The regulation lists factors states are to consider in setting standards, including the ability of providers to communicate with limited English proficient enrollees, accommodation of disabilities, and “the availability of triage lines or screening systems, as well as the use of telemedicine, e-visits, and/or other evolving and innovative technological solutions.” If states create exceptions from network adequacy standards, they must monitor enrollee access on an ongoing basis.

The Final Rule marks the first major overhaul of the Medicaid and CHIP programs in more than a decade. It requires states to establish network adequacy standards in Medicaid and CHIP managed care for providers. § 457.1230(a) states that “[t]he State must ensure that the services are available and accessible to enrollees as provided in § 438.206 of this chapter.” (emphasis added).

Perhaps now the MCOs will be audited! Amen!

Audits “Breaking Bad” in New Mexico: Part II

By: Edward M. Roche, the founder of Barraclough NY LLC, a litigation support firm that helps healthcare providers fight against statistical extrapolations.

In the first article in this series, we covered how a new governor of New Mexico recently came into power and shortly thereafter, all 15 of the state’s nonprofit providers for behavioral health services were accused of fraud and replaced with companies owned by UnitedHealthcare.

When a new team is brought in to take over a crisis situation, one might expect that things would improve. The replacement companies might be presumed to transfer to New Mexico newer and more efficient methods of working, and patient services would become better and more efficient. Out with the old, in with the new. The problem in New Mexico is that this didn’t happen – not at all.

The corporate structure in New Mexico is byzantine. UnitedHealth Group, Inc. is a Minnesota corporation that works through subsidiaries, operating companies and joint ventures to provide managed healthcare throughout the United States. In New Mexico, UnitedHealth worked through Optum Behavioral Health Solutions and United Behavioral Health, Inc. OptumHealth New Mexico is a joint venture between UnitedHealthcare Insurance Company and United Behavioral Health, according to the professional services contract signed with the State of New Mexico.

And that’s not all. OptumHealth is not the company providing the services. According to the contract, It was set up to act as a bridge between actual providers of health services and a legal entity called the State of New Mexico Interagency Behavioral Health Purchasing Collaborative. This Collaborative combines together 16 agencies within the state government.

OptumHealth works by using subcontractors to actually deliver healthcare under both Medicaid and Medicare. Its job is to make sure that all claims from the subcontractors are compliant with state and federal law. It takes payment for the claims submitted and then pays out to the subcontractors. But for this service, OptumHealth takes a 28-percent commission, according to court papers.

This is a nice margin. A complaint filed by whistleblower Karen Clark, an internal auditor with OptimumHealth, indicated that from October 2011 until April 2012, OptumHealth paid out about $88.25 million in Medicaid funds and got a commission of $24.7 million. The payments went out to nine subcontractors. Clark claimed that from Oct. 1, 2011 until April 22, 2013, the overall payouts were about $529.5 million, and the 28-percent commission was about $148.3 million.

In spite of the liberal flow of taxpayer money, things did not go well. Clark’s whistleblower suit, filed in the U.S. District Court for the District of New Mexico, claimed that OptumHealth knew of massive fraud but refused to investigate. Clark says she was eventually fired after she uncovered the malfeasance. It appears that even after learning of problems, OptumHealth kept billing away, eager to continue collecting that 28-percent commission.

Clark’s complaint details a number of problems in New Mexico’s behavioral health sector. It is a list of horrors: there were falsified records, services provided by unlicensed providers, use of improper billing codes, claims for services that never were provided, and many other problems. Allegedly, many client files contained no treatment plans or treatment notes, or even records of what treatments had been provided and s services billed for times when offices were closed. The suit also claims that some services were provided by probationers instead of licensed providers, and a number of bills were submitted for a person who was outside the United States at the time.

The complaint further alleges that one provider received $300,000 in payments, but had submitted only $200,000 worth of claims. When Clark discovered this she allegedly was told by her supervisor at OptumHealth that it was “too small to be concerned about”. It also is alleged that a) insight-oriented psychotherapy was billed when actually the client was being taught how to brush their teeth; b) the same services were billed to the same patient several times per month, and files were falsified to satisfy Medicaid rules; c) interactive therapy sessions were billed for patients who were non-verbal and unable to participate; d) individual therapy was claimed when group therapy was given; e) apart from Medicaid, other sources allegedly were billed for exactly the same services; and f) developmentally disabled patients were used to bill for group therapy from which they had no capacity to benefit. Clark also stated that investigations of one provider for false billing were suspended because they were “a big player in the state”.

