Category Archives: Psychiatrists

House Bill 403: A Potential Upheaval of Medicaid!

Is this the end of the managed care organizations (MCOs)?

If the Senate’s proposed committee substitute (PCS) to House Bill 403 (HB 403) passes the answer is yes. The Senate’s PCS to House Bill 403 was just favorably reported out of the Senate Health Care Committee on June 15, 2017. The next step for the bill to advance will be approval by the Senate Rules Committee. Click here to watch its progress.

As my readers are well aware, I am not a proponent for the MCOs. I think the MCOs are run by overpaid executives, who pay themselves too high of bonuses, hire charter flights, throw fancy holiday parties, and send themselves and their families on expensive retreats – to the detriment of Medicaid recipients’ services and Medicaid providers’ reimbursement rates. See blog. And blog.

Over the last couple days, my email has been inundated by people abhorred with HB 403 – urging the Senators to retain the original HB 403, instead of the PCS version. As with all legislation, there are good and bad components. I went back and re-read these emails, and I realized multiple authors sat on an MCO Board. Of course MCO Board members will be against HB 403! Instead of hopping up and down “for” or “against” HB 403, I propose a (somewhat) objective review of the proposed legislation in this blog.

While I do not agree with everything found in HB 403, I certainly believe it is a step in the right direction. The MCOs have not been successful. Medically necessary behavioral health care services have been reduced or terminated, quality health care providers have been terminated from catchment areas, and our tax dollars have been misused.

However, I do have concern about how quickly the MCOs would be dissolved and the new PHPs would be put into effect. There is no real transition period, which could provide safety nets to ensure continuity of services. We all remember when NCTracks was implemented in 2013 and MMIS was removed on the same day. There was no overlap – and the results were catastrophic.

The following bullet points are the main issues found in HB 403, as currently written.

  • Effective date – MCOs dissolve immediately (This could be dangerous if not done properly)

Past legislation enacted a transition time to dissolve the MCOs. Session Law 2015-245, as amended by Session Law 2016-121, provided that the MCOs would be dissolved in four years, allowing the State to implement a new system slowly instead of yanking the tablecloth from the table with hopes of the plates, glasses, and silverware not tumbling to the ground.

According to HB 403, “on the date when Medicaid capitated contracts with Prepaid Health Plans (PHPs) begin, as required by S.L. 2015-245, all of the following shall occur:…(2) The LME/MCOs shall be dissolved.”

Session Law 2015-245 states the following timeline: “LME/MCOs shall continue to manage the behavioral health services currently covered for their enrollees under all existing waivers, including the 1915(b) and (c) waivers, for four years after the date capitated PHP contracts begin. During this four-year period, the Division of Health Benefits shall continue to negotiate actuarially sound capitation rates directly
with the LME/MCOs in the same manner as currently utilized.”

HB 403 revises Session Law 2015-245’s timeline by the following: “LME/MCOs shall continue to manage the behavioral health services currently covered for their enrollees under all existing waivers, including the 1915(b) and (c) waivers, for four years after the date capitated PHP contracts begin. During this four-year period, the Division of Health Benefits shall continue to negotiate actuarially sound capitation rates directly with the LME/MCOs in the same manner as currently utilized.

Instead of a 4-year transition period, the day the PHP contracts are effective, the MCOs no longer exist. Poof!! Maybe Edward Bulwer-Lytton was right when he stated, “The pen is mightier than the sword.”

Again, I am not opposed to dissolving the MCOs for behavioral health care; I just want whatever transition to be reasonable and safe for Medicaid recipients and providers.

With the MCOs erased from existence, what system will be put in place? According to HB 403, PHPs shall manage all behavioral health care now managed by MCOs and all the remaining assets (i.e., all those millions sitting in the savings accounts of the MCOs) will be transferred to DHHS in order to fund the contracts with the PHPs and any liabilities of the MCOs. (And what prevents or does not prevent an MCO simply saying, “Well, now we will act as a PHP?”).

What is a PHP? HB 403 defines PHPs as an entity, which may be a commercial plan or provider-led entity with a PHP license from the Department of Insurance and will operate a capitated contract for the delivery of services. “Services covered by PHP:

  1. Physical health services
  2. Prescription drugs
  3. Long-term care services
  4. Behavioral health services

The capitated contracts shall not cover:

  1. Behavioral health
  2. Dentist services
  3. The fabrication of eyeglasses…”

It would appear that dentists will also be managed by PHPs. As currently written, HB 403 also sets no less than three and no more than five contracts between DHHS and the PHPs should be implemented.

Don’t we need a Waiver from the Center for Medicare and Medicaid Services (CMS)?

Yes. We need a Waiver. 42 CFR 410.10(e) states that “[t]he Medicaid agency may not delegate, to other than its own officials, the authority to supervise the plan or to develop or issue policies, rules, and regulations on program matters.” In order to “Waive” this clause, we must get permission from CMS. We had to get permission from CMS when we created the MCO model. The same is true for a new PHP model.

Technically, HB 403 is mandating DHHS to implement a PHP model before we have permission from the federal government. HB 403 does instruct DHHS to submit a demonstration waiver application. Still, there is always concern and hesitancy surrounding implementation of a Medicaid program without the blessing of CMS.

  • The provider network (This is awesome)

HB 403 requires that all contracts between PHPs and DHHS have a clause that requires PHPs to not exclude providers from their networks except for failure to meet objective quality standards or refusal to accept network rates.

  • PHPs use of money (Also good)

Clearly, the General Assembly drafted HB 403 out of anger toward the MCOs. HB 403 implements more supervision over the new entities. It also disallows use of money on alcohol, first-class airfare, charter flights, holiday parties or similar social gatherings, and retreats, which, we all know these are precisely the activities that State Auditor Beth Wood found occurring, at least, at Cardinal. See Audit Report.

HB 403 also mandates that the Office of State Human Resources revise and update the job descriptions for the area directors and set limitations on salaries. No more “$1.2 million in CEO salaries paid without proper authorization.”

