Category Archives: Medicaid Reimbursements
Here is an article that I wrote that was first published on RACMonitor on March 15, 2018:
All audits are questionable, contends the author, so appeal all audit results.
Providers ask me all the time – how will you legally prove that an alleged overpayment is erroneous? When I explain some examples of mistakes that Recovery Audit Contractors (RACs) and other health care auditors make, they ask, how do these auditors get it so wrong?
First, let’s debunk the notion that the government is always right. In my experience, the government is rarely right. Auditors are not always healthcare providers. Some have gone to college. Many have not. I googled the education criteria for a clinical compliance reviewer. The job application requires the clinical reviewer to “understand Medicare and Medicaid regulations,” but the education requirement was to have an RN. Another company required a college degree…in anything.
Let’s go over the most common mistakes auditors make that I have seen. I call them “oops, I did it again.” And I am not a fan of reruns.
- Using the Wrong Clinical Coverage Policy/Manual/Regulation
Before an on-site visit, auditors are given a checklist, which, theoretically, is based on the pertinent rules and regulations germane to the type of healthcare service being audited. The checklists are written by a government employee who most likely is not an attorney. There is no formal mechanism in place to compare the Medicare policies, rules, and manuals to the checklist. If the checklist is erroneous, then the audit results are erroneous. The Centers for Medicare & Medicaid Services (CMS) frequently revises final rules, changing requirements for certain healthcare services. State agencies amend small technicalities in the Medicaid policies constantly. These audit checklists are not updated every time CMS issues a new final rule or a state agency revises a clinical coverage policy.
For example, for hospital-based services, there is a different reimbursement rate depending on whether the patient is an inpatient or outpatient. Over the last few years there have been many modifications to the benchmarks for inpatient services. Another example is in behavioral outpatient therapy; while many states allow 32 unmanaged visits, others have decreased the number of unmanaged visits to 16, or, in some places, eight. Over and over, I have seen auditors apply the wrong policy or regulation. They apply the Medicare Manual from 2018 for dates of service performed in 2016, for example. In many cases, the more recent policies are more stringent that those of two or three years ago.
- A Flawed Sample Equals a Flawed Extrapolation
The second common blunder auditors often make is producing a flawed sample. Two common mishaps in creating a sample are: a) including non-government paid claims in the sample and b) failing to pick the sample randomly. Both common mistakes can render a sample invalid, and therefore, the extrapolation invalid. Auditors try to throw out their metaphoric fishing nets wide in order to collect multiple types of services. The auditors accidentally include dates of service of claims that were paid by third-party payors instead of Medicare/Medicaid. You’ve heard of the “fruit of the poisonous tree?” This makes the audit the fruit of the poisonous audit. The same argument goes for samples that are not random, as required by the U.S. Department of Health and Human Services (HHS) Office of Inspector General (OIG). A nonrandom sample is not acceptable and would also render any extrapolation invalid.
- A Simple Misunderstanding
A third common blooper found with RAC auditors is simple misunderstandings based on lack of communication between the auditor and provider. Say an auditor asks for a chart for date of service X. The provider gives the auditor the chart for date of service X, but what the auditor is really looking for is the physician’s order or prescription that was dated the day prior. The provider did not give the auditor the pertinent document because the auditor did not request it. These issues cause complications later, because inevitably, the auditor will argue that if the provider had the document all along, then why was the document not presented? Sometimes inaccurate accusations of fraud and fabrication are averred.
- The Erroneous Extrapolation
Auditors use a computer program called RAT-STATS to extrapolate the sample error rate across a universe of claims. There are so many variables that can render an extrapolation invalid. Auditors can have too low a confidence level. The OIG requires a 90 percent confidence level at 25 percent precision for the “point estimate.” The size and validity of the sample matters to the validity of the extrapolation. The RAT-STATS outcome must be reviewed by a statistician or a person with equal expertise. An appropriate statistical formula for variable sampling must be used. Any deviations from these directives and other mandates render the extrapolation invalid. (This is not an exhaustive list of requirements for extrapolations).