Other alleged abuse included a provider that submitted claims for 15-20 hours per day of group therapy for 20 to 40 children at a time, and for numerous psychotherapy services never provided. The complaint also describes one individual provider that supposedly worked three days per week, routinely billing Medicaid for twelve 30-minute individual psychotherapy sessions; 12 family psychotherapy sessions; 23 children in group therapy; and 32 children in group interactive psychotherapy each day.

A number of other abuses are detailed in the complaint: a) some providers had secretaries prescribing medication; b) one provider claimed that it saw 30 patients each 90 minutes per day for psychotherapeutic treatment; c) some individuals allegedly submitted claims for 30 hours per day of treatment; and d) some facilities had no credentialed psychotherapist at any of its facilities. Remember that all of these subcontractors are providing behavioral (psychiatric and psychological) services. Clark found that others submitted bills claiming the services were performed by a medical doctor, but there were none at their facility.

And in one of the most stunning abuses imaginable, one provider allegedly diagnosed all of their patients as having autism. Clark believes this was done because it allowed billing under both medical and mental health billing codes.

These are only a few of the apparent problems we see in New Mexico’s behavioral services.

You would think that once all of this had been brought to light, then public authorities such as the state’s Attorney General’s office would be eager to investigate and begin to root out the abusers. But that isn’t what happened.

James Hallinan, a spokesman for that office, stated that “based on its investigation, the Office of the Attorney General determined it would be in the best interest of the State to decline to intervene in the case.”

While it was making this decision, Clark’s allegations remained under court seal. But now they can be shown.

Note:

(*) Hallinan, James, spokesman for Attorney General’s office, quoted by Peters, J. and Lyman, A. Lawsuit: $14 million in new Medicaid fraud ignored in botched behavioral health audits, January 8, 2016, NM Political Report, URL: http://nmpoliticalreport.com/26519/lawsuit-optumhealth-botched-audits-of-nm-providers/ accessed March 22, 2016.

This article is based on US ex rel. Karen Clark and State of New Mexico ex rel. Karen Clark and Karen Clark, individually vs. UnitedHealth Group, Inc., United Healthcare Insurance Company, United Behavioral Health, Inc., and OptumHealth New Mexico, Complaint for Damages and Penalties, United States District Court for the District of New Mexico, No. 13-CV-372, April 22, 2013 held under court seal until a few weeks ago.

The Merger of the MCOs!

Breaking News: From DHHS

Raleigh, NC

State health officials announced today that the state- and Medicaid-funded Local Management Entities/Managed Care Organizations providing mental health, intellectual and developmental disability and substance use services to North Carolina citizens will be consolidating into four service regions across the state.

Further consolidation will improve quality of services, accessibility, accountability and long-term sustainability.

“I’m a strong believer in LME/MCOs,” said Rick Brajer, Secretary of the Department of Health and Human Services. “These populations deserve dedicated management.”

The newly consolidated service areas are:

  • North Central Region: CenterPoint Human Services and Cardinal Innovations Healthcare Solutions will be merging
  • South Central Region: Sandhills Center and Alliance Behavioral Healthcare will be merging
  • Eastern Region: Eastpointe and Trillium Health Resources will be merging
  • Western Region: Partners Behavioral Health Management and Smoky Mountain LME/MCO will be merging

newmco

Audits “Breaking Bad” in New Mexico

By: Ed Roche, founder of Barraclough NY LLC, a litigation support firm that helps healthcare providers fight against statistical extrapolations

It was published in RACMonitor.

Healthcare providers sometimes can get caught up in a political storm. When this happens, audits can be used as a weapon to help preferred providers muscle into a market. This appears to have happened recently in New Mexico.

Let’s go back in time.

On Sept. 14, 2010, Susana Martinez was in Washington, D.C. She was looking for campaign contributions to run for the governorship of New Mexico. She visited the office of the government lobbying division of UnitedHealth Group and picked up a check for $25,000.

The next day, Martinez published an editorial claiming that Bill Richardson’s administration in New Mexico was tolerating much “waste, fraud and abuse” in its Medicaid program. Eventually, she was elected as the 31st governor of New Mexico and took office Jan. 1, 2011.

According to an email trail, by the fall of 2012, Martinez’s administration was busy exchanging emails with members of the boards of directors of several healthcare companies in Arizona. During this same period, the Arizonans made a number of contributions to a political action committee (PAC) set up to support Martinez. At the same time, officers from New Mexico’s Human Services Department (HSD) made a number of unannounced visits to Arizona.

The lobbying continued in earnest. Hosted in part by UnitedHealth money, the head of HSD visited Utah’s premier ski resort, and the bill was paid for by an organization financed in part by UnitedHealth. The governor’s chief of staff was treated to dinner at an expensive steakhouse in Las Vegas. There is suspicion of other contacts, but these have not been identified. All of these meetings were confidential.

The governor continued to publicly criticize health services in New Mexico. She focused on 15 mental health providers who had been in business for 40 years. They were serving 87 percent of the mental health population in New Mexico and had developed an extensive delivery system that reached all corners of the state.

Martinez honed in on one mental health provider because the CEO used a private aircraft. He was accused of using Medicaid funds to finance a lavish lifestyle. None of this was true. It turned out that the owner had operations all over the state and used the plane for commuting, but it made for good sound bites to feed the press.

The state decided to raise the pressure against the providers. Public Consulting Group (PCG), a Boston-based contractor, was called in to perform an audit of mental health services. In addition to taking samples and performing analyses of claims, PCG was asked to look for “credible allegations of fraud.”

In legal terms, the phrase “credible allegations of fraud” carries much weight. Under the Patient Protection and Affordable Care Act, it can be used to justify punitive actions against a provider. It is surprising that only “allegations” are necessary, not demonstrated proof. The reality is that in practical terms, a provider can be shut down based on allegations alone.

In a letter regarding its work, PCG stated that “there are no credible allegations of fraud.” Evidently, that was the wrong answer. PCG was kicked out of New Mexico and not allowed to complete its audit. HSD took over.

The PCG letter had been supplied to HSD in a Microsoft Word format. In a stunning act, HSD removed the statement concluding that there were “no credible allegations of fraud.” HSD continued to use the PCG letter, but only in this altered form.

HSD continued to insist publicly that there were credible allegations of fraud. Since PCG had been kicked out before completing the audit, a HSD staff attorney took the liberty of performing several statistical extrapolations that generated a repayment demand of more than $36 million. During testimony, the attorney admitted that the extent of his experience with statistics was an introductory course he had taken years earlier in college.

Two years later, statistical experts from Barraclough NY LLC who are elected fellows of the American Statistical Association examined HSD’s work and concluded that it was faulty and unreliable. They concluded there was zero credibility in the extrapolations.

But for the time being, the extrapolations and audits were powerful tools. On June 24, 2013, all of the aforementioned 15 nonprofits were called into a meeting with HSD. All were accused of massive fraud. They were informed that their Medicaid payments were to be impounded. The money needed to service 87 percent of New Mexico’s mental health population was being cut off.

The next day, UnitedHealth announced a $22 million investment in Santa Fe. We have not been able to track down the direct beneficiaries of these investments. However, we do know that the governor’s office immediately issued a press release on their behalf.

The 15 New Mexico providers were being driven out of business. This had been planned well in advance. Shortly thereafter, the government of New Mexico, through HSD, [approved] issued $18 million in no-bid contracts to five Arizona-based providers affiliated with UnitedHealth. These are the same companies that had been contributing to the governor’s PAC.

These five Arizona companies then took over all mental health services for New Mexico. Their first step was to begin cutting back services. To give one example: patients with two hours therapy per week were cut back to 10 fifteen-minute sessions per year.It was the beginning of a mental health crisis in New Mexico.

As of today, two of the Arizona providers have abandoned their work in New Mexico. A third is in the process of leaving. What is the result? Thousands of New Mexico mental health patients have been left with no services. Entire communities have been completely shut [cut] off. The most vulnerable communities have been hit the hardest.

Through litigation, the 15 original providers forced the New Mexico Attorney General to examine the situation. It took a long time. All of the providers now are out of business. The Attorney General reported a few weeks ago that there were never any credible allegations of fraud.

This should mean that the impounded money would be returned to the 15 providers. After all, the legal reason why it was impounded in the first place has been shown to be false. One would think that the situation could return to normal.

The original 15 should be able to continue their business, and hire back the more than 1,500 persons they had been forced to lay off. Once the impounded monies are returned to the providers, they will be able to pay their legal bills, which now add up to hundreds of thousands of dollars.

Unfortunately, that is not happening. HSD still is claiming that the $36 million extrapolation is due, and that actually, the providers owe the state money. The New Mexico government is not budging from its position. The litigation continues.