  • Provider contracts with the PHPs (No choice is never good)

It appears that HB 403 will not allow providers to choose which PHP to join. DHHS is to create the regions for the PHPs and every county must be assigned to a PHP. Depending on how these PHPs are created, we could be looking at a similar situation that we have now with the MCOs. If the State is going to force you to contract with a PHP to provide Medicaid services, I would want the ability to choose the PHP.

In conclusion, HB 403 will re-shape our entire Medicaid program, if passed. It will abolish the MCO system, apply to almost all Medicaid services (both physical and mental), open the provider network, limit spending on inappropriate items, and assign counties to a PHP.

Boy, what I would give to be a fly on the wall in all the MCO’s boardrooms (during the closed sessions).

Merger of Cardinal and Eastpointe: Will [Should] It Go Through?

What if, right before your wedding day, you discover a secret about your betrothed that changes the very fabric of your relationship. For example, you find out your spouse-to-be is actually gay or a heroin addict. Not that there is anything bad about being gay or a heroin addict, but these are important facts to know and accept [or reject] about your future mate prior to the ringing of the wedding bells. The same is true with two companies that are merging to become one. The merged entity will be liable for any secrets either company is keeping. In this hypothetical, Eastpointe just found out that Cardinal has been cheating – and the wedding is set for July 1!

Cardinal Innovations and Eastpointe, two of our managed care organizations (MCO) charged with managing Medicaid behavioral health care funds plan to merge, effective July 1, 2017. Together the monstrous entity would manage Medicaid behavioral funds for 32 counties.

Last week the State Auditor published a scathing Performance Audit on Cardinal. State Auditor Beth Wood found more than $400,000 in “unreasonable” expenses, including corporate retreats at a luxury hotel in Charleston, S.C.; chartering planes to fly to Greenville, Rocky Mount and Smithfield; providing monthly detailing service for the CEO’s car; and purchasing alcohol, private and first-class airline tickets and other items with company credit cards.

Cardinal’s most significant funding is provided by Medicaid. Funding from Medicaid totaled $567 million and $587 million for state fiscal years 2015 and 2016, respectively. In other words, the State Auditor found that Cardinal is using our tax dollars – public money obtained by you and me – for entertainment, while concurrently, denying behavioral health care services and terminating providers from its catchment area. Over 30% of my salary goes to taxes. I do not accept Cardinal mismanaging my hard earned money – or anyone else’s. It is unacceptable!

“The unreasonable spending on board retreats, meetings, Christmas parties and travel goes against legislative intent for Cardinal’s operations, potentially resulting in the erosion of public trust,” the audit states.

Eastpointe, however, is not squeaky clean.

A June 2015 Performance Audit by the State Auditor found that its former chief financial officer Bob Canupp was alleged to have received kickbacks worth a combined $547,595. It was also alleged that he spent $143,041 on three agency vehicles without a documented business purpose. Canupp, chief executive Ken Jones and other employees also were determined to have used Eastpointe credit cards to make $157,565 in “questionable purchases.” There has not been an audit, thus far, on Eastpointe’s management of public funds. One can only hope that the results of the Cardinal audit spurs on Beth Wood to metaphorically lift the skirts of all the MCOs.

Given the recent audit on Cardinal, I would like to think that Eastpointe is hesitant to merge with such an entity. If a provider had mismanaged Medicaid funds like the State Auditor found that Cardinal did, without question, the authorities would be investigating the provider for Medicaid fraud, waste, and abuse. Will Eastpointe continue with the merger despite the potential liability that may arise from Cardinal’s mismanagement of funds? Remember, according to our State Auditor, “Cardinal could be required to reimburse the State for any payroll expenditures that are later disallowed because they were unauthorized.” – Post-payment review!!

Essentially, this is a question of contract.

We learned about the potential merger of Cardinal and Eastpointe back in January 2017, when Sarah Stroud, Eastpointe’s chief executive, announced in a statement that the agency plans to negotiate a binding agreement within weeks. The question is – how binding is binding?

Every contract is breakable, but there will be a penalty involved in breaching the contract, usually monetary. So – fantastic – if Eastpointe does back out of the merger, maybe our tax dollars that are earmarked for behavioral health care services for Medicaid recipients can pay the penalty for breaching the contract.

Another extremely troubling finding in Cardinal’s State Audit Report is that Cardinal is sitting on over $70 million in its savings account. The audit states that “[b]ased on Cardinal’s accumulated savings, the Department of Health and Human Services (DHHS) should consider whether Cardinal is overcompensated. For FY 2015 and 2016, Cardinal accumulated approximately $30 million and $40 million, respectively, in Medicaid savings. According to the Center for Medicaid and Medicare Services (CMS), Cardinal can use the Medicaid savings as they see fit.”

As Cardinal sees fit??!!?! These are our tax dollars. Cardinal is not Blue Cross Blue Shield. Cardinal is not a private company. Who in the world thought it a good idea to allow any MCO to use saved money (money not spent on behavioral health care services for Medicaid recipients) to use as it sees fit. It is unconscionable!

Because of my blog, I receive emails almost daily from mothers and fathers of developmentally disabled or mentally handicapped children complaining about Cardinal’s denials or reductions in services. I am also told that there are not enough providers within the catchment area. One mother’s child was approved to receive 16 hours of service, but received zero services because there was no available provider. Another family was told by an MCO that the family’s limit on the amount of services was drastically lower than the actual limit. Families contact me about reduced services when the recipient’s condition has not changed. Providers contact me about MCO recoupments and low reimbursement rates.

Cardinal, and all the MCOs, should be required to use our tax dollars to ensure that enough providers are within the catchment areas to provide the medically necessary services. Increase the reimbursement rates. Increase necessary services.

According to the report, “Cardinal paid about $1.9 million in FY 2015 employee bonuses and $2.4 million in FY 2016 employee bonuses. The average bonus per employee was about $3,000 in FY 2015, and $4,000 in FY 2016. The bonuses were coded to Cardinal’s administrative portion of Medicaid funding source in both years.” Cardinal employs approximately 635 employees.

