Category Archives: North Carolina

Hospital Association Joins Lawsuit to Enjoin “Psychiatric Boarding”

New Hampshire hospitals have joined the American Civil Liberties Union (ACLU) in a lawsuit against the State of New Hampshire over the boarding of mental health patients in hospital emergency rooms.

In November 2018, the ACLU filed a class action lawsuit in NH federal court asking the court to order the cease of the practice of “psychiatric boarding,” in which mental health patients are held sometimes against their will and without due process in hospital emergency rooms throughout New Hampshire as they await admission to the state psychiatric hospital, often for weeks at a time. This is not only a New Hampshire problem. This is a problem in every state. The hospitals want the practice abolished because, in most cases of severe mental illness, the patient is unemployed and uninsured. There are not enough psychiatric beds to hold the amount of mentally ill consumers.

Many psychiatric patients rely on Medicaid, but due to the Institution for Mental Disease (IMD) exclusion, Medicaid does not cover the cost of care for patients 21 to 64 years of age (when Medicare kicks in) at inpatient psychiatric or addiction treatment facilities with a capacity greater than 16 beds. This rule makes it difficult for states to fund larger inpatient psychiatric hospitals, which further exacerbates the psychiatric boarding crisis.

The emergency rooms (ER) have become the safety net for mental health. The two most common diagnoses at an ER is alcohol abuse and suicidal tendencies. There has been a sharp increase in ER visits for the people suffering from mental health issues in the recent years. Are we as a population growing more depressed?

It is very frustrating to be in a hospital without the allowance to leave. But that is what psychiatric boarding is – patients present to an ER in crisis and because there is no bed for them at a psychiatric hospital, the patient is held at the hospital against their will until a bed opens up. No psychiatric care is rendered at the ER. It is just a waiting game, which is not fun for the people enduring it.

I recently encountered a glimpse into how it feels to be stuck at a hospital without the ability to leave. On a personal level, although not dealing with mental health but with hospitals in general, I recently broke my leg. I underwent surgery and received 6 screws and a plate in my leg. Around Christmas I became extremely ill from an infection in my leg. After I passed out at my home due to an allergic reaction to my medication which caused an epileptic seizure, my husband called EMS and I was transported to the hospital. Because it was the day after Christmas, the staff was light. I was transported to a hospital that had no orthopedic surgeon on call. (Akin to a mental health patient presenting at an ER – there are no psychiatric residents at most hospitals). Because no orthopedic surgeon was on call, I was transported to a larger hospital and underwent emergency surgery for the infection. I stayed at the hospital for 5 of the longest days of my life. Not because I still needed medical treatment, but because the orthopedic surgeon had taken off for vacation between Christmas and New Year’s. Without the orthopedic’s authorization that I could leave the hospital I was stuck there unless I left against medical advice. Finally, at what seemed to be at his leisurely time, the orthopedic surgeon came back to work the afternoon of January 1, 2019, and I was able to leave the hospital… but not without a few choice words from yours truly. I can tell you without any reservation that I was not a stellar patient those last couple days when I felt well enough to leave but there was no doctor present to allow it.

I imagine how I felt those last couple days in the hospital is how mentally ill patients feel while they are being held until a bed at a psychiatric unit opens up. It must be so frustrating. It certainly cannot be ameliorating any presenting mental health condition. In my case, I had no mental health issues but once I felt like I was being held against my will, mental health issues started to arise from my anger.

A shortage of psychiatric inpatient beds is a key contributing factor to overcrowded ERs across the nation. Between 1970 and 2006, state and county psychiatric inpatient facilities in the country cut capacity from about 400,000 beds to fewer than 50,000.

A study conducted by Wake Forest University found that ER stays for mental health issues are approximately 3.2 times longer stays than for physical reasons.

ER visits rose by nearly 15% between 2006 and 2014, according to the Healthcare Cost and Utilization Project. Over the same time period, ER visits associated with mental health and substance abuse shot up by nearly 44%.

Hopefully if the NH Hospital Association is successful in its lawsuit, other states will follow suit and file a lawsuit. I am not sure where the mentally ill will go if they do not remain at the ER. Perhaps this lawsuit and others that follow will force states to change the current Medicaid laws that do not allow mental health coverage for those over 21 years old. With the mental health and physical health Americans with Disabilities’ parity laws, I do not know why someone hasn’t challenged the constitutionality of the IMD exclusion.

Another NCTracks Debacle? Enter NC HealthConnex – A Whole New Computer System To Potentially Screw Up

North Carolina is mandating that health care providers link with all other health care providers. HIPAA be damned! Just another hoop to jump through in order to get paid by Medicaid – as if it isn’t hard enough!

If you do not comply and link your health care practice to NC HealthConnex by June 1, 2019, you could lose your Medicaid contract.

“As North Carolina moves into data-driven, value-based health care, the NC HIEA is working to modernize the state-designated health information exchange, now called NC HealthConnex.” About NC HealthConnex website.

NC HIEA = NC Health Information Exchange Authority (NC HIEA) and created by N.C. Gen. Stat. § 90-414.7. “North Carolina Health Information Exchange Authority.”

North Carolina state law mandates that all health care providers who receive any State funds, which would include Medicaid, HealthChoice and the State Health Plan, must connect and submit patient demographic and clinical data to NC HealthConnex by June 1, 2019. The process could take 12 to 18 months. So you better get going. Move it or lose it, literally. If you do not comply, you can lose your license to participate in state-funded programs, including Medicaid.