- That Darn Purple Ink!
A fifth reason that auditors get it wrong is because of nitpicky, nonsensical reasons such as using purple ink instead of blue. Yes, this actually happened to one of my clients. Or if the amount of time with the patient is not denoted on the medical record, but the duration is either not relevant or the duration is defined in the CPT code. Electronic signatures, when printed, sometimes are left off – but the document was signed. A date on the service note is transposed. Because there is little communication between the auditor and the provider, mistakes happen.
The moral of the story — appeal all audit results.
Premature Recoupment of Medicare or Medicaid Funds Can Feel Like Getting Mauled by Dodgeballs: But Is It Constitutional?
State and federal governments contract with many private vendors to manage Medicare and Medicaid. And regulatory audits are fair game for all these contracted vendors and, even more – the government also contracts with private companies that are specifically hired to audit health care providers. Not even counting the contracted vendors that manage Medicaid or Medicare (the companies to which you bill and get paid), we have Recovery Act Contractors (RAC), Zone Program Integrity Contractors (ZPICs), Medicare Administrative Contractors (MACs), and Comprehensive Error Rate Testing (CERT) auditors. See blog for explanation. ZPICs, RACs, and MACs conduct pre-payment audits. ZPICs, RACs, MACs, and CERTs conduct post-payment audits.
It can seem that audits can hit you from every side.
“Remember the 5 D’s of dodgeball: Dodge, duck, dip, dive and dodge.”
Remember the 5 A’s of audits: Appeal, argue, apply, attest, and appeal.”
Medicare providers can contest payment denials (whether pre-payment or post-payment) through a five-level appeal process. See blog.
On the other hand, Medicaid provider appeals vary depending on which state law applies. For example, in NC, the general process is an informal reconsideration review (which has .008% because, essentially you are appealing to the very entity that decided you owed an overpayment), then you file a Petition for Contested Case at the Office of Administrative Hearings (OAH). Your likelihood of success greatly increases at the OAH level because these hearings are conducted by an impartial judge. Unlike in New Mexico, where the administrative law judges are hired by Human Services Department, which is the agency that decided you owe an overpayment. In NM, your chance of success increases greatly on judicial review.
In Tx, providers may use three methods to appeal Medicaid fee-for-service and carve-out service claims to Texas Medicaid & Healthcare Partnership (TMHP): electronic, Automated Inquiry System (AIS), or paper within 120 days.
In Il, you have 60-days to identify the total amount of all undisputed and disputed audit
overpayment. You must report, explain and repay any overpayment, pursuant to 42 U.S.C.A. Section 1320a-7k(d) and Illinois Public Aid Code 305 ILCS 5/12-4.25(L). The OIG will forward the appeal request pertaining to all disputed audit overpayments to the Office of Counsel to the Inspector General for resolution. The provider will have the opportunity to appeal the Final Audit Determination, pursuant to the hearing process established by 89 Illinois Adm. Code, Sections 104 and 140.1 et. seq.
You get the point.”Nobody makes me bleed my own blood. Nobody!” – White Goodman
Recoupment During Appeals
Regardless whether you are appealing a Medicare or Medicaid alleged overpayment, the appeals process takes time. Years in some circumstances. While the time gently passes during the appeal process, can the government or one of its minions recoup funds while your appeal is pending?
The answer is: It depends.
Before I explain, I hear my soapbox calling, so I will jump right on it. It is my legal opinion (and I am usually right) that recoupment prior to the appeal process is complete is a violation of due process. People are always shocked how many laws and regulations, both on the federal and state level, are unconstitutional. People think, well, that’s the law…it must be legal. Incorrect. Because something is allowed or not allowed by law does not mean the law is constitutional. If Congress passed a law that made it illegal to travel between states via car, that would be unconstitutional. In instances that the government is allowed to recoup Medicaid/care prior to the appeal is complete, in my (educated) opinion. However, until a provider will fund a lawsuit to strike these allowances, the rules are what they are. Soapbox – off.