Good to know that Cardinal is thriving. Employees are overpaid and receive hefty bonuses. Executives are buying alcohol, private and first-class airline tickets and other items with company credit cards. It hosts lavish Christmas parties and retreats. It sits on a $70 million savings account. While I receive reports from families and providers that Medicaid recipients are not receiving medically necessary services, that there are not enough providers within the catchment area to render the approved services, that the reimbursement rates for the services are too low to attract quality providers, that more expensive services are denied for incorrect reasons, and that all the MCOs are recouping money from providers that should not be recouped.

If I were Eastpointe, I would run, regardless the cost.

Legislative Update For May 10, 2017

I am a member of the Health Law Section’s Legislative Committee, along with attorneys Shawn Parker, and Scott Templeton. Together we drafted summaries of all the potential House and Senate Bills that have passed one house (crossed over) and have potential of becoming laws. We published it on the NC Bar Association Blog. I figured my readers would benefit from the Bill summaries as well. Please see below blog.

On behalf of the North Carolina Bar Association Health Law Section’s Legislative Committee,  we are providing the following 2017 post-crossover legislative update.

The North Carolina General Assembly has been considering a substantial number of bills of potential relevance to health law practitioners this session. The Health Law Section’s Legislative Committee, with the help of NCBA staff, has been monitoring these bills on virtually a daily basis.

The General Assembly’s rules provide for a “crossover date” during the legislative session, which this year was April 27. The importance of that date is essentially that, with certain caveats, unless a bill has passed one chamber (House or Senate) by the crossover date, the bill will no longer be considered by the legislature. The following listing provides brief descriptions of current proposed legislation, in two categories.

The first category includes bills that passed either the House or Senate by the crossover date, and therefore remain in consideration by the legislature. The second category includes bills that did not pass either chamber before the crossover date, but because the bills contain an appropriation or fee provisions, they may continue to be considered pursuant to legislative rules.

In addition to the bills listed below, a number of bills did not make crossover and do not meet an exception to the crossover rule, and are likely “dead” for this legislative session. We recognize, however, that the legislature is capable of “reviving” legislation by various mechanisms. The Legislative Committee continues to monitor legislation during the session, and in addition to this update, we may provide further updates as appropriate, and also anticipate doing a final summary once the legislature has adjourned later this year.

Bills That Passed One Chamber by the Crossover Date.

House Bills 

HB 57: Enact Physical Therapy Licensure Compact

Makes North Carolina a member of the Physical Therapy Licensure Compact, upon the 10th member state to enact the compact. Membership in the compact would allow physical therapists who hold licenses in good standing in any other compact state to practice physical therapy in North Carolina. Likewise, physical therapists holding a valid license in North Carolina would be able to practice physical therapy in any of other the compact member states.

 HB 140: Dental Plans Provider Contracts/Transparency

Provides that insurance companies that offer stand-alone dental insurance are subject to the disclosure and notification provisions of G.S. 58-3-227.

 HB 156: Eyeglasses Exemption from Medicaid Capitation

Adds the fabrication of eyeglasses to the list of services that are not included as part of transitioning the State Medicaid program to a capitated system.

HB 199: Establish Standards for Surgical Technology

Creates standards for surgical technology care in hospitals and ambulatory surgical facilities, specifically prohibiting employing or contracting with a surgical technologist unless that technologist produces one of four enumerated qualifications.

HB 206: N.C. Cancer Treatment Fairness

Requires insurance coverage parity so orally administered anti-cancer drugs are covered on a basis no less favorable than intravenously administered or injected anti-cancer drugs.

 HB 208 : Occupational Therapy Choice of Provider

Adds licensed occupational therapists to the list of providers for whom insurers are required to pay for services rendered, regardless of limitations to access of such providers within the insurance contract.

 HB 243: Strengthen Opioid Misuse Prevention (STOP) Act

Requires, among other things, practitioners to review information in the state-controlled substance reporting system prior to prescribing certain targeted controlled substance and limits the length of supply that a targeted controlled substance may be prescribed for acute pain relief.

HB 258: Amend Medical Malpractice Health Care Provider Definition

Includes paramedics, as defined in G.S. 131E-155, within the definition of health care provider for the purposes of medical malpractice actions.

HB 283: Telehealth Fairness Act

Requires health benefit plans to provide coverage for health care services that are provided via telemedicine as if the service were provided in person.

HB 307: Board Certified Behavioral Analyst/Autism Coverage

Adds board certified behavioral analysts as professionals that qualify for reimbursement for providing adaptive behavioral treatments under North Carolina’s mandatory coverage requirements for autism spectrum disorder.

 HB 403: LME/MCO Claims Reporting/Mental Health Amendments

Requires Local Management Entities/Managed Care Organizations (LME/MCOs) to use a state-designated standardized format for submitting encounter data, clarifies that the data submitted may be used by DHHS to, among other authorized purposes, set capitation rates. Also modifies multiple statutory requirements and references related to LME/MCOs. Limits the LME/MCOs’ use of funds to their functions and responsibilities under Chapter 122C. Also limits the salary of an area director unless certain criteria are met.

HB 425: Improve Utilization of MH Professionals

Allows licensed clinical addiction specialists to own or have ownership interest in a North Carolina professional corporation that provides psychotherapeutic services. Allows licensed professional counselors or licensed marriage and family therapist to conduct initial examinations for involuntary commitment process when requested by the LME and approved by DHHS.

HB 550: Establish New Nurse Licensure Compact

Repeals the current nurse licensure compact codified at G.S. 90-171.80 – 171.94 and codifies a substantially similar compact, which North Carolina will join upon adoption by the 26th state, allowing nurses to have one multi-state license, with the ability to practice in both their home state and other compact states.

HB 631: Reduce Admin. Duplication MH/DD/SAS Providers

Directs DHHS to establish a work group to examine and make recommendations to eliminate administrative duplication of requirements affecting healthcare providers.

Senate Bills 

SB 42: Reduce Cost and Regulatory Burden/Hospital Construction

Directs the N.C. Medical Care Commission to adopt the American Society of Healthcare Engineers Facility Guidelines for physical plant and construction requirements for hospital facilities and to repeal the current set of rules pertaining to such requirements under the current hospital facilities rules within the North Carolina Administrative Code.