If you go to the NC Health Information Exchange Authority (NC HIEA) website article, entitled, “NC HealthConnex Participant Base Continues to Grow,” you will see the following:

Screen Shot 2018-11-29 at 3.21.53 PM

I highlighted the Session Law that, according to the above, requires that health care providers who receive state funds must connect to NC HealthConnex. See above. However, when you actually read Session Law 2017-57, it is untrue that Session Law 2017-57 mandates that health care providers who receive state funds must connect to NC HealthConnex.

If you follow the citation by NC HIEA (above), you will see that buried in Session Law 2017-57, the 2017 Appropriations Bill, is a clause that states:

“SECTION 11A.8.(e)  Of the funds appropriated in this act to the Department of Health and Human Services, Division of Central Management and Support, Office of Rural Health, for the Community Health Grant Program, the sum of up to one hundred fifty thousand dollars ($150,000) in recurring funds for each fiscal year of the 2017‑2019 fiscal biennium shall be used to match federal funds to provide to safety net providers eligible to participate in the Community Health Grant Program, through the Rural Health Technology Team, ongoing training and technical assistance with respect to health information technology, the adoption of electronic health records, and the establishment of connectivity to the State’s health information exchange network known as NC HealthConnex.”

As you can plainly read, this clause only allots funds to provide training and assistance to providers eligible to participate in the Community Health Grant Program. The above clause certainly does not mandate that Healthcare providers who receive state funds connect to NC HealthConnex.

Session Law 2017-57, only mandates $150,000 for training and assistance for HealthConnex.

So what is the legal statute that mandates health care providers who receive state funds must connect to NC HealthConnex?

Ok, bear with me. Here’s where it gets complex.

A law was passed in 2015, which created the North Carolina Health Information Exchange Authority (NC HIEA). NC HIEA is a sub agency of the North Carolina Department of Information Technology (NC DIT) Government Data Analytic Center. NC HIEA operates the NC HealthConnex. The State CIO maintains the responsibility if the NC HealthConnex.

Supposedly, that 2015 law mandates that health care providers who receive state funds must connect to NC HealthConnex…

I read it. You can click on the link here. This subsection is the only section that I would deem apropos to health care providers accepting State funding:

“In consultation with the Advisory Board, develop a strategic plan for achieving statewide participation in the HIE Network by all hospitals and health care providers licensed in this State.”

What part of the above clause states that health care providers are MANDATED to participate? So, please, if any of my readers actually know which law mandates provider participation, please forward to me. Because my question is – Is participation REALLY mandated? Will providers seriously lose their reimbursement rights for services rendered for failing to participate in NC HealthConnex?? Because I see multiple violations of federal law with this requirement, including HIPAA and due process.

HealthConnex can link your practice to it if you use the following EHR programs:

  • Ace Health Solutions
  • Allscripts
  • Amazing Charts/Harris Healthcare Company
  • Aprima
  • Athena Health
  • AYM Technologies
  • Casehandler
  • Centricity
  • Cerner
  • CureMD
  • DAS Health/Aprima
  • eClinicalWorks
  • eMD
  • eMed Solutions, LLC
  • EPIC
  • Evident- Thrive
  • Greenway
  • ICANotes Behavioral Health EHR
  • ICAN Solutions, Inc
  • Integrity/Checkpoint
  • Kaleidacare
  • Lauris Online
  • McKesson Practice Partners
  • Medical Transcription Billing Corporation
  • Medinformatix
  • Meditab Software, Inc.
  • Meditech
  • Mediware-Alphaflex
  • MTBC
  • MicroMD
  • Netsmart
  • NextGen
  • Office Ally
  • Office Practicum
  • Oncelogix Sharenote
  • Patagonia Health
  • Physician’s Computer Company (PCC)
  • PIMSY
  • Practice Fusion Cloud
  • Praxis
  • PrognoCIS
  • PsyTech Solutions, Inc.
  • Qualifacts – Carelogic
  • Radysans
  • Reli Med Solutions
  • SET-Works
  • SRS
  • The Echo Group
  • Therap
  • Trimed Tech
  • Valant
  • Waiting Room Solutions

The law also requires:

  • Hospitals as defined by G.S. 131E-176(13), physicians licensed to practice under Article 1 of Chapter 90 of the General Statutes, physician assistants as defined in 21 NCAC 32S .0201, and nurse practitioners as defined in 21 NCAC 36 .0801 who provide Medicaid services and who have an electronic health record system shall connect by June 1, 2018.
  • All other providers of Medicaid and state-funded services shall connect by June 1, 2019. See changes in 2018 Session Law below.
  • Prepaid Health Plans (PHPs), as defined in S.L. 2015-245, will be required to connect to the HIE per their contracts with the NC Division of Health Benefits (DHB). Clarifies that PHPs are required to submit encounter and claims data by the commencement of the contract with NC DHB.
  • Clarifies that Local Management Entities/Managed Care Organizations (LMEs/MCOs) are required to submit encounter and claims data by June 1, 2020.

New from the 2018 Legislative Short Session, NCSL 2018-41: 

  • Dentists and ambulatory surgical centers are required to submit clinical and demographic data by June 1, 2021.
  • Pharmacies are required to submit claims data pertaining to State services once per day by June 1, 2021, using pharmacy industry standardized formats.

To meet the state’s mandate, a Medicaid provider is “connected” when its clinical and demographic information pertaining to services paid for by Medicaid and other State-funded health care funds are being sent to NC HealthConnex, at least twice daily—either through a direct connection or via a hub (i.e., a larger system with which it participates, another regional HIE with which it participates or an EHR vendor). Participation agreements signed with the designated entity would need to list all affiliate connections.

Let’s just wait and see how this computer system turns out. Hopefully we don’t have a second rendition of NCTracks. We all know how well that turned out. See blog and blog.