Going back to whether recoupment may occur before your appeal is complete…
For Medicare audit appeals, there can be no recoupment at levels one and two. After level two, however, the dodgeballs can fly, according to the regulations. Remember, the time between levels two and three can be 3 – 5 years, maybe longer. See blog. There are legal options for a Medicare provider to stop recoupments during the 3rd through 5th levels of appeal and many are successful. But according to the black letter of the law, Medicare reimbursements can be recouped during the appeal process.
Medicaid recoupment prior to the appeal process varies depending on the state. Recoupment is not allowed in NC while the appeal process is ongoing. Even if you reside in a state that allows recoupment while the appeal process is ongoing – that does not mean that the recoupment is legal and constitutional. You do have legal rights! You do not need to be the last kid in the middle of a dodgeball game.
Don’t be this guy:
When you get accused of Medicare or Medicaid fraud or of an alleged overpayment, the federal and state governments have the authority to suspend your reimbursements. If you rely heavily on Medicaid or Medicare, this suspension can be financially devastating. If your Medicare or Medicaid reimbursements are suspended, you have to hire an attorney. And, somehow, you have to be able to afford such legal representation without reimbursements. Sadly, this is why many providers simply go out of business when their reimbursements are suspended.
But, legally, how long can the state or federal government suspend your Medicare or Medicaid payments without due process?
According to 42 C.F.R. 405.371, the federal government may suspend your Medicare reimbursements upon ” reliable information that an overpayment exists or that the payments to be made may not be correct, although additional information may be needed for a determination.” However, for Medicare, there is a general rule that the suspension may not last more than 180 days. MedPro Health Providers, LLC v. Hargan, 2017 U.S. Dist. LEXIS 173441 *2.
There are also procedural safeguards. A Medicare provider must be provided notice prior to a suspension and given the opportunity to submit a rebuttal statement explaining why the suspension should not be implemented. Medicare must, within 15 days, consider the rebuttal, including any material submitted. The Medicare Integrity Manual states that the material provided by the provider must be reviewed carefully.
42 CFR 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.”
Notice the differences…
Number one: In the Medicare regulation, the word used is “may” suspend. In the Medicaid regulation, the word used is “must” suspend. This difference between may and must may not resonate as a huge difference, but, in the legal world, it is. You see, “must” denotes that there is no discretion (even though there is discretion in the good cause exception). On the other hand, “may” suggests more discretionary power in the decision.
Number two: In the Medicare regulation, notice is required. It reads, “Except as provided in paragraphs (d) and (e) of this section, CMS or the Medicare contractor suspends payments only after it has complied with the procedural requirements set forth at § 405.372.” 405.372 reads the Medicare contractor must notify the provider or supplier of the intention to suspend payments, in whole or in part, and the reasons for making the suspension. In the Medicaid regulation, no notice is required. 455.23 reads “The State Medicaid agency may suspend payments without first notifying the provider of its intention to suspend such payments.”
Number three: In the Medicare regulation, a general limit of the reimbursement suspension is imposed, which is 180 days. In the Medicaid regulation, the regulations states that the suspension is “temporary” and must be lifted after either of the following (1) there is a determination of no credible allegations of fraud or (2) the legal proceedings regarding the alleged fraud are complete.
Yet I have seen States blatantly violate the “temporary” requirement. Consider the New Mexico situation. All the behavioral health care providers who were accused of Medicaid fraud have been cleared by the Attorney General. The regulation states that the suspension must be lifted upon either of the following – meaning, if one situation is met, the suspension must be lifted. Well, the Attorney General has cleared all the New Mexico behavioral health care providers of fraud. Criterion is met. But the suspension has not been lifted. The Health Services Department (HSD) has not lifted the suspension. This suspension has continued for 4 1/2 years. It began June 24, 2013. See blog, blog, and blog. Here is a timeline of events.
Why is there such a disparity in treatment with Medicare providers versus Medicaid providers?
The first thing that comes to mind is that Medicare is a fully federal program, while Medicaid is state-run. Although a portion of the funds for Medicaid comes from the federal government.
Secondly, Medicare patients pay part of costs through deductibles for hospital and other costs. Small monthly premiums are required for non-hospital coverage. Whereas, Medicaid patients pay nothing.
Thirdly, Medicare is for the elderly, and Medicaid is for the impoverished.
But should these differences between the two programs create such a disparity in due process and the length of reimbursement suspensions for health care providers? Why is a Medicare provider generally only susceptible to a 180 day suspension, while a Medicaid provider can be a victim of a 4 1/2 year suspension?
Parity, as it relates to mental health and substance abuse, prohibits insurers or health care service plans from discriminating between coverage offered for mental illness, serious mental illness, substance abuse, and other physical disorders and diseases. In short, parity requires insurers to provide the same level of benefits for mental illness, serious mental illness or substance abuse as for other physical disorders and diseases.
Does parity apply to Medicare and Medicaid providers?
Most of Medicare and Medicaid law is interpreted by administrative law judges. Most of the time, a health care provider, who is not receiving reimbursements cannot fund an appeal to Superior Court, the Court of Appeals, and, finally the Supreme Court. Going to the Supreme Court costs so much that most normal people will never present before the Supreme Court…it takes hundreds and hundreds upon thousands of dollars.
In January 1962, a man held in a Florida prison cell wrote a note to the United States Supreme Court. He’d been charged with breaking into a pool hall, stealing some Cokes, beer, and change, and was handed a five-year sentence after he represented himself because he couldn’t pay for a lawyer. Clarence Earl Gideon’s penciled message eventually led to the Supreme Court’s historic 1963 Gideon v. Wainwright ruling, reaffirming the right to a criminal defense and requiring states to provide a defense attorney to those who can’t afford one. But it does not apply to civil cases.
Furthermore, pro bono attorneys and legal aid attorneys, although much-needed for recipients, will not represent a provider.
So, until a health care provider, who is a gaga-zillionaire, pushes a lawsuit to the Supreme Court, our Medicare and Medicaid law will continue to be interpreted by administrative law judges and, perhaps, occasionally, by Superior Court. Do not take this message and interpret that I think that administrative law judges and Superior Court judges are incapable of interpreting the laws and fairly applying them to certain cases. That is the opposite of what I think. The point is that if the case law never gets to the Supreme Court, we will never have consistency in Medicare and Medicaid law. A District Court in New Mexico could define “temporary” in suspensions of Medicare and/or Medicaid reimbursements as 1 year. Another District Court in New York could define “temporary” as 1 month. Consistency in interpreting laws only happens once the Supreme Court weighs in.
Until then, stay thirsty, my friend.
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.
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:
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.
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.
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!!!!
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:
- Vaya Health
- Partners Behavioral Health Management
- Cardinal Innovations (formerly)
- Trillium Health Resources
- Alliance Behavioral Health Care
- 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…
EHR Incentive Payments: If the Practice is Accepting Them, There Better Be a Legal Assignment Contract!
Under the Medicare EHR incentive program, CMS makes incentive payments to individual providers, not to practices or groups. The same is true for Medicaid. According to CMS, the incentive payment is based on the provider’s meaningful use of the EHRs and does not constitute reimbursement for the expenses incurred in establishing EHRs. Prior to actual receipt of an incentive payment, a recipient may assign the payment to a third party, typically, the practice group of which the recipient is a member.
This is a question of equity. Legally, the incentive payments are made to physicians not practice groups. But if the facility bears the burden of the price tag of the computer software, which price tags are not nominal, shouldn’t the facility receive the incentive payments? CMS has made it clear that the incentive payments are not intended to subsidize the price of the software program and updates. Instead, the incentive payments are intended to reward the use of such computer software.
The facilities, generally, pay for the EHR incentive program software programs. Some programs can be as high as $50,000/month. And updated regulatory compliance is not guaranteed. See blog. Plus, the practice group can be held liable for non-compliance issues found in the EHR technology. If the facility is audited and any non-compliance is under-covered, most physicians will be indemnified by the facility for any alleged overpayment, and the facility will be on the hook for any alleged overpayment (depending on the employment relationship). This increased burden on the practice group is why many physicians assign their incentive payments to the facilities. But it has to be done in a legally compliant manner.
Recently, however, I have been contacted by multiple health care facilities which have accepted the EHR incentive payments on behalf of its employed physicians, but did not have adequate, legal assignment contracts to receive the EHR incentives on behalf of the providers. These facilities relied on old, outdated, generic, employment contracts as the basis for the facilities accepting these payments on behalf of the physicians. Not having appropriate assignment contracts with the physicians can make the facilities liable to the physicians for the money accepted on their behalf.
Generic employee contracts that simply state that the facility can bill for and receive reimbursements on behalf of the physicians do not constitute adequate legal authority to accept EHR incentive payments on behalf of physician-employees.
Facilities, in order to legally accept the incentive payments on behalf of their employee-physicians must (1) determine whether their physicians are eligible professionals; and (2) execute a legally binding assignment contract.
Eligible Professionals (“EPs”) must first determine whether they are exactly that – eligible professionals.
Eligible professionals under the Medicare EHR Incentive Program include:
- Doctor of medicine or osteopathy
- Doctor of dental surgery or dental medicine
- Doctor of podiatry
- Doctor of optometry
Who is an Eligible Professional under the Medicaid EHR Incentive Program?
Eligible professionals under the Medicaid EHR Incentive Program include:
- Physicians (primarily doctors of medicine and doctors of osteopathy)
- Nurse practitioner
- Certified nurse-midwife
- Physician assistant who furnishes services in a Federally Qualified Health Center or Rural Health Clinic that is led by a physician assistant.
To qualify for an incentive payment under the Medicaid EHR Incentive Program, an eligible professional must meet one of the following criteria:
- Have a minimum 30% Medicaid patient volume*
- Have a minimum 20% Medicaid patient volume, and is a pediatrician*
- Practice predominantly in a Federally Qualified Health Center or Rural Health Center and have a minimum 30% patient volume attributable to needy individuals
* Children’s Health Insurance Program (CHIP) patients do not count toward the Medicaid patient volume criteria.
Eligible for Both Programs?
Eligible professionals eligible for both the Medicare and Medicaid EHR Incentive Programs must choose which incentive program they wish to participate in when they register. Before 2015, an EP may switch programs only once after the first incentive payment is initiated. Most EPs will maximize their incentive payments by participating in the Medicaid EHR Incentive Program.
EPs can switch programs as often as they desire–until they receive their first payment. After receiving their first payment, they may only switch once between programs prior to 2015.
If you are part of a practice, each eligible professional may qualify for an incentive payment if each eligible professional successfully demonstrates meaningful use of certified EHR technology. Each eligible professional is only eligible for one incentive payment per year, regardless of how many practices or locations at which he or she provide services.
Hospital-based eligible professionals are not eligible for incentive payments. An eligible professional is considered hospital-based if 90% or more of his or her services are performed in a hospital inpatient (Place Of Service code 21) or emergency room (Place Of Service code 23) setting.
What language needs to be included in any assignment contracts?
A recent study by the American Hospital Association (AHA) found federal programs, including meaningful use, have cost health systems and post-acute care (PAC) providers nearly $39 billion a year. Small practices in particular have been hit hard by the added costs and administrative burden brought on by changing regulations. Studies have shown that small, specialty, non-hospital, facilities have carried the brunt of the financial burden for the EHR requirements.
Under the Medicaid incentive program, an EP may reassign incentive payments to “an entity promoting the adoption of certified EHR technology.” This term is defined as:
State-designated entities that are promoting the adoption of certified EHR technology by enabling oversight of the business, operational and legal issues involved in the adoption and implementation of certified EHR technology or by enabling the exchange and use of electronic clinical and administrative data between participating providers, in a secure manner, including maintaining the physical and organizational relationship integral to the adoption of certified EHR technology by eligible providers.
The Assignment Contract
At a minimum, the assignment language should address the following issues:
(1) Is the EP assigning all or a portion of the incentive payments to the facility? Be specific.
(2) Be clear on whether the facility or the EP must furnish the documentation necessary to establish meaningful use each year. In other words, denote who will be entering the data into the CMS or Medicaid website.
(3) Indicate whether the EP will consult with the facility in order to determine which incentive program will yield the higher possible payments – or – whether the decision rests with the facility.
(4) The assignment language should state, accurately, whether the facility expects to be designated as an “entity promoting the adoption of certified EHR technology.”
(5) The contract should state, accurately, whether there is or will be a valid contractual arrangement allowing the facility to bill for the EP’s services. Basically, if there is already an employment contract in place, this assignment contract can act as an addendum or exhibit to the original employment contract.
(6) Define the term of assignment with a start date and an end date.
Only after the the facility determines that the physicians are eligible to receive the EHR incentive payments AND a valid assignment contract is executed, can the facility legally accept the incentive payments on behalf of its physicians. If the facility accepts the incentive payments and the physicians are not eligible, the facility will owe money to the government. If the facility accepts the incentive payments without an assignment contract, the physicians could demand the payments from the practice.
Recently, my blog was named one of the top 75 health care blogs in the nation!!! See here for all 75 blogs. Thank you to everyone who subscribes to this blog. I remember when I started the blog in 2012, I thought, “who in the world will find Medicare and Medicaid interesting?” Now, 5 years later, I have thousands of readers and national recognition. Who would’ve thought???
What if there are only 76 health care blogs in existence? Well, that would take the wind out of my sails.
Even if there are only 76 health care blogs in the nation, I am still humbled and grateful to be named one of the top 75 health care blogs.
Thank you!! And keep reading!
Silence Can Be Deadly: Can You Be Held Responsible for Medicare/caid Billings Errors That You Never Knew Existed?
You submit a claim for medically necessary services for a Medicaid recipient. Let’s say you provide behavioral health care services and prescribe medication for people who suffer from schizophrenia or bipolar. One member of your staff (a PA) prescribes Abilify to a child – perfectly acceptable treatment for schizophrenia. The child suffers a seizure and dies. It is discovered, unbeknownst to you, as the owner of the agency, that the staff member prescribing the medication was not appropriately supervised. You are shocked. You are dismayed. You are terrified.
Sure enough, someone tattles on you and a qui tam lawsuit is filed against your agency.
A qui tam (kwee tam) lawsuit is Latin for “who as well,” a lawsuit brought by a private citizen (popularly called a “whistleblower”) against a person or company who is believed to have violated the law in the performance of a contract with the government or in violation of a government regulation, when there is a statute which provides for a penalty for such violations. The whistleblower in qui tam lawsuits can be awarded a lot of money, which is why whistleblowers bring the lawsuits.
In other words, a qui tam lawsuit filed against you is bad…very bad.
You are looking at six figures, easily, in attorneys’ fees, years of litigation, endless sleepless nights, and a high dose of Prozac. All because one of your staff was not properly licensed and could not prescribe medication without supervision. And you had no idea…
Wait…what? Isn’t “intent” or, legally, “scienter” a requirement to prove fraud?? You mean that I could be prosecuted for fraud when I had zero intent to commit fraud, plus, I didn’t even know it was occurring?
This is what happened to Universal Health Services, Inc.’s subsidiary that provided behavioral health care services in Massachusetts. Universal Health Serv. v. United States ex rel. Escobar, 136 S.Ct. 1989 (2016).
The Court of Appeals for the First Circuit held that each time a billing party submits a claim, it implicitly communicates that it conformed to the relevant program requirements, such that it was entitled to receive payment. Every claim implicitly promised compliance of every law!
Imagine the slippery slope with this decision – a multi-state company with offices across the nation bills millions to Medicare and Medicaid monthly. Executive management is in Rhode Island. An office in Tampa fails to check the criminal background of its employees for a period of a year, but in all other ways complies with the regulations and renders medically necessary services that entire year. According to the 1st Circuit opinion, the company could be liable for fraud and the false claims act, resulting in millions of dollars of penalties.
Did it matter to the judge in this case that the company was large? What if it were a small company with one office and four staff?
Juxtapose the 7th Circuit which held only express (or affirmative) falsehoods can render a claim “false” or “fraudulent.” In other words, you can only be held liable for fraud if you purposely or affirmatively acted.
The Supreme Court (last year) held that the implied false certification theory can, at least in some circumstances, provide a basis for liability.
The thinking is that a half truth is a lie. Which is correct…but is it fraud? A classic example of an actionable half-truth in contract law is the seller who reveals that there may be two new roads near a property he is selling, but fails to disclose that a third potential road might bisect the property.
The False Claims Act imposes civil liability on “any person who . . . knowingly presents, or causes to be presented, a false or fraudulent claim for payment or approval.” §3729(a)(1)(A). Here’s the prob-lem-o: Congress never defined what is “false.”
Here is what the Supreme Court had to say about the unlicensed social worker:
“So too here, by submitting claims for payment using payment codes that corresponded to specific counseling services, Universal Health represented that it had provided individual therapy, family therapy, preventive medication counseling, and other types of treatment. Moreover, Arbour staff members allegedly made further representations in submitting Medicaid reimbursement claims by using National Provider Identification numbers corresponding to specific job titles. And these representations were clearly misleading in context. Anyone informed that a social worker at a Massachusetts mental health clinic provided a teenage patient with individual counseling services would probably—but wrongly—conclude that the clinic had complied with core Massachusetts Medicaid requirements (1) that a counselor “treating children [is] required to have specialized training and experience in children’s services,” 130 Code Mass. Regs. §429.422, and also (2) that, at a minimum, the social worker possesses the prescribed qualifications for the job, §429.424(C). By using payment and other codes that conveyed this information without disclosing Arbour’s many violations of basic staff and licensing requirements for mental health facilities, Universal Health’s claims constituted misrepresentations.””
In English, this means that: With the act of submitting a Medicaid claim, you are promising that you have followed all rules, including the licensure status required for rendering that service.
The Court held that:
The issue is whether a defendant should face False Claims Act liability only if it fails to disclose the violation of a contractual, statutory, or regulatory provision that the Government expressly designated a condition of payment. The Court concluded that the FCA does not impose this limit on liability. But it also held that not every undisclosed violation of an express condition of payment automatically triggers liability. It matters whether the omission was material.
The Supreme Court determined that not all statutory or regulatory violations are material, disagreeing with the government and the 1st Circuit.
But the Court never made a decision regarding Universal Health Services, Inc. Instead, it vacated the 1st Circuit and remanded the case for reconsideration of whether respondents have sufficiently pleaded a False Claims Act violation. But in doing so, the Court gave guidance as to its opinion. It wrote: “This case centers on allegations of fraud, not medical malpractice.”
What that one sentence tells me is that the Supreme Court does not want to create liability for any and every regulatory omission/mistake on a Medicaid claim. Mistakes happen. People are human. Apparently, even the Supreme Court knows that…