Category Archives: North Carolina

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.

Exclusive: Medicaid: The State of the Union

Here is an article that I wrote as a Medicaid news update, state-by-state, as seen on RACMonitor.

The latest and greatest in Medicaid news, state by state.

While Medicare is a nationwide healthcare insurance program, Medicaid, the government-funded health insurance for the poor and developmentally disabled, is state-specific, generally speaking. The backbone of Medicaid is federal; federal regulations set forth the minimum requirements that states must follow. It is up to the states to decide whether to mandate more stringent or more regulatory oversight than is required by the federal regulations.

Why is it important for you to know the latest up-to-date information on Medicaid issues? First, if you accept Medicaid, you need to know. Secondly, if you are thinking about expanding into different states, you need to be aware of how Medicaid is handled there.

What is happening in your State?

Alabama: Alabama did not expand Medicaid. The U.S. Department of Health and Human Services (HHS) Office of Inspector General (OIG) recommended that Alabama improve its Medicaid security program, aligning it with federal requirements. The OIG also stated that Alabama also needs to provide adequate oversight to its contractors and address other vulnerabilities OIG found in its audit. Expect more audits here. In particular, the Medicaid Maternity Program is under the microscope. Apparently, healthcare providers that provide medically necessary services to women on the Maternity Program have been duped before, as some of the women enrolled had already given birth. Recoupment!
Alaska: Alaska expanded Medicaid in 2015. Currently, lawmakers in the legislature here have introduced bills that would require the state to seek 20-hour work requirements for those enrolled in Medicaid.
Arizona: Arizona expanded Medicaid, but with an approved section 1115 waiver. Arizona has failed to collect up to $36.7 million in rebates from prescription drug manufacturers since 2010 and may need to pay the federal government a portion of that amount, according to a new federal audit, which means more audits to reconcile the payback. Arizona State Rep. Kelli Butler wants to allow uninsured individuals to buy into the state’s Medicaid program. Butler is expected to introduce legislation to authorize a buy-in or direct state officials to study the proposal. The buy-in option would require consumers to pay the full cost of their insurance coverage.
Arkansas: Arkansas expanded Medicaid, but with an approved section 1115 waiver. On March 5, 2018, it became the third state to win the Trump administration’s permission to compel Medicaid recipients to work or prepare for a job. The state’s program integrity is focusing its upcoming audits on home health, long-term care facilities, and inpatient hospital stays.
California: California expanded Medicaid. The state’s Medicaid agency has posted draft language of a new state plan amendment (SPA) that would make major changes to Federally Qualified Health Center (FQHC) and Rural Health Clinic (RHC) reimbursement. If approved, the SPA would be retroactive to Jan. 1, 2018, so expect audits and recoupments. The proposed SPA would implement multiple new requirements for FQHC and RHCS. For example, the proposed productivity standard requires physicians to document 3,200 visits per year and applicable allied health professionals such as physician assistants and nurse practitioners to document 2,600 visits per year. In January 2018, Aetna received approval to participate in California’s Medicaid program as “Aetna Better Health of California.”
Colorado: Colorado expanded Medicaid. Not unexpectedly, the state has one of the more lenient regulatory environments. For example, Colorado’s permissive approach to regulating more than 700 licensed residential and outpatient drug treatment centers got the attention of a congressional subcommittee investigating the drug rehab industry last year. Also, Colorado’s governor announced that he is not opposed to work requirements for Medicaid beneficiaries.
Connecticut: Connecticut expanded Medicaid. The Connecticut Health Policy Project data shows that net pharmacy spending minus rebates from Connecticut’s Medicaid program tripled from 2000 to 2017. After rebates, Medicaid’s pharmacy costs decreased from $542 million in 2015 to $465 million in 2017, a drop of over 14 percent. Interestingly, on March 21, 2018, the state’s General Assembly increased Connecticut’s 8,500 home care workers’ wages, and adding worker’s compensation, even those workers are being compensated by Medicaid. The increased wage will rise to $16.25 per hour by 2020 and will cost the state, after federal Medicaid reimbursement, $725,790 in 2018, almost $7 million in 2019, and over $9.3 million in 2020. If you have a home health agency here, you better make sure that lawmakers are smart enough to increase the reimbursement rates; otherwise, a lot of home health agencies will go out of business.