Medicaid participation continues to get more and more complicated. Remember the day when you could write a service note with a pen? That was so much cheaper than investing in computers and software. When did it get so expensive to provide health care to the most needy?

Non-Profit Going For-Profit: Merger Mania Manifests

According to the American Hospital Association, America has 4,840 general hospitals that aren’t run by the federal government: 2,849 are nonprofit, 1,035 are for-profit and 956 are owned by state or local governments.

What is the distinction between a for-profit and not-for-profit hospital… besides the obvious? The obvious difference is that one is “for-profit” and one is “not-for-profit” – but any reader of the English language would be able to tell you that. Unknown to some is that the not-for-profit status does not mean that the hospital will not make money; the status has nothing to do with a hospitals bottom line. Just ask any charity that brings in millions of dollars.

The most significant variation between non-profit and for-profit hospitals is tax status. Not-for-profit hospitals are exempt from state and local taxes. Some say that for-profit hospitals have to be more cost-effective because they have sales taxes and property taxes. I can understand that sentiment. Sales taxes and property taxes are nothing to sneeze at.

The organizational structure and culture also varies at for-profit hospitals rather than not-for-profit hospitals. For-profit hospitals have to answer to shareholders and/or investors. Those that are publicly traded may have a high attrition rate at the top executive level because when poor performance occurs heads tend to roll.

Bargaining power is another big difference between for-profit and non-profit. For-profit has it while non-profit, generally, do not. The imbalance of bargaining power comes into play when the government negotiates its managed care contracts. I also believe that bargaining power is a strong catalyst in the push for mergers. Being a minnow means that you have insect larvae and fish eggs to consume. Being a whale, however, allows you to feed on sea lion, squid, and other larger fish.

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Merger Mania

A report conducted by the Health Research Institute showed 255 healthcare merger and acquisition (M&A) deals in the second quarter of 2018. Just the second quarter! According to the report, deal volume is up 9.4% since last year.

The most active sub-sector in the second quarter of 2018 is long-term care, with 104 announced healthcare M&A deals representing almost 41% of deal volume.

The trend today is that for-profit hospitals are buying up smaller, for-profit hospitals and, any and all, not-for-profit hospitals. The upshot is that hospitals are growing larger, more massive, more “corporate-like,” and less community-based. Is this trend positive or negative? I will have to research whether the prices of services increase at hospitals that are for-profit rather than not-for-profit, but I have a gut feeling that they do. Not that prices are the only variable to determine whether the merger trend is positive or negative. From the hospital’s perspective, I would much rather be the whale, not the minnow. I would feel much more comfortable swimming around.

My opinion is that, as our health care system veers toward value-based reimbursement and this metamorphous places financial pressure on providers, health care providers are struggling for more efficient means of cost control. The logical solution is to merge and buy up the smaller fish until your entity is a whale. Whales have more bargaining power and more budget.

In 2017, 29 for-profit companies bought 18 for-profit hospitals and 11 not-for-profits, according to an analysis for Kaiser Health News.

10 hospital M&A transactions involved health care organizations with net revenues of $1 billion or more in 2017.

Here, in NC, Mission Health, a former, not-for-profit hospital in Asheville, announced in March 2018 that HCA Healthcare, the largest, for-profit, hospital chain would buy it for $1.5 billion. The NC Attorney General had to sign off on the deal since the deal involved a non-profit turning for-profit, and he did ultimately did sign off on it.

Regardless your opinion on the matter, merger mania has manifested. Providers need to determine whether they want to be a whale or a minnow.

Medicaid Incidents: To Report or Not To Report?

The answer resides in the injury, not the quality of the care.

A consumer trips and falls at your long term care facility. It is during her personal care services (PCS). Dorothy, a longtime LPN and one of your most trusted employees, is on duty. According to Dorothy, she was aiding Ms. Brown (the consumer who fell) from the restroom when Ms. Brown sneezed multiple times resulting in a need for a tissue. Dorothy goes to the restroom (only a few feet away) when Ms. Brown’s fourth sneeze sends her reeling backward and falling on her hip.

To report or not to report? That is the question. 

Whether ’tis nobler in the mind to suffer
The slings and arrows of outrageous fortune,
Or to take arms against a sea of troubles
And by opposing end them.

What is your answer?

Is Ms. Brown’s fall a Level I, Level II, or a Level III incident? What are your reporting duties?

  • If you answered Level II and no requirement to report – you would be correct.
  • If you answered Level III and that you must report the incident within 24 hours, you would be correct.

Wait, what? How could both answers be correct? Which is it? A Level II and no reporting it or a Level III and a report due within 24 hours?

It depends on Ms. Brown’s injuries, which is what I find fascinating and a little… how should I put it… wrong?! Think about it…the level of incident and the reporting requirement is not based on whether Dorothy properly provided services to Ms.Brown. No…the answer resides in Ms. Brown’s injuries. Whether Dorothy acted appropriately or not appropriately or rendered sub-par services has no bearing on the level of incident or reporting standards.

According to the Department of Health and Human Services’ (DHHS) Incident Response and Reporting Manual, Ms. Brown’s fall would fall (no pun intended) within a Level II of response if Ms. Brown’s injuries were not a permanent or psychological impairment. She bruised her hip, but there was no major injury.

However, if Ms. Brown’s fall led to a broken hip, surgery, and a replacement of her hip, then her fall would fall within a Level III response that needs to be reported within 24 hours. Furthermore, even at a Level III response, no reporting would be required except that, in my hypothetical, the fall occurred while Dorothy was rendering PCS, which is a billable Medicaid service. Assuming that Ms. Brown is on Medicaid and Medicare (and qualifies for PCS), Dorothy’s employer can be reimbursed for PCS; therefore, the reporting requirement within 24 hours is activated.