SB 161: Conforming Changes LME/MCO Grievances/Appeals

Provides a technical change to North Carolina LME/MCO enrollee grievance statutes by renaming “managed care actions” as “adverse benefit determinations” to conform to changes in federal law.

SB 368: Notice of Medicaid SPA Submissions

Directs DHHS to notify the General Assembly when DHHS submits to the federal government an amendment to the Medicaid State Plan, or decides not to submit a previously published amendment.

 SB 383: Behavioral Health Crisis EMS Transport

Directs DHHS to develop a plan for adding Medicaid coverage for ambulance transports to behavioral health clinics under Medicaid Clinical Coverage Policy 15.

SB 384: The Pharmacy Patient Fair Practices Act

Prohibits pharmacy benefits managers from using contract terms to prevent pharmacies from providing direct delivery services and allows pharmacists to discuss lower-cost alternative drugs with and sell lower-cost alternative drugs to its customers.

SB 630: Revise IVC Laws to Improve Behavioral Health

Makes substantial revisions to Chapter 122C regarding involuntary commitment laws.

Bills That Did Not Pass Either Chamber by the Crossover Date, But Appear to Remain Eligible for Consideration.

House Bills

HB 88: Modernize Nursing Practice Act

Eliminates the requirement of physician supervision for nurse practitioners, certified nurse midwives, clinical nurse specialists and certified registered nurse anesthetists.

HB 185: Legalize Medical Marijuana

Creates the North Carolina Medical Cannabis Act.  Among many other provisions, it provides that physicians would not be subject to arrest, prosecution or penalty for recommending the medical use of cannabis or providing written certification for the medical use of cannabis pursuant to the provision of the newly created article.

HB 270: The Haley Hayes Newborn Screening Bill

Directs additional screening tests to detect Pompe disease, Mucopolysaccharidosis Type I, and X-linked Adrenoleukodystrophy as part of the state’s mandatory newborn screening program.

HB 858: Medicaid Expansion/Healthcare Jobs Initiatives

Repeals the legislative restriction on expanding the state’s Medicaid eligibility and directs DHHS to provide Medicaid coverage to all people under age 65 with incomes equal to or less than 133 percent of the federal poverty guidelines. Appropriates funds and directs the reduction of certain recurring funds to implement the act. Additionally the bill creates and imposes an assessment on each hospital that is not fully exempt from both the current equity and upper payment limit assessments imposed by state law.

HB 887: Health Insurance Mandates Study/Funds

Appropriates $200,000 to fund consultant services to assist the newly established Legislative Research Commission committee on state mandatory health insurance coverage requirements.

HB 902: Enhance Patient Safety in Radiological Imaging.

Creates a new occupational licensure board to regulate the practice of radiologic imaging and radiation therapy procedures by Radiologic Technologists and Radiation Therapists.

Senate Bills

SB 73: Modernize Nursing Practice Act

Eliminates the requirement of physician supervision for nurse practitioners, certified nurse midwives, clinical nurse specialists and certified registered nurse anesthetists.

SB 290: Medicaid Expansion/Healthcare Jobs Initiative

Repeals the legislative restriction on expanding the state’s Medicaid eligibility and directs DHHS to provide Medicaid coverage to all people under age 65 with incomes equal to or less than 133 percent of the federal poverty guidelines. Appropriates funds, directs the reduction of certain recurring funds to implement the Act. Additionally the bill creates and imposes an assessment on each hospital that is not fully exempt from both the current equity and upper payment limit assessments imposed state law.

SB 579: The Catherine A. Zanga Medical Marijuana Bill

Creates the North Carolina Medical Cannabis Act.  Among many other provisions, it provides that physicians would not be subject to arrest, prosecution or penalty for recommending the medical use of cannabis or providing written certification for the medical use of cannabis pursuant to the provision of the newly created article.

SB 648: Legalize Medical Marijuana

Creates the North Carolina Medical Cannabis Act.  Among many other provisions, it provides that physicians would not be subject to arrest, prosecution or penalty for recommending the medical use of cannabis or providing written certification for the medical use of cannabis pursuant to the provision of the newly created article.

Please contact a member of the Health Law Section’s Legislative Committee should you have any questions regarding this report.  The Committee’s members are Knicole Emanuel, Shawn Parker, and Scott Templeton (chair).

Health Care Fraud Liability: With Yates Fired – What Happens to the Memo?

“You’re fired!” President Trump has quite a bit of practice saying this line from The Apprentice. Recently, former AG Sally Yates was on the receiving end of the line. “It’s not personal. It’s just business.”

The Yates Memo created quite a ruckus when it was first disseminated. All of a sudden, executives of health care agencies were warned that they could be held individually accountable for actions of the agency.

What is the Yates Memo?

The Yates Memo is a memorandum written by Sally Quillian Yates, former Deputy Attorney General for the U.S. Dept. of Justice, dated September 9, 2015.

It basically outlines how federal investigations for corporate fraud or misconduct should be conducted  and what will be expected from the corporation getting investigated. It was not written specifically about health care providers; it is a general memo outlining the investigations of corporate wrongdoing across the board. But it is germane to health care providers.

See blog.

January 31, 2017, Sally Yates was fired by Trump. So what happens to her memo?

With Yates terminated, will the memo that has shaken corporate America that bears her name go as well? Newly appointed Attorney General Jeff Sessions wrote his own memo on March 8, 2017, entitled “Memorandum for all Federal Prosecutors.” it directs prosecutors to focus not on corporate crime, but on violent crime. However, investigations into potential fraud cases and scrutiny on providers appear to remain a top priority under the new administration, as President Donald Trump’s proposed budget plan for fiscal year 2018 included a $70 million boost in funding for the Health Care Fraud and Abuse Control program.

Despite Sessions vow to focus on violent crimes, he has been clear that health care fraud remains a high priority. At his confirmation, Sessions said: “Sometimes, it seems to me, Sen. Hirono, that the corporate officers who caused the problem should be subjected to more severe punishment than the stockholders of the company who didn’t know anything about it.” – a quote which definitely demonstrates Sessions aligns with the Yates Memo.