Delaware: Delaware expanded Medicaid, but since it is so small in size and population, the expansion only added approximately 10,000 Medicaid recipients. This year, after two years of increasing Medicaid spending by approximately $70 million, Delaware’s Medicaid costs are expected to decrease a small amount, even with the expansion. Beginning this year, Delaware gives additional weight to value-based care when determining payment. Rather than paying solely for volume of care – hospital stays, tests and procedures, regardless of outcomes – the state will pay for achieving optimal health for its Medicaid recipients.
Florida: Florida did not expand Medicaid. Lawmakers are considering opioid prescription limits for Medicaid recipients. The proposals would limit prescriptions for opioids to three-day supplies, but also allow for up to seven-day supplies if physicians deem it medically necessary. If passed, I question whether lawsuits will be filed claiming that such a move violates the Equal Protection Clause of the Constitution, because it violates parity between Medicaid recipients and the private-pay insured. And what about the people suffering with chronic, long-term pain? (especially considering the state’s demographics). In other news, Gov. Rick Scott has proposed to transition the state’s Children’s Medical Services program to a private managed care organization, beginning in 2019.
Georgia: Georgia did not expand Medicaid. Recently, the Georgia Department of Community Health mistakenly issued multiple Medicaid ID numbers to hundreds of patients. Those mistakes led the state and federal governments to make duplicate payments for care of some Medicaid patients. Now, Georgia is being asked to refund the federal government’s share of the duplicate payments — more than $665,000. Expect more audits to fund the repayment.
Hawaii: Hawaii expanded Medicaid. But the state is cracking down on its providers. In an effort to improve fraud prevention, Hawaii is performing more comprehensive screening, credentialing, and enrollment for all Medicaid providers. Those of you who are already credentialed here, expect tougher standards for re-credentialing.
Idaho: Idaho did not expand Medicaid, but it did expand dental coverage. On March 12, 2018, the state’s Senate passed a bill that restores Medicaid non-emergency dental coverage. The coverage was cut in 2011 during the recession. The bill, HB 465, already passed the House and now moves to Gov. Butch Otter. It is expected to cost $38 a year per patient.
Illinois: Illinois expanded Medicaid. On Jan. 12, 2018, five nursing home operators filed a federal lawsuit against the state, arguing that low Medicaid payment rates and the claims backlog are jeopardizing patient care. The lawsuit was filed by Generations Health Care Network, Carlyle Healthcare Center, St. Vincent’s Home, Clinton Manor Living Center, and Extended Care Clinical, which operate 100 skilled nursing facilities throughout the state. Because of Section 30(A) of the Social Security Act (SSA), which mandates that reimbursement rates allow for quality of care, why aren’t more health care providers filing lawsuits to increase Medicaid reimbursement rates?
Indiana: Indiana expanded Medicaid, but with an approved section 1115 waiver, which includes work requirements and adds premium penalties for tobacco users. The state also plans to use an enrollment block on members who fail to meet work requirements. Indiana focuses its audits on outliers: in other words, a provider that provides significantly more services than like-specialties.
Iowa: Iowa expanded Medicaid, but with an approved section 1115 waiver. The state’s Department of Human Services announced on March 12, 2018 that Iowa is in the process of searching for additional managed care organizations for the current program. So if you have the capacity to act as an Managed Care Organization (MCO), throw your name in the ring. Because of pressure from the federal government, Iowa has implemented more prepayment reviews. Specifically, auditors are reviewing hospital discharge records for any sign of noncompliance.
Kansas: Kansas did not expand Medicaid. On Feb. 15, 2018, the American Civil Liberties Union (ACLU) filed a federal class-action lawsuit arguing that the state’s Medicaid program is improperly denying Hepatitis C medication to members until they are severely ill. The suit names Kansas Department of Health and Environment (KDHE) Secretary Jeff Andersen and KDHE Division of Health Care Finance Director Jon Hamdorf. Medicaid managed care plans in the state either require “severe liver damage” before covering the drugs or allow some coverage before that point. If you have a Kansas Medicaid contract, on Feb. 18, 2018, Maximus instituted a compliance plan and announced that it is committed to reaching a June 1 deadline to deal with state concerns over the company’s processing of Medicaid applications. Maximus is required to reach certain performance standards or face fines and the potential loss of its contract.
