Category Archives: Psychologists

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 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.

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?

NC Medicaid: Freedom of Choice of Providers? Why Bother? Providers Are Fungible!…Right?

I found some interesting language in the 1915(b) Waiver last week (well, interesting to me).

What is the 1915(b) Waiver? In the simplest of terms, with the 1915(b) Waiver, NC has asked the federal government for an exception to certain mandatory statutes.  In order to request the exception or “waiver” of certain federal statutes, NC had to draft our 1915(b) Waiver and promise the federal government that, despite the fact that NC is not following certain federal statutes, that certain things about Medicaid will not change.  Even though we may have waived the federal statute requiring it.

For example, in our 1915(b) Waiver, NC asks to waive Medicaid recipients’ “freedom of choice of provider” provision.  As in, federal statute requires the states to allow a Medicaid recipient to have the freedom to choose whatever or whomever provider that recipient desires.  (Kind of like…”You like your doctor? You can keep your doctor!”)

Well, NC had to waive the freedom of choice of provider because the MCOs in NC are jurisdictional.  For example, if Dr. Norwood provides Medicaid services in Durham, there is no reason that she should have to contract with Smokey Mountain Center (SMC).  And because Dr. Norwood does not contract with SMC, a Medicaid recipient cannot choose to receive services from Dr. Norwood, which, obviously, limits Medicaid recipients’ freedom of choice of provider.

The thinking behind the waiver of Medicaid recipients’ freedom of choice of provider is that (in my opinion), realistically, even if we did not waive the provision mandating the freedom of choice of provider, how likely is it that a Medicaid recipient residing in Asheville would choose to receive services from a Medicaid provider in Durham, NC? Most likely, the Medicaid recipients in Asheville have never heard of the Medicaid providers in Durham.  So…waive the freedom of choice….it’s harmless.

However, in order for the feds to allow this waiver of the freedom of choice of provider, NC had to promise something.

Our promise is found in the 1915(b) Waiver.  The language of our promise reads, ”

1915(b)

Why is this important?

Because it is not true.  Our promise that we made to the federal government in order for the federal government to allow us to implement our managed care system for our mental health, substance abuse, and developmentally disabled population is not true.

“These providers support this initiative and consumers have at least as much choice in individual providers as they had in the pre-reform non-managed care environment.”

If the Waiver were Pinocchio, its nose would be circling the earth.

It reminds me of my grandma.  Grandma is the sweetest, most wonderful grandma in the world.  She and my grandpa lived in a home in Cary, NC for over five decades.  When grandpa passed and grandma’s health began to decline, grandma decided to sell her home and move into an assisted living facility.  Well, grandma’s home was near and dear to all 5 children’s hearts, as well as all 15+ grandchildren’s hearts (I know…I have a huge family).  I, personally, had so many wonderful memories there (fishing in the lake behind the house, playing pool and ping-pong in the basement, climbing up and down the laundry chute acting as if it were a secret passage way, and grandpa’s amazing tomato sandwiches, gumbo and cornbread).

Anyway, the point is that when grandma sold the house, there was a stipulation in the contract.  The buyer promised to not bulldoze the house and build a new home.  You see, this neighborhood was old…one of the oldest in Cary.  So the homes were built in the 70s.  It had become “posh” to buy an older home in this neighborhood because the lots were so large and the location was so great and to simply flatten the old house for a new one.

Well, grandma wouldn’t have it.  There was too much nostalgia in the home for some buyer to bulldoze the home.  So the contract to sell the house stipulated that the buyer would not bulldoze the house.  So grandma sold the home.

And the buyer bulldozed the home.

Of all the low-down, dirty tricks!!! To lie in a contract to my grandma! Needless to say, grandma was very upset.  She felt that a piece of her life vanished, which, obviously, it did.

Well, grandma has a number of attorneys in the family (including me).  So grandma’s kids began to talk about a lawsuit.  But grandma said that even if she sued the buyer that it would not bring back the house.  Money could not replace the memories at grandma’s house.

If I am remembering correctly, this new house was built 5-6 years ago. Maybe more.  I pass the neighborhood all the time.  To date, I still have not driven to see the house that replaced grandma’s house.  I don’t think I could take it.

What is worse than lying to a grandmother about her home?

In my opinion? Lying to the feds about the freedom of choice of Medicaid provider that our Medicaid recipients have here in NC.  Talk about a vulnerable population…our most needy citizens, but add to the vulnerability mental health issues, substance abuse issues, and/or developmentally disablement.  And, now, let’s lie about their freedom of choice.

So where am I getting my allegation that Medicaid recipients do not have “at least enough choice in individual providers as they had in pre-reform non-managed care?”

Normally I only blog as to facts that I can corroborate with some research.  However, this blog may not be corroborated by any independent research.  My allegation is based on my own experience as a Medicaid attorney, conversations with my clients, emails that I have received from providers across the state, memos I have read from the MCOs, and the very real fact that the MCOs are terminating (or not renewing) hundreds of provider contracts across the state.

For the sake of argument, let’s say I am right.  That Medicaid recipients do not have at least the same freedom of choice of provider as pre-MCOs.  What then?

If I am right, this is the situation in which we find ourselves today.  So what is happening today?

As the MCOs determine that fewer providers are needed within a catchment area, the MCOs are refusing to contract with “redundant and unnecessary” providers.  But are these providers really unnecessary?  Really redundant?  Are we to believe that mental health providers are fungible?  Meaning that one provider is just as good as the next…that nothing makes some provider “stick out?”  Are providers fungible like beach balls are fungible?

Let’s test that theory.

Abby is a suicidal teenager.  She has suffered from schizophrenia with auditory hallucinations since she was a child.  For the last six years, Abby has seen Dr. Norwood.  It took some time, but, eventually, Abby began to trust Dr. Norwood.  Dr. Norwood has developed a close relationship with Abby, even telling Abby to call her 24 hours a day, 7 days a week if she is in crisis.  Dr. Norwood resides in Durham, so Alliance Behavioral Healthcare (Alliance) is her MCO, and Dr. Norwood provides Abby with outpatient behavioral therapy (OBT).  But, in addition to the weekly therapy, Dr. Norwood also provides Abby with a sense of security.  Abby knows that, if needed, Dr. Norwood would be there for here under any circumstances.  In addition, Abby trusts Dr. Norwood because she is a female.  Abby has an intense distrust of males.  When Abby was 9, her step-father raped her over and over until child protective services stepped in, but not before Abby suffered 8 broken bones and has lost the ability to reproduce forever.

Then, Alliance held its RFPs a couple of months ago.  It’s “tryout.”

And Dr. Norwood was not awarded a contract with Alliance.  Dr. Norwood has no idea why Alliance did not award her a contract.  Only that, according to Alliance, Alliance has sufficient number of providers providing OBT within its catchment area and Dr. Norwood’s services are no longer needed.

Because mental health care providers are fungible, right?

Who cares whether Abby receives services from Dr. Norwood? She can get the same exact services from a large corporation…we will call it “Triangle Counseling.” (BTW: If a Triangle Counseling really exists, I apologize.  This is a fictitious company made up for my example).  Triangle Counseling employs 25+ psychiatrists and 30+ counselors.  When a Medicaid recipient is referred to Triangle, Triangle assigns a psychiatrist and a counselor to the recipient.  Oh, and if, for some reason, the Medicaid recipients needs crisis help outside business hours, Triangle provides “tele-care” so the Medicaid recipient can speak to a computer screen on which a person can be seen by a counselor.

Abby is now hospitalized.  Dr. Norwood filed bankruptcy, lost her 30 year+ career, and is receiving monetary support from the state.

I ask you, if Alliance (or any other MCO) has terminated even one provider, hasn’t that MCO restricted Medicaid recipients’ freedom of choice of provider beyond what was contemplated by the Waiver?  Is the clause in our Waiver that “freedom of choice of provider will be the same as before the implementation of MCOs?,” truthful?  What if the MCO has terminated 10 provider contracts?  50?  100? 

Yet, in order to implement the MCO system, we promised the federal government in our 1915(b) Waiver that “consumers have at least as much choice in individual providers as they had in the pre-reform non-managed care environment.”

Fact or fiction?

Are providers fungible?  Because my grandma knows from experience, houses sure are not.

How Managed Care Organizations Will Be the Downfall of Mental Health in NC

Lately, mental health has been a topic of great interest to many people.  Tragedies like the Navy Yard shooting bring the mental health issue even more to the forefront.  Remember, the shooter had complained about auditory hallucinations prior to the horrible event.

Yet North Carolina, like many other states, has implemented the managed care system for Medicaid behavioral health.  These managed care organizations (MCOs) will be the downfall of the mental health care system.

That’s a pretty strong statement, huh? How could these MCOs be the downfall of mental health?

Let me explain…

Currently, in NC we have hundreds of thousands of mental health care providers across the state.  Most of the behavioral health care providers are not huge companies.  Many thousands of these providers are small businesses with under 10 staff, although there are certainly some that staff numerous psychiatrists and hundreds of employees.  Regardless, in the aggregate, these behavioral health care provider staff millions of North Carolinians.  (I don’t have the data on the numbers, so these numbers are estimates).

Not only do we rely on these behavioral health care providers to staff millions of North Carolinians, but these providers also service our 1.5 million Medicaid recipients with any mental health care issue.

I doubt I would receive any opposition to the statement that these behavioral health care providers across NC are assets to our community.  They provide employment for some and mental health services for others.  Without our behavioral health care providers, our Medicaid recipients would (a) not receive medically necessary treatment; and (b) most likely, be hospitalized, incarcerated, or simply non-productive citizens. Not to mention the number of people who would become unemployed if the behavioral health care providers went our of business.

Many studies have proven that, in fact, many mentally ill not receiving care end up in prisons or the emergency room (ER).  For example,  in one study, “More Mentally Ill Persons Are in Jails and Prisons Than Hospitals: A Survey of the States,” the authors found that:

Using 2004–2005 data not previously published, we found that in the United States there are now more than three times more seriously mentally ill persons in jails and prisons than in hospitals. Looked at by individual states, in North Dakota there are approximately an equal number of mentally ill persons in jails and prisons compared to hospitals. By contrast, Arizona and Nevada have almost ten times more mentally ill persons in jails and prisons than in hospitals. It is thus fact, not hyperbole, that America’s jails and prisons have become our new mental hospitals.

The way to combat the fact that many mentally ill become hospitalized or jailed is to have enough behavioral health care providers to service all the people in-need and to allow people easy access to the providers at all times.  It only makes sense. If we have people needing mental health care services, we need enough providers to service them.  This is Logic 101, people.

Well, when we switched over the managed care system for behavioral health, at first, we didn’t see a huge impact.  Yes, we missed ValueOptions.  Yes, we hated the process of provider credentialing and obtaining additional contracts with the new MCOs (I mean, good gracious, we already had the contract with the Department of Health and Human Services (DHHS).  How many contracts would we need?)  But, at first, the MCOs were not crippling.  Killing a ton of trees? Yes.  But crippling? No.

Our government leaders performed two (2) fatal flaws when implementing the MCOs.  (1) The MCOs were allowed to conduct a closed network after a short period of time; and (2) the MCOs were not statewide.  Well, there were probably many more flaws, but these were the most fatal.

CLOSED NETWORK

The MCOs are allowed via statute to contract with the number of providers that it deems necessary for its catchment area.  If, for example, MeckLINK, the MCO in Meckeleburg county, decides that 1 provider can service all the mental health needs of Medicaid recipients in Mecklenburg county, then MeckLINK may contract with only one provider.

What happens to the rest of the behavioral health providers in Mecklenburg county?  Well, those providers do not have contracts with MeckLINK to provide services within Mecklenburg county.  Never mind that the provider had signed a 5-year lease in downtown Charlotte.  No other provider except for the one that MeckLINK contracts with can provide services in Mecklenburg county.

So you say, so what? The providers can provide services in 99 other counties.

But, what if a provider has been in business for 15 years.  What if the mentally ill that the provider services are severely mentally ill?  What if that provider was the only person that some Medicaid recipients trusted?  What if those Medicaid recipients refuse to switch providers?  Who suffers?  Because, despite any other contention, behavioral health care providers are not fungible.

Or…change it from MeckLINK to Smokey Mountain Center (SMC), which starting next month will have a 23 county catchment area.  23 counties!!

What happens when SMC determines that it will only contract with 2 providers per county?

Are the thousands of behavioral health care providers who reside and service those 23 counties that can no longer provider services all to move out of SMC’s catchment area in order to continue their careers?

No, realistically, if SMC decides that it will only contract with 2 providers per county, all other providers within SMC’s catchment area go out of business.  All employees of those thousands of providers are  unemployed.  Unemployment sky-rockets and the need for Medicaid and food stamps sky-rocket.

NOT STATEWIDE

The MCOs in NC are not statewide.  What does that mean?  That means that every MCO in NC has its own catchment area…or jurisdiction.  If you are a provider in Wake county, you must have a contract with Alliance Behavioral Health (Alliance).  If you are a provider in Pitt county, you must have a contract with East Carolina Behavioral Health (ECBH).

Other states have implemented MCOs differently.  Such as New Mexico…not that the MCOs are working great in NM, but I do agree with this one facet of NM MCOs.  Other states have MCOs that are statewide.  Each MCO has providers across the state, and…get this…the Medicaid recipients get to choose with which MCO they want to deal.

Think about it…Medicaid recipients having a choice among MCOs depending on the providers with which the MCO contracts.

But not in NC.

In NC, Medicaid recipient Alice may choose to go to Dr. Jane in Charlotte.  In fact, Alice has gone to Dr. Jane for years.  Alice suffers schizophrenia with visual hallucinations.  Dr. Jane has known Alice for so long that Dr. Jane can tell when Alice is going through a more troubling than normal bout.  But last week MeckLINK determined that it would not contract with Dr. Jane and demanded that Dr. Jane transition all clients.

So, Dr. Jane transitions Alice to Dr. Kelly and closes up her shop.  Dr. Jane and her 16 employees file for unemployment, food stamps and subsidized housing…oh, and Medicaid.

Alice decides she hates Dr. Kelly and is convinced that Dr. Kelly had devised a plot to rid her of Dr. Jane.  Remember, people who suffer from mental illnesses don’t always think rationally…

So Alice never goes to any appointments with Dr. Kelly.  Instead, she begins to use heroin again.

Sound far off? Crazy? Unrealistic?

I beg to differ.

The way in which the MCOs are set-up in NC allows the MCOs to unilaterally decide to contract with one provider, but not the other.  Or even scarier, just 1 provider.  The MCO set-up in NC allows the MCOs to determine that certain providers cannot service the population within its catchment area.

A GLIMPSE INTO THE FUTURE

If our MCOs continue to terminate Medicaid provider contracts at the rate that they are currently, thousands and thousands of providers will soon be out of business.  Hundreds of thousands of citizens will be unemployed (the staff of the provider companies).  Unemployment will increase.  The need for Medicaid and food stamps will increase.  The very few behavioral health care providers that are still allowed to provide services to Medicaid recipients will be overwhelmed, unable to meet the needs of every single recipient.  Medicaid recipients will not receive individual, unique mental health care; Medicaid recipients will be overlooked (whether they don’t go to appointments, become hospitalized or incarcerated).

And something very tragic will happen here in NC.  And not on a Navy Yard.

Hence the downfall of mental health in NC.

The NC Medicaid Mental Health 10-Ring Circus: How 10 Mini-Jurisdictions Will Be the Downfall of Mental Health

Ever been to a three-ring circus? It is hard to stay focused on one ring because so much is happening in all 3 rings.  Are you supposed to watch the lion-tamer? The trapeze artists? Or the motorcycles jumping through rings of fire? You can’t watch all the acts.  You end up turning your head back and forth like a water sprinkler, only to catch some of each act.

Now imagine a 10-ring circus.

You wouldn’t be able to see much of any act.

This is similar to our NC Medicaid mental health system.  Instead of the one single state entity running our mental health system for Medicaid, we have 10 entities.  And all 10 entities have different rules.  Different Medicaid rates.  (Not to mention this is in violation of the federal “single state agency” mandate).

So what is the effect of these 10 mini-jurisdictions with different rules on our Medicaid mental health system?

Providers are going out of business.  Medicaid recipients are not receiving medically necessary, mental health services.

While the dancing bears, the fire-eaters and the acrobats are all performing, the ringmaster loses control.

Yesterday a psychologist-friend (We will call her Dr. Liz) told me that a mother called her asking whether Dr. Liz could see her child.  Dr. Liz soon learned that the mother and the child were on Medicaid.  Dr. Liz agreed to assess the child, but sadly informed the mother that it was highly unlikely that Dr. Liz could provide therapy for the child because the child is on Medicaid.

The mother burst into tears.  She explained that she lives in Fayetteville.  (Dr. Liz provides services in Durham).  One and a half hours away.  The mother said that Dr. Liz was the 30th provider she called.

29 providers either refused to see the child or had waiting lists months and months long because the child is on Medicaid.

The mother explained that the psychologist the child had routinely seen went out of business and that she did not understand why there were no psychologists within an hour and a half drive of her that were willing or able to provide services to her child.

She cried, “Why won’t anyone take Medicaid?”

When Dr. Liz told me this story, I was deeply saddened.  Yet this is reality.

Dr. Liz could not provide services to the child because, despite the fact that Dr. Liz has a Medicaid contract with the Department of Health and Human Services (DHHS) to provide Medicaid services throughout North Carolina, one managed care organization (MCO), Alliance Behavioral Health (Alliance), has decided that Dr. Liz cannot provide services in Durham County (where Dr. Liz is located).

We have 11 MCOs across North Carolina.

MCO map

Although after September 30, 2013, we will have 10 MCOs.  After Sept. 30, Western Highlands will be consolidated with Smoky Mountain, and Smoky Mountain will oversee management of mental health services for 23 western North Carolina counties.

So I will use 10 MCOs in this blog as there will be 10 within a few weeks.  BTW: There is also a lot of talk that MeckLINK will soon be the next MCO to disappear, but we shall see.

So how are these 10 MCO creating mini-jurisdictions? And why are these mini-jurisdictions causing the downfall of NC Medicaid mental health?

Let me explain:

Dr. Liz lives and works in Durham county.  Alliance is the MCO.  Alliance has refused to provide Dr. Liz with a Medicaid contract.  Therefore, Dr. Liz is not allowed to provide Medicaid services in Wake, Durham, Cumberland, or Johnston counties, because Alliance is in charge of those counties.

However, if Dr. Liz drives over to Fuquay Varina (Harnett county), Dr. Liz CAN provide Medicaid services there because Sandhills, the MCO for Harnett county, contracted with Dr. Liz.

Do you see the issue?

In essence, by Alliance not contracting with Dr. Liz, Alliance has taken Dr. Liz’s Medicaid contract with DHHS and torn a chunk out of it.  Dr. Liz’s contract with DHHS states she can provide services statewide.  But Alliance removed Dr. Liz’s ability to provide services in 4 counties, Wake, Cumberland, Durham and Johnston.  Since Dr. Liz could, theoretically, provide services in 96 other counties, Alliance removed a small chunk of Dr. Liz’s contract with DHHS…but still a chunk nonetheless.

If Dr. Liz ONLY provided services within Alliance’s catchment, then Alliance, by refusing to contract with Dr. Liz, would have either (1) put Dr. Liz out of business; (2) caused Dr. Liz to no longer accept Medicaid; or (3) forced Dr. Liz to relocate.

As all 10 MCOs are managing Medicaid differently, one provider could be allowed to provide Medicaid services in half the state, but not the other half.

While, theoretically, on paper, it may seem easy to tell Dr. Liz to just relocate her practice to Fuquay Varina, in reality, this is much more difficult.

Dr. Liz signed a 5-year lease for her building in Durham, and she is only in her first year (she just renewed it) of the lease.  She also has a daughter who attends school nearby her office.  Were Dr. Liz to move her office, she would no longer be able to transport her daughter to school.  Her clients cannot drive to Fuquay.  Most of her Medicaid clients lack transportation or the funds to pay for gas to drive 30 minutes further.  She has no clients in Fuquay.  She has no staff in Fuquay.  Her staff will not follow her to Fuquay; they all live in Durham. 

Dr. Liz does not have monetary ability to go lease another building in Fuquay.  But she is unable to perform her work where she is located now in Durham.

So what happens?

More times than not…the provider’s company goes bankrupt.  Which is why the mother cannot find services for her child in Fayetteville.  Many providers in Fayetteville and across NC have gone belly up.  The few remaining providers are either limiting the number of Medicaid patients they will accept or have long waiting lists.

Not only do the MCOs determine the providers with whom to contract differently, the MCOs even reimburse certain Medicaid services differently.

Assertive Community Treatment Team (ACTT) is a 24-hour service for the severely mentally ill.  All 10 MCOs must provide ACTT services, but the MCOs do not have to reimburse uniformly.

Therefore, if Dr. Liz were to provide ACTT services in the western part of the state, Dr. Liz may receive $295.32 per unit.  But if Dr. Liz provided the services in southern NC, she may have been reimbursed $323.98 per unit.

This Medicaid reimbursement rate changing depending on which MCO is paying would be like a Chatham county DMV charging $25 to renew your license, but a Mecklenburg county DMV charging $75.  It is a North Carolina state license!  The price to renew should be statewide.

Just like Medicaid should be uniform across the state. 

But, instead, here in NC, we have created 10 mini-jurisdictions.

In each of the 10 mini-jurisdictions, the MCO dictate the rules.  In each of the 10 MCOs, the rules are different.  Each MCO can choose to contract with a provider (or not) with zero regard as to the effect on the provider, the provider’s company, and the Medicaid recipients.  The MCOs can reimburse the same Medicaid services at different rates.

The dancing bears, the fire-eater, and the acrobats are all charging different entrance fees, depending on which entrance you entered.  (And we all know that a dancing bear should not be in charge of entrance fees!) 

The ringmaster is sleeping.

There is no uniformity in Medicaid mental health in NC. 

It is a 10-ring circus!

Smoke and Mirrors: ECBH Increasing Medicaid Rates (But Decreasing the Amount of Services Authorized?)

I am always amazed at magicians.  David Copperfield, David Blaine…

I once saw David Copperfield live.  I was convinced prior to the show that I would be able to determine how he performed the illusions. I just KNEW that I would see the strings or the trapdoor. But I did not. I was thoroughly amazed. Despite the fact that I still know that magic is not real, I was still awe-struck and entertained.  Realistically, magic is just smoke and mirrors. But, dag  on, those smoke and mirrors do a fantastic job.  At times, while watching a magic show, I find myself actually believing in magic. That is the power of smoke and mirrors.

Smoke and mirrors do not only appear in magic.  Many politicians are expert wielders of smoke and mirrors.  So to are many salesmen. And, apparently, East Carolina Behavioral Health (ECBH).

An article was published on NC Health News’ website yesterday. “Medicaid LME Updates: Cumberland/Alliance to Merge, Good News from ECBH.” Article is good. Information is good. But the ECBH news, I find “smoky.”

Click here for the article by Taylor Sisk

According to the article, “ECBH will increase the rates for psychological testing by 10 percent, personal care services by 16 percent, peer support by 7 percent and facility-based crisis and detoxification services to cover the full cost of the service.”

On the surface, the increase in rates that ECBH is implementing sounds great, right? In my head, I thought, “Wow! ECBH is doing some great marketing. Providers will want to work with ECBH…”

The problem is that the “surface level” or rate increase “on its face” is never the whole story. (Which is why ECBH’s rate increase is such an amazing use of smoke and mirrors. Most people will never see past the smoke).

The MCOs are prepaid. If the MCOs’ do NOT contract with providers and NOT authorize services, profits rise. 

But would an MCO REALLY deny medically necessary services, theoretically, to INCREASE profit?? You can decide.

However, one of my clients hired me because ECBH denied 100% of continuing authorizations and new referrals for ACTT services in Pitt County.

ONE HUNDRED PERCENT!

What are ACTT services?

DMA Clinical Policy 8A defines ACTT services:

The Assertive Community Treatment Team [ACTT] is a service provided by an interdisciplinary team that ensures service availability 24 hours a day, 7 days per week and is prepared to carry out a full range of treatment functions wherever and whenever needed. A service beneficiary is referred to the Assertive Community Treatment Team service when it has been determined that his or her needs are so pervasive or unpredictable that they cannot be met effectively by any other combination of available community services. Typically this service should be targeted to the 10% of MHDDSA service beneficiaries who have serious and persistent mental illness or co-occurring disorders, dual and triply diagnosed and the most complex and expensive treatment needs.” 

ACTT services are reserved for the extremely mentally ill.  These are the people who need 24-hour services; recipients receiving ACTT services are people who must receive the ACTT services to function.  Yet, ECBH denied 100% of my client’s new referrals and continuing authorizations.  One such denial was a Medicaid recipient who had been arrested 6 times since April 2012.  After the ACTT denial, the Medicaid recipient was again incarcerated, which is where the recipient is now.  Another denial resulted in the Medicaid recipient being hospitalized for suicidal ideation.

For recipients already receiving ACTT services, ECBH has forced my client to “step-down” the recipients to outpatient behavioral therapy (“OBT”). Of the Medicaid recipients that ECBH has forced Petitioner to “step-down,” three recipients were immediately referred back to ACTT when the OBT providers stated that the recipients suffered too high acuity of mental health illness to manage in OBT setting.  Two recipients were incarnated after discharge; the jail employees are complaining of psychiatric problems that are difficult to manage. 

Back in May 2013, the local news channel in Greenville, North Carolina, aired “9 On Your Side Mental Health Town Hall exposes problems, brings you answers.”  The news channel coverage demonstrates the possibility of the widespread breath of ECBH denials, in general. Maybe ECBH’s denials of medically necessary services is not limited to my client’s personal situation.

Regardless of the breadth of ECBH’s denials of medically necessary services, back in May 2013, ECBH was getting some bad marketing from the local news. So what does ECBH do? Raise reimbursement rates.

If, in fact, ECBH is denying many medically necessary Medicaid services in order to raise profit, then isn’t ECBH’s rate increase just smoke and mirrors?