In each scenario, Dorothy’s actions remain the same. It is the extent of Ms. Brown’s injury that changes.

See the below tables for further explanation:

INCIDENT RESPONSE AND REPORTING MANUAL

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These tables are not exhaustive, so please click on the link above to review the entire Incident Response and Reporting Manual.

Other important points:

  • Use the federal Occupational Safety and Health Administration’s (OSHA) guidelines to distinguish between injuries requiring first aid and those requiring treatment by a health professional. 
  • A visit to an emergency room (in and of itself) is not considered an incident. 
  • Level I incidents of suspected or alleged cases of abuse, neglect or
    exploitation of a child (age 17 or under) or disabled adult must still be reported
    pursuant to G.S. 108A Article 6, G.S. 7B Article 3 and 10A NCAC 27G .0610.

Providing residential services to anyone is, inevitably, more highly regulated than providing outpatient services. The chance of injury, no matter the cause, is exponentially greater if the consumer is in your care 24-hours a day. That’s life. But if you do provide residential services, know your reporting mandates or you could suffer penalties, fines, and possible closure.

Lastly, understand that these penalties for not reporting can be subjective, not objective. If Ms. Brown’s fall led to a broken hip that repaired without surgery or without replacement of the hip, is that hip injury considered “permanent?” 

In cases of reporting guidelines, it is prudent to keep your attorney on speed dial.

 

NC Medicaid: Waiver v. Non -Waiver Services – What’s the Difference?

There is a 4.9 year waiting list to receive a spot on the Innovations Waiver. The waiting list is unhelpful when you have a child or adult with severe developmental disabilities who needs Waiver services NOW. What services are available for the disabled who qualify for Waiver services, but have not received a spot on the Innovations Waiver yet?

For children (up to age 20), the alternative to the Innovations Waivers is the Community Alternatives Program for Children (CAP/C) 1915(c) Home and Community-Based Services (HCBS) waiver was approved by the Centers for Medicare & Medicaid Services (CMS). The waiver took effect March 1, 2017.

Here is a breakdown of services offered for the Innovations Waiver versus CAP/C:

Category CAP/C Waiver [1] NC Innovations Waiver [2]
Cost limit under waiver $129,000

(Section 5.7.3)

$135,000

(Attachment F)

Case Management 80 hours (320 units) per calendar year

(Appendix B)

Respite 720 hours/fiscal year

Each day of institutional respite counts as 24 hours towards the annual limit.

(Appendix B)

The cost of respite care for 24 hours cannot exceed the per diem rate for the average community ICF-IID Facility
Pediatric Nurse Aide Type, frequency, tasks and number of hours per day are authorized by the case management entity based on medical necessity.

(Appendix B)

In-Home Aide Type, frequency, tasks and number of hours per day are authorized by the case management entity based on medical necessity.

(Appendix B)

Financial Management Service Consumer-directed initiation fee must be assessed the first month of enrollment and shall not exceed 4 units (1 hour).  Monthly management fees shall be assessed each month and shall not exceed 4 units (1 hour) per month.

(Appendix B)

Financial Support Services are available and provider directed.
Assistive Technology Included in a combined home and vehicle modification budget of $28,000 per beneficiary per the cycle of the CAP, which is renewed every 5 years.

(Appendix B)

Limited to $50,000 (ATES and Home Modifications) over the life of the waiver period, 5 years

(Attachment C)

Community Transition Services To transition CAP beneficiaries from 90-day or more institutional setting;

 

One-time expenses, not to exceed $2,500 over the cycle of the CAP, 5 years.

(Appendix B)

To provide initial set-up expense for adults to facilitate transition from community living;

 

Life of the waiver limit of $5,000 per beneficiary.

(Attachment C)

Home Accessibility and Adaptation/Home Modifications Included in a combined home and vehicle modification budget of $28,000 per beneficiary per the cycle of the CAP, which is renewed every 5 years.

(Appendix B)

Home modifications are limited to expenditures of $50,000 of supports (ATES, Home Modifications) over the duration of the waiver, 5 years.
Goods and Services Not to exceed $800 annually (July-June)

(Appendix B)

Not to exceed $2,000 annually

(Attachment C)

Training, Education, and Consultative Services/Natural Supports Education Limited to $500 per fiscal year (July 1-June30)

(Appendix B)

Reimbursement for class and conferences limited to $1,000 per year

(Attachment C)

Vehicle Modification Included in a combined home and vehicle modification budget of $28,000 per beneficiary per the cycle of the CAP, which is renewed every 5 years.

(Appendix B)

Limited to $20,000 over the life of the waiver

(Attachment C)

Community Living and Support (allowing for a paraprofessional) Subject to limits on sets of services

(Attachment C)

 

For adult beneficiaries who live in a private home[3], no more than 84 hours per week for any combination of community networking, day supports, supported employment, personal care, in-home skill-building and/or Community Living and Supports

(Attachment D)

Community Navigator Provider directed service
Community Networking Payment for attendance at classes and conferences cannot exceed $1,000 per beneficiary per plan year.

(Attachment C)

Crisis Services Crisis Intervention and stabilization Supports may be authorized for periods of up to 14 calendar day increments per event.

 

Out-of-home Crisis services may be authorized in increments of up to 30 calendar days.

(Attachment C)

 

Day Supports (A group, facility-based service that provides assistance to the individual with acquisition, retention or improvement in socialization and daily living skills.)