Kentucky: Kentucky expanded Medicaid, but with an approved section 1115 waiver. In January, Kentucky’s waiver was approved by the federal government to implement work requirements for Medicaid recipients. Implementation will start in April 2018, with full implementation by July 2018. The waiver was approved for five years, through Sept. 30, 2023. In state audit news, non-emergency medical transportation (NEMT) providers are on the chopping block.
Louisiana: Louisiana expanded Medicaid, but now the state may remove 46,000 elderly and disabled individuals from Medicaid as part of a series of healthcare-related budget cuts proposed by Gov. John Bel Edwards for 2019. The proposal would cut $657 million in state healthcare funding and as much as $2.4 billion, including federal matching funds, in total. The proposal would also cut funding to safety net hospitals and eliminate mental health services for adults who don’t otherwise qualify for Medicaid.
Maine: Maine expanded Medicaid. The state adopted the Medicaid expansion through a ballot initiative in November 2017; the measure required submission of the state plan amendment within 90 days and implementation of expansion within 180 days of the effective date. In Maine audit news, a behavioral healthcare provider accused of fraud has put behavioral healthcare providers on the front line.
Maryland: Maryland expanded Medicaid. Maryland’s system of pushing hospitals to achieving lower admissions has added up to hundreds of millions of dollars in savings, a new report shows. Since 2014, the state caps hospitals’ revenue each year, letting them keep the difference if they reduce inpatient and outpatient treatment while maintaining care quality. Per capita hospital spending by all insurers has grown by less than 2 percent a year in Maryland, below the economic growth rate, defined four years ago as 3.58 percent annually, a key goal for the program.
Massachusetts: Massachusetts expanded Medicaid. The state has begun to roll out new Accountable Care Organization (ACO) networks. Members assigned to an ACO have until May 31 to switch before they are locked in for nine months. The changes are expected to impact more than 800,000 Medicaid recipients and are designed to better manage patient care, reimburse providers based on quality, and address social determinants of health. There is expected confusion with this change among Medicaid patients and providers.
Michigan: Michigan expanded Medicaid, but with an improved section 1115 waiver. On Feb. 18, 2018, Michigan announced that it would consider a proposal to transition the state’s $2.8 billion Medicaid nursing home and long-term care services programs into managed care. An initial review by the state Department of Health and Human Services is expected to begin by July 1.
Minnesota: Minnesota expanded Medicaid. MN has a proposed Medicaid waiver bill, which requests permission from the federal government to implement an 80-hour-per-month requirement that would mandate Medicaid beneficiaries who are able-bodied adults and not the sole caretaker of a child to work, actively seek employment, participate in educational or training programs, or volunteer.
Mississippi: Mississippi did not expand Medicaid. The five-year waiver request from Gov. Phil Bryant seeks to require nondisabled adults, including low-income parents and caretakers, to participate in at least 20 hours per week of “workforce training.” To be eligible, Medicaid beneficiaries must work, be self-employed, volunteer, or be in a drug treatment program, among other approved activities. If people don’t comply, they’ll be kicked off Medicaid.
Missouri: Missouri did not expand Medicaid. The Missouri Hospital Association has won a lawsuit against the Centers for Medicare & Medicaid Services (CMS) over a rule that deducts Medicare and commercial insurance reimbursements from total disproportionate-share hospital (DSH) allotments. U.S. District Judge Brian Wimes ruled that the agency exceeded its authority. State hospitals would have had to pay back $96 million for 2011 and 2012 alone. Expect more scrutiny on hospitals in light of this decision.
Montana: Montana expanded Medicaid, but with an approved 1115 waiver. Montana is one of many states that have proposed budget cuts to Medicaid. A new proposed rule, which would take effect April 1, would move the state’s addiction counseling from a needs-based system to a cap of 12 individual sessions. The rule may be retroactive, so expect audits to recoup if the rule passes.
