Category Archives: Medicaid Appeals
No, this is not a Shakespearean blog post. The Hamlet in this case is not the Prince of Denmark; it is a hospital system who hired a doctor, Dr. Hernandez as an independent contractor and whose private practice flopped. When the hospital at which he had privileges refused to hire him as an employee, Hernandez sued Hamlet under the False Claims Act (FCA) and Unfair Trade Practices- AND WON!!
Relationships between hospitals and physicians may forever be changed.
In an October 2018 decision, Hamlet H.M.A., LLC V. Hernandez, the NC Court of Appeals ruled that a hospital can be liable to a physician for Unfair and Deceptive Trade Practices (UDTP) – causing a new level of care to be needed in negotiations between hospitals and physicians.
Dr. Hernandez accepted a position with Sandhills Regional Medical Center. The original offer was for Dr. Hernandez to set up his own independent practice and to be an independent contractor for the hospital. The offer guaranteed a minimum collection amount for the first 18 months of the 36-month contract. The base salary was $325,000, with a bonus based on worked RVUs. Dr. Hernandez countered and asked to be considered as an employee instead of as an independent contractor. Sandhills sent an email offering a base salary of $275,000 as an employee. As any reasonable, logical person would do, Dr. Hernandez responded with an email stating that it would be irrational to accept a base salary so much lower in order to obtain employee status. The hospital offered an “employee status option” at the end of 18 months.
Dr. Hernandez then sent Sandhills an email asking to extend the time period of guaranteed income to 24 months, rather than 18 months. Plaintiff replied that it could not extend the period of guaranteed income, but raised the monthly salary from $47,616.82 to $49,500.00 and also added a signing bonus of $30,000.00. After further negotiations, the parties entered into a Physician Recruitment Agreement on March 9, 2011.
Dr. Hernandez’s private practice flopped, and at the end of the first 18-month period, he requested to exercise the employment option in his contract and to become an employee of Sandhills. But Sandhills did not give Dr. Hernandez an employment contract.
On August 29, 2014, Sandhills filed a complaint against Dr. Hernandez alleging breach of contract and demanding repayment of the entire amount paid to Dr. Hernandez, a total of 21 payments amounting to $902,259.66. Dr. Hernandez filed an answer with counterclaims for breach of contract, fraud, unfair or deceptive trade practices, and unjust enrichment. A jury trial was held in Superior Court in Richmond County at the end of August and the beginning of September 2016. The jury returned a verdict for Sandhills for $334,341.14 (a random number).
Dr. Hernandez countered sued the hospital for Unfair and Deceptive Trade Practices (UDTP) alleging that the hospital fraudulently induced him to enter into the contract with the hospital as an independent contractor. His allegations that the hospital violated UDTP because the hospital offered a lower salary to be considered an employee was shocking and unprecedented. Most likely, Sandhills never even contemplated that it could be held liable under UDTP because of a disparity in salary offered to Dr. Hernandez depending on his employment status. Most likely, the man or woman who sent the email to Dr. Hernandez with the disparate salaries never asked its general counsel whether the action could penalize the hospital. Who would have thought to?
One exception to UDTP is the “learned profession” exception. Basically, the courts have held that if the two parties to an agreement are learned professionals and the topic of the contract has to do with the parties’ speciality; i.e, medicine, in this case, then the parties cannot allege UDTP because both parties were knowledgeable. The issue of first impression presented by Hamlet is whether the “learned profession” exception set forth in N.C. Gen. Stat. § 75-1.1(b) applies to a dispute between a physician and a hospital relating to alleged false claims made by the hospital to induce the physician to enter into an employment contract. If the learned profession exception were to apply, then Dr. Hernandez’s UDTP claim against Sandhill would be dismissed.
Dr. Hernandez alleged that the hospital made false representations to induce him to enter into a contract. The Court held that the fact that he is a physician does not change the nature of the negotiation of a business contract. The Court found that the “learned profession” exception does not apply to any negotiation just because the two parties are physicians. For example, if a physician and a hospital were to contract to buy a beach house, then the exception would not apply because the nature of the contract (were something go awry and cause an UDTP lawsuit) because buying a beach house has nothing to do with being a physician or hospital. Similarly, here, the Court held that an employment contract had nothing to do with rendering medicine. Therefore, the exception did not apply. The Court of Appeals reversed the trial court’s directed verdict against Dr. Hernandez.
This decision definitely creates more tension between hospitals and physicians. Now, in negotiations with employees and independent contractors, hospitals need to be mindful that UDTP claims can be alleged against them. This case is recent precedent for an unfamiliar modern world of health care negotiations.
Effective January 2, 2019, the Center for Medicare and Medicaid Services (CMS) radically changed its guidance on the use of extrapolation in audits by recovery audit contractors (RACs), Medicare administrative contractors (MACs), Unified Program Integrity Contractors (UPICs), and the Supplemental Medical Review Contractor (SMRC).
Extrapolation is the tsunami in Medicare/caid audits. The auditor collects a small sample of claims to review for compliance. She then determines the “error rate” of the sample. For example, if 50 claims are reviewed and 10 are found to be noncompliant, then the error rate is set at 20%. That error rate is applied to the universe, which is generally a three-year time period. It is assumed that the random sample is indicative of all your billings regardless of whether you changed your billing system during that time period of the universe or maybe hired a different biller.
With extrapolated results, auditors allege millions of dollars of overpayments against health care providers…sometimes more than the provider even made during that time period. It is an overwhelming wave that many times drowns the provider and the company.
Prior to this recent change to extrapolation procedure, the Program Integrity Manual (PIM) offered little guidance to the proper method for extrapolation.
Well, Change Request 10067 – overhauled extrapolation in a HUGE way.
The first modification to the extrapolation rules is that the PIM now dictates when extrapolation should be used.
Determining When a Statistical Sampling May Be Used. Under the new guidance, a contractor “shall use statistical sampling when it has been determined that a sustained or high level of payment error exists. The use of statistical sampling may be used after documented educational intervention has failed to correct the payment error.” This guidance now creates a three-tier structure:
- Extrapolation shall be used when a sustained or high level of payment error exists.
- Extrapolation may be used after documented educational intervention (such as in the Targeted Probe and Educate (TPE) program).
- It follows that extrapolation should not be used if there is not a sustained or high level of payment error or evidence that documented educational intervention has failed.
“High level of payment error” is defined as 50% or greater. The PIM also states that the contractor may review the provider’s past noncompliance for the same or similar billing issues, or a historical pattern of noncompliant billing practice. This is HUGE because so many times providers simply pay the alleged overpayment amount if the amount is low or moderate in order to avoid costly litigation. Now those past times that you simply pay the alleged amounts will be held against you.
Another monumental modification to RAC audits is that the RAC auditor must receive authorization from CMS to go forward in recovering from the provider if the alleged overpayment exceeds $500,000 or is an amount that is greater than 25% of the provider’s Medicare revenue received within the previous 12 months.
The identification of the claims universe was also re-defined. Even CMS admitted in the change request that, on occasion, “the universe may include items that are not utilized in the construction of the sample frame. This can happen for a number of reasons, including, but not limited to: (1) Some claims/claim lines are discovered to have been subject to a prior review, (2) The definitions of the sample unit necessitate eliminating some claims/claim lines, or (3) Some claims/claim lines are attributed to sample units for which there was no payment.”
There are many more changes to discuss, but I have been asked to appear on RACMonitor to present the details on February 19, 2019. So sign up to listen!!!
Obtaining injunctions against the government is the best part of my job. I love it. I thrive on it. Whenever there is a reduction in Medicare/caid reimbursements rates, I secretly hope someone hires me to get an injunction to increase the reimbursement rates. But injunctions are expensive. So I am always happy whenever a provider obtains an injunction against the government, even if I were not hired to obtain it.
On December 27, 2018, Judge Rudolph Contreras, United States District Judge, ordered the Department of Health and Human Services (“HHS”) to increase the Medicare reimbursements rates for outpatient drugs under the 340B Drug Program. A permanent injunction!!!
