Category Archives: Residential Services

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!

Termination of a Provider’s Medicaid Contract May Result in Homeless, Mentally Ill Adolescents

A client came to me, we will call him John, and explained that his company X had been placed on prepayment review by the Carolinas Center of Medical Excellence (CCME) 6 months prior.  Like every other health care provider that is placed on prepayment review, he thought… “That’s fine. My documents comply with all applicable Medicaid rules and regulations….This will be easy greasey.”

6 months later, he is sitting in my office with a Notice of Termination of Company X’s Medicaid contract.

CCME had audited Company X’s Outpatient Behavorial Therapy (OBT) services, found the documentation noncompliant and terminated the Medicaid contract.

Problem is, Company X does not only provide OBT.  Company X runs residential services for children and adults (mostly adolescents) with severe mental illnesses. Meaning, Company X provides these children and adults with a home, 24-hour care, food, essentials, and therapy.

The residential services were not found out of compliance.  Only the OBT.  I asked John what the percentage of OBT services Company X providers compared to the residential, and he said that OBT was a very small percentage.  OBT is the daytime therapy for the all the residents of Company X.

I asked him what would happen if the Notice of Termination of Medicaid contract went into effect.

“I would have to close my doors.”

Me: “What would happen to your clients?”

“Some would go back to the families that couldn’t care for them initially. Others, I don’t know. All the residential providers that I know of around us have gone under for whatever reason.”

Me: (In shock): “They would be homeless?”

“Many, yes.”

Folks, do not freak out yet. We  have filed a Temporary Restraining Order (TRO) and Preliminary Injunction against the Department of Health and Human Services (DHHS) disallowing DHHS from terminating the Medicaid contract of Company X until a full hearing can be heard.  The TRO was granted.  Our hearing to plead our case for the Preliminary Injunction is tomorrow.

Will keep you posted.