Nebraska: Nebraska did not expand Medicaid. On March 7, 2018, advocates for Medicaid expansion launched a petition drive, “Insure the Good Life,” to place the expansion issue on the November 2018 general election ballot. State lawmakers have rejected the expansion measure the past five legislative attempts. Nebraska has paid millions to the federal government in the past few years for noncompliance. Many think it will owe millions more. Audits on providers will increase in Nebraska to compensate for money paid to the federal government – in all service types.
Nevada: Nevada did expand Medicaid. It paid the federal government roughly $4.1 million in 2017 to use HealthCare.gov. CMS also asked for 1.5 percent of the premium payments that were collected through its exchange last year, a percentage that will double in 2019. Nevada plans to cut its IT costs by replacing its use of HealthCare.gov with a new health insurance exchange in 2019. Pain management providers and pharmacies are the target of Medicaid audits here.
New Hampshire: New Hampshire expanded Medicaid, but with an approved section 1115 waiver. On March 9, 2018, the New Hampshire Senate passed a bill to continue the state’s Medicaid expansion program. The legislation, which now heads to the House, would impose work requirements on members and utilize 5 percent of liquor revenues to cover the cost of expansion. The Senate voted to reauthorize the Medicaid program for five years and transition to managed care in 2019. The current expansion program, the New Hampshire Health Protection Program, covers about 50,000 individuals.
New Jersey: New Jersey expanded Medicaid. On March 13, 2018, Gov. Phil Murphy delivered his first budget address, unveiling a $37.4 billion budget with a projected surplus of $743 million. 2019 revenues are projected to grow by 5.7 percent from last year. Among the healthcare provisions are: a) close to $4.4 billion in state funds to provide healthcare to almost 1.8 million residents through New Jersey’s Medicaid program, NJ FamilyCare; b) $8.5 million to implement autism spectrum disorder services for Medicaid-eligible children and teens to help 10,000+ families with behavioral and physical supports; c) $11 million in state and federal funds to expand family planning services under NJ FamilyCare to residents at or below 200 percent of the federal poverty level; d) $252 million to fund the hospital Charity Care program; and e) $100 million to fund addiction initiatives (list not exhaustive).
New Mexico: New Mexico expanded Medicaid. The 15 behavioral healthcare providers that were put out of business in 2013 have filed lawsuits against the state. Speculation has it that after the election this year – likely taking Gov. Susana Martinez out of office – the providers may get compensated. New Mexico auditors are focused on the delivery of babies and services to the elderly.
New York: New York expanded Medicaid. Recently, the state’s Assembly released its one-house budget bill. The plan restores $135 million in reductions to the Medicaid program. The big news in the Big Apple regarding Medicaid is in home health. The New York Court of Appeals, the state’s highest court, has agreed to hear a case regarding wages for home care workers. A state Appellate Court ruled in September 2017 that home care agencies must pay live-in home health aides for 24 hours per day, not the 13 hours that is the industry standard, assuming that they are allowed eight hours of sleep and three hours for meals. The New York Department of Labor has issued an emergency regulation that maintains the policy of allowing employers to pay home care workers for 13 hours of a 24-hour shift. If the decision stands, it means that agencies must pay for an additional 11 hours of care per day, almost doubling the cost of care. It is estimated that it will increase costs for home care in New York’s Medicaid program by tens of millions of dollars. Any of you who have home health care agencies in New York, which are dependent on Medicaid, beware that the reimbursement rates are not increasing to accommodate for the increased wages. Many home health companies will go out of business if the decision stands.
North Carolina: North Carolina did not expand Medicaid. The state is seeking to transition its Medicaid program from a fee-for-service model to a managed care model for all services. The transition of beneficiaries with a serious mental illness, a serious emotional disturbance, a substance use disorder, or an intellectual/developmental disability (IDD) will be delayed until the launch of behavioral health and IDD tailored plans. The state estimates that 2.1 million individuals will be eligible for managed care. This is a huge overhaul of the Medicaid system.