By law, companies, like individuals, are not required to cooperate with the Justice Department during an investigation.  The Yates Memo incentivizes executives to cooperate. However, the concept was not novel. Section 9-28.700 of the U.S. Attorneys’ Manual, states: “Cooperation is a potential mitigating factor, by which a corporation – just like any other subject of a criminal investigation – can gain credit in a case that otherwise is appropriate for indictment and prosecution.”

Even though Trump’s proposed budget decreases the Department of Justice’s budget, generally, the increase in the budget for the Health Care Fraud and Abuse Control program is indicative of this administration’s focus on fraud, waste, and abuse.

Providers accused of fraud, waste, or abuse suffer extreme consequences. 42 CFR 455.23 requires states to suspend Medicaid reimbursements upon credible allegations of fraud. The suspension, in many instances, lead to the death of the agency – prior to any allegations being substantiated. Just look at what happened in New Mexico. See blog. And the timeline created by The Santa Fe New Mexican.

When providers are accused of Medicare/caid fraud, they need serious legal representation, but with the suspension in place, many cannot afford to defend themselves.

I am “all for” increasing scrutiny on Medicare/caid fraud, waste, and abuse, but, I believe that due process protection should also be equally ramped up. Even criminals get due process.

The upshot regarding the Yates Memo? Firing Yates did not erase the Yates Memo. Expect Sessions and Trump to continue supporting the Yates Memo and holding executives personally accountable for health care fraud – no more hiding behind the Inc. or LLC. Because firing former AG Yates, did nothing to the Yates Memo…at  least not yet.

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!

Medicaid Forecast: Cloudy with 100% Chance of Trump

Regardless how you voted, regardless whether you “accept” Trump as your president, and regardless with which party you are affiliated, we have a new President. And with a new President comes a new administration. Republicans have been vocal about repealing Obamacare, and, now, with a Republican majority in Congress and President, changes appear inevitable. But what changes?

What are Trump’s and our legislature’s stance on Medicaid? What could our future health care be? (BTW: if you do not believe that Medicaid funding and costs impact all healthcare, then please read blog – and understand that your hard-working tax dollars are the source of our Medicaid funding).

WHAT IS OUR HEALTHCARE’S FORECAST?

The following are my forecasted amendments for Medicaid:

  1. Medicaid block grants to states

Trump has indicated multiple times that he wants to put a cap on Medicaid expenses flowing from the federal government to the states. I foresee either a block grant (a fixed annual amount per state) or a per capita cap (fixed dollar per beneficiary) being implemented.

What would this mean to Medicaid?

First, remember that Medicaid is an entitlement program, which means that anyone who qualifies for Medicaid has a right to Medicaid. Currently, the federal government pays a percentage of a state’s cost of Medicaid, usually between 60-70%. North Carolina, for example, receives 66.2% of its Medicaid spending from Uncle Sam, which equals $8,922,363,531.

While California receives only 62.5% of its Medicaid spending from the federal government, the amount that it receives far surpasses NC’s share – $53,436,580,402.

The federal funding is open-ended (not a fixed a mount) and can inflate throughout the year, but, in return, the states are required to cover certain health care services for certain demographics; e.g., pregnant women who meet income criteria, children, etc. With a block grant or per capita cap, the states would have authority to decide who qualifies and for what services. In other words, the money would not be entwined with a duty that the state cover certain individuals or services.

Opponents to block grants claim that states may opt to cap Medicaid enrollment, which would cause some eligible Medicaid recipients to not get coverage.

On the other hand, proponents of per capita caps, opine that this could result in more money for a state, depending on the number of Medicaid eligible residents.

2. Medicaid Waivers

The past administration was relatively conservative when it came to Medicaid Waivers through CMS. States that want to contract with private entities to manage Medicaid, such as managed care organizations (MCOs), are required to obtain a Waiver from CMS, which waives the “single state entity” requirement. 42 CFR 431.10. See blog.

This administration has indicated that it is more open to granting Waivers to allow private entities to participate in Medicaid.

There has also been foreshadowing of possible beneficiary work requirements and premiums.Montana has already implemented job training components for Medicaid beneficiaries. However, federal officials from the past administration instructed Montana that the work component could not  be mandatory, so it is voluntary. Montana also expanded its Medicaid in 2015, under a Republican governor. At least for one Medicaid recipient, Ruth McCafferty, 53, the voluntary job training was Godsend. She was unemployed with three children at home. The Medicaid job program paid for her to participate in “a free online training to become a mortgage broker. The State even paid for her 400-mile roundtrip to Helena to take the certification exam. And now they’re paying part of her salary at a local business as part of an apprenticeship to make her easier to hire.” See article.

The current administration may be more apt to allow mandatory work requirements or job training for Medicaid recipients.

3. Disproportionate Share Hospital

When the ACA was implemented, hospitals were at the negotiating table. With promises from the past administration, hospitals agreed to take a cut on DSH payments, which are paid to hospitals to help offset the care of uninsured and Medicaid patients. The ACA’s DSH cut is scheduled to go into effect FY 2018 with a $2 billion reduction. It is scheduled to continue to reduce until FY 2025 with a $8 billion reduction. The reason for this deduction was that the ACA would create health coverage for more people and with Medicaid expansion there would be less uninsured.

If the ACA is repealed, our lawmakers need to remember that DSH payments are scheduled to decrease next year. This could have a dramatic impact on our hospitals. Last year, approximately 1/2 of our hospitals received DSH. In 2014, Medicaid paid approximately $18 billion for DSH payments, so the proposed reductions make up a high percentage of DSH payments.

4. Physician payment predictability

Unlike the hospitals, physicians got the metaphoric shaft when the ACA was implemented. Many doctors were forced to provide services to patients, even when those patients were not covered by a health plan. Many physicians had to  increase the types of insurance they would accept, which increased their administrative costs and the burden.

This go-around, physicians may have the ear of the HHS Secretary-nominee, Tom Price, who is an orthopedic surgeon. Dr. Price has argued for higher reimbursement rates for doctors and more autonomy. Regardless, reimburse rate predictability may stabilize.

CMS Clarifying Medicare Overpayment Rules: The Bar Is Raised (Yet Again) for Health Care Providers

Have you ever watched athletes compete in the high jump? Each time an athlete is successful in pole vaulting over the bar, the bar gets raised…again…and again…until the athlete can no longer vault over the bar. Similarly, the Center for Medicare and Medicaid Services (CMS) continue to raise the bar on health care providers who accept Medicare and Medicaid.

In February, CMS finalized the rule requiring providers to proactively investigate themselves and report any overpayments to CMS for Medicare Part A and B. (The Rule for Medicare Parts C and D were finalized in 2014, and the Rule for Medicaid has not yet been promulgated). The Rule makes it very clear that CMS expects providers and suppliers to enact robust self auditing policies.

We all know that the Affordable Care Act (ACA) was intended to be self-funding. Who is funding it? Doctors, psychiatrists, home care agencies, hospitals, long term care facilities, dentists…anyone who accepts Medicare and Medicaid. The self-funding portion of the ACA is strict; it is infallible, and its fraud, waste, and abuse (FWA) detection tools…oh, how wide that net is cast!

Subsection 1128J(d) was added to Section 6402 of the ACA, which requires that providers report overpayments to CMS “by the later of – (A) the date which is 60 days after the date on which the overpayment was identified; or (B) the date any corresponding cost report is due, if applicable.”

Identification of an overpayment is when the person has, or reasonably should have through the exercise of reasonable diligence, determined that the person received an overpayment. Overpayment includes referrals or those referrals that violate the Anti-Kickback statute.

CMS allows providers to extrapolate their findings, but what provider in their right mind would do so?

There is a six-year look back period, so you don’t have to report overpayments for claims older than six years.

You can get an extension of the 60-day deadline if:

• Office of Inspector General (OIG) acknowledges receipt of a submission to the OIG Self-Disclosure Protocol
• OIG acknowledges receipt of a submission to the OIG Voluntary Self-Referral Protocol
• Provider requests an extension under 42 CFR §401.603

My recommendation? Strap on your pole vaulting shoes and get to jumping!

Medicaid Closed Networks: Can Waivers Waive Your Legal Rights?

Sorry for the lapse in blogging. I took off for Thanksgiving and then got sick. I hope you all had a wonderful Thanksgiving!!

While I was sick, I thought about all the health care providers that have been put out of business because the managed care organization (MCO) in their area terminated their Medicaid contract or refused to contract with them. I thought about how upset I would be if I could not see my doctor, whom I have seen for years. See blog for “You Do Have Rights!

Then I thought about…Can a Waiver waive a legal right?

Federal law mandates that Medicaid recipients be able to choose their providers of choice. Court have also held that this “freedom of choice” of provider is a right, not a privilege.

42 U.S.C. § 1396a states that Medicaid recipients may obtain medical services from “any institution, agency, community pharmacy, or person, qualified to perform the service or services required… who undertakes to provide him such services….” Id. at (a)(23).

So how can these MCOs restrict access?

First, we need to discuss the difference between a right and a privilege.

For example, driving is a privilege, not a right. You have no right to a driver’s license, which is why you can lose your license for things, such as multiple DUIs. Plus, you cannot receive a driver’s license unless you pass a test, because a license is not a right.

Conversely, you have the right to free speech and the right to vote. Meaning, the government cannot infringe on your rights to speak and vote unless there are extraordinary circumstances. For example, the First Amendment does not protect obscenity, child pornography, true threats, fighting words, incitement to imminent lawless action (yelling “fire” in a crowded theater), criminal solicitation or defamation. Your right to vote will be rescinded if you are convicted of a felony. Furthermore, you do not need to take a test or qualify for the rights of free speech and voting.

Likewise, your choice of health care provider is a right. It can only be usurped in extraordinary circumstances. You do not need to take a test or qualify for the right. (Ok, I am going to stop underlining “right” and “privilege” now. You get the point).

Then how are MCOs operating closed networks? For that matter, how can Blue Cross Blue Shield (BCBS) terminate a provider’s contract? Wouldn’t both those actions limit your right to choose your provider?

The answer is yes.

And the answer is simple for BCBS. As for BCBS, it is a private company and does not have to follow all the intricate regulations for Medicare/caid. 42 U.S.C.  § 1396a is inapplicable to it.

But Medicaid recipients have the right to choose their provider.  This “freedom of choice” provision has been interpreted by both the Supreme Court and the Seventh Circuit as giving Medicaid recipients the right to choose among a range of qualified providers, without government interference (or its agents thereof).

What does this mean? How can a managed care organization (MCO) here in NC maintain a closed network of providers without violating the freedom of choice of provider rule?

The “Stepford” answer is that we have our Waivers in NC, which have waived the freedom of choice. In our 1915 b/c Waiver, there are a couple pages that enumerates certain statutes. We “x” out the statutes that we were requesting to waive.

It looks like this:

waiver1

Furthermore, federal law carves out an exception to freedom to choose right when it comes to managed care. But to what extent? It the federal carve unconstitutional?

But…the question is twofold:

  • Would our Waiver stand up to federal court scrutiny?
  • Can our state government waive your rights? (I couldn’t help it).

Let’s think of this in the context of the freedom of speech. Could NC request from the federal government a waiver of our right to free speech? It sounds ludicrous, doesn’t it? What is the difference between your right to free speech and your right to choose a provider? Is one right more important than the other?

The answer is that no one has legally challenged our Waiver’s waiver of the right to freedom of provider with a federal lawsuit claiming a violation of a constitutionally protected right. It could be successful. If so, in my opinion, two legal theories should be used.

  1. A § 1983 action; and/or
  2. A challenge under 42 CFR 431.55(f)

Section 1983 creates a federal remedy against anyone who deprives “any citizen of the United States… of any rights, privileges, or immunities secured by the Constitution and laws” under the color of state law. 42 U.S.C. § 1983. The Supreme Court has explained that § 1983 should be read to generally “authorize[] suits to enforce individual rights under federal statutes as well as the Constitution.” City of Rancho Palos Verdes, Cal. v. Abrams, 544 U.S. 113, 119 (2005).