In November 2017, HHS reduced the Medicare reimbursement rates for outpatient drugs acquired through the 340B Program from average sales price (“ASP”) plus 6% to ASP minus 22.5%. Medicare Program: Hospital Outpatient Prospective Payment and Ambulatory Surgical Center Payment Systems and Quality Reporting Programs, 82 Fed. Reg. 33,558, 33,634 (Jul. 20, 2017) (codified at 42 C.F.R. pt. 419).
HHS reduced Medicare reimbursements worth billions of dollars to private institutions. HHS has the authority to set Medicare reimbursement rates. But one should question a 30% reduction. Drug prices haven’t dropped.
Plaintiff – the American Hospital Association (AHA) – sued HHS when HHS cut outpatient pharmaceuticals by 30%. HHS contends that the rate adjustment was statutorily authorized and necessary to close the gap between the discounted rates at which Plaintiffs obtain the drugs at issue—through Medicare’s “340B Program”—and the higher rates at which Plaintiffs were previously reimbursed for those drugs under a different Medicare framework.
AHA asked the Court to vacate the HHS’ rate reduction, require HHS to apply previous reimbursement rates for the remainder of this year, and require HHS to pay Plaintiffs the difference between the reimbursements they have received this year under the new rates and the reimbursements they would have received under the previous rates.
HHS argued that AHA failed to exhaust its administrative remedies. See blog.
What is the 340B Drug Program?
In 1992, Congress established what is now commonly referred to as the “340B Program.” Veterans Health Care Act of 1992, Pub L. No. 102-585, § 602, 106 Stat. 4943, 4967–71. The 340B Program allows participating hospitals and other health care providers (“covered entities”) to purchase certain “covered outpatient drugs” from manufacturers at or below the drugs’ “maximum” or “ceiling” prices, which are dictated by a statutory formula and are typically significantly discounted from those drugs’ average manufacturer prices. See 42 U.S.C. § 256b(a)(1)–(2).3 Put more simply, this Program “imposes ceilings on prices drug manufacturers may charge for medications sold to specified health care facilities.” Astra USA, Inc. v. Santa Clara Cty., 563 U.S. 110, 113 (2011). It is intended to enable covered entities “to stretch scarce Federal resources as far as possible, reaching more eligible patients and providing more comprehensive services.” H.R. Rep. No. 102-384(II), at 12 (1992); see also Medicare Program: Hospital Outpatient Prospective Payment System and Ambulatory Surgical Center Payment Systems and Quality Reporting Programs (“2018 OPPS Rule”), 82 Fed. Reg. 52,356, 52,493 & 52,493 n.18 (Nov. 13, 2017) (codified at 42 C.F.R. pt. 419). Importantly, and as discussed in greater detail below, the 340B Program allows covered entities to purchase certain drugs at steeply discounted rates, and then seek reimbursement for those purchases under Medicare Part B at the rates established by OPPS.
HHS provided a detailed explanation of why it believed this rate reduction was necessary. First, HHS noted that several recent studies have confirmed the large “profit” margin created by the difference between the price that hospitals pay to acquire 340B drugs and the price at which Medicare reimburses those drugs. Second, HHS stated that because of this “profit” margin, HHS was “concerned that the current payment methodology may lead to unnecessary utilization and potential over-utilization of separately payable drugs.” It cited, as an example of this phenomenon, a 2015 Government Accountability Office Report finding that Medicare Part B drug spending was substantially higher at 340B hospitals than at non-340B hospitals. The data indicated that “on average, beneficiaries at 340B . . . hospitals were either prescribed more drugs or more expensive drugs than beneficiaries at the other non-340B hospitals in GAO’s analysis.” Id. at 33,633. Third, HHS expressed concern “about the rising prices of certain drugs and that Medicare beneficiaries, including low-income seniors, are responsible for paying 20 % of the Medicare payment rate for these drugs,” rather than the lower 340B rate paid by the covered hospitals.
The Court found that Plaintiff – AHA – did not need to exhaust its administrative remedies because there was no administrative remedy to exhaust. HHS had ruled that 340B drugs were to be recompensed at 30% lower rates. There is no appeal route for a rule made. There is no reconsideration review of a rule made. Therefore, the Court found that exhaustion of administrative remedies would be futile because no administrative remedies existed.
But the most important finding the Court made was that the 30% reduction in Medicare reimbursement rates for 340B drugs was arbitrary, capricious and outside the Secretary’s legal scope. The Court made the brash decision to determine the reimbursement rate for 340B drugs was arbitrary, but could not decide a remedy.
A remedy for an erroneous rule is to strike the rule and have the government repay the 340B drug reimbursements at the amount that should have been paid. But the Court does not order this. Instead the Court asks for each side to brief what remedy they think should be used. They have 30 days to brief their side.
Once You STOP Accepting Medicaid/Care, How Much Time Has to Pass to Know You Will Not Be Audited? (For Past Nitpicking Documentation Errors)
I had a client, a dentist, ask me today how long does he have to wait until he need not worry about government, regulatory audits after he decides to not accept Medicare or Medicaid any more. It made me sad. It made me remember the blog that I wrote back in 2013 about the shortage of dentists that accept Medicaid. But who can blame him? With all the regulatory, red tape, low reimbursement rates, and constant headache of audits, who would want to accept Medicare or Medicaid, unless you are Mother Teresa…who – fun fact – vowed to live in poverty, but raised more money than any Catholic in the history of the recorded world.
What use is a Medicaid card if no one accepts Medicaid? It’s as useful as our appendix, which I lost in 1990 and have never missed it since, except for the scar when I wear a bikini. A Medicaid card may be as useful as me with a power drill. Or exercising lately since my leg has been broken…
The answer to the question of how long has to pass before breathing easily once you make the decision to refuse Medicaid or Medicare? – It depends. Isn’t that the answer whenever it comes to the law?
By Whom and Why You Are Being Investigated Matters
If you are being investigated for fraud, then 6 years.
If you are being investigated by a RAC audit, 3 years.
If you are being investigated by some “non-RAC entity,” then it however many years they want unless you have a lawyer.
If being investigated under the False Claims Act, you have 6 – 10 years, depending on the circumstances.
If investigated by MICs, generally, there is a 5-year, look-back period.
ZPICS have no particular look-back period, but with a good attorney, reasonableness can be argued. How can you be audited once you are no longer liable to maintain the records?
The CERT program is limited by the same fiscal year.
The Alternative: Self-Disclosure (Hint – This Is In Your Favor)
If you realized that you made an oops on your own, you have 60-days. The 60-day repayment rule was implemented by the Centers for Medicare and Medicaid Services (“CMS”), effective March 14, 2016, to clarify health care providers’ obligations to investigate, report, and refund identified overpayments under the Affordable Care Act (“ACA”).
Notably, CMS specifically stated in the final rule that it only applies to traditional Medicare overpayments for Medicare Part A and B services, and does not apply to Medicaid overpayments. However, most States have since legislated similar statutes to mimic Medicare rules (but there are arguments to be made in courts of law to distinguish between Medicare and Medicaid).
On September 20, 2018, CMS released a new proposed rule in an effort to reduce the regulatory burden on health care providers. Now we have all heard CMS’ attempts to increase transparency and decrease burden on and for providers. But, usually, it ends up being all talk and no walk. So, I decided to investigate exactly how CMS new proposal purports to make a difference.
The proposals fall under three categories: (1) Proposals that simplify and streamline processes; (2) proposals that reduce the frequency of activities and revise timelines; and (3) proposals that are obsolete, duplicative, or that contain unnecessary requirements.
CMS projects savings of nearly $5.2 billion and a reduction of 53 million hours through 2021. That results in saving 6,000 years of burden hours over the next three years.
- Proposals that simplify and streamline processes
Ambulatory surgery centers (ASCs)
ASCs and hospitals have long competed for business. This competition has, at times, led to hospitals providing outpatient surgical services refusing to sign written transfer agreements or to grant admitting privileges to physicians performing surgery in an ACS. CMS’ proposed rule is aimed at making is easier for ACSs to receive and admit patients. Currently, as a condition for coverage an ASC must – (i) Have a written transfer agreement with a hospital that meets the requirements of paragraph (b)(2) of this section; or (ii) Ensure that all physicians performing surgery in the ASC have admitting privileges at a hospital that meets the requirements of paragraph (b)(2) of this section. CMS proposes to remove the above-mentioned requirements.