North Dakota: North Dakota expanded Medicaid. The state received substantial funds from a settlement designed to compensate states, in part, for the billions of dollars in healthcare costs associated with treating tobacco-related diseases under state Medicaid programs. To date, states have received more than $50 billion in settlement payments. North Dakota is also one of the “test” states to allow Medicare Advantage Value-Based Insurance Design to waive many requirements of federal regulation.
Ohio: Ohio expanded Medicaid. On March 13, 2018, it was announced that the Ohio Pharmacists Association alleged that CVS Caremark overcharges Medicaid managed care plans for medications while often reimbursing pharmacists less than the cost of the drugs. CVS denied accusations of overcharging in an attempt to drive out retail competition and reported that there are strict firewalls between their retail business and their pharmacy benefit manager (PBM) business, CVS Caremark. Beginning in July, Medicaid MCOs will be required to report to state regulators how much PBMs are paying pharmacies.
Oklahoma: Oklahoma did not expand Medicaid. On March 6, 2018, Gov. Mary Fallin issued an executive order to develop Medicaid work requirements. On March 13, 2018, the OK Senate approved legislation to tighten the income threshold for Medicaid eligibility among parents and caretakers to 20 percent of the federal poverty level, down from 40 percent under current state law. The move could impact nearly 44,000 of the 107,000 parents and caretakers on Medicaid in the state. The legislation now moves to the House.
Oregon: Oregon expanded Medicaid. But how it will be funded makes state hospitals angry. Voters approved taxes on hospitals and health plans to continue to fund the state’s Medicaid expansion. The taxes, which were approved in a ballot measure, are expected to generate $210 million to $320 million over two years by imposing a 0.7 percent tax on some hospitals and a 1.5 percent tax on gross health insurance premiums and on managed care organizations. Unions and large, self-insured employers are exempt.
Pennsylvania: Pennsylvania expanded Medicaid. On March 8, 2018, the state’s Department of Human Services discussed HB 59, a bill that would require able-bodied Medicaid recipients to prove they are looking for work. The bill was passed last year by the General Assembly, but vetoed by Gov. Wolf. Acting Human Services Secretary Teresa Miller said implementing the requirements would be expensive, estimating that the project could run up to $600 million in the first year.
Rhode Island: Rhode Island expanded Medicaid. On Feb. 14, 2018, it was announced that the number of recently released inmates in Rhode Island who died from an opioid overdose decreased between 2016 and 2017. The study attributed the decrease to the availability of medication-assisted treatment in correctional facilities starting in 2016. Rhode Island was the first state to offer inmates methadone, buprenorphine, and naltrexone.
South Carolina: South Carolina did not expand Medicaid. The state is overhauling its Medicaid Management Information System. Cognosante was awarded the contract, effective March 6, 2018 through March 5, 2023.
South Dakota: South Dakota did not expand Medicaid. Furthermore, the state is seeking permission from the Trump administration to implement Medicaid work requirements, a move that would affect 4,500 beneficiaries. In South Dakota audit news, Program Integrity has ramped up the number of audits and prepayment reviews, especially on behavioral healthcare, dental care, hospital care, and home health.
Tennessee: Tennessee did not expand Medicaid. In February, the Centers for Medicare & Medicaid Services approved a proposal to launch a two-year pilot designed to improve prescription drug adherence and effectiveness for Medicaid beneficiaries. As part of the pilot, pharmacists will work with Medicaid beneficiaries enrolled in patient-centered medical homes to ensure that medications are appropriate, safe, and taken as directed. As many as 300,000 enrollees may be affected by the pilot. This initiative will affect pharmacies based within hospitals.
Texas: Texas did not expand Medicaid. The state’s Health and Human Services Commission (HHSC) announced contract awards for the state’s Children’s Health Insurance Program (CHIP) in rural areas. The six awardees are Blue Cross and Blue Shield of Texas (Central Region), Driscoll Children’s Health Plan (Hidalgo Region), Molina Healthcare of Texas, Inc. (Central, Hidalgo, Northeast, and West Regions), Superior Health Plan, Inc./Centene (West Region), and TX Children’s Health Plan, Inc. (Northeