Category Archives: Medical Malpractice

As NC Morphs to ACOs, the Brains (The Mental Side of Medicaid) Remain With MCOs: Perfect for the Headless Horseman

ACOs could be the answer to Medicaid budget problems. At least for physical services for the neck down. The brain, for now, will continue with the MCOs.

I understand that Medicaid services for physical needs will be within the parameters of the ACOs and that MH/DD/SA will remain with MCOs. But it seems that we are cutting the head off the body. This system would be perfect for the Headless Horseman; I assume the Headless Horseman did not suffer from any mental afflictions being that he had no head.

The shift to the ACO system is an attempt to revamp the fee-for-service payment method and dissuade physicians from ordering more procedures and services than are actually necessary.

According to a new Harvard study, as many as 42 percent of U.S. Medicare patients were subjected to procedures providing little if any medical benefit, costing the government program up to $8.5 billion in wasteful spending.

What could be the cause of this needless spending? You could argue that plaintiffs’ lawyers are at fault because of creating a fear of medical malpractice lawsuits. Doctors become so concerned about being the subject of a medical malpractice lawsuit that the physician is over-inclusive as to tests/procedures rather than risk being accused of medical malpractice by failing to test. This is commonly referred to as practicing “defensive medicine.”

But you could also argue that the entire fee-for-service payment method currently used by physicians gives a financial incentive to providers to recommend more services, more testing, more procedures. For example, ordering a test a patient doesn’t really need, in an effort simply to have the results show up in her records, would be considered practicing defensive medicine.

It is without question that defensive medicine is better for physicians, and very understandable. If I were a physician, knowing as much as I do about health care law, I would definitely practice defensive medicine. And purchase the Cadillac of the liability insurances, one that covers 100% of attorneys’ fees for my choice of attorney. Those plaintiff lawyers would scare me, too!

But defensive medicine is not the best approach for the Medicaid budget. One possible way to eliminate defensive medicine practices is to implement the accountable care organizations (ACOs). While ACOs do not completely do away with a fee-for-service payment system, they creates incentives to be more efficient by offering bonuses when physicians keep costs down. Providers get paid more for keeping patients out of the hospitals.

North Carolina is implementing the ACO model for physical health care (not for MH/DD/SA).

North Carolina Department of the Health and Human Services (DHHS) has announced that the NC Medicaid system will be changed over to the ACO model by July 2015, although some question whether the deadline is a bit unrealistic.

However, in NC, there are already ACOs, whose experience can give us an idea of what the NC Medicaid system’s ACO experience will resemble. Here is a list of active ACOs in NC (according to one website):

Physicians HealthCare Collaborative
AnewCare Collaborative
Cornerstone Health Care, PA
Meridian Holdings, Inc.
Triad Healthcare Network, LLC
Coastal Carolina Quality Care, Inc.
Accountable Care Coalition of Caldwell County, LLC
Accountable Care Coalition of Eastern North Carolina

Another article cites that in NC we have 14 ACOs currently active.

Our ACOs in NC service MediCARE patients, not MediCAID.

I am not aware of a single other state in USA that has implemented ACOs to Medicaid, which seems odd, considering the number of ACOs across the nation for Medicare and the touted success of ACOs in Medicare. Could NC possibly be the leader in ACOs for Medicaid? There is no question that, when we implement the ACOs, all eyes will be on NC to determine the success or failure of the program.

The ACOs will not, however, manage behavioral health. We will continue with the MCOs behavioral health care. So the ACOs will be in charge of everything the neck down. But is the ACO system going to replicate the MCO system? (As everyone knows who has read my blogs, I am not a fan of the MCO system).

ACO…MCO….What’s the difference?

Hopefully, and I believe it is correct to say, the ACOs will be vastly different from their counterpart, the MCO (in a good way).


In essence, I have high hopes for the ACOs. I believe that the brain (MH/DD/SA) should have been included with the rest of the body, but, maybe, in time it will be.

NC State Law May Violate Federal Medicaid Law

The U.S. Supreme Court heard oral arguments January 8, 2013, as to whether the federal Medicaid Act trumps North Carolina‘s Medicaid seizure law.  As of now, when a plaintiff wins a medical malpractice lawsuit, the State is authorized to recoup up to 1/3 of any jury award or settlement or the actual amount of Medicaid payments (whichever is less), regardless of how much of the award was designated for medical expenses.

The underlying case is Delia v. E.M.A.

The Facts: Emily M. Armstrong was born on February 25, 2000. She was seriously injured during her delivery resulting in mental retardation, cerebral palsy and several other medical conditions. Two months after Emily was born, Emily’s parents, Sandra and William Earl Armstrong applied for Medicaid. From Emily’s birth until her untimely death, Medicaid paid over $1.9 million in medical expenses on Emily’s behalf.  Emily’s parents and guardian sued the physicians who delivered her and settled for $2.8 million.  DHHS immediately placed a lien on the settlement money.

The Legal Issue: Whether N.C. Gen. Stat. § 108A-57 is preempted by the Medicaid Act’s anti-lien provision, 42 U.S.C. §§ 1396a(a)(25), 1396k(a),

The Legal Issue in English:  The Federal law prohibits recovery from any payments not made for past medical expenses. In other words, if the jury or settlement does not specify which portion of the settlement or award was reimbursement of medical expenses, then Medicaid cannot recoup any money.  In North Carolina a minor child is not allowed to recover for past medical expenses.  Therefore, in Emily’s case, none of the monies was designated as past medical expenses. Thus….Medicaid (under the federal law) cannot be reimbursed for the expenses paid out for  Emily. Which law wins? Federal or State?

Once the case was settled, the NC Court ordered that $933,333 of the settlement must be paid to the state.

Emily’s parents sued NC DHHS in the U.S. District Court for the Western District of North Carolina, saying that federal law prevents the State from any reimbursement.

The North Carolina U.S. District Court for the Western District of North Carolina granted summary judgment in favor of the State, saying the State law trumps federal law.  Emily’s parents appealed.

The United States Court of Appeals for the Fourth Circuit vacated the lower court’s decision. However, the appellate court held that DHHS had the right to recoup a portion of Emily’s settlement, but it remanded the case because the State failed to provide an itemization of how much of the settlement was designated as past medical expenses.

The Supreme Court of the United States granted the State’s petition for certiorari.  John Maddrey argued on behalf of the State. Christopher Browning, Jr., argued on behalf of Emily’s parents.

Now we wait….Does the North Carolina law allowing the State to take 1/3 of a settlement, if the money was not designated as past medical expenses, violate federal Medicaid law disallowing the states from taking money from a settlement unless the settlement money was designated  as past medical expenses.

The question that has to be answered, not saying that it can be answered, is: When the insurance company for the physicians settled with Emily’s parents, were they paying for past medical expenses? Or were they paying for Emily’s parents’ loss of child, mental anguish and pain and suffering?

Guess we need another trial to determine that issue.