Furthermore, now, for every patient admitted and/or pre-surgically assessed at an ACS, the ACS must ensure that each patient has a comprehensive medical history and physical assessment not more than 30-days before the date of the scheduled surgery, that, upon admission, each patient undergoes a pre-surgical assessment competed by a physician, and that each patient’s medical history and physical assessment be placed in the patient’s medical record prior to the surgical procedure. Instead, CMS proposes to defer to each individual ASC’s policy and operating physician’s clinical judgment. CMS will still require the documentation of any pre-existing condition and that the documentation including any allergies, medical history, and physical examination be placed in the patient’s file pre-surgery. But, without question, these two proposed rules will lighten the burden on ACSs and its relationships with hospitals.
Expect a heavy dose of comments to be from hospitals. I think that CMS’ thought process behind this is that it costs substantially less to perform surgeries in an ASC rather than a hospital. But I question whether CMS has studied outcome results – I have no empirical evidence; I only question.
The federal regulations presently require that hospice staff include an individual with specialty knowledge of hospice medications. The proposed rule eliminates this requirement. I believe that this proposal arose from complaints of high payroll. This proposed change could cut payrolls significantly because salaries can be reduced without specialty knowledge.
In addition, the proposed rule replaces the requirement that hospices provide a copy of medication policies and procedures to patients, families and caregivers with a requirement that hospices provide information regarding the use, storage, and disposal of controlled drugs to the patient or patient representative, and family. This information would be provided in a more user-friendly manner, as determined by each hospice.
CMS’ new proposed rule allows a hospital that is part of a hospital system consisting of multiple separately certified hospitals to elect to have a unified and integrated Quality Assessment and Performance Improvement (QAPI) program for all of its member hospital. The system governing body will be responsible and accountable for ensuring that each of its separately certified hospitals meets all of the requirements of this section.
There is fine print that you will need to review: Each separately certified hospital within the system would have to demonstrate that: the unified and integrated QAPI program was established in a manner that takes into account each member hospital’s unique circumstances and any significant differences in patient populations and services offered in each hospital; and the unified and integrated QAPI program would establish and implement policies and procedures to ensure that the needs and concerns of each of its separately certified hospitals, regardless of practice or location, were given due consideration, and that the unified and integrated QAPI program would have mechanisms in place to ensure that issues localized to particular hospitals were duly considered and addressed.
Again, I believe that this proposed change is all about saving money.
- Proposals that reduce the frequency of activities and revise timelines
We propose to remove the requirement that Home Health Agencies (HHAs) provide a copy of the clinical record to a patient, upon request, by the next home visit. We propose to retain the requirement that the copy of the clinical record must be provided, upon request, within 4 business days.
Sometimes a patient’s record is voluminous. With the new age of EHR, hard copies are not so easily accessible.
Critical Access Hospitals
CMS’ proposed rule will change the requirement at § 485.635(a)(4) to reflect the current medical practice where providers are expected to update their policies and procedures as needed in response to regulatory changes, changes in the standard of care, or nationally recognized guidelines. The current rule requires a CAH’s professional personnel to review its policies at least annually and the CAH to review as necessary. The proposal is to reduce burden and provide flexibility by requiring the CAH’s, professional personnel, at a minimum, to conduct a biennial review of its policies and procedures instead of an annual review.
Instead of reviewing emergency preparedness plans annually, CMS proposes to revise these requirements, so that applicable providers and suppliers have increased flexibility with compliance.
- Proposals that are obsolete, duplicative, or that contain unnecessary requirements
Hospitals and CAH Swing-Bed Requirements
CMS’ proposed rule removes the cross reference in the regulations for hospital swing-bed providers and for CAH swing-bed providers. The cross-reference gives a resident the right to choose to, or refuse to, perform services for the facility if they so choose. If the resident works, the facility must document it in the resident’s plan of care, noting whether the services are voluntary or paid, and, if paid, providing wages for the work being performed, at prevailing rates.
The new proposal also removes requirement that facilities with more than 120 beds to employ a social worker on full-time basis and in obtaining routine and 24-hour emergency dental care.
The comment period for this proposed rule ends on November 19, 2018. You can go to the Federal Register to make a formal comment.
Comments may be submitted electronically through the e-Regulation website https://www.cms.gov/Regulations-and-Guidance/Regulations-and-Policies/eRulemaking/index.html?redirect=/eRulemaking.
When action happens in the Medicare/caid world, it happens quickly. Sometimes you do not receive adequate notice to coordinate continuity of care for your consumers or patients. For example, on August 3, 2018, the Center for Medicare and Medicaid Services announced that at midnight on August 18, 2018, it would be terminating the contract between CMS and ESEC, LLC, an Oklahoma-based surgery center.
CMS provided ESEC 15 days notice of complete termination of Medicare and Medicaid reimbursements. Now I do not know the details of ESEC’s financial reliance on Medicare or Medicaid, but, these days, few providers are solely third-party pay or cash-only. I can only assume that ESEC is scrambling to initiate a lawsuit to remain afloat and open for business. Or ESEC is praying for a “rescind” by correcting whatever issues it purportedly had. Personally, I would not count on a possible rescind. I would be proactively seeking legal intervention.
Here are some examples of recent terminations and the notice received by the providers:
- Baylor St. Luke’s Medical Center’s heart transplant program lost federal funding August 17, 2018. The hospital will no longer be able to bill Medicare and Medicaid for heart transplants.
- Effective August 9, 2018, Brookwood Baptist Medical Center’s Medicare contract was terminated. The notice was published July 25, 2018.
- As of August 12, 2018, The Grandview Nursing & Rehabilitation Facility’s Medicare contract was terminated. Notice of the termination was published August 1, 2018.
- As of September 1, 2018, Compassus-Kansas City, a hospice company, will lose its Medicare contract. Notice was provided August 17, 2018.
- On August 3, 2018, CMS announced that it was terminating Deligent Health Services Inc.’s Medicare and Medicaid contact, effective December 5, 2017. (That is quite a retroactive timeframe).
Can Careless Judy put a healthcare provider out of business?
This happens all the time. Sure, ESEC probably had knowledge that CMS was investigating it. However, CMS has the authority to issue these public notices of termination without holding a hearing to determine whether CMS’ actions are accurate. What if Careless Judy in Program Integrity made a human error and ESEC actually does meet the standards of care. But you see, Careless Judy accidentally used the minimum standards of care from 2008 instead of 2018. It’s an honest mistake. She had no malice against ESEC. But, my point is – where is the mechanism that prevents a surgical ambulatory center from going out of business – just because Careless Judy made a mistake?
To look into whether any legal mechanism exists to prevent Careless Judy from putting the ambulatory center out of business, I turn to the legal rules.
42 CFR 488.456 governs terminations of provider agreements. Subsection (a) state that termination “ends – (1) Payment to the facility; and (2) Any alternative remedy.”
Subsection (b) states that CMS or the State may terminate the contract with the provider if the provider “Is not in substantial compliance with the requirements of participation, regardless whether immediate jeopardy is present.” On the bright side, if no immediate jeopardy exists then CMS or the State must give 15 days notice. If there is found to be immediate jeopardy, the provider get 2 days. But who determines what is “substantial compliance?” Careless Judy?
42 CFR 489.53 lists the reasons on which CMS may rely to terminate a provider. Although, please note, that the regulations use the word “may” and not “must.” So we have some additional guidance as to when a provider’s contract may be terminated, but it still seems subjective. Here are the reasons:
- The provider is not complying with the provisions of title XVIII and the applicable regulations of this chapter or with the provisions of the agreement.
- The provider or supplier places restrictions on the persons it will accept for treatment and it fails either to exempt Medicare beneficiaries from those restrictions or to apply them to Medicare beneficiaries the same as to all other persons seeking care.
- It no longer meets the appropriate conditions of participation or requirements (for SNFs and NFs) set forth elsewhere in this chapter. In the case of an RNHCI no longer meets the conditions for coverage, conditions of participation and requirements set forth elsewhere in this chapter.
- It fails to furnish information that CMS finds necessary for a determination as to whether payments are or were due under Medicare and the amounts due.
- It refuses to permit examination of its fiscal or other records by, or on behalf of CMS, as necessary for verification of information furnished as a basis for payment under Medicare.
- It failed to furnish information on business transactions as required in § 420.205 of this chapter.
- It failed at the time the agreement was entered into or renewed to disclose information on convicted individuals as required in § 420.204 of this chapter.
- It failed to furnish ownership information as required in § 420.206 of this chapter.
- It failed to comply with civil rights requirements set forth in 45 CFR parts 80, 84, and 90.
- In the case of a hospital or a critical access hospital as defined in section 1861(mm)(1) of the Act that has reason to believe it may have received an individual transferred by another hospital in violation of § 489.24(d), the hospital failed to report the incident to CMS or the State survey agency.
- In the case of a hospital requested to furnish inpatient services to CHAMPUS or CHAMPVA beneficiaries or to veterans, it failed to comply with § 489.25 or § 489.26, respectively.
- It failed to furnish the notice of discharge rights as required by § 489.27.
- The provider or supplier refuses to permit copying of any records or other information by, or on behalf of, CMS, as necessary to determine or verify compliance with participation requirements.
- The hospital knowingly and willfully fails to accept, on a repeated basis, an amount that approximates the Medicare rate established under the inpatient hospital prospective payment system, minus any enrollee deductibles or copayments, as payment in full from a fee-for-service FEHB plan for inpatient hospital services provided to a retired Federal enrollee of a fee-for-service FEHB plan, age 65 or older, who does not have Medicare Part A benefits.
- It had its enrollment in the Medicare program revoked in accordance to § 424.535 of this chapter.
- It has failed to pay a revisit user fee when and if assessed.
- In the case of an HHA, it failed to correct any deficiencies within the required time frame.
- The provider or supplier fails to grant immediate access upon a reasonable request to a state survey agency or other authorized entity for the purpose of determining, in accordance with § 488.3, whether the provider or supplier meets the applicable requirements, conditions of participation, conditions for coverage, or conditions for certification.
As you can see from the above list of possible termination reasons, many of which are subjective, it could be easy for Careless Judy to terminate a Medicare contract erroneously, based on inaccurate facts, or without proper investigation.
The same is true for Medicaid; your contract can be terminated on the federal or state level. The difference is that at the state level, Careless Judy is a state employee, not a federal.
42 CFR 498.5 governs appeal rights for providers contract terminations. Subsection (b) states that “Any provider dissatisfied with an initial determination to terminate its provider agreement is entitled to a hearing before an ALJ.”
42 CFR 498.20 states that an initial determination by CMS (like a contract termination) is binding unless it is reconsidered per 42 CFR 498.24.
A Stay of the termination should suspend the termination until the provider can obtain a hearing by an impartial tribunal until the appeal has been completed. The appeal process and supposed automatic Stay of the termination is the only protection for the provider from Careless Judy. Or filing an expensive injunction.
There is a federal regulation that is putting health care providers out of business. It is my legal opinion that the regulation violates the U.S. Constitution. Yet, the regulation still exists and continues to put health care providers out of business.
Because so far, no one has litigated the validity of the regulation, and I believe it could be legally wiped from existence with the right legal arguments.
How is this important?
Currently, the state and federal government are legally authorized to immediately suspend your Medicare or Medicaid reimbursements upon a credible allegation of fraud. This immense authority has put many a provider out of business. Could you survive without any Medicare or Medicaid reimbursements?
The federal regulation to which I allude is 42 CFR 455.23. It is a federal regulation, and it applies to every single health care provider, despite the service type allowed by Medicare or Medicaid. Home care agencies are just as susceptible to an accusation of health care fraud as a hospital. Durable medical equipment agencies are as susceptible as dentists. Yet the standard for a “credible allegation of fraud” is low. The standard for which the government can implement an immediate withhold of Medicaid/care reimbursements is lower than for an accused murderer to be arrested. At least when you are accused of murder, you have the right to an attorney. When you are accused to health care fraud on the civil level, you do not receive the right to an attorney. You must pay 100% out of pocket, unless your insurance happens to cover the expense for attorneys. But, even if your insurance does cover legal fees, you can believe that you will be appointed a general litigator with little to no knowledge of Medicare or Medicaid regulatory compliance litigation.
42 USC 455.23 states that:
“The State Medicaid agency must suspend all Medicaid payments to a provider after the agency determines there is a credible allegation of fraud for which an investigation is pending under the Medicaid program against an individual or entity unless the agency has good cause to not suspend payments or to suspend payment only in part.
(2) The State Medicaid agency may suspend payments without first notifying the provider of its intention to suspend such payments.
(3) A provider may request, and must be granted, administrative review where State law so requires.”
In the very first sentence, which I highlighted in red, is the word “must.” Prior to the Affordable Care Act, this text read “may.” From my years of experience, every single state in America has used this revision from “may” to “must” for governmental advantage over providers. When asked for good cause, the state and or federal government protest that they have no authority to make a decision that good cause exists to suspend any reimbursement freeze during an investigation. But this protest is a pile of hooey.
In reality, if anyone could afford to litigate the constitutionality of the regulation, I believe that the regulation would be stricken an unconstitutional.
Here is one reason why: Due Process
The Fifth and Fourteenth Amendments to the Bill of Rights provide us our due process rights. Here is the 5th Amendment:
“No person shall be held to answer for a capital, or otherwise infamous crime, unless on a presentment or indictment of a Grand Jury, except in cases arising in the land or naval forces, or in the Militia, when in actual service in time of War or public danger; nor shall any person be subject for the same offense to be twice put in jeopardy of life or limb; nor shall be compelled in any criminal case to be a witness against himself, nor be deprived of life, liberty, or property, without due process of law; nor shall private property be taken for public use, without just compensation.”
There have been a long and rich history of interpretation of the due process clause. The Supreme Court has interpreted the due process clauses to provide four protections: (1) procedural due process (in civil and criminal proceedings), (2) substantive due process, (3) a prohibition against vague laws, and (4) as the vehicle for the incorporation of the Bill of Rights.
42 CFR 455.23 violates procedural due process.
Procedural due process requires that a person be allowed notice and an opportunity to be heard before a government official takes a person’s life, liberty, or property.
Yet, 42 CFR 455.23 allows the government to immediately withhold reimbursements for services rendered based on an allegation without due process and taking a provider’s property; i.e., money owed for services rendered. Isn’t this exactly what procedural due process was created to prevent???? Where is the fundamental fairness?
42 CFR 455.23 violates substantive due process.
The Court usually looks first to see if there is a fundamental right, by examining if the right can be found deeply rooted in American history and traditions.
Fundamental rights include the right to vote, right for protection from pirates on the high seas (seriously – you have that right), and the right to constitutional remedies. Courts have held that our right to property is a fundamental right, but to my knowledge, not in the context of Medicare/caid reimbursements owed; however, I see a strong argument.
If the court establishes that the right being violated is a fundamental right, it applies strict scrutiny. This test inquires into whether there is a compelling state interest being furthered by the violation of the right, and whether the law in question is narrowly tailored to address the state interest.
Where the right is not a fundamental right, the court applies a rational basis test: if the violation of the right can be rationally related to a legitimate government purpose, then the law is held valid.
Taking away property of a Medicare/caid provider without due process violates substantive due process. The great thing about writing your own blog is that no one can argue with you. Playing Devil’s advocate, I would anticipate that the government would argue that a suspension or withhold of reimbursements is not a “taking” because the withhold or suspension is temporary and the government has a compelling reason to deter health care fraud. To which, I would say, yes, catching health care fraud is important – I am in no way advocating for fraud. But important also is the right to be innocent until proven guilty, and in civil cases, our deeply-rooted belief in the presumption of innocence is upheld by the action at issue not taking place until a hearing is held.
For example, if I sue my neighbor and declare that he is encroaching on my property, the property line is not moved until a decision is in my favor.
Another example, if I sue my business partner for breach of contract because she embezzled $1 million from me, I do not get the $1 million from her until it is decided that she actually took $1 million from me.
So to should be – if a provider is accused of fraud, property legally owned by said provider cannot just be taken away. That is a violation of substantive due process.
42 CFR 455.23 violates the prohibition against vague laws
A law is void for vagueness if an average citizen cannot understand it. The vagueness doctrine is my favorite. According to census data, there are 209.3 million people in the US who are over 24-years. Of those over 24-years-old, 66.9 million have a college degree. 68% do not.
Although here is a quick anecdote: Not so sure that a college degree is indicative of intelligence. A recent poll of law students at Columbia University showed that over 60% of the students, who were polled, could not name what rights are protected by the 1st Amendment. Once they responded “speech,” many forgot the others. In case you need a refresher for the off-chance that you are asked this question in an impromptu interview, see here.
My point is – who is to determine what the average person may or may not understand?
Back to why 42 CFR 455.23 violates the vagueness doctrine…
Remember the language of the regulations: “The State Medicaid agency must suspend all Medicaid payments to a provider after the agency determines there is a credible allegation of fraud…”
“Credible allegation of fraud” is defined as an allegation, which has been verified by the State, from any source, including but not limited to the following:
- Fraud hotline complaints.
- Claims data mining.
- Patterns identified through provider audits, civil false claims cases, and law enforcement investigations. Allegations are considered to be credible when they have indicia of reliability and the State Medicaid agency has reviewed all allegations, facts, and evidence carefully and acts judiciously on a case-by-case basis.”
With a bit of research, I was able to find a written podcast published by CMS. It appears to be a Q and A between two workers at CMS discussing whether they should suspend a home health care agency’s reimbursements, similar to a playbook. I assume that it was an internal workshop to educate the CMS employees considering that the beginning of the screenplay begins with a “canned narrator” saying “This is a Medicaid program integrity podcast.”
The weird thing is that when you pull up the website – here – you get a glimpse of the podcast, but, at least on my computer, the image disappears in seconds and does not allow you to read it. I encourage you to determine whether this happens you as well.
While the podcast shimmered for a few seconds, I hit print and was able to read the disappearing podcast. As you can see, it is a staged conversation between “Patrick” and “Jim” regarding suspicion of a home health agency falsifying certificates of medical necessity.
On page 3, “Jim” says, “Remember the provider has the right to know why we are taking such serious action.”
But if your Medicare/caid reimbursements were suddenly suspended and you were told the suspension was based upon “credible allegations of fraud,” wouldn’t you find that reasoning vague?
42 CFR 455.23 violates the right to apply the Bill of Rights to me, as a citizen
This esoteric doctrine only means that the Bill of Rights apply to State governments. [Why do lawyers make everything so hard to understand?]
The 340B drug program is a topic that needs daily updates. It seems that something is happening constantly. Like a prime time soap opera or The Bachelor, the 340B program is all the talk at the water cooler. From lawsuits to legislation to executive orders – there is no way of knowing the outcome, so we all wait with bated breath to watch who will hold the final rose.
On Tuesday, July 17, 2018, the metaphoric guillotine fell on the American Hospital Association (AHA) and on hospitals across the country. The Court of Appeals (COA) dismissed AHA’s lawsuit.
On November 1, 2017, the US Department of Health and Human Services released a Final Rule implementing a payment reduction for most covered outpatient drugs billed to Medicare by 340B-participating hospitals from the current Average Sales Price (ASP) plus 6% rate to ASP minus 22.5%, which represents a payment cut of almost 30%.
Effective January 1, 2018, the 30% slash in reimbursement rates became reality, but only for locations physically connected to participating hospitals. CMS is expected to broaden the 30% reduction to all 340B-participating entities in the near future.
What is the 340B drug program? The easiest explanation for the 340B program is that government insurance, Medicare and Medicaid, do not want to pay full price for medicine. In an effort to reduce costs of drugs for the government payors, the government requires that all drug companies enter into a rebate agreement with the Secretary of the Department of Health and Human Services (HHS) as a precondition for coverage of their drugs by Medicaid and Medicare Part B. If a drug manufacturer wants its drug to be prescribed to Medicare and Medicaid patients, then it must pay rebates.
The American Hospital Association (“AHA”) filed for an injunction last year requesting that the US District Court enjoin CMS from implementing the 340B payment reduction. On the merits, AHA argues that the HHS’s near-30% rate reduction constitutes an improper exercise of its statutory rate-setting authority.
The US District Court did not reach an opinion on the merits; it dismissed the case, issued December 29, 2017, based on lack of subject matter jurisdiction. The District Court found that: Whenever a provider challenges HHS, there is only one potential source of subject matter jurisdiction—42 U.S.C. § 405(g). The Medicare Act places strict limits on the jurisdiction of federal courts to decide ‘any claims arising under’ the Act.
The Supreme Court has defined two elements that a plaintiff must establish in order to satisfy § 405(g). First, there is a non-waivable, jurisdictional requirement that a claim for benefits shall have been “presented” to the Secretary. Without presentment, there is no jurisdiction.
The second element is a waivable requirement to exhaust administrative remedies. I call this legal doctrine the Monopoly requirement. Do not pass go. Go directly to jail. Do not collect $200. Unlike the first element, however, a plaintiff may be excused from this obligation when, for example, exhaustion would be futile. Together, § 405(g)’s two elements serve the practical purpose of preventing premature interference with agency processes, so that the agency may function efficiently and so that it may have an opportunity to correct its own errors, to afford the parties and the courts the benefit of its experience and expertise, and to compile a record which is adequate for judicial review. However, there are ways around these obsolete legal doctrines in order to hold a state agency liable for adverse decisions.
Following the Dec. 29, 2017, order by the District Court, which dismissed the lawsuit on jurisdictional grounds, the plaintiffs (AHA) appealed to the U.S. Court of Appeals (COA), which promptly granted AHA’s request for an expedited appeal schedule.
In their brief, AHA contends that the District Court erred in dismissing their action as premature and that their continued actual damages following the Jan. 1 payment reduction’s effective date weighs heavily in favor of preliminary injunctive relief. More specifically, AHA argues that 30% reduction is causing irreparable injury to the plaintiffs “by jeopardizing essential programs and services provided to their communities and the vulnerable, poor and other underserved populations, such as oncology, dialysis, and immediate stroke treatment services.”
By contrast, the government’s brief rests primarily on jurisdictional arguments, specifically that: (1) the Medicare Act precludes judicial review of rate-setting activities by HHS; and (2) the District Court was correct that no jurisdiction exists.
Oral arguments in this appeal were May 4, 2018.
AHA posted in its newsletter that the COA seemed most interested in whether Medicare law precludes judicial review of CMS’ rule implementing the cuts. AHA says it hopes a ruling will be reached in the case sometime this summer.
In a completely different case, the DC District Court is contemplating a request to toll the time to file a Section 340B appeal.
AHA v. Azar, a case about RAC audits and the Medicare appeal backlog. During a March 22, 2018, hearing, the COA asked AHA to submit specific proposals that AHA wishes the COA to impose and why current procedures are insufficient. It was filed June 22, 2018.
In it proposal, AHA pointed out that HHS is needlessly causing hospitals to file thousands of protective appeals by refusing to toll the time for hospitals to file appeals arising out of the reduction in reimbursement that certain 340B hospitals. In order to avoid potential arguments from the government that 340B hospitals that do not administratively appeal the legality of a reduced rate will be time barred from seeking recovery if the court holds that the reduction in payments is unlawful, AHA proposed that the Secretary agree to toll the deadline for such appeals until resolution of the 340B litigation—an arrangement that would preserve the 340B hospitals’ right to full reimbursement in the event the 340B litigation is not successful. HHS has refused to toll the time, meaning that Section 340B hospitals will have to protect their interests in the interim by filing thousands upon thousands of additional claim appeals, which will add thousands upon thousands of more appeals to the current ALJ-level backlog.
In a unanimous decision, three judges from the COA sided with HHS and ruled the hospitals’ suit was filed prematurely because hospitals had not formally filed claims with HHS because they were not yet experiencing cuts.
Basically, what the judges are saying is that you cannot ask for relief before the adverse action occurs. Even though the hospitals knew the 30% rate reduction would be implemented January 1, 2018, they had to wait until the pain was felt before they could ask for relief.