Meanwhile, New Mexico now is tied with Montana in having the highest suicide rate in the continental United States.

Governmental Wand Waving and Late Apologies

In one of the most audacious acts of governmental power, in 2013, New Mexico accused 15 behavioral health care provider agencies of credible allegations of fraud and immediately suspended all Medicaid reimbursements to these agencies. These behavioral health care agencies comprised 87.5% of all New Mexico’s behavioral health care. Hundreds of thousands Medicaid recipients were adversely affected; all of a sudden, their mental health care provider was gone. Most of the companies were devastated. (One company was allowed to stay open because it paid millions to the state). See blog for more. See documentary.

Now, over 2 1/2 years later, three days ago (February 8, 2016), the NM Attorney General cleared 10 of the 15 companies. Oops, sorry, there was never any fraud. Sorry about the devastation of your company.

Imagine losing your job, your reputation, all your money, getting accused of a crime…then let two years pass. You walk into the grocery store (and everywhere else you go) and people stare at you, thinking that you are guilty of the crime for which you are accused. (Ever read “The Count of Monte Cristo?”)

Then you are exonerated. Are you happy or angry?

Here’s the issue: The government has a lot of power. Legally, the government has the authority to accuse you of a crime, seize your home, seize your property, take away your children, to put you in jail, to put you to death, etc.; the only barrier between the government carrying out these drastic measures and you is due process.

So, readers, if you are understanding my logic thus far, you understand the importance of due process.

However, for you who accept Medicare and Medicaid, due process is nonexistent. Since the inception of the Affordable Care Act (ACA), when it comes to accusations of fraud, due process has been suspended.

Hence the situation in New Mexico. Without substantial evidence supporting its decision (remember the Public Consulting Group (PCG) audit in this case actually found no credible allegations of fraud), the State of New Mexico accused 15 companies of fraud, suspended all their reimbursements, and put most of the companies out of business.

With a mere waving of the wand.

And an apology too little too late.

New Mexico AG clears third agency of Medicaid billing fraud!!!

BREAKING NEWS

Here is the article (my opinions will be forthcoming):

SANTA FE – The Attorney General’s Office has cleared a third behavioral health agency of Medicaid fraud, and it’s reaching out to audit firms for help in investigating the remaining dozen referred by the Human Services Department two years ago.

Attorney General Hector Balderas said Wednesday that he has issued requests for proposals from audit firms to help with the investigations, to speed up the process.

A spokesman for Balderas, meanwhile, said the AG’s Office has completed its investigation into Raton-based Service Organization for Youth and found no Medicaid fraud on the part of the agency, although there was overbilling.

The AG’s Office referred the case back to the Human Services Department to pursue the overbilling, according to spokesman James Hallinan. The alleged amount was not immediately available.

As an outgrowth of the SOY investigation, a former therapist for the agency was charged six weeks ago by the AG’s Office with Medicaid fraud. She allegedly provided false billing information to SOY.

The Human Services Department in 2013 referred to the attorney general 15 nonprofits that provided services to the mentally ill and addicted, saying an audit it commissioned had found $36 million in overbilling, mismanagement and possible fraud.

Two of the providers – The Counseling Center of Alamogordo and Santa Fe-based Easter Seals El Mirador – had previously been cleared of fraud by the AG’s Office and are in disputes with HSD about what, if anything, they owe for alleged overbilling.

Former Attorney General Gary King, who left office at the end of December, had said it could take up to six years to complete the probes. Balderas said that was too long and got approval from the Legislature during the regular session to shift $1.8 million out of a consumer protection fund to hire extra help.

The request for proposals “is a critical infusion of resources to expedite the behavioral health Medicaid fraud investigations,” Balderas said Wednesday in a statement. He said expanding the pool of experts to work with his staff “will allow our investigation to proceed even more quickly and efficiently, which has always been my priority.”

The request for proposals, issued last week, requires that bidders respond by June 30.

After the Human Services Department cut off Medicaid funding to the providers and referred them to the AG’s Office, it brought in five Arizona companies to take over a dozen of them. SOY, however, had its Medicaid funding restored by HSD and continued to operate, with technical assistance from one of the Arizona firms.

The report on the SOY investigation was not immediately available from Balderas’ office. Hallinan said it was being reviewed before release to ensure that it didn’t affect the criminal proceedings against the former SOY therapist.