Category Archives: Managed Care

$1.68 million. That’s what company controlling millions in taxpayer dollars wants back from fired CEO

Article in the Winston Salem Journal today:

Cardinal Innovations filed a lawsuit Monday in Mecklenburg Superior Court against fired chief executive Richard Topping.

The state’s largest managed care organization – which controls hundreds of millions in taxpayer dollars – is suing to recoup $1.68 million in severance from Topping, as well as prevent him from collecting any further payments approved by the former board that was disbanded Nov. 27.

The lawsuit says Topping’s severance represents “excessive and unlawful payments.”

Cardinal oversees providers of services for mental health, developmental disabilities and substance abuse for more than 850,000 Medicaid enrollees in 20 counties, including Forsyth and five others in the Triad. It handles more than $675 million in annual federal and state Medicaid money.

shhhhtoppings

An investigation by McGuireWoods LLP was requested by a reconstituted board, formed in January and approved by state health Secretary Mandy Cohen, along with interim chief executive Trey Sutten. It was conducted by McGuireWoods partner Kurt Meyers, a former federal prosecutor.

The lawsuit represents a new action by Cardinal, and is not in response to the previous board’s lawsuit against the state to allow for executive salaries, including for Topping, that exceeded those permitted by state law.

However, it does represent a follow-up on the temporary restraining order and then preliminary injunction won against Topping and the former board filed in the same court.

The injunction prevents Topping and the former board from interfering with N.C. Department of Health and Human Services’ regulatory actions versus Cardinal that began when Cohen ordered the takeover of the organization on Nov. 27.

The former board took action against Topping’s employment at its Nov. 17 meeting by terminating his contract without cause. The board, at Topping’s request, would have been allowed to stay on through Dec. 1.

Cardinal said in the lawsuit that “Topping’s motive in asking the board to allow him to remain CEO was so that he could use his position as CEO to ensure that Cardinal Innovations paid him the lump-sum severance before his departure.”

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Now to my opinion:

Disclosure: I have not read the Complaint and would love someone to send it to me. But, on the face of this article, my experience in the legal world, and my limited knowledge about the whole Topping debacle:

While we can all agree that Topping’s salary, plus bonuses and perks, was absolutely repugnant and offensive to taxpayers (like me), Topping did not get there all by himself. The Board of Directors met, discussed Topping’s salary, and voted to give him that salary. The Board of Directors, essentially, is the heart and the brain of Cardinal Innovations.

Is Cardinal Innovations going to sue itself for bestowing such an outrageous salary, plus benefits, to Topping?

Because if I am Topping and I get sued for having a high salary, I am going to point at the Board of Directors and say, “I couldn’t have gotten paid without your votes, Board. So have fun and sue yourself.”

BTW: Isn’t this lawsuit a conflict of interest?? It was only last year that Cardinal filed a lawsuit asking the court to ALLOW TOPPING TO CONTINUE TO RECEIVE SUCH OUTRAGEOUS SALARY THAT NOW – SAME COMPANY – IS SUING BECAUSE IT GAVE THIS SALARY TO IT CEO…which is it, Cardinal? Or is it just a matter of following the wind of public opinion? 

Not to mention – HOW IS CARDINAL FUNDING THE LAWSUIT (ATTORNEYS’ FEES) – WITH OUR TAX DOLLARS!!!!!!! I mean, good for Womble Carlyle, the law firm hired with our tax dollars to spend more money on a losing case (my opinion) because Cardinal mismanaged our tax dollars! Winner, winner, chicken dinner! Last year it got paid to file a lawsuit to keep Topping’s salary and perks. Five months later it’s hired to sue for giving Topping’s salary and perks. See blog.

Does anyone else not see how screwed up this is?????

Letter to HHS: RAC Audits “Have Absolutely No Direct Impact on the Medicare Providers” – And I Spotted Elvis!

Recovery audits have absolutely no direct impact on the Medicare providers working hard to deliver much needed healthcare services to beneficiaries.

And Elvis Presley is still alive! Oh, and did you know that Bill Clinton never had an affair on Hillary? (since when has her name become one word, like Prince or Beyonce?)

This sentence was written in a March 6, 2018, correspondence from The Council for Medicare Integrity to HHS Secretary Alex Azar.

“Recovery auditing has never been an impediment to the delivery of healthcare services nor is it an intrusion in the physician-patient relationship.” – Kristin Walter of The Council for Medicare Integrity. BTW, Ms. Walter, health care has a space between the two syllables.

The purpose of this letter that was sent from the The Council for Medicare Integrity to Secretary Azar was to request an increase of prepayment reviews for Medicare providers. For those of you so blessed to not know what a prepayment review, prepayment review is a review of your Medicare (or Caid) claims prior to being paid. It sounds reasonable on paper, but, in real life, prepayment review is a Draconian, unjust, and preposterous tool aimed at putting healthcare providers out of business, or if not aimed, is the unknown or accidental outcome of such a review. If placed on prepayment review, your Medicare or Medicaid reimbursements are 100% cut off. Gone. Like the girl in that movie with Ben Affleck, Gone Girl Gone, and, like the girl, not really gone because it’s alive – you provided services and are owed that money – but it’s in hiding and may ruin your life. See blog.

Even if I were wrong, which I am not, the mere process in the order of events of prepayment review is illogical. In the interest of time, I will cut-and-paste a section from a prior blog that I wrote about prepayment review:

In real-life, prepayment review:

  • The auditors may use incorrect, inapplicable, subjective, and arbitrary standards.

I had a case in which the auditors were denying 100% ACTT services, which are 24-hour mental health services for those 10% of people who suffer from extreme mental illness. The reason that the auditor was denying 100% of the claims was because “lower level services were not tried and ruled out.” In this instance, we have a behavioral health care provider employing staff to render ACTT services (expensive), actually rendering the ACTT services (expensive), and getting paid zero…zilch…nada…for a reason that is not required! There is no requirement that a person receiving ACTT services try a lower level of service first. If the person qualifies for ACTT, the person should receive ACTT services. Because of this auditor’s misunderstanding of ACTT, this provider was almost put out of business.

Another example: A provider of home health was placed on prepayment review. Again, 90 – 100% of the claims were denied. In home health, program eligibility is determined by an independent assessment conducted by the Division of Medical Assistance (DMA) via Liberty, which creates an individualized plan of care. The provider submitted claims for Patient Sally, who, according to her plan, needs help dressing. The service notes demonstrated that the in-home aide helped Sally dress with a shirt and pants. But the auditor denies every claim the provider bills for Sally (which is 7 days a week) because, according to the service note, the in-home aide failed to check the box to show she/he helped put on Sally’s shoes. The auditor fails to understand that Sally is a double amputee – she has no feet.

Quis custodiet ipsos custodes – Who watches the watchmen???

  • The administrative burden placed on providers undergoing prepayment review is staggering.

In many cases, a provider on prepayment review is forced to hire contract workers just to keep up with the number of document requests coming from the entity that is conducting the prepayment review. After initial document requests, there are supplemental document requests. Then every claim that is denied needs to be re-submitted or appealed. The amount of paperwork involved in prepayment review would cause an environmentalist to scream and crumple into the fetal position like “The Crying Game.”

  • The accuracy ratings are inaccurate.

Because of the mistakes the auditors make in erroneously denying claims, the purported “accuracy ratings” are inaccurate. My daughter received an 86 on a test. Given that she is a straight ‘A’ student, this was odd. I asked her what she got wrong, and she had no idea. I told her to ask her teacher the next day why she received an 86. Oops. Her teacher had accidentally given my daughter an 86; the 86 was the grade of another child in the class with the same first name. In prepayment review, the accuracy ratings are the only method to be removed from prepayment, so the accuracy of the accuracy ratings is important. One mistaken, erroneously denied claim damages the ratings, and we’ve already discussed that mistakes/errors occur. You think, if a mistake is found, call up the auditing entity…talk it out. See below.

  • The communication between provider and auditor do not exist.

Years ago my mom and I went to visit relatives in Switzerland. (Not dissimilar to National Lampoon’s European Vacation). They spoke German; we did not. We communicated with pictures and hand gestures. To this day, I have no idea their names. This is the relationship between the provider and the auditor.

Assuming that the provider reaches a live person on the telephone:

“Can you please explain to me why claims 1-100 failed?”

“Don’t you know the service definitions and the policies? That is your responsibility.”

“Yes, but I believe that we follow the policies. We don’t understand why these claims are denied. That’s what I’m asking.”

“Read the policy.”

“Not helpful.”

  • The financial burden on the provider is devastating.

If a provider’s reimbursements are 80 – 100% reliant on Medicaid/care and those funds are frozen, the provider cannot meet payroll. Yet the provider is expected to continue to render services. A few years ago, I requested from NC DMA a list of providers on prepayment review and the details surrounding them. I was shocked at the number of providers that were placed on prepayment review and within a couple months ceased submitting claims. In reality, what happened was that those providers were forced to close their doors. They couldn’t financially support their company without getting paid.

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Back to the current blog

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So to have The Council for Medicare Integrity declare that prepayment review has absolutely no impact on Medicare providers is ludicrous.

Now, I will admit that the RAC (and other acronyms) prepayment and post payment review programs have successfully recovered millions of dollars of alleged overpayments. But these processes must be done right, legally. You can’t just shove an overzealous, for-profit, audit company out the door like an overweight kid in a candy store. Legal due process and legal limitations must be required – and followed.

Ms. Walter does present some interesting, yet factually questionable, statistics:

  • “Over the past 5 years alone, Medicare has lost more than $200 billion taxpayer dollars to very preventable billing errors made by providers.”

Not quite sure how this was calculated. A team of compliance auditors would have had to review hundreds of thousands of medical records to determine this amount. Is she referring to money that has been recovered and the appeal process afforded to the providers has been exhausted? Or is this number how much money is being alleged has been overpaid? How exactly were these supposed billing errors “very preventable?” What does that mean? She is either saying that the health care providers could have prevented the ostensible overbillings – or – she is saying that RAC auditors could have prevented these purported overbillings by increased prepayment review. Either way … I don’t get it. It reminds me of Demi Moore in A Few Good Men, “I object.” Judge states, “Overruled.” Demi Moore pleads, “I strenuously object.” Judge states, “Still overruled.” “Very preventable billing errors,” said Ms. Walters. “Still overruled.”

  • “Currently, only 0.5 percent of Medicare claims are reviewed, on a post-payment basis, for billing accuracy and adherence to program billing rules. This leaves 99.5 percent of claims immune from any checks and balances that would ensure Medicare payments are correct.”

Again, I am curious as to the mathematic calculation used. Is she including the audits performed, not only by RACs, but audits by ZPICs, CERTS, MACs, including Palmetto, Noridian and CGS, federal and state Program Integrities, State contractors, MFCUs, MICs, MCOs, PERMs, PCG, and HHS? Because I can definitely see that we need more players.

  • “The contrast between Medicare review practices and private payers is startling. Despite the dire need to safeguard Medicare dollars, CMS currently allows Recovery Audit Contractors (RACs) to review fewer than 30 Medicare claim  types (down from 800 claim types initially) and has scaled back to allow a review of a mere 0.5 percent of Medicare provider claims after they have been paid. Considered a basic cost of doing business, the same providers billing Medicare comply, without issue, with the more extensive claim review requirements of private health insurance companies. With Medicare however, provider groups have lobbied aggressively to keep their overpayments, putting intense pressure on CMS to block Medicare billing oversight.”

Did I wake up in the Twilight Zone? Zombies? Let’s compare Medicare/caid to private health care companies.

First, let’s talk Benjamins (or pennies in Medicare/caid). A study was conducted to compare Texas Medicare/caid reimbursement rates to private pay. Since everything is bigger in Texas, including the reimbursement rates for Medicare/caid, I figured this study is demonstrative for the country (obviously each state’s statistics would vary).

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According to a 2016 study by the National Comparisons of Commercial and Medicare Fee-For-Service Payments to Hospitals:

  • 96%. In 2012, average payments for commercial inpatient hospital stays were higher than Medicare fee-for-service payments for 96% of the diagnosis related groups (DRGs) analyzed.
  • 14%. Between 2008 and 2012, the commercial-to-Medicare payment difference had an average increase of 14%.
  • 86%. Longer hospital stays do not appear to be a factor for higher average commercial payments. During this period, 86 percent of the DRGs analyzed had commercial-to-Medicare average length-of-stay of ratios less than one.

The “basic cost of doing business” for Medicare/caid patients is not getting appropriate reimbursement rates.

The law states that the reimbursements rates should allow quality of care. Section 30(A) of the Medicare Act requires that each State “provide such methods and procedures relating to the utilization of, and the payment for, care and services available under the plan (including but not limited to utilization review plans as provided for in section 1396b(i)(4) of this title) as may be necessary to safeguard against unnecessary utilization of such care and services and to assure that payments are consistent with efficiency, economy, and quality of care and are sufficient to enlist enough providers so that care and services are available under the plan at least to the extent that such care and services are available to the general population in the geographic area.” (emphasis added).

Second, billing under Medicare/caid is much more complex than billing third-party payors, which are not required to follow the over-regulated, esoteric, administrative, spaghetti sauce that mandates providers who accept Medicare and/or Medicaid (a whole bunch of independent vegetables pureed into a sauce in which the vegetables are indiscernible from the other). The regulatory burden required of providing Medicare and/or Medicaid services does not compare to the administrative and regulatory burden associated with private pay, regardless of Ms. Walter’s uncited and unreferenced claims that “the more extensive claim review requirements [are with the] private health insurance companies.” We’re talking kumquats to rack of lamb (are kumquats cheap)?

Third, let’s discuss this comment: “provider groups have lobbied aggressively.” RAC auditors, and all the other alphabet soup, are paid A LOT. Government bureaucracy often does not require the same “bid process” that a private company would need to pass. Some government contracts are awarded on a no-bid process (not ok), which does not create the best “bang for your buck for the taxpayers.”

I could go on…but, I believe that you get the point. My readers are no dummies!

I disagree with the correspondence, dated March 6, 2018, from The Council for Medicare Integrity to HHS Secretary Alex Azar is correct. However, my question is who will push back against The Council for Medicare Integrity? All those health care provider associations that “have lobbied aggressively to keep their overpayments, putting intense pressure on CMS to block Medicare billing oversight.”?

At the end of the day (literally), I questioned the motive of The Council for Medicare Integrity. Whenever you question a person’s motive, follow the money. So, I googled “who funds The Council for Medicare Integrity? Unsurprisingly, it was difficult to locate. According to The Council for Medicare Integrity’s website it provides transparency with the following FAQ:

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Again, do you see why I am questioning the source of income?

According to The Council for Medicare Integrity, “The Council for Medicare Integrity is a 501(c)(6) non-profit organization. The Council’s mission is to educate policymakers and other stakeholders regarding the importance of healthcare integrity programs that help Medicare identify and correct improper payments.

As a 501(c)(6) organization, the Council files IRS Form 990s annually with the IRS as required by law. Copies of these filings and exemption application materials can be obtained by mailing your request to the Secretary at: Council for Medicare Integrity, Attention: Secretary, 9275 W. Russell Road, Suite 100, Las Vegas, Nevada 89148. In your request, please provide your name, address, contact telephone number and a list of documents requested. Hard copies are subject to a fee of $1.00 for the first page and $.20 per each subsequent page, plus postage, and must be made by check or money order, payable to the Council for Medicare Integrity. Copies will be provided within 30 days from receipt of payment. These documents are also available for public inspection without charge at the Council’s principal office during regular business hours. Please schedule an appointment by contacting the Secretary at the address above.

This website serves as an aggregator of all the verifiable key facts and data pertaining to this important healthcare issue, as well as a resource center to support the provider community in their efforts to comply with Medicare policy.”

I still question the funding (and the bias)…Maybe funded by the RACs??

Inpatient Rehabilitation Facility Stay Claim Denials – Appeal Those Findings!

Centers for Medicare & Medicaid Services (CMS) created a new page on its Recovery Audit Contractor (RAC) website entitled “Provider Resources.” CMS indicated that it will post on this page any new issues the RACs have proposed to audit and are being evaluated by CMS for approval. It is like a glimpse behind the curtain to see the Great Oz. This is a fantastic resource for providers.  CMS posts a list of review topics that have been proposed, but not yet approved, for RACs to review. You can see the future!

Topics proposed for future audits:

  • Inpatient Rehabilitation Facility (IRF) Stays: Meeting Requirements to be considered Reasonable and Necessary;
  • Respiratory Assistive Devices: Meeting Requirements to be considered Reasonable and Necessary;
  • Excessive or Insufficient Drugs and Biologicals Units Billed;
  • E&M Codes billed within a Procedure Code with a “0” Day Global Period (Endoscopies or some minor surgical procedures);
  • E&M Codes billed within a Procedure Code with a “10” Day Global Period (other minor procedures);
  • E&M Codes billed within a Procedure Code with a “90” Day Global Period (major surgeries);

Over the next few weeks, intermittently (along with other blog posts), I will tackle these, and other, hot RAC audit topics.

IRFs are under fire in North Carolina, South Carolina, Virginia, and West Virginia!

Many patients with conditions like stroke or brain injury, who need an intensive medical rehabilitation program, are transferred to an inpatient rehabilitation facility.

Palmetto, one of Medicare’s MACs, conducted a prepayment review of IRFs in these four states. The results were bleak, indeed, and will, most likely, spur more audits of IRFs in the future. If you are a Medicare provider within Palmetto’s catchment area, then you know that Palmetto conducts a lot of targeted prepayment review. Here is a map of the MAC jurisdictions:

medicaremac

You can see that Palmetto manages Medicare for North Carolina, South Carolina, West Virginia, and Virginia. So Palmetto’s prepayment review covered its entire catchment area.

North Carolina Results A total of 28 claims were reviewed with 19 of the claims either completely or partially denied. The total dollars reviewed was $593,174.60 of which $416,483.42 was denied, resulting in a charge denial rate of 70.2 percent.

South Carolina Results A total of 24 claims were reviewed with 16 of the claims either completely or partially denied. The total dollars reviewed was $484,742.68 of which $325,266.43 was denied, resulting in a charge denial rate of 67.1 percent.

West Virginia Results
A total of two claims were reviewed with two of the claims either completely or partially denied. The total dollars reviewed was $32,506.21 of which $32,506.21 was denied, resulting in a charge denial rate of 100 percent.

Virginia Results
A total of 39 claims were reviewed with 31 of the claims either completely or partially denied. The total dollars reviewed was $810,913.83 of which $629,118.08 was denied, resulting in a charge denial rate of 77.6 percent.

In all 4 states, the most cited denial code was “5J504,” which means that “need for service/item not medically and reasonably necessary.” Subjective, right? I mean, who is better at determining medical necessity: (1) the treating physician who actually performs services and conducts the physical; or (2) a utilization auditor without an MD and who as never rendered medical services on the particular consumer? I see it all the time…former dental hygienists review the medical records of dentists and determine that no medial necessity exists…

When it comes to IRF Stays, what is reasonable and necessary?

According to Medicare policy and CMS guidance, the documentation in the patient’s IRF
medical record must demonstrate a reasonable expectation that the following criteria were met at the time of admission to the IRF. The patient must:

  • Require active and ongoing intervention of multiple therapy disciplines (Physical
    Therapy [PT], Occupational Therapy [OT], Speech-Language Pathology [SLP], or
    prosthetics/orthotics), at least one of which must be PT or OT;
  • Require an intensive rehabilitation therapy program, generally consisting of:
    ◦ 3 hours of therapy per day at least 5 days per week; or
    ◦ In certain well-documented cases, at least 15 hours of intensive rehabilitation
    therapy within a 7-consecutive day period, beginning with the date of admission;
  • Reasonably be expected to actively participate in, and benefit significantly
    from, the intensive rehabilitation therapy program (the patient’s condition and
    functional status are such that the patient can reasonably be expected to make
    measurable improvement, expected to be made within a prescribed period of time
    and as a result of the intensive rehabilitation therapy program, that will be of practical value to improve the patient’s functional capacity or adaptation to impairments);
  • Require physician supervision by a rehabilitation physician, with face-to-face
    visits at least 3 days per week to assess the patient both medically and functionally
    and to modify the course of treatment as needed; and
  • Require an intensive and coordinated interdisciplinary team approach to the
    delivery of rehabilitative care.

Did you notice how often the word “generally” or “reasonably” was used? Because the standard for an IRF stay is subjective. In fact, I would wager a bet that if I reviewed  the same documentation as the Palmetto auditors did, that I could make a legal argument that the opposite conclusion should have been drawn. I do it all the time. This is the reason that so many audits are easily overturned…they are subjective!

Therefore, when you get an audit result, such as the ones referenced above:

APPEAL! APPEAL! APPEAL!

Want to Drop Medicaid? (And I Don’t Blame You), But Here Are a Few Issues to Contemplate First

Low reimbursement rates make accepting Medicaid seem like drinking castor oil. You wrinkle your nose and swallow quickly to avoid tasting it. But if you are a provider that does accept Medicaid and you wish to stop accepting Medicaid – read this blog and checklist (below) before taking any action! Personally, if you do accept Medicaid, I say, “Thank you.” See blog. With more and more Medicaid recipients, the demand for providers who accept Medicaid has catapulted.

The United States has become a Medicaid nation. Medicaid is the nation’s largest health insurance program, covering 74 million, or more than 1 in 5 Americans.

Earlier this year, Kaiser published a report stating that 70% of office-based providers accept new patients covered by Medicaid. But this report does not mean that Medicaid recipients have access to quality health care. I will explain below.

medicaidacceptance

The variation in the above chart is interesting. Reimbursement rates directly impact whether providers in the state accept Medicaid. The participation goes from a low of 38.7% in New Jersey (where primary care reimbursement rates are 48% of Medicare rates) to a high of 96.5% in Nebraska (where the primary care reimbursement is 75% of Medicare). Montana, with a 90% physician participation rate, pays the same rate as Medicare for primary care, while California, with a 54.2% participation rate, pays 42% of the Medicare reimbursement rate. We should all strive to be like Nebraska and Montana … granted the number of Medicaid recipients are fewer in those states. For September 2017, Nebraska ranked 45th out of the 50 states for Medicaid enrollment. Montana ranked 42nd. Wyoming came in dead last.

Statistically writing, Medicaid covers:

  • 39% of all children.
  • Nearly half of all births in the country.
  • 60% of nursing home and other long-term care expenses.
  • More than 1/4 of all spending on mental health services and over a fifth of all spending on substance abuse treatment.

However, even if the report is correct and 70% of health care providers do accept Medicaid, that is not indicative of quality access of care for Medicaid recipients. The number of Medicaid recipients is skyrocketing at a rate that cannot be covered by the number of providers who accept Medicaid. Kaiser estimates that by 2020, more than 25% (1 out of 4) of Americans will be dependent on Medicaid. Because of the low reimbursement rates, health care providers who do accept Medicaid are forced to increase the quantity of patients, which, logically, could decrease the quality … or the amount of time spent with each patient. Citing the percentage of providers who accept Medicaid, in this instance, 70%, is not indicative of quality of access of care; the ratio of Medicaid recipients to providers who accept Medicaid would be more germane to quality of access to care for Medicaid recipients. Even if 70% of health care providers accept Medicaid, but we have 74 million Medicaid recipients, then 70% is not enough. My opinion is what it is because based on years of experience with this blog and people reaching out to me. I have people contact me via this blog or email explaining that their mother, father, child, sister, or brother, has Medicaid and cannot find a provider for – dental, mental health, developmentally disabled services. So, maybe, just maybe, 70% is not good enough.

Before dropping Medicaid like a hot potato, ask yourself the following questions:

  1. Will I have enough patients without Medicaid to keep my staff and I busy?

Location! Location! Location! Your location matters. If you provide health care services in areas that are predominantly Medicaid-populated, then you may need to reconsider dropping the ‘Caid. California, New York, and Texas were the top spenders in Medicaid for fiscal year 2016, totaling over a whopping $183 billion of America’s total expenditure on ‘Caid, which was $553 billion.

I am sure that I am preaching to the choir, but choosing to not accept Medicaid is not fiscally sound if you and your staff will be twiddling their thumbs all day. Even low reimbursement rates are better than no reimbursement rates. On the downside, if you choose to accept Medicaid, you need a “rainy-day” fund to pay for attorneys to defend any regulatory audits, termination of Medicaid contracts, accusations of fraud, prepayment review, and/or other adverse determinations by the state (and, if you accept  Medicare, the federal government and all its vendors).

2. Have I attested for the Medicaid EHR meaningful use incentives?

If you attested and accepted the EHR incentive payments, you may need to continue seeing Medicaid patients in order to keep/maintain your EHR payments. (Please consult an attorney).

3. Will I still be subject to Medicaid audits in the future?

If avoiding Medicaid audits is your primary reason for dropping ‘Caid, ‘ho your horses. Refusing to accept ‘Caid going forward does not indemnify you from getting future audits. In fact, in cases of credible allegations of fraud, you may be subject to future Medicaid audits for another 6 years after you no longer accept Medicaid. You will also need to continue to maintain all your records for regulatory compliance. If you cease accepting Medicaid, those recipients will need to find new providers. Those medical records are the Medicaid recipients’ property and need to be forwarded to the new provider.

If you are currently under investigation for credible allegations of fraud, of which you may or may not be aware, then suddenly stop accepting Medicaid, it could be a red flag to an investigator. Not that ceasing to accept Medicaid is evidence of wrongdoing, but sometimes sudden change, regardless of the change, can spur curiosity in auditors. For example, in NC DHHS v. Parker Home Care, the Court of Appeals ruled that a tentative notice of overpayment by Public Consulting Group (PCG) does not constitute a final agency decision. The managed care organizations (MCOs) freaked out because the MCOs were frightened that a health care provider could argue, in Court, that Parker Home Care applies to MCOs, as well. They were so freaked out that they filed an Amicus Curiae Brief, which is a Brief on behalf of a person or organization that is not a party to a particular litigation but that is permitted by the court to advise it in respect to some matter of law that directly affects the case in question. The MCOs’ Brief states, “The Court of Appeals’ decision, if allowed to stand, could be construed to undermine the authority explicitly granted to managed care organizations, such as the LME/MCOs in North Carolina, by CMS.” Too bad our Waiver specifically states that DHS/DMA to CMS states, “[DMA] retains final decision-making authority on all waiver policies and requirements.” But I digress. In Parker Home Care, the MCOs filed the Brief to preserve their self-instilled authority over their catchments areas. However, despite the MCOs request that the NC Supreme Court take the issue under consideration, the Supreme Court denied certiorari, which means the Supreme Court refused to entertain the issue. While it is not “law” or “precedent” or “written in stone,” generally, attorneys argue that the Supreme Court’s refusal to entertain an issue means that it does not deem the issue to be a controversy … that the Court agrees with the lower court’s decision. Hence, the argument that the MCOs  cannot render final agency decisions.

4. Will I be able to sleep at night?

Health care providers become health care providers, generally, with the intent to help people. This makes most health care providers nurturing people. You have to ask yourself whether you will be comfortable, ethically, with your decision to not accept Medicaid. I cannot tell you how many of my clients tell me, at some point, “I’m just not going to accept Medicaid anymore.” And, then continue to accept Medicaid … because they are good people. It infuriates me when I am in court arguing that terminating a provider’s Medicaid contract will put the provider out of business, and the attorney from the State makes a comment like, “It was the provider’s business decision to depend this heavily on Medicaid.” No, actually, many providers do feel an ethical duty to serve the Medicaid population.

Check your health care community and determine whether other providers with your specialty accept Medicaid. Are they accepting new Medicaid patients? Are they viable options for your patients? Are they as good as you are? Just like attorneys, there are good and bad; experienced and inexperienced; intelligent and not-so-much; capable and not-so-much.

5. Can I delegate Medicaid recipients to a mid-level practitioner?

Physician assistants and nurse practitioners are wonderful assets to have to devote to Medicaid recipients. This is not to say that Medicaid recipients deserve lesser-educated services because, quite frankly, some PAs and NPs are just as good as the MDs. But you get my point. If PAs and NPs have a lower billable rate, then it makes business financial sense to delegate the Medicaid recipients to them. Similarly, I have an amazing, qualified paralegal, Todd Yoho. He has background in medical coding, went to two years of law school, and is smarter than many attorneys. I am blessed to have him. But the reality is that his billable rate is lower than mine. I try to use his services whenever possible to try to keep the attorneys’ fees lower. Same with mid-level practitioner versus using the MD.

6. Instead of eliminating Medicaid patients, can I just decrease my Medicaid patients?

This could be a compromise with yourself and your business. Having the right balance between Medicaid recipients and private pay, or even Medicare patients, can be key in increasing income and maintaining quality of care. Caveat: In most states, you are allowed to cap your Medicaid recipients. However, there are guidelines that you muts follow. Even Medicaid HMOs or MCOs could have different requirements for caps on Medicaid recipients. Again, seek legal advice.

Hostile Takeover: Cardinal Usurped by DHHS! Any Possible Relief to Providers for Misconduct?

DHHS has ousted and taken over Cardinal Innovations!

And may I just say – Finally! Thank you, Sec. Cohen.

Cardinal is/was the largest of seven managed care organizations (MCOs) that was given the task to manage Medicaid funds for behavioral health care recipients. These are Medicaid recipients suffering from developmental disabilities, mental health issues, and substance abuse; these are our population’s most needy. These MCOs are given a firehose of Medicaid money; i.e., tax dollars, and were entrusted by the State of North Carolina, each individual taxpayer, Medicaid recipients, and the recipients’ families to maintain an adequate network of health care providers and authorize medically necessary behavioral health care services. Cardinal’s budget was just over $682 million in 2016. Instead, I have witnessed, as a Medicaid and Medicare regulatory compliance litigator, and have legally defended hundreds of health care providers who were unlawfully terminated from the MCOs’ catchment areas, refused a contract with the MCOs, accused of owing overpayments to the MCOs for services that were appropriately rendered. To the point that the provider catchment areas are woefully underrepresented (especially in Minority-owned companies), recipients are not receiving medically necessary services, and the MCOs are denying medically necessary services. The MCOs do so under the guise of their police power. For years, I have been blogging that this police power is overzealous, unsupervised, unchecked, and in violation of legal authority. I have blogged that the MCOs act as the judge, jury, and executioner. I  have also stated that the actions of the MCOs are financially driven. Because when providers are terminated and services are not rendered, money is not spent, at least, on the Medicaid recipients’ services.

But, apparently, the money is spent on executives. This past May, State Auditor Beth Wood wrote a scathing performance audit regarding Cardinal’s lavish spending on CEO pay as well as on expensive Christmas parties and board retreats, charter flights for executives and “questionable” credit card purchases, including alcohol. All of that, her report said, threatened to “erode public trust.” Cardinal’s former CEO Richard Topping made more than $635,000 in salary this year. On Monday (November 21, 2017), DHHS escorted Topping and three other executives out the door. But they did not walk away empty handed. Topping walked away with a $1.7 million severance while three associates left with packages as high as $740,000 – of taxpayer money!

This overspending on salaries and administration is not new. Cardinal has been excessively spending on itself since inception. This has been a long term concern, and I congratulate Sec. Cohen for having the “cojones” to do something about it. (I know. Bad joke. I apologize for the French/Spanish).

In 2011, Cardinal spent millions of dollars constructing its administrative facility.

cardinaloutside

cardinal4 Break Room

cardconference Conference Room

According to Edifice, the company that built Cardinal Innovations’ grand headquarters, starting in 2011, Cardinal’s building is described as:

“[T[his new three-story, 79,000-square-foot facility is divided into two separate structures joined by a connecting bridge.  The 69,000-square-foot building houses the regional headquarters and includes Class A office space with conference rooms on each floor and a fully equipped corporate board room.  This building also houses a consumer gallery and a staff cafe offering an outdoor dining area on a cantilevered balcony overlooking a landscaped ravine.  The 10,000-square-foot connecting building houses a corporate training center. Computer access flooring is installed throughout the facility and is supported by a large server room to maintain redundancy of information flow.” How much did that cost the Medicaid recipients in Cardinal’s catchment area? Seem appropriate for an agent of the government spending tax money for luxurious office space? Shoot, my legal office is not even that nice. And I don’t get funded by tax dollars!

In 2015, I wrote:

On July 1, 2014, Cardinal Innovations, one of NC’s managed care organizations (MCOs) granted its former CEO, Ms. Pam Shipman, a 53% salary increase, raising her salary to $400,000/year. In addition to the raise, Cardinal issued Ms. Shipman a $65,000 bonus based on 2013-2014 performance.

Then in July 2015, according to the article in the Charlotte Observer, Cardinals paid Ms. Shipman an additional $424,975, as severance. Within one year, Ms. Shipman was paid by Cardinal a whopping $889,975. Almost one million dollars!!!!

I have been blogging about MCO misconduct for YEARS. Seeblog, blog, blog, blog, and blog.

Now, finally, DHHS says Cardinal Innovations “acted unlawfully” in giving its ousted CEO $1.7 million in severance, and DHHS took over the Charlotte-based agency. It was a complete oust. One journalist quoted Cardinal as saying, “DHHS officials arrived at Cardinal “unexpectedly and informed the executive leadership team that the department is assuming control of Cardinal’s governance.”” Unexpected they say? Cardinal conducted unexpected audits all the time on their providers. But, the shoe hurts when it’s on the other foot.

The MCOs are charged with the HUGE  fiscal and moral responsibility, on behalf of the taxpayers, to manage North Carolina and federal tax dollars and authorize medically necessary behavioral health care services for Medicaid recipients, our population’s most needy. The MCOs in NC are as follows:

  1. Vaya Health
  2. Partners Behavioral Health Management
  3. Cardinal Innovations (formerly)
  4. Trillium Health Resources
  5. Eastpointe
  6. Alliance Behavioral Health Care
  7. Sandhills Center

The 1915 (b)(c) Waiver Program was initially implemented at one pilot site in 2005 and evaluated for several years. Two expansion sites were then added in 2012. The State declared it an immediate success and requested and received the authority from CMS to implement the MCO project statewide. Full statewide implementation is expected by July 1, 2013. The MCO project was intended to save money in the Medicaid program. The thought was that if these MCO entities were prepaid on a capitated basis that the MCOs would have the incentive to be fiscally responsible, provide the medically necessary services to those in need, and reduce the dollars spent on prisons and hospitals for mentally ill.

Sadly, as we have seen, fire hoses of tax dollars catalyze greed.

Presumably, in the goal of financial wealth, Cardinal Innovations, and, maybe, expectantly the other MCOs, have sacrificed quality providers being in network and medically necessary services for Medicaid recipients, Cardinal has terminated provider contracts. And for what? Luxurious office space, high salaries, private jets, and a fat savings account.

I remember a former client from over 5 years ago, who owned and ran multiple residential facilities for at-risk, teen-age boys with violent tendencies and who suffered severe mental illness. Without cause, Alliance terminated the client’s Medicaid contract. There were no alternatives for the residents except for the street. We were able to secure a preliminary injunction preventing the termination. But for every one of those stories, there are providers who did not have the money to fight the terminations

Are there legal recourses for health care providers who suffered from Cardinal’s actions?

The million dollar question.

In light of the State Auditor’s report and DHHS’ actions and public comments that it was usurping Cardinal’s leadership based on “recent unlawful actions, including serious financial mismanagement by the leadership and Board of Directors at Cardinal Innovations,” I believe that the arrows point to yes, with a glaring caveat. It would be a massive and costly undertaking. David and Goliath does not even begin to express the undertaking. At one point, someone told me that Cardinal had $271 million in its bank account. I have no way to corroborate this, but I would not be surprised. In the past, Cardinal has hired private, steeply-priced attorney regardless that its funds are tax dollars. Granted, now DHHS may run things differently, but without question, any legal course of action against any MCO would be epically expensive.

Putting aside the money issue, potential claims could include (Disclaimer: this list is nonexhaustive and based on a cursory investigation for the purpose of my blog. Furthermore, research has not been conducted on possible bars to claims, such as immunity and/or exhaustion of administrative remedies.):

  • Breach of fiduciary duty. Provider would need to demonstrate that a duty existed between providers and MCO (contractual or otherwise), that said MCO breached such duty, and that damages exist. Damages can include actual loss and if intent is proven, punitive damages may be sought.
  • Unfair and Deceptive Trade Practices. Providers would have to prove three elements: (1) an unfair or deceptive act or practice; (2) in or affecting commerce; (3) which proximately caused the injury to the claimant. A court will first determine if the act or practice was “in or affecting commerce” before determining if the act or practice was unfair or deceptive. Damages allowed are actual damages, plus treble damages (three times the actual damages).
  • Negligence. Providers would have to show (1) duty; (2) breach; (3) cause in fact; (4) proximate cause; and (5) damages. Actual damages are allowed for a negligence claim.
  • Breach of Contract. The providers would have to demonstrate that there was a valid contract; that the providers performed as specified by the contract; that the said MCO failed to perform as specified by the contract; and that the providers suffered an economic loss as a result of the defendant’s breach of contract. Actual damages are recoverable in a breach of action claim.
  • Declaratory Judgment. This would be a request to the Court to make a legal finding that the MCO failed to follow certain Medicaid procedures and regulations.
  • Violation of Article I, NC Constitution (legal and contractual right to receive payments for reimbursement claims due and payable under the Medicaid regulations.

To name a few…

How Does OIG Target Provider Types for Audits and Who Needs to Worry?

Interestingly, how OIG and who OIG targets for audits is much more transparent than one would think. OIG tells you in advance (if you know where to look).

Prior to June 2017, the Office of Inspector General’s (OIG) OIG updated its public-facing Work Plan to reflect those adjustments once or twice each year. In order to enhance transparency around OIG’s continuous work planning efforts, effective June 15, 2017, OIG began updating its Work Plan website monthly.

Why is this important? I will even take it a step further…why is this information crucial for health care providers, such as you?

These monthly reports provide you with notice as to whether the type of provider you are will be on the radar for Medicare and Medicaid audits. And the notice provided is substantial. For example, in October 2017, OIG announced that it will investigate and audit specialty drug coverage and reimbursement in Medicaid – watch out pharmacies!!! But the notice also states that these audits of pharmacies for speciality drug coverage will not begin until 2019. So, pharmacies, you have over a year to ensure compliance with your records. Now don’t get me wrong… you should constantly self audit and ensure regulatory compliance. Notwithstanding, pharmacies are given a significant warning that – come 2019 – your speciality drug coverage programs better be spic and span.

Another provider type that will be on the radar – bariatric surgeons. Medicare Parts A and B cover certain bariatric procedures if the beneficiary has (1) a body mass index of 35 or higher, (2) at least one comorbidity related to obesity, and (3) been previously unsuccessful with medical treatment for obesity. Treatments for obesity alone are not covered. Bariatric surgeons, however, get a bit less lead time. Audits for bariatric surgeons are scheduled to start in 2018. Considering that 2018 is little more than a month away, this information is less helpful. The OIG Work Plans do not specific enough to name a month in which the audits will begin…just sometime in 2018.

Where do you find such information? On the OIG Work Plan website. Click here. Once you are on the website, you will see the title at the top, “Work Plan.” Directly under the title are the “clickable” subjects: Recently Added | Active Work Plan Items | Work Plan Archive.  Pick one and read.

You will see that CMS is not the only agency that OIG audits. It also audits the Food and Drug Administration and the Office of the Secretary, for example. But we are concerned with the audits of CMS.

Other targeted providers types coming up:

  • Telehealth
  • Security of Certified Electronic Health Record Technology Under Meaningful Use
  • States’ Collection of Rebates on Physician-Administered Drugs
  • States’ Collection of Rebates for Drugs Dispensed to Medicaid MCO Enrollees
  • Adult Day Health Care Services
  • Oversight of States’ Medicaid Information Systems Security Controls
  • States’ MCO Medicaid Drug Claims
  • Incorrect Medical Assistance Days Claimed by Hospitals
  • Selected Inpatient and Outpatient Billing Requirements

And the list goes on and on…

Do not think that if your health care provider type is not listed on the OIG website that you are safe from audits. As we all know, OIG is not the only entity that conducts regulatory audits. The States and its contracted vendors also audit, as well as the RACs, MICs, MACs, CERTs

Never forget that whatever entity audits you, YOU HAVE APPEAL RIGHTS!

Cardinal Board Slashes CEO’s Salary and CEO Cannot Accept!

In the wake of bad press, Cardinal Innovation’s Board of Directors finally acted and cut Richard Topping’s, the CEO, obnoxiously high salary, which is paid with Medicaid fund tax dollars. It seems he received a salary decrease of over $400,000! According to the below article, Topping did not take the news well and stated that he cannot accept the massive decrease in salary. See blog.

Will Topping quit? Who will manage Cardinal?

See article below written by Richard Craver of the Winston Salem Journal:

The salary for the chief executive of Cardinal Innovations Healthcare Solutions has been cut by two-thirds — from $617,526 a year to $204,195 — reducing it to the maximum allowed by North Carolina law. Cardinal’s embattled board of directors passed a resolution on CEO Richard Topping’s salary after a four-hour closed special session that ended about 11 p.m. Tuesday, according to Charlotte radio station WFAE.

The vote was 5-3 in favor of the resolution with two members abstaining and two members absent. The eight members represented a quorum.

Bryan Thompson serves on the Cardinal board as the lone representative from Davie, Forsyth, Rockingham and Stokes counties. He was the chairman of CenterPoint Human Services of Winston-Salem until it was taken over by Cardinal in June 2016. Thompson confirmed Wednesday that he introduced the motion for the resolution. “I am very proud of the work Cardinal Innovations does and the seriousness I observed in the board members last night,” Thompson said. “I fully support the resolution adopted to bring the salary into range as provided by the state.” Ashley Conger, Cardinal’s vice president of communications and marketing, on Wednesday confirmed the board’s salary-reduction resolution. “Richard is still leading the company, and his priority is to ensure stability and continuity for our employees, members and communities as we continue work with the state to address their concerns,” Conger said.

Cardinal’s board chairwoman, Lucy Drake, voted against the resolution. “We brought him in and we offered (the reduced salary) to him. And he has said he cannot accept that,” Drake told WFAE.

It’s unclear if Topping qualifies for a severance package should he choose to resign because of the salary cut. “We have got to find out who on the team is going to stay,” Drake said. “We’ve got to find out who will be running Cardinal. Because this just completely overwhelmed me. I didn’t know this was going this way tonight.” Attending the meeting was Dave Richard, the state’s deputy health secretary for medical assistance and head of its Medicaid program. After the second of two scathing state audits, the N.C. Department of Health and Human Services issued a statement Oct. 2 saying, “Cardinal should immediately bring its salary/compensation package for its CEO in line with the other MCOs, and shed its excessive severance offerings. DHHS will continue to monitor Cardinal’s performance.” Richard told legislators on Oct. 11 that he would present to the Cardinal board a list of state compliance requirements for Cardinal, the largest of the state’s seven behavioral-health managed care organizations, or MCOs. On Wednesday, Richard said through a spokesman that Cardinal’s board is taking steps to comply with state law, “and we look forward to continuing to work with Cardinal to ensure North Carolinians receive excellent care and state resources are handled appropriately.”

Reversing course

The board’s decision represents a stunning about-face for the MCO. On Sept. 18, Cardinal sued the state to maintain what it claims is the authority to pay Topping up to 3½ times more than his peers. Drake issued a statement supporting the lawsuit, which challenges the state’s authority to set executive-compensation limits. Cardinal filed the lawsuit against the Office of State Human Resources with the State Office of Administrative Hearings. Cardinal’s predecessor was formed in part as a legislative experiment for using private sector methods to lower the cost of caring for Medicaid enrollees without sacrificing the quality of care.

Cardinal and Topping have viewed the agency as an independent contractor as part of state Medicaid reform, gaining financial and business flexibility beyond those of other MCOs. That included being able to retain about $70 million in Medicaid savings from fiscal years 2014-15 and 2015-16. Topping has said Cardinal is performing in accord with what legislators have asked it to do. However, Cardinal is considered a political subdivision of the state, with oversight contracts subject to approval by the state health secretary and executive compensation subject to Office of State Human Resources guidelines. Cardinal argues in its complaint that not being allowed to pay Topping up to $635,000 in annual salary could convince him to resign, thereby putting Cardinal “at a significant market disadvantage” recruiting a top executive in the Mecklenburg County business market. “This would result in immediate and irreparable harm to Cardinal Innovations and reduce the organization’s ability to fulfill its mission,” Cardinal said. Topping’s current three-year contract provides severance payments “for a broad range of reasons” beyond termination of employment without just cause. They include:

  • If Cardinal is taken over or ceases to be an independent entity.
  • If a majority of the board is replaced without the board’s approval.
  • If the agency is “materially” affected by statutory or regulatory changes to its services, revenue, governance or employment practices.

Excessive spending

About 96,300 Triad Medicaid enrollees may be along for the ride if a day of reckoning arrives for Cardinal. That’s how many individuals could be affected in Davie, Forsyth, Rockingham and Stokes counties involving services for mental health, developmental disorders and substance abuse. Cardinal oversees providers of those services and handles more than $675 million in annual federal and state Medicaid money.

The main issue at hand is executive compensation and severance packages that Cardinal has committed to Topping and 10 other executives, which legislators have called excessive and unacceptable. The Cardinal board approved two raises for Topping since he became chief executive in July 2015. Cardinal’s board minutes are not available on its website, and Cardinal officials have a pattern of responding slowly to public and media requests for those minutes, including a request made Friday that it referred to its legal team.

An internal DHHS audit, released Oct. 1, determined that the salary and severance packages Cardinal’s board approved “pose a substantial risk (to Cardinal) and may not be in the best interest of Cardinal, beneficiaries and/or the state.” “This is excessive and raises concerns about the entity’s solvency and ability to continue to provide services in the event of a significant change in its leadership team,” DHHS said in a statement. In May, the state auditor’s office cited in its audit of Cardinal unauthorized executive compensation and a combined $490,756 in high-end board retreats and “unreasonable spending (that) could erode public trust.”

N.C. Auditor Beth Wood said in May that Cardinal “is not independent of the state … and it is definitely responsible to the General Assembly.” “Its whole independent contractor claims have been taken out of context, and they are being misleading when they say they are,” Wood said. Wood also blamed the Office of State Human Resources for not doing a better job of monitoring Cardinal’s executive-compensation packages.

Uncertain future

A bipartisan group of state legislators is urging the state health secretary, Dr. Mandy Cohen, to replace Topping and the board, and/or terminate Cardinal’s state Medicaid contracts, for noncompliance with state laws. State health officials and legislators say they are not ready to predict what steps Cohen might take, which could include splintering Cardinal’s 20-county territory and assigning parts to one or more of the state’s other six MCOs. Cardinal also covers Alamance and Davidson counties. “All of the options are possible,” state Sen. Joyce Krawiec, R-Forsyth, said last week. Krawiec is a member of the Joint Legislative Oversight Committee on Health and Human Services. However, it is not likely that Cohen would approve resurrecting CenterPoint. Since taking office, Cohen has tightened core performance requirements for the MCOs, including adding financial penalties for noncompliance. “These new contracts hold each organization accountable to meeting key performance measures to ensure high-quality care,” Cohen said.

State Rep. Donny Lambeth, R-Forsyth, a co-chairman of the health-care oversight committee, said last week that while it would be cumbersome to divvy up the Cardinal counties “to other MCO who would absorb these services … it can be done.” Counties can request, during a relatively brief period each year, to switch MCOs with the state health secretary’s permission. Three county managers — Dudley Watts of Forsyth, Lance Metzler of Rockingham and Rick Morris of Stokes — said last week that their respective boards of commissioner have not discussed contingency plans in preparation for any action by Cohen on Cardinal. Krawiec said the executive-compensation information about Cardinal is “very disappointing and disturbing.” “While Cardinal has obviously shown us how health services can be delivered at a cost savings, those savings have led to lavish expenditures by Cardinal,” she said. “Instead of returning the savings back into improving the system and providing for those in need, the funds have been spent in a very irresponsible manner.”

_____________________________________________________________________

Oh, to have been a fly on the wall, during Tuesday’s Board of Directors meeting at Cardinal… We will definitely need to request the meeting minutes!

Cardinal Sues State to Keep Paying CEO $635,000 – With Our Tax Dollars!

On September 18, Cardinal filed a Petition at the Office of Administrative Hearings (OAH) challenging the State’s authority to set executive compensation limits. In other words, Cardinal is suing the State of NC to keep paying Toppings $635,000.00 with our tax dollars. See below:

petition

On Tuesday (October 10, 2017) legislators blasted Cardinal Healthcare and strongly urged DHHS Secretary Mandy Cohen to terminate its contract with Cardinal. The legislators challenged the impressive and questionably-needed administrative costs of the managed care organizations (MCOs), including exorbitant salaries, office parties, and private jets. Cardinal’s CEO Richard Topping, who became CEO in July 2015, was compensated at $635,000.00 this year. His total compensation was over $1.2 million in 2016 and 2017 (for a government job; i.e., our tax dollars. So we all may own a portion of his home). See blog. and blog. The State Auditor also reported excessive spending and mismanagement of funds. Let’s keep in mind, people, these funds are earmarked to provide medically necessary services to our most needy population suffering from mental illness, substance abuse, and developmentally disabilities. But Toppings wants a Porsche. (Disclaimer – my opinion).

And if we weren’t enraged enough about the obscene salary of Cardinal’s CEO, Cardinal decided to spend more tax dollars…on attorneys’ fees to litigate maintaining its CEO’s salary. When I heard this, I hoped that Cardinal, with our tax dollars, paid an internal general counsel, who would litigate the case. I mean, an in-house counsel gets a salary, so it wouldn’t cost the taxpayers extra money (over and beyond his/her salary) to sue the State. But, no. I was woefully disappointed. Cardinal hired one of the biggest law firms in the State of NC – Womble Carlyle – the only firm downtown Raleigh with its signage on the outside of the skyscraper. I am sure that costs a pretty penny. Please understand – this is nothing against Womble Carlyle. It is a reputable firm with solid lawyers, which is why Cardinal hired them. But they ain’t cheap.

BACKGROUND

Cardinal is a Local Management Entity/Managed Care Organization (LME/MCO) created by North Carolina General Statute 122C. IT IS NOT A PRIVATE COMPANY, LIKE BCBS. Cardinal is responsible for managing, coordinating, facilitating and monitoring the provision of mental health, developmental disabilities, and substance abuse services in 20 counties across North Carolina. Cardinal is the largest of the state’s seven LME/MCOs, serving more than 850,000 members. Cardinal has contracted with DHHS to operate the managed behavioral healthcare services under the Medicaid waiver through a network of licensed practitioners and provider agencies.  State law explicitly states Cardinal’s core mission as a government
entity.

CARDINAL’S FUNDING

Cardinal’s most significant funding is provided by Medicaid (85%). Funding from Medicaid totaled $567 million and $587 million for state fiscal years 2015 and 2016, respectively. Medicaid is a combination of federal and state tax dollars. If you pay taxes, you are paying for Toppings’ salary and the attorneys’ fees to keep that salary.

North Carolina General Statute 122C-123.1 states: “Any funds or part thereof of an area authority that are transferred by the area authority to any entity including a firm, partnership, corporation, company, association, joint stock association, agency, or nonprofit private foundation shall be subject to reimbursement by the area authority to the State when expenditures of the area authority are disallowed pursuant to a State or federal audit.” (Emphasis Added).

Our State Auditor, in its audit of Cardinal, already found that Cardinal’s spending of its funds is disallowed:

cardinals salary

Not only has the State Auditor called Cardinal out for excessive salaries, in a letter, dated August 10, 2017, the Office of State Human Resources told Cardinal that “Based on the information you submitted, the salary of your Area Director/CEO is above this new rate and, therefore, out of compliance. Please work to adjust the Area  Director/CEO salary accordingly and notify us of how you have remedied this situation. In the future, please ensure that any salary adjustment complies with the
provisions of G.S. 122C-121- the Mental Health, Developmental Disabilities, and Substance Abuse Act of 1985.” (emphasis added). In other words – follow the law! What did Cardinal do? Sued the Office of State Human Resources.

Concurrently, Cardinal is terminating provider contracts in its closed network (which keeps Cardinal from having to pay those providers), decreasing and denying behavioral health care services to Medicaid recipients (which keeps Cardinal from having to pay for those services). — And now, paying attorneys to litigate in court to keep the CEO’s salary of $635,000.00. Because of my blog, I receive emails from parents who are distraught because Cardinal is decreasing or terminating their child’s services. Just look at some of the comments people have written on my blog. Because of my job, I see firsthand the providers that are getting terminated or struck with alleged overpayments by Cardinal (and all the MCOs).

My questions are – if Cardinal has enough money to pay its CEO $635,000.00, why doesn’t Cardinal increase reimbursement rates to providers? Provide more services to those in need? Isn’t that exactly why it exists? Oh, and, let’s not forget Cardinal’s savings account. The State Auditor found that “For FY 2015 and 2016, Cardinal accumulated approximately $30 million and $40 million, respectively, in Medicaid savings.” Cardinal, and all the MCOs, sit in a position that these government entities could actually improve mental health in NC. They certainly have the funds to do so.

According to a blog follower, Cardinal pays lower reimbursement rates than other MCOs:

Psychiatric Diagnostic Eval. (Non-Medical) 90791
Cardinal MCO Pays $94.04
Partners MCO Pays 185.90
Medicare Pays 129.60
SC Medicaid Pays 153.94

Psychotherapy 60 minutes (in-home) 90837
Cardinal MCO Pays $74.57
Partners MCO Pays 112.00
Medicare Pays 125.93
SC Medicaid Pays 111.90

According to the Petition, Cardinal’s argument is that it is not a government entity. That its employees, including Toppings, does not receive state government benefits and are not part of the state retirement program. It also states in its Petition that Cardinal hires external consultants (with our tax dollars) to conduct a market compensation study every two years. (cough!). Cardinal complains, in the Petition, that “If forced to reduce its CEO’s salary to a level well below market rate for the leader of an organization of Cardinal Innovations’ size and complexity, Cardinal Innovations would be likely to immediately lose its current CEO and would be at a significant market disadvantage when trying to replace its current CEO with one of similar experience and expertise in the industry, as is necessary to lead Cardinal Innovations. This would result in immediate and irreparable harm to Cardinal Innovations and reduce the organization’s ability to fulfill its mission.” Wow – Toppings must be unbelievable…a prodigy…the picture of utopia…

The State has informed Cardinal that a salary is more appropriate at $194,471.00 with the possibility of a 5% exception up to $204,195.00.

In its Petition, Cardinal calls the statutorily required salary cap “an irrationally low salary range.” If I take out 50% for taxes, which is high, Toppings is paid $26,458.33 per month. In comparison, the Medicaid recipients he serves get the following per month (at the most):

eligibility

Disgusted? Angry? Contact your local representative. Don’t know who your representative is? Click here. I wonder how the IRS would react if I protested by refusing to pay taxes… Don’t worry. I’m not going to go all Martha Stewart on you.

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).

Eastpointe Sues DHHS, Former Sec. Brajer, Nash County, and Trillium Claiming Conspiracy! (What It Means for Providers)

In HBO’s Game of Thrones, nine, noble, family houses of Westeros fight for the Iron Throne – either vying to claim the throne or fighting for independence from the throne.

Similarly, when NC moved to the managed care organizations for Medicaid behavioral health care services, we began with 12 MCOs (We actually started with 23 (39 if you count area authorities) LME/MCOs, but they quickly whittled down to 11). “The General Assembly enacted House Bill 916 (S.L. 2011-264) (“H.B. 916) to be effective June 23, 2011, which required the statewide expansion of the 1915(b)/(c) Medicaid Waiver Program to be completed within the State by July 1, 2013.” Compl. at 25. Now the General Assembly is pushing for more consolidation.

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game of thrones

Now we have seven (7) MCOs remaining, and the future is uncertain. With a firehose of money at issue and the General Assembly’s push for consolidation, it has become a bloody battle to remain standing in the end, because, after all, only one may claim the Iron Throne. And we all know that “Winter is coming.”

Seemingly, as an attempt to remain financially viable, last week, on Thursday, June 8, 2017, Eastpointe, one of our current MCOs, sued the Department of Health and Human Services (DHHS), Nash County, Trillium Health Resources, another MCO, and former secretary Richard Brajer in his individual and former official capacity. Since the Complaint is a public record, you can find the Complaint filed in the Eastern District of NC, Western Division, Civil Action 5:17-CV-275. My citations within this blog correspond with the paragraphs in the Complaint, not page numbers.

Eastpointe’s Complaint wields a complex web of conspiracy, government interference, and questionable relationships that would even intrigue George R. R. Martin.

The core grievance in the lawsuit is Eastpointe alleges that DHHS, Trillium, Nash County, and Brajer unlawfully conspired and interfered with Eastpointe’s contract to manage behavioral health care services for its twelve (12) county catchment area, including Nash County.  In 2012, Nash County, as part of the The Beacon Center, signed a contract and became part of a merger with Eastpointe being the sole survivor (Beacon Center and Southeastern Regional Mental Health were swallowed by Eastpointe). At the heart of Eastpointe’s Complaint, Eastpointe is alleging that Nash County, Trillium, DHHS, and Brajer conspired to breach the contract between Eastpointe and Nash County and unlawfully allowed Nash County to join Trillium’s catchment area.

In June 2013, the General Assembly, pursuant to Senate Bill 208 (S.L. 2013-85 s. 4.(b)), appended N.C.G.S. § 122C-115 to include subparagraph (a3), permitting a county to disengage from one LME/MCO and align with another with the approval of the Secretary of the NCDHHS, who was required by law to promulgate “rules to establish a process for county disengagement.” N.C.G.S. § 122C-115(a3) (“Rules”) (10A N.C.A.C. 26C .0701-03).

Why does it matter whether Medicaid recipients receive behavioral health care services from providers within Trillium or Eastpointe’s catchment area?? As long as the medically necessary services are rendered – that should be what is important – right?

Wrong. First, I give my reason as a cynic (realist), then as a philanthropist (wishful thinker).

Cynical answer – The MCOs are prepaid. In general and giving a purposely abbreviated explanation, the way in which the amount is determined to pre-pay an MCO is based on how many Medicaid recipients reside within the catchment area who need behavioral health care services. The more people in need of Medicaid behavioral health care services in a catchment area, the more money the MCO receives to manage such services. With the removal of Nash County from Eastpointe’s catchment area, Eastpointe will lose approximately $4 million annually and Trillium will gain approximately $4 million annually, according to the Complaint. This lawsuit is a brawl over the capitated amount of money that Nash County represents, but it also is about the Iron Throne. If Eastpointe becomes less financially secure and Trillium becomes more financially secure, then it is more likely that Eastpointe would be chewed up and swallowed in any merger.

Philanthropic answer – Allowing Nash County to disengage from Eastpointe’s catchment area would inevitably disrupt behavioral health care services to our  most fragile and needy population. Medicaid recipients would be denied access to their chosen providers…providers that may have been treating them for years and created established trust. Allowing Nash County to disembark from Eastpointe would cause chaos for those least fortunate and in need of behavioral health care services.

Eastpointe also alleges that DHHS refused to approve a merger between Eastpointe and Cardinal purposefully and with the intent to sabotage Eastpointe’s financial viability.

Also in its Complaint, Eastpointe alleges a statewide, power-hungry, money-grubbing conspiracy in which Brajer and DHHS and Trillium are conspiring to pose Trillium as the final winner in the “MCO Scramble to Consolidate,” “Get Big or Die” MCO mentality arising out of the legislative push for MCO consolidation. Because, as with any consolidation, duplicate executives are cut.

Over the last couple years, Eastpointe has discussed merging with Cardinal, Trillium, and Sandhills – none of which occurred. Comparably, Joffrey Lannister and Sansa Stark discussed merging. As did Viserys and Illyrio wed Daenerys to Khal Drogo to form an alliance between the Targaryens.

Some of the most noteworthy and scandalous accusations:

Against Trillium:

Leza Wainwright, CEO of Trillium and director of the NC Council of Community MH/DD/SA Programs (“NCCCP”) (now I know why I’ve never been invited to speak at NCCCP). Wainwright “brazenly took actions adverse to the interest of Eastpointe in violation of the NCCCP mission, conflicts of interest policy of the organization, and her fiduciary duty to the NCCCP and its members.” Compl. at 44.

Robinson, Governing Board Chair of Trillium, “further informed Brajer that he intended for Trillium to be the surviving entity in any merger with Eastpointe and that “any plan predicated on Trillium and Eastpointe being coequal is fundamentally flawed.”” Compl. at 61.

“On or about May 11, 2016, Denauvo Robinson (“Robinson”), Governing Board Chair of Trillium wrote Brajer, without copying Eastpointe, defaming Eastpointe’s reputation in such a way that undermined the potential merger of Eastpointe and Trillium.” Compl. at 59.

“Robinson, among other false statements, alleged the failure to consummate a merger between Eastpointe, CoastalCare, and East Carolina Behavioral Health LMEs was the result of Eastpointe’s steadfast desire to maintain control, and Eastpointe’s actions led those entities to break discussions with Eastpointe and instead merge to form Trillium.” Compl. at 60.

“Trillium, not Nash County, wrote Brajer on November 28, 2016 requesting approval to disengage from Eastpointe and to align with Trillium.” Compl. at 69.

Against DHHS:

Dave Richards, Deputy Secretary for Medical Assistance, maintains a “strong relationship with Wainwright” and “displayed unusual personal animus toward Kenneth Jones, Eastpointe’s former CEO.” Compl. at 47.

Brajer made numerous statements to Eastpointe staff regarding his animus toward Jones and Eastpointe. “Brajer continued to push for a merger between Eastpointe and Trillium.” Compl. at 53.

“On December 5, 2016, the same day that former Governor McCrory conceded the election to Governor Cooper, Brajer wrote a letter to Trillium indicating that he approved the disengagement and realignment of Nash County.” Compl. at 72.

“On March 17, 2016, however, Brajer released a memorandum containing a plan for consolidation of the LME/MCOs, in which NCDHHS proposed Eastpointe being merged with Trillium.” Compl. at 55.

Brajer’s actions were “deliberately premature, arbitrary, and capricious and not in compliance with statute and Rule, and with the intent to destabilize Eastpointe as an LME/MCO).” Compl. at 73.

“Brajer conspired with Nash County to cause Nash County to breach the Merger Agreement.” Compl. at 86.

Brajer “deliberately sought to block any merger between Eastpointe and other LME/MCOs except Trillium.” Compl. at 96.

“Brajer and NCDHHS’s ultra vires and unilateral approval of the Nash County disengagement request effective April 1, 2017 materially breached the contract between Eastpointe and NCDHHS. Equally brazen was Brajer’s calculated failure to give Eastpointe proper notice of the agency action taken or provide Eastpointe with any rights of appeal.” Compl. at 101.

Against Nash County

“To date, Nash County is Six Hundred Fifty Three Thousand Nine Hundred Fifty Nine Thousand and 16/100 ($653,959.16) in arrears on its Maintenance of Efforts to Eastpointe.” Compl. at 84.

“While serving on Eastpointe’s area board, Nash County Commissioner Lisa Barnes, in her capacity as a member of the Nash County Board of Commissioners, voted to adopt a resolution requesting permission for Nash County to disengage from Eastpointe and realign with Trillium. In so doing, Barnes violated her sworn oath to the determent of Eastpointe.” Compl. at 85.

What Eastpointe’s lawsuit could potentially mean to providers:

Eastpointe is asking the Judge in the federal court of our eastern district for a Temporary Restraining Order and Preliminary Injunction prohibiting Nash County from withdrawing from Eastpointe’s catchment area and joining Trillium’s catchment area.  It is important to note that the behavioral health care providers in Eastpointe’s catchment area may not be the same behavioral health care providers in Trillium’s catchment area. There may be some overlap, but without question there are behavioral health care providers in Trillium’s catchment area that are not in Eastpointe’s catchment area and vice versa.

If Eastpointe is not successful in stopping Nash County from switching to Trillium’s catchment area, those providers who provide services in Nash County need to inquire – if you do not currently have a contract with Trillium, will Trillium accept you into its catchment area, because Trillium runs a closed network?!?! If Trillium refuses to include Nash County’s behavioral health care providers in its catchment area, those Nash County providers risk no longer being able to provide services to their consumers. If this is the case, these Nash County, non-Trillium providers may want to consider joining Eastpointe’s lawsuit as a third-party intervenor, as an interested, aggrieved person. Obviously, you would, legally, be on Eastpointe’s side, hoping to stay Nash County’s jump from Eastpointe to Trillium.

Even if Eastpointe is successful in stopping Nash County’s Benedict Arnold, then, as a provider in Eastpointe’s catchment area, you need to think ahead. How viable is Eastpointe? Eastpointe’s lawsuit is a powerful indication that Eastpointe itself is concerned about the future, although this lawsuit could be its saving grace. How fair (yet realistic) is it that whichever providers happen to have a contract with the biggest, most powerful MCO in the end get to continue to provide services and those providers with contracts with smaller, less viable MCOs are put out of business based on closed networks?

If Nash County is allowed to defect from Eastpointe and unite with Trillium, all providers need to stress. Allowing a county to abscond from its MCO on the whim of county leadership could create absolute havoc. Switching MCOs effects health care providers and Medicaid recipients. Each time a county decides to choose a new MCO the provider network is upended. Recipients are wrenched from the provider of their choice and forced to re-invent the psychological wheel to their detriment. Imagine Cherokee County being managed by Eastpointe…Brunswick County being managed by Vaya Health…or Randolph County being managed by Partners. Location-wise, it would be an administrative mess. Every election of a county leadership could determine the fate of a county’s Medicaid recipients.

Here is a map of the current 7 MCOs:

new mco map

All behavioral health care providers should be keeping a close watch on the MCO consolidations and this lawsuit. There is nothing that requires the merged entity to maintain or retain the swallowed up entities provider network. Make your alliances because…

“Winter is coming.”