The lawsuit was not dismissed based on the doctrine of exhaustion of administrative remedies. The Decision noted that in some cases plaintiffs might be justified in seeking judicial review before they have exhausted their administrative remedies, but that wouldn’t be the solution here.
Hindsight is always 20-20. I read the 11 page decision. But I believe that AHA failed in two ways that may have changed the outcome: (1) Nowhere in the decision does it appear that the attorneys for AHA argued that the subject matter jurisdiction issue was collateral to the merits; and (2) The lawsuit was filed pre-January 1, 2018, but AHA could have amended its complaint after January 1, 2018, to show injury and argue that its comments were rejected (final decision) by the rule being implemented.
But, hey, we will never know.
Here is an article that I wrote as a Medicaid news update, state-by-state, as seen on RACMonitor.
The latest and greatest in Medicaid news, state by state.
While Medicare is a nationwide healthcare insurance program, Medicaid, the government-funded health insurance for the poor and developmentally disabled, is state-specific, generally speaking. The backbone of Medicaid is federal; federal regulations set forth the minimum requirements that states must follow. It is up to the states to decide whether to mandate more stringent or more regulatory oversight than is required by the federal regulations.
Why is it important for you to know the latest up-to-date information on Medicaid issues? First, if you accept Medicaid, you need to know. Secondly, if you are thinking about expanding into different states, you need to be aware of how Medicaid is handled there.
What is happening in your State?
|Alabama:||Alabama did not expand Medicaid. The U.S. Department of Health and Human Services (HHS) Office of Inspector General (OIG) recommended that Alabama improve its Medicaid security program, aligning it with federal requirements. The OIG also stated that Alabama also needs to provide adequate oversight to its contractors and address other vulnerabilities OIG found in its audit. Expect more audits here. In particular, the Medicaid Maternity Program is under the microscope. Apparently, healthcare providers that provide medically necessary services to women on the Maternity Program have been duped before, as some of the women enrolled had already given birth. Recoupment!|
|Alaska:||Alaska expanded Medicaid in 2015. Currently, lawmakers in the legislature here have introduced bills that would require the state to seek 20-hour work requirements for those enrolled in Medicaid.|
|Arizona:||Arizona expanded Medicaid, but with an approved section 1115 waiver. Arizona has failed to collect up to $36.7 million in rebates from prescription drug manufacturers since 2010 and may need to pay the federal government a portion of that amount, according to a new federal audit, which means more audits to reconcile the payback. Arizona State Rep. Kelli Butler wants to allow uninsured individuals to buy into the state’s Medicaid program. Butler is expected to introduce legislation to authorize a buy-in or direct state officials to study the proposal. The buy-in option would require consumers to pay the full cost of their insurance coverage.|
|Arkansas:||Arkansas expanded Medicaid, but with an approved section 1115 waiver. On March 5, 2018, it became the third state to win the Trump administration’s permission to compel Medicaid recipients to work or prepare for a job. The state’s program integrity is focusing its upcoming audits on home health, long-term care facilities, and inpatient hospital stays.|
|California:||California expanded Medicaid. The state’s Medicaid agency has posted draft language of a new state plan amendment (SPA) that would make major changes to Federally Qualified Health Center (FQHC) and Rural Health Clinic (RHC) reimbursement. If approved, the SPA would be retroactive to Jan. 1, 2018, so expect audits and recoupments. The proposed SPA would implement multiple new requirements for FQHC and RHCS. For example, the proposed productivity standard requires physicians to document 3,200 visits per year and applicable allied health professionals such as physician assistants and nurse practitioners to document 2,600 visits per year. In January 2018, Aetna received approval to participate in California’s Medicaid program as “Aetna Better Health of California.”|
|Colorado:||Colorado expanded Medicaid. Not unexpectedly, the state has one of the more lenient regulatory environments. For example, Colorado’s permissive approach to regulating more than 700 licensed residential and outpatient drug treatment centers got the attention of a congressional subcommittee investigating the drug rehab industry last year. Also, Colorado’s governor announced that he is not opposed to work requirements for Medicaid beneficiaries.|
|Connecticut:||Connecticut expanded Medicaid. The Connecticut Health Policy Project data shows that net pharmacy spending minus rebates from Connecticut’s Medicaid program tripled from 2000 to 2017. After rebates, Medicaid’s pharmacy costs decreased from $542 million in 2015 to $465 million in 2017, a drop of over 14 percent. Interestingly, on March 21, 2018, the state’s General Assembly increased Connecticut’s 8,500 home care workers’ wages, and adding worker’s compensation, even those workers are being compensated by Medicaid. The increased wage will rise to $16.25 per hour by 2020 and will cost the state, after federal Medicaid reimbursement, $725,790 in 2018, almost $7 million in 2019, and over $9.3 million in 2020. If you have a home health agency here, you better make sure that lawmakers are smart enough to increase the reimbursement rates; otherwise, a lot of home health agencies will go out of business.|
|Delaware:||Delaware expanded Medicaid, but since it is so small in size and population, the expansion only added approximately 10,000 Medicaid recipients. This year, after two years of increasing Medicaid spending by approximately $70 million, Delaware’s Medicaid costs are expected to decrease a small amount, even with the expansion. Beginning this year, Delaware gives additional weight to value-based care when determining payment. Rather than paying solely for volume of care – hospital stays, tests and procedures, regardless of outcomes – the state will pay for achieving optimal health for its Medicaid recipients.|
|Florida:||Florida did not expand Medicaid. Lawmakers are considering opioid prescription limits for Medicaid recipients. The proposals would limit prescriptions for opioids to three-day supplies, but also allow for up to seven-day supplies if physicians deem it medically necessary. If passed, I question whether lawsuits will be filed claiming that such a move violates the Equal Protection Clause of the Constitution, because it violates parity between Medicaid recipients and the private-pay insured. And what about the people suffering with chronic, long-term pain? (especially considering the state’s demographics). In other news, Gov. Rick Scott has proposed to transition the state’s Children’s Medical Services program to a private managed care organization, beginning in 2019.|
|Georgia:||Georgia did not expand Medicaid. Recently, the Georgia Department of Community Health mistakenly issued multiple Medicaid ID numbers to hundreds of patients. Those mistakes led the state and federal governments to make duplicate payments for care of some Medicaid patients. Now, Georgia is being asked to refund the federal government’s share of the duplicate payments — more than $665,000. Expect more audits to fund the repayment.|
|Hawaii:||Hawaii expanded Medicaid. But the state is cracking down on its providers. In an effort to improve fraud prevention, Hawaii is performing more comprehensive screening, credentialing, and enrollment for all Medicaid providers. Those of you who are already credentialed here, expect tougher standards for re-credentialing.|
|Idaho:||Idaho did not expand Medicaid, but it did expand dental coverage. On March 12, 2018, the state’s Senate passed a bill that restores Medicaid non-emergency dental coverage. The coverage was cut in 2011 during the recession. The bill, HB 465, already passed the House and now moves to Gov. Butch Otter. It is expected to cost $38 a year per patient.|
|Illinois:||Illinois expanded Medicaid. On Jan. 12, 2018, five nursing home operators filed a federal lawsuit against the state, arguing that low Medicaid payment rates and the claims backlog are jeopardizing patient care. The lawsuit was filed by Generations Health Care Network, Carlyle Healthcare Center, St. Vincent’s Home, Clinton Manor Living Center, and Extended Care Clinical, which operate 100 skilled nursing facilities throughout the state. Because of Section 30(A) of the Social Security Act (SSA), which mandates that reimbursement rates allow for quality of care, why aren’t more health care providers filing lawsuits to increase Medicaid reimbursement rates?|
|Indiana:||Indiana expanded Medicaid, but with an approved section 1115 waiver, which includes work requirements and adds premium penalties for tobacco users. The state also plans to use an enrollment block on members who fail to meet work requirements. Indiana focuses its audits on outliers: in other words, a provider that provides significantly more services than like-specialties.|
|Iowa:||Iowa expanded Medicaid, but with an approved section 1115 waiver. The state’s Department of Human Services announced on March 12, 2018 that Iowa is in the process of searching for additional managed care organizations for the current program. So if you have the capacity to act as an Managed Care Organization (MCO), throw your name in the ring. Because of pressure from the federal government, Iowa has implemented more prepayment reviews. Specifically, auditors are reviewing hospital discharge records for any sign of noncompliance.|
|Kansas:||Kansas did not expand Medicaid. On Feb. 15, 2018, the American Civil Liberties Union (ACLU) filed a federal class-action lawsuit arguing that the state’s Medicaid program is improperly denying Hepatitis C medication to members until they are severely ill. The suit names Kansas Department of Health and Environment (KDHE) Secretary Jeff Andersen and KDHE Division of Health Care Finance Director Jon Hamdorf. Medicaid managed care plans in the state either require “severe liver damage” before covering the drugs or allow some coverage before that point. If you have a Kansas Medicaid contract, on Feb. 18, 2018, Maximus instituted a compliance plan and announced that it is committed to reaching a June 1 deadline to deal with state concerns over the company’s processing of Medicaid applications. Maximus is required to reach certain performance standards or face fines and the potential loss of its contract.|
|Kentucky:||Kentucky expanded Medicaid, but with an approved section 1115 waiver. In January, Kentucky’s waiver was approved by the federal government to implement work requirements for Medicaid recipients. Implementation will start in April 2018, with full implementation by July 2018. The waiver was approved for five years, through Sept. 30, 2023. In state audit news, non-emergency medical transportation (NEMT) providers are on the chopping block.|
|Louisiana:||Louisiana expanded Medicaid, but now the state may remove 46,000 elderly and disabled individuals from Medicaid as part of a series of healthcare-related budget cuts proposed by Gov. John Bel Edwards for 2019. The proposal would cut $657 million in state healthcare funding and as much as $2.4 billion, including federal matching funds, in total. The proposal would also cut funding to safety net hospitals and eliminate mental health services for adults who don’t otherwise qualify for Medicaid.|
|Maine:||Maine expanded Medicaid. The state adopted the Medicaid expansion through a ballot initiative in November 2017; the measure required submission of the state plan amendment within 90 days and implementation of expansion within 180 days of the effective date. In Maine audit news, a behavioral healthcare provider accused of fraud has put behavioral healthcare providers on the front line.|
|Maryland:||Maryland expanded Medicaid. Maryland’s system of pushing hospitals to achieving lower admissions has added up to hundreds of millions of dollars in savings, a new report shows. Since 2014, the state caps hospitals’ revenue each year, letting them keep the difference if they reduce inpatient and outpatient treatment while maintaining care quality. Per capita hospital spending by all insurers has grown by less than 2 percent a year in Maryland, below the economic growth rate, defined four years ago as 3.58 percent annually, a key goal for the program.|
|Massachusetts:||Massachusetts expanded Medicaid. The state has begun to roll out new Accountable Care Organization (ACO) networks. Members assigned to an ACO have until May 31 to switch before they are locked in for nine months. The changes are expected to impact more than 800,000 Medicaid recipients and are designed to better manage patient care, reimburse providers based on quality, and address social determinants of health. There is expected confusion with this change among Medicaid patients and providers.|
|Michigan:||Michigan expanded Medicaid, but with an improved section 1115 waiver. On Feb. 18, 2018, Michigan announced that it would consider a proposal to transition the state’s $2.8 billion Medicaid nursing home and long-term care services programs into managed care. An initial review by the state Department of Health and Human Services is expected to begin by July 1.|
|Minnesota:||Minnesota expanded Medicaid. MN has a proposed Medicaid waiver bill, which requests permission from the federal government to implement an 80-hour-per-month requirement that would mandate Medicaid beneficiaries who are able-bodied adults and not the sole caretaker of a child to work, actively seek employment, participate in educational or training programs, or volunteer.|
|Mississippi:||Mississippi did not expand Medicaid. The five-year waiver request from Gov. Phil Bryant seeks to require nondisabled adults, including low-income parents and caretakers, to participate in at least 20 hours per week of “workforce training.” To be eligible, Medicaid beneficiaries must work, be self-employed, volunteer, or be in a drug treatment program, among other approved activities. If people don’t comply, they’ll be kicked off Medicaid.|
|Missouri:||Missouri did not expand Medicaid. The Missouri Hospital Association has won a lawsuit against the Centers for Medicare & Medicaid Services (CMS) over a rule that deducts Medicare and commercial insurance reimbursements from total disproportionate-share hospital (DSH) allotments. U.S. District Judge Brian Wimes ruled that the agency exceeded its authority. State hospitals would have had to pay back $96 million for 2011 and 2012 alone. Expect more scrutiny on hospitals in light of this decision.|
|Montana:||Montana expanded Medicaid, but with an approved 1115 waiver. Montana is one of many states that have proposed budget cuts to Medicaid. A new proposed rule, which would take effect April 1, would move the state’s addiction counseling from a needs-based system to a cap of 12 individual sessions. The rule may be retroactive, so expect audits to recoup if the rule passes.|
|Nebraska:||Nebraska did not expand Medicaid. On March 7, 2018, advocates for Medicaid expansion launched a petition drive, “Insure the Good Life,” to place the expansion issue on the November 2018 general election ballot. State lawmakers have rejected the expansion measure the past five legislative attempts. Nebraska has paid millions to the federal government in the past few years for noncompliance. Many think it will owe millions more. Audits on providers will increase in Nebraska to compensate for money paid to the federal government – in all service types.|
|Nevada:||Nevada did expand Medicaid. It paid the federal government roughly $4.1 million in 2017 to use HealthCare.gov. CMS also asked for 1.5 percent of the premium payments that were collected through its exchange last year, a percentage that will double in 2019. Nevada plans to cut its IT costs by replacing its use of HealthCare.gov with a new health insurance exchange in 2019. Pain management providers and pharmacies are the target of Medicaid audits here.|
|New Hampshire:||New Hampshire expanded Medicaid, but with an approved section 1115 waiver. On March 9, 2018, the New Hampshire Senate passed a bill to continue the state’s Medicaid expansion program. The legislation, which now heads to the House, would impose work requirements on members and utilize 5 percent of liquor revenues to cover the cost of expansion. The Senate voted to reauthorize the Medicaid program for five years and transition to managed care in 2019. The current expansion program, the New Hampshire Health Protection Program, covers about 50,000 individuals.|
|New Jersey:||New Jersey expanded Medicaid. On March 13, 2018, Gov. Phil Murphy delivered his first budget address, unveiling a $37.4 billion budget with a projected surplus of $743 million. 2019 revenues are projected to grow by 5.7 percent from last year. Among the healthcare provisions are: a) close to $4.4 billion in state funds to provide healthcare to almost 1.8 million residents through New Jersey’s Medicaid program, NJ FamilyCare; b) $8.5 million to implement autism spectrum disorder services for Medicaid-eligible children and teens to help 10,000+ families with behavioral and physical supports; c) $11 million in state and federal funds to expand family planning services under NJ FamilyCare to residents at or below 200 percent of the federal poverty level; d) $252 million to fund the hospital Charity Care program; and e) $100 million to fund addiction initiatives (list not exhaustive).|
|New Mexico:||New Mexico expanded Medicaid. The 15 behavioral healthcare providers that were put out of business in 2013 have filed lawsuits against the state. Speculation has it that after the election this year – likely taking Gov. Susana Martinez out of office – the providers may get compensated. New Mexico auditors are focused on the delivery of babies and services to the elderly.|
|New York:||New York expanded Medicaid. Recently, the state’s Assembly released its one-house budget bill. The plan restores $135 million in reductions to the Medicaid program. The big news in the Big Apple regarding Medicaid is in home health. The New York Court of Appeals, the state’s highest court, has agreed to hear a case regarding wages for home care workers. A state Appellate Court ruled in September 2017 that home care agencies must pay live-in home health aides for 24 hours per day, not the 13 hours that is the industry standard, assuming that they are allowed eight hours of sleep and three hours for meals. The New York Department of Labor has issued an emergency regulation that maintains the policy of allowing employers to pay home care workers for 13 hours of a 24-hour shift. If the decision stands, it means that agencies must pay for an additional 11 hours of care per day, almost doubling the cost of care. It is estimated that it will increase costs for home care in New York’s Medicaid program by tens of millions of dollars. Any of you who have home health care agencies in New York, which are dependent on Medicaid, beware that the reimbursement rates are not increasing to accommodate for the increased wages. Many home health companies will go out of business if the decision stands.|