Section 1983 does not authorize a federal remedy against state interference with all government entitlements, however; “it is rights, not the broader or vaguer ‘benefits’ or ‘interests,’ that may be enforced under the authority of that section.” Gonzaga Univ. v. Doe, 536 U.S. 273, 283 (2002). But the courts have already held that the freedom to choose your provider is a right.

In 2012, the Seventh Circuit confirmed that § 1983 authorizes Medicaid recipients to sue to enforce the right to freely choose among qualified health providers.

In Planned Parenthood, the court was confronted with an Indiana state law prohibiting state agencies from providing state or federal funds to any entity that performs abortions or maintains or operates a facility in which abortions are performed – regardless of whether there is any nexus between those funds and the abortion services. See Planned Parenthood, 699 F.3d at 967 (7th Cir. 2012). In other words, the law effectively prohibited entities that perform abortions from receiving any state or federal funds for any (non-abortion) purpose.

The Court found that the restrictions violated the Medicaid recipients’ right to freedom of choice of provider.

There are, as always, more than one way to skin a cat. You could also attack the Waiver’s waiver of the freedom to choose your health care provider by saying the NC is violating 42 CFR 431.55.

Notice the last sentence in subsection (d) in the picture above. In our Waiver, NC promises to abide by 42 CFR 431.55(f), which states:

(f) Restriction of freedom of choice—
(1) Waiver of appropriate requirements of section 1902 of the Act may be authorized for States to restrict beneficiaries to obtaining services from (or through) qualified providers or practitioners that meet, accept, and comply with the State reimbursement, quality and utilization standards specified in the State’s waiver request.
(2) An agency may qualify for a waiver under this paragraph (f) only if its applicable State standards are consistent with access, quality and efficient and economic provision of covered care and services and the restrictions it imposes—
(i) Do not apply to beneficiaries residing at a long-term care facility when a restriction is imposed unless the State arranges for reasonable and adequate beneficiary transfer.
(ii) Do not discriminate among classes of providers on grounds unrelated to their demonstrated effectiveness and efficiency in providing those services; and
(iii) Do not apply in emergency circumstances.
(3) Demonstrated effectiveness and efficiency refers to reducing costs or slowing the rate of cost increase and maximizing outputs or outcomes per unit of cost.
(4) The agency must make payments to providers furnishing services under a freedom of choice waiver under this paragraph (f) in accordance with the timely claims payment standards specified in § 447.45 of this chapter for health care practitioners participating in the Medicaid program.

Basically, to argue a violation of 42 CFR 431.55, you would have to demonstrate that NC violated or is violating the above regulation by not providing services “consistent with access, quality and efficient and economic provision of covered care and services.”

So, while it is true that NC has requested and received permission from the Center of Medicare and Medicaid Services (CMS) to restrict access to providers, that fact may not be constitutional.

Someone just needs to challenge the Waiver’s waiver.

As the 31st State Expands Medicaid: Do We Need to Be Concerned About a Physician Shortage?

Recently, Montana became the 31st state, including D.C., to expand Medicaid. Discussion regarding Medicaid expansion is ongoing in one state: Utah. Nineteen (19) states have rejected Medicaid expansion, including NC.

When Medicaid expansion was first introduced, it was a highly polarized, political topic, with Republican governors, generally, rejecting expansion and Democrat governors, generally, accepting expansion.

Now, however, many Republican governors have opted to expand Medicaid. There are currently 31 Republicans, 18 Democrats, and one independent that hold the office of governor in the states. Yet, 31 states have expanded Medicaid. Here is an extremely, difficult-to-read chart outlining the states that have opted to expand, those that have opted to reject expansion, and the one state (Utah) still discussing:

caid expansion1medicaidexpansion2

I know, it’s hard to read. Feel free to go to the actual Kaiser website to see the chart readable by humans. (Microsoft’s “Snipping Tool” leaves much to be desired; Apple’s “Screen Shot” is much better, in my opinion).

An interesting fact is that, in its first week with Medicaid expansion, Montana had over 5,500 people sign up for Medicaid.

Another interesting fact is that, approximately 18,078 physicians graduate from medical school in America per year.  But in Montana?

montana

N/A…as in, none. Not applicable. You see, Montana does not have a medical school. It does participate in the Washington, Wyoming, Alaska, Montana, and Idaho collaborative program. However, the collaborative program does not do a stellar job at recruiting physicians to Montana. It tries. But the statistics are stacked against Montana.

“Sixty-eight percent of doctors who complete all their training in one state end up practicing there,” according to the Association of American Medical Colleges.

Yet Montana has no medical school. And expanded Medicaid. If any of you ever took economics, there is this accepted theory called, “supply and demand.”

supplyanddemand

Supply and demand dictates that, when supply is low and demand is high, the product, whatever it is, can be sold at the highest price. Medicaid expansion, however, is creating an anomaly. Medicaid expansion expects a higher demand to meet the lower supply without increasing the reimbursement rates. This is a fundamental flaw in Medicaid expansion. If, on the other hand, Medicaid expansion was premised on an increase in reimbursement rates, we may see an uptick in supply. When demand is high and supply is low, many people “demanding” get nothing.

Let’s think about how many patients each primary care physician can handle.

“According to a 2013 survey by the American Academy of Family Physicians, the average member of that group has 93.2 “patient encounters” each week — in an office, hospital or nursing home, on a house call or via an e-visit. That’s about 19 patients per day. The family physicians said they spend 34.1 hours in direct patient care each week, or about 22 minutes per encounter, with 2,367 people under each physician’s care.” See article.

physician need

“The baseline projections from BHPr’s physician supply and requirements models suggest that overall requirements are growing faster than the FTE supply of physicians (Exhibits 51 and 52). Between 2005 and 2020, requirements are projected to grow to approximately 976,000 (22 percent), while FTE supply is projected to grow to approximately 926,600 (14 percent). These projections suggest a modest, but growing, shortfall of approximately 49,000 physicians by 2020 if today’s level of health care services is extrapolated to the future population. ” See article.