 

Subject to limits on sets of services

(Attachment C)

 

For adult beneficiaries who live in a private home, no more than 84 hours per week for any combination of community networking, day supports, supported employment, personal care, in-home skill-building and/or Community Living and Supports

(Attachment D)

Residential Supports (for Group Home or Alternative Family Living) Subject to limits on sets of services

(Attachment C)

 

For adult beneficiaries who receive residential supports, no more than 40 hours per week for any combination of community networking, day supports and supported employment services.  For child beneficiaries who receive residential supports, during the school year, no more than 20 hours per week for any combination of community networking, day supports and supported employment services.

(Attachment D)

Supported Employment Services (provide assistance with choosing, acquiring, and maintaining a job for beneficiaries 16 and older) Subject to limits on sets of services

(Attachment C)

 

For adult beneficiaries who live in a private home, no more than 84 hours per week for any combination of community networking, day supports, supported employment, personal care, in-home skill-building and/or Community Living and Supports

(Attachment D)

Supported Living (flexible partnership that enables a person to live in his own home with support from an agency that provides individualized assistance in a home that is under the control and responsibility of the person Subject to limits on sets of services

 

For adult beneficiaries who live in a private home, no more than 84 hours per week for any combination of community networking, day supports, supported employment, personal care, in-home skill-building and/or Community Living and Supports

(Attachment D)

 

Person receiving Supported Living may not also receive Community Living and Supports, Respite Services or Personal Care Services

[1] See NC Division of Medical Assistance, Clinical Coverage Policy No: 3K-1, Amended Date: March 1, 2018.  The CAP/C waiver was renewed by CMS effective March 1, 2017-February 28, 2022.

[2] See NC Division of Medical Assistance, Clinical Coverage Policy No: 8-P, Amended Date: November 1, 2016.

Medicare and Medicaid Regulations Suspended During Natural Disasters

My blog (below) was published on RACMonitor.

CMS provides Medicare waivers for providers dealing with natural disasters.

I live in North Carolina, and as most of you have seen on the news, we just underwent a natural disaster. Its name is Hurricane Florence. Our Governor has declared a state of emergency, and this declaration is extremely important to healthcare providers that accept Medicare and Medicaid and are located within the state of emergency. Once a state of emergency is implemented, the 1135 Waiver is activated for Medicare and Medicaid providers, and it remains activated for the duration of the state of emergency. The 1135 Waiver allows for exceptions to normal regulatory compliance regulations during a disaster. It is important to note that, during the disaster, a state of emergency must be officially “declared” in order to activate the 1135 Waiver.

About a year ago, the Centers for Medicare & Medicaid Services (CMS) finalized the 1135 Waiver to establish consistent emergency preparedness requirements for healthcare providers participating in Medicare and Medicaid, to increase patient safety during emergencies, and to establish a more coordinated response to natural and manmade disasters. The final rule requires certain participating providers and suppliers to plan for disasters and coordinate with federal, state, tribal, regional, and local emergency preparedness systems to ensure that facilities are adequately prepared to meet the needs of their patients during disasters and emergency situations.

The final rule states that Medicare and Medicaid participating providers and suppliers must do the following prior to a natural disaster capable of being foreseen:

  • Conduct a risk assessment and develop an emergency plan using an all-hazards approach, focusing on capacities and capabilities that are critical to preparedness for a full spectrum of emergencies or disasters specific to the location of a provider or supplier;
  • Develop and implement policies and procedures, based on the plan and risk assessment;
  • Develop and maintain a communication plan that complies with both federal and state law, and ensures that patient care will be well-coordinated within the facility, across healthcare providers, and with state and local public health departments and emergency systems; and
  • Develop and maintain training and testing programs, including initial and annual trainings, and conduct drills and exercises or participate in an actual incident that tests the plan.

Obviously, the minutiae of this final rule deviates depending on the type of provider. The waivers and modifications apply only to providers located in the declared “emergency area” (as defined in section 1135(g)(1) of the Social Security Act, or SSA) in which the Secretary of the U.S. Department of Health and Human Services (HHS) has declared a public health emergency, and only to the extent that the provider in question has been affected by the disaster or is treating evacuees.

Some examples of exceptions available for providers during a disaster situation under the 1135 Waiver are as follows:

  • CMS may allow Critical Access Hospitals (CAHs) to exceed the 25-bed limit in order to accept evacuees.
  • CMS can temporarily suspend a pending termination action or denial of payment sanction so as to enable a nursing home to accept evacuees.
  • Normally, CAHs are expected to transfer out patients who require longer admissions to hospitals that are better equipped to provide complex services to those more acutely ill. The average length of stay is limited to 96 hours. However, during a natural disaster, the CAH may be granted a 1135 Waiver to the 96-hour limit.
  • Certification for a special purpose dialysis facility can be immediate.
  • Relocated transplant candidates who need to list at a different center can transfer their accumulated waiting time without losing any allocation priority.
  • For home health services, normally, the patient must be confined to his or her home. During a state of emergency, the place of residence may include a temporary alternative site, such as a family member’s home, a shelter, a community, facility, a church, or a hotel. A hospital, SNF, or nursing facility would not be considered a temporary residence.

In rare circumstances, the 1135 Waiver flexibilities may be extended to areas beyond the declared emergency area. A limitation of the 1135 Waiver is that, during a state of emergency, an Inpatient Prospective Payment System- (IPPS)-excluded psychiatric or rehabilitation unit cannot be used for acute patients. A hospital can submit a request for relief under 1135 Waiver authority, and CMS will determine a course of action on a case-by-case basis. A hospital could also apply for certification of portions of its facility to act as a nursing facility. Hospitals with fewer than 100 beds, located in a non-urbanized area, may apply for swing bed status and receive payment for skilled nursing facility services.

If a provider’s building is devastated during a state of emergency, the 1135 Waiver allows the provider to maintain its Medicare and Medicaid contract, despite a change of location – under certain circumstances and on a case-by-case basis. Factors CMS will consider are as follows: (1) whether the provider remains in the same state with the same licensure requirements; (2) whether the provider remains the same type pf provider after relocation; (3) whether the provider maintains at least 75 percent of the same medical staff, nursing staff, and other employees, and whether they are contracted; (4) whether the provider retains the same governing body or person(s) legally responsible for the provider after the relocation; (5) whether the provider maintains essentially the same medical staff bylaws, policies, and procedures, as applicable; (6) whether at least 75 percent of the services offered by the provider during the last year at the original location continue to be offered at the new location; (7) the distance the provider moves from the original site; and (8) whether the provider continues to serve at least 75 percent of the original community at its new location.

The 1135 Waiver does not cover state-run services. For example, the 1135 Waiver does not apply to assisted living facilities. The federal government does not regulate assisted living facilities. Instead, assisted living is a state service under the Medicaid program. The same is true for clinical laboratory improvement amendment (CLIA) certification and all Medicaid provider rules. The 1135 Waiver also does not allow for the 60 percent rule to be suspended. The 60 percent Rule is a Medicare facility criterion that requires each Inpatient Rehabilitation Facility (IRF) to discharge at least 60 percent of its patients with one of 13 qualifying conditions.

In conclusion, when the governor of your state declares a state of emergency, the 1135 Waiver is activated for healthcare providers. The 1135 Waiver provides exceptions and exclusions to the normal regulatory requirements. It is important for healthcare providers to know and understand how the 1135 Waiver affects their particular types of services prior to a natural disaster ever occurring.

Medicare and Medicaid in the News: An Overview

With so much news about Medicare and Medicaid, I decided to do a general update of Medicare and Medicaid in the news. To the best of my ability, I am trying not to put my own “spin” on the stories, but just relay what is happening. Besides, Hurricane Florence is coming, and we have to hunker down. FYI: There is no more water at Costco.

Here is an overview of current “hot topics” for Medicare and Medicaid:

Affordable Care Act

On September 5, 2018, attorneys argued in TX district court whether the Affordable Care Act should be repealed. The Republican attorneys, who want the ACA repealed will argue that the elimination of the tax penalty for failure to have health insurance rendered the entire law unconstitutional because the Supreme Court upheld the ACA in 2012 by saying its requirement to carry insurance was a legitimate use of Congress’ taxing power. We await the Court’s decision.

Patient Dumping

In Maine, two hospitals illegally turned away emergency room patients in mental health crises and sometimes had them arrested for trespassing. The hospitals are Central Maine Medical Center and St. Mary’s Regional Medical Center, and they have promised to address and change these policies. It is likely that the hospitals will be facing penalties. Generally, turning away a patient from an ER is over $100,000 per violation.

Kickbacks

Six San Francisco Bay Area medical professionals have been indicted for an alleged kickback scheme in which three paid and three received kickbacks for healthcare referrals in home health.

Medicaid Work Requirements

In June, Arkansas became the first state to implement a work requirement into its Medicaid program. The guinea pig subjects for the work requirement were Medicaid expansion recipients aged 30-49, without children under the age of 18 in the home, did not have a disability, and who did not meet other exemption criteria. On a monthly basis, recipients must work, volunteer, go to school, search for work, or attend health education classes for a combined total of 80 hours and report the hours to the Arkansas Department of Human Services (DHS) through an online portal. Recipients who do not report hours any three months out of the year lose Medicaid health coverage until the following calendar year. September 5th was the reporting deadline for the third month of the policy, making today the first time that recipients can lose Medicaid coverage as a result of the work requirement. There are 5,426 people who missed the first two reporting deadlines, which is over half of the group of 30-49 year olds subject to the policy beginning in June. If these enrollees do not do not log August hours or an exemption into the portal by September 5th, they will lose Medicaid coverage until January 2019.

Accountable Care Organizations

According to a report in late August, accountable care organizations (ACOs) that requires physicians to take on substantial financial risk saved Medicare just over $100 million in the model’s first year, the CMS said in a report released Monday.

Lower Medicare Drug Costs

Back in May, the Trump administration published a “blueprint” for lowering drug costs. Advocacy groups are pushing back, saying that his plan will decrease access to drugs.

Balance Billing

Balance billing is when a patient presents at an emergency room and needs emergency medical services before the patient is able to determine whether the surgeon at the hospital is “in-network” with his insurance…most likely, because the patient is unconscious and no one has time to check for insurance networks. More and more states are passing laws to protect consumers from balance billing. An example of balance billing was Drew Calver, whose health plan paid $56,000 for his 4-day emergency stay at St. David’s Medical Center. Once he was discharged, he received a bill from the hospital for $109,000. The Employee Retirement Income Security Act (ERISA) regulates company plans that practice this. The hospital eventually reduced the bill to $332.

Patient Abandonment

During a fire, staff at two Santa Rosa, California-based nursing homes “abandoned their residents, many of them unable to walk and suffering from memory problems, according to a legal complaint filed by the California Department of Social Services.” The Department of Social Services accused the staff members of being unprepared for the emergency fire.

Makes you wonder what could possibly happen in the fast-approaching hurricane. At least with a hurricane, we have days advance notice. Granted there is no more water in the stores or gasoline at the pumps, but Amazon Prime, one-day service still works…for now.

A Federal Regulation Violates the U.S. Constitution and Ruins Careers; Yet It Sits…Vaguely

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.

Why?

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.”

2018-08-07 -- pic of cms 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?]

Medicaid Reform: As Addictive as Fortnite

Do you have a kid addicted to Fortnite? The numbers are rising…

For those of you who have been living under a rock for the past year, this is how Fortnite is explained on the internet:

“In short, it’s a mass online brawl where 100 players leap out of a plane on to a small island and then fight each other until only one is left. Hidden around the island are weapons and items, including rifles, traps and grenade launchers, and players must arm themselves while exploring the landscape and buildings. It’s also possible to collect resources that allow you to build structures where you can hide or defend yourself. As the match progresses, the playable area of land is continually reduced, so participants are forced closer and closer together. The last survivor is the winner.”

More than 40 million people play Fortnite. According to the May 2018 Medicaid Enrollment Report, 73,633,050 Americans are enrolled in Medicaid or CHIP, so government-assisted health insurance definitely trumps Fortnite on participation.

Recently, the General Assembly passed and the Governor signed two Bills into law pertaining to Medicaid reform: (1) HB 403 (Session Law 2018-48); and (2) HB 156 (Session Law 2018-49). Notice that the Session Laws are one digit separate from each other. That is because Governor Cooper signed these two bills consecutively and on the same day. But did he read them? I do not know the answer, but I do know this: Medicaid reform in NC has become a Fortnite. The MCOs, provider-led entities, ACOs, auditors, DHHS…everyone is vying for a piece of the very large Medicaid budget, approximately $3.6 billion – or 16% of NC’s total budget. It is literally a firehose of money if you can manage to be a player in the Medicaid Fortnite – a fight to eliminate everyone but you. Unlike Fortnite, the pay-off for winning Medicaid Fortnite is financially lucrative. But it is a fight with few winners.

Session Law 2018-48 is entitled, “An Act to Modify the Medicaid Transformation Legislation.”

Session Law 2018-49 is entitled, “An Act to Require Medicaid Prepaid Health Plans to Obtain a License from the Department of Insurance and to Make Other Changes Pertaining to Medicaid Transformation and the Department of Insurance.”

Don’t you like how the House decided to use the term “transformation” instead of “reform?” The term “reform” had been over-utilized.

Recently, the North Carolina Medical Society announced that it is throwing its metaphoric hat in the ring to become “Carolina Complete Health,” a provider-led patient-care center.

The New Laws

Session Law 2018-48

Session Law 2018-48 defines provider-led entity (PLE) as an entity that meets the following criteria: (1) A majority of the entity’s ownership is held by an individual or entity that has its primary business purpose the operation of a capitated contract for Medicaid; (2) A majority of the entity’s governing body is composed of licensed physicians, physician assistants, nurse practitioners, or psychologist and have experience treating Medicaid beneficiaries; (3) Holds a PHP license issued by the Department of Insurance (see Session Law 2018-49).

Services covered by PHP’s will include physical health services, prescription drugs, long-term services and supports, and behavioral health care services for North Carolina Health Choice recipients. The PHP’s will not cover services currently covered by the managed care organizations (MCOs).

Session Law 2018-48 allows for 4 contracts with PHPs to provide services for Medicaid and NC Health Choice (statewide contracts). Plus, it allows up to 12 regional contracts.

What is the future of behavioral health and the MCO system?

For now, they will still exist. The double negative wording of the new Session Law makes it seem like the MCOs will have less authority, but the MCOs will continue to cover for services described in subdivisions a, d, e, f, g, j, k, and l of this subdivision.

Session Law 2018-48 also creates new entities called BH IDD Tailored Plans. Session Law 2018-48 carves out developmentally disabled services (or IDD). It mandates that DHHS create a detailed plan for implementation of a new IDD program under the 1115 Waiver. Services provided by the new Tailored Plans shall pay for and manage services currently offered under the 1915(b)(c) Waiver.

Here’s the catch for providers: “Entities operating BH IDD Tailored Plans shall maintain closed provider networks for behavioral health, intellectual and developmental disability, and traumatic brain injury services and shall ensure network adequacy.” (emphasis added). Fortnite continues with providers jockeying to be included in the networks.

For the next four years only an MCO may operate a BH IDD Tailored Plan. This tells me that the MCOs have sufficiently lawyered up with lobbyists. After the term of the initial contracts, the Tailored Plans will be the result of RFPs issued by DHHS and the submission of competitive bids from nonprofit PHPs.

DHHS was to report to the Joint Legislative Oversight Committee with a plan for the implementation of the Tailored Plans by June 22, 2018. – Sure would’ve loved to be a fly on that wall.

Starting August 31, 2018, DHHS is authorized to take any actions necessary to implement the BH IDD Tailored Plans in accordance with all the requirements in this Act.

Session Law 2018-49

A provider-led entity must meet all the following criteria: (1) A majority of the entity’s ownership is held by an individual or entity that has as its primary business purpose operating a capitated contract with with Medicaid providers; and (2) A majority of the governing body is composed of individuals who are licensed as physicians, physician assistants, nurse practitioners, or psychologists and all of whom have experienced treating Medicaid beneficiaries.

Session Law 2018-49 requires that all PHPs apply for a license with the Commissioner of Insurance. With the application, all entities would need to provide proof of financial stability and other corporate documents. This new law definitely increases the authority of the Commissioner of Insurance (Mike Causey).

The remaining portion of the law pertains to protection against insolvency, continuation of healthcare services in case of insolvency, suspension or revocation of licenses, administrative procedures, penalties and enforcement, confidentiality of information, and that sort.

Session Law 2018-49 also applies to the current opioid crisis. It allows a “lock-in programs” for those consumers who use multiple pharmacies and multiple doctors to “lock them in” to one pharmacy and one doctor.

Besides the “lock-in” program, Session Law 2018-49 is basically a law that brings the Department of Insurance into the Medicaid arena.

Let Fortnite begin!

Former Cardinal CEO files countersuit to retain severance

Here are our tax dollars continuing to be used for such great purposes!!! I completely understand Cardinal’s desire to recoup our tax dollars that went into Topping’s pocket – noble, indeed. But I am stumped as how, supposedly, Topping had the executive authority to unilaterally name his salary?? Did he have such authority – or, like many companies, was Topping’s exorbitant salary a Board decision? And – if Topping’s salary were a Board decision – is Cardinal suing itself for past poor decisions???? Curiouser and curiouser.

Regardless, let’s give a “hat’s off” and a “thank you” to Richard Craver staying on top of this important and upsetting issue. #icantwaituntilwererich (see below for context).

By Richard Craver Winston-Salem Journal

The fired chief executive of Cardinal Innovations, Richard Topping Jr., filed Tuesday his countersuit to thwart the agency’s attempt to recover $1.68 million in paid severance.

A reconstituted board of directors for Cardinal, the state’s largest behavioral health managed care organization, has alleged that Topping used his post to enrich himself and three other executives. That board filed its lawsuit March 29.

Both lawsuits were filed in Mecklenburg Superior Court.

The agency oversees providers of mental, substance abuse and development disabilities services for 20 counties, including Forsyth County. It has responsibility for more than 850,000 Medicaid recipients and more than $675 million in federal and state Medicaid funding.

According to an investigation done by former federal prosecutor Kurt Meyers at the new board’s request, Topping convinced the former board leadership to pay him the severance before he was removed by state health Secretary Mandy Cohen on Nov. 27 as part of a N.C. Department of Health and Human Services takeover of Cardinal.

The current Cardinal board not only wants to recoup $3.8 million in overall executive severance, but also at least $125,000 in damages. The complaint called Topping’s severance “excessive and unlawful payments.”

Topping faces seven claims in the Cardinal lawsuit: breach of contract; breach of fiduciary duties; breach of implied duty of good faith and fair dealing (in his role as CEO); conversion (deleting data from Cardinal-owned devices and not returning Cardinal electronic property); unjust enrichment; constructive trust (knowingly accepting overpayments in severance); and constructive fraud (taking without permission highly confidential Cardinal financial and operational data).

“He inflated his salary without regard to the reputational, regulatory and legal damages it was going to cause,” Meyers said.

Topping claims his reputation has been “severely damaged” in the healthcare sector by the Cardinal lawsuit and investigation.

Topping called claims made in Meyers’ detailed presentation “misleading and false” even though it contained email and text exchanges between Topping, former Cardinal executives and former board chairwoman Lucy Drake about his post-Cardinal plans.

“Topping took these steps acknowledging he would never get another contract with Cardinal, nor likely with any other North Carolina healthcare provider,” Trey Sutten said March 29. Sutten was named as interim CEO by Cohen on Nov. 27 and full-time CEO on March 29.

The Charlotte Observer said among those named by Topping as defendants were Cardinal general counsel Chuck Hollowell, deputy general counsel Stephen Martin and board vice chairwoman Carmen Hooker Odom. DHHS said Tuesday it had no comment about Topping’s countersuit.

Topping was paid as much as $635,000 in annual salary, about 3½ times the maximum allowed under state law.

Topping has claimed the salary, which was raised twice by the former board during his term, was justified based on an independent market survey of Charlotte-area healthcare executives. The Charlotte Observer said Topping claims he and the other former executives were paid at the 50th percentile of market rates.

According to Meyers’ investigation, Topping pressured the former board not to fire him for several months by saying that if he was terminated, his entire management team would also leave with him. According to Meyers, Topping told the board that if that action occurred, it would “end Cardinal as they knew it.”

Topping claimed he did not create the severance platform in dispute.

“Cardinal Innovations Healthcare, Carmen Hooker Odom, Chuck Hollowell and Stephen Martin deny the false claims and baseless allegations brought by former CEO Richard Topping,” Cardinal spokeswoman Ashley Conger said in a statement.

Texts and emails between Topping and Pete Murphy, former chief information officer, epitomized their self-enrichment thinking, Meyers said.

The former board paid $1.7 million in severance to Topping, along with $740,000 to Murphy; $690,000 to Will Woodell, chief operating officer; and $684,000 to Dr. Ranota Hall, chief medical officer.

One exchange— sent Nov. 17 before Topping was fired by the former board — involved Murphy and Topping discussing Topping’s securing 1.5-gigabytes of highly confidential Cardinal management files, including personnel files, before leaving his post.

Murphy wrote that Topping “was smart to take files now.” Topping ended the text with an emoji with a finger over the lips. Meyers said he interpreted that emoji as saying “Shhh. Be quiet, and don’t tell anyone what I’m doing.”

An email exchange between the former executives took place after Topping’s termination by the former board. The board agreed to allow Topping to remain as CEO through Nov. 30.

The context, according to Meyers, was Topping’s work to secure venture capital or private equity for a private startup business, potentially to compete against Cardinal in the planned Medicaid reform marketplace with Cardinal’s confidential financial and operational information in hand.

“I can’t wait until we’re rich,” Murphy wrote. Topping answered, “I’ve made great progress on that front.” (emphasis added).

Topping’s lawsuit claims he was gathering information to create a healthcare smartphone app.

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For background, see blog and blog.