|North Carolina:||North Carolina did not expand Medicaid. The state is seeking to transition its Medicaid program from a fee-for-service model to a managed care model for all services. The transition of beneficiaries with a serious mental illness, a serious emotional disturbance, a substance use disorder, or an intellectual/developmental disability (IDD) will be delayed until the launch of behavioral health and IDD tailored plans. The state estimates that 2.1 million individuals will be eligible for managed care. This is a huge overhaul of the Medicaid system.|
|North Dakota:||North Dakota expanded Medicaid. The state received substantial funds from a settlement designed to compensate states, in part, for the billions of dollars in healthcare costs associated with treating tobacco-related diseases under state Medicaid programs. To date, states have received more than $50 billion in settlement payments. North Dakota is also one of the “test” states to allow Medicare Advantage Value-Based Insurance Design to waive many requirements of federal regulation.|
|Ohio:||Ohio expanded Medicaid. On March 13, 2018, it was announced that the Ohio Pharmacists Association alleged that CVS Caremark overcharges Medicaid managed care plans for medications while often reimbursing pharmacists less than the cost of the drugs. CVS denied accusations of overcharging in an attempt to drive out retail competition and reported that there are strict firewalls between their retail business and their pharmacy benefit manager (PBM) business, CVS Caremark. Beginning in July, Medicaid MCOs will be required to report to state regulators how much PBMs are paying pharmacies.|
|Oklahoma:||Oklahoma did not expand Medicaid. On March 6, 2018, Gov. Mary Fallin issued an executive order to develop Medicaid work requirements. On March 13, 2018, the OK Senate approved legislation to tighten the income threshold for Medicaid eligibility among parents and caretakers to 20 percent of the federal poverty level, down from 40 percent under current state law. The move could impact nearly 44,000 of the 107,000 parents and caretakers on Medicaid in the state. The legislation now moves to the House.|
|Oregon:||Oregon expanded Medicaid. But how it will be funded makes state hospitals angry. Voters approved taxes on hospitals and health plans to continue to fund the state’s Medicaid expansion. The taxes, which were approved in a ballot measure, are expected to generate $210 million to $320 million over two years by imposing a 0.7 percent tax on some hospitals and a 1.5 percent tax on gross health insurance premiums and on managed care organizations. Unions and large, self-insured employers are exempt.|
|Pennsylvania:||Pennsylvania expanded Medicaid. On March 8, 2018, the state’s Department of Human Services discussed HB 59, a bill that would require able-bodied Medicaid recipients to prove they are looking for work. The bill was passed last year by the General Assembly, but vetoed by Gov. Wolf. Acting Human Services Secretary Teresa Miller said implementing the requirements would be expensive, estimating that the project could run up to $600 million in the first year.|
|Rhode Island:||Rhode Island expanded Medicaid. On Feb. 14, 2018, it was announced that the number of recently released inmates in Rhode Island who died from an opioid overdose decreased between 2016 and 2017. The study attributed the decrease to the availability of medication-assisted treatment in correctional facilities starting in 2016. Rhode Island was the first state to offer inmates methadone, buprenorphine, and naltrexone.|
|South Carolina:||South Carolina did not expand Medicaid. The state is overhauling its Medicaid Management Information System. Cognosante was awarded the contract, effective March 6, 2018 through March 5, 2023.|
|South Dakota:||South Dakota did not expand Medicaid. Furthermore, the state is seeking permission from the Trump administration to implement Medicaid work requirements, a move that would affect 4,500 beneficiaries. In South Dakota audit news, Program Integrity has ramped up the number of audits and prepayment reviews, especially on behavioral healthcare, dental care, hospital care, and home health.|
|Tennessee:||Tennessee did not expand Medicaid. In February, the Centers for Medicare & Medicaid Services approved a proposal to launch a two-year pilot designed to improve prescription drug adherence and effectiveness for Medicaid beneficiaries. As part of the pilot, pharmacists will work with Medicaid beneficiaries enrolled in patient-centered medical homes to ensure that medications are appropriate, safe, and taken as directed. As many as 300,000 enrollees may be affected by the pilot. This initiative will affect pharmacies based within hospitals.|
|Texas:||Texas did not expand Medicaid. The state’s Health and Human Services Commission (HHSC) announced contract awards for the state’s Children’s Health Insurance Program (CHIP) in rural areas. The six awardees are Blue Cross and Blue Shield of Texas (Central Region), Driscoll Children’s Health Plan (Hidalgo Region), Molina Healthcare of Texas, Inc. (Central, Hidalgo, Northeast, and West Regions), Superior Health Plan, Inc./Centene (West Region), and TX Children’s Health Plan, Inc. (Northeast Region). Contracts are slated to begin on Sept. 1, 2018. This is a big change to Texas Medicaid.|
|Utah:||Utah did not expand Medicaid. On March 9, 2018, Utah legislators passed a limited Medicaid expansion bill. The legislation would cover approximately 70,000 individuals who earn under 100 percent of the federal poverty level and impose a work requirement and spending cap for enrollees.|
|Vermont:||Vermont expanded Medicaid. One hospital here recently paid $1.6 million to resolve allegations that it violated the False Claims Act (FCA). According to the government, between January 2012 and September 2014, Brattleboro Memorial knowingly submitted a number of outpatient laboratory claims that lacked proper documentation. On another note, Vermont only has 188 beds in its mental health system, and patients are placed on waiting lists or forced to rely on hospital ERs. This is an ongoing problem for patients and hospitals.|
|Virginia:||Virginia did not expand Medicaid. On March 2, 2018, Gov. Ralph Northam told state budget legislators to include Medicaid expansion spending plans or he would add the expansion as a budget amendment. In state audit news, Program Integrity’s spotlight is shining on long-term care facilities, durable medical equipment, transportation, and hospitals.|
|Washington:||Washington expanded Medicaid. On Feb. 20, 2018, the state announced that it approved all nine Accountable Communities of Health (ACH) Medicaid Transformation Project Plans. The Medicaid Transformation Project is the state’s Section 1115 waiver, approved by the Centers for Medicare & Medicaid Services (CMS) in 2017. Under the waiver, the first initiative involves transforming Medicaid delivery in each regional service area through ACHs. The newly approved project plans will look to improve the overall health of Medicaid beneficiaries by tackling the opioid crisis and integrating behavioral health, among other aims.|
|West Virginia:||West Virginia expanded Medicaid. On March 6, 2018, it was announced that Medicaid funding could be at risk after Gov. James Justice signed a bill increasing state workers’ and teachers’ pay by 5 percent following a statewide teachers’ strike. According to West Virginia Senate Finance Chairman Craig Blair, the pay raises could be funded through cuts to Medicaid, among other areas; however, the Governor stated that the Medicaid budget would not be cut. The strike was in response to low pay and rising health insurance costs. The raises are expected to cost the state treasury approximately $110 million a year.|
|Wisconsin:||Wisconsin did not expand Medicaid. The state covers adults up to 100 percent of the federal poverty line in Medicaid, but it did not adopt the Patient Protection and Affordable Care Act (PPACA) expansion. Still, managed care will soon be mandatory. The state’s Department of Health Services reported that through June 2018, it will roll out mandatory enrollment for many Supplemental Security Income (SSI) beneficiaries in Medicaid managed care. Approximately 28,000 beneficiaries may be impacted. The change impacts members who live an SSI managed care service area, are age 19 or older, and have a Medicaid SSI or SSI-related disability. Previously, SSI beneficiaries could opt out of managed care after two months. Up to two-thirds of eligible beneficiaries typically opt out of managed care.|
|Wyoming:||Wyoming did not expand Medicaid. A bill that would have required able-bodied Medicaid recipients in Wyoming to work at a job, go to school, or do volunteer work died this month in a House committee. The state’s Department of Health is partnering with Medicity to develop a new health information exchange for the state. The Wyoming Frontier Information Exchange will be a centralized repository of clinical data for participating patients, powered in part by Medicity’s data aggregation and interoperability technology.|