This is not the first time I have noted the increasing physician shortage with Medicaid expansion. There is a huge difference in giving someone a Medicaid card and providing a person with quality health care. A card is a piece of paper. If you cannot find a physician..or psychiatrist…or pulmonologist….or neurosurgeon who will accept Medicaid, then your Medicaid card is simply a piece of paper, not even worth the paper upon which it is printed. See blog. And blog. And blog.

The same can be said with the shortage of dentists. See blog.

With a shortage of approximately 49,000 physicians in 2o20, I pray that I am not holding a Medicaid card.

If I am, I will be another victim of high demand with low supply.

MCO CEO Compensated $400,000 Plus Bonuses with Our Tax Dollars!

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.

$400,000 a year, plus bonuses.  Apparently, I got into the wrong career; the public sector seems to pay substantially more.

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!!!! To manage 16 counties’ behavioral health care services for Medicaid recipients.

For comparison purposes, the President of the United States earns $400,000/year (to run the entire country). Does the CEO of Cardinal equate to the President of the United States? Like the President, the CEO of Cardinal, along with all the other MCOs’ CEOs, are compensated with tax dollars.

Remember that the entire purpose of the MCO system is to decrease the risk of Medicaid budget overspending by placing the financial risk of overspending on the MCO instead of the State. In theory, the MCOs would be apt to conservatively spend funds and more carefully monitor the behavioral health care services provided to consumers within its catchment area to ensure medically necessity and not wasteful, unnecessary services.

Also, in theory, if the mission of the MCOs were to provide top-quality, medically necessary, behavioral health care services for all Medicaid recipients in need within its catchment area, as the MCOs often tout, then, theoretically, the MCOs would decrease administrative costs in order to provide higher quality, beefier services, increase reimbursement rates to incentivize health care providers to accept Medicaid, and maybe, even, not build a brand, new, stand-alone facility with top-notch technology and a cafeteria that looks how I would imagine Googles’ to look.

Here is how Cardinal’s building was described in 2010:

This 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.

The MCOs are not private companies. They do not sell products or services. Our tax dollars comprise the MCOs’ budget. Here is a breakdown of Cardinal’s budgetary sources from last year.

Cardinals budget

The so-called “revenues” are not revenues; they are tax dollars…our tax dollars.

78.1% of Cardinal’s budget, in 2014, came from our Medicaid budget. The remaining 21.7% came from state, federal, and county tax dollars, leaving .2% in the “other” category.

Because Cardinal’s budget is created with tax dollars, Cardinal is a public company working for all of us, tax paying, NC, residents.

When we hear that Tim Cook, Apple’s CEO, received $9.22 million in compensation last year, we only contributed to his salary if we bought Apple products. If I never bought an Apple product, then his extraordinarily high salary is irrelevant to me. If I did buy an Apple product, then my purchase was a voluntary choice to increase Apple’s profits, or revenues.

When we hear that Cardinal Innovations paid $424,975 to ousted CEO, Pam Shipman, over and above her normal salary of $400,000 a year, we all contributed to Shipman’s compensation involuntarily. Similarly, the new CEO, Richard Toppings, received a raise when he became CEO to increase his salary to $400,000 a year. Again, we contributed to his salary.

A private company must answer to its Board of Directors. But an MCO, such as Cardinal, must answer to tax payers.

I work very hard, and I expect that my dollars be used intelligently and for the betterment of society as a whole. Isn’t that the purpose of taxes? I do not pay taxes in order for Cardinal to pay its CEO $400,000.

For better or for worse, a large percentage of our tax dollars, here in NC, go to the Medicaid budget. I would venture that most people would agree that, as a society, we have a moral responsibility to ensure that our most vulnerable population…our poorest citizens…have adequate health care. No one should be denied medical coverage and our physicians cannot be expected to dole out charity beyond their means.

Hence, Medicaid.

We know that Medicaid recipients have a difficult time finding physicians who will accept Medicaid. We know that a Medicaid card is inferior to a private payor card and limits provider choice and allowable services. We know that certain services for which our private insurances pay, simply, are not covered by Medicaid. Why should a Medicaid-insured person receive sub-par medical services or have more difficulty finding willing providers, while privately insured persons receive high quality medical care with little effort?  See blog or blog.

Part of the trouble with Medicaid is the low reimbursements given to health care providers. Health-care consulting firm Merritt Hawkins conducted a study of Medicaid acceptance rates which found that just 45.7 percent of physicians are now accepting Medicaid patients in the U.S.’s largest 15 cities and the numbers worsen when you look at sub-specialties.

The reimbursement rates are so low for health care providers; the Medicaid services are inadequate, at best; and people in need of care have difficulty finding Medicaid physicians. Yet the CEO of Cardinal Innovations is compensated $400,000 per year.

Cardinal has 635 employees. Its five, top-paid executives are compensated $284,000-$400,000 with bonuses ranging $56,500-$122,000.

Richard Topping, Cardinal’s new CEO, told the Charlotte Observer that “it doesn’t cut into Medicaid services.”

He was also quoted as saying, “It’s a lot of money. It is. You’ve just got to look at the size and the scope and the scale.”

In contrast, Governor McCrory is compensated approximately $128,000.  Is McCrory’s “size, scope, and scale” smaller than the CEO’s of Cardinal?  Is the CEO of Cardinal “size and scope and scale,” more akin to the President of the US?

“We are a public entity that acts like a private company for a public purpose,” Toppings says.  Each MCO’s Board of Directors approve salaries and bonuses.

Cardinal is not the only MCO in NC compensating its CEO very well.  However, according to the Charlotte Observer, Cardinal’s CEO’s compensation takes the cake.

Smokey Mountain Center (SMC) pays its Chief Medical Officer Craig Martin $284,000 with a $6,789 longevity bonus.

Four years ago, before the initial 11 MCOs, the administrative cost of the MCOs was nonexistent (except for the pilot program, Piedmont Behavioral Health, which is Cardinal now).  Implementing the MCO system increased administrative costs, without question.  But by how much?  How much additional administrative costs are acceptable?

Is it acceptable to pay $400,000+ for a CEO of a public entity with our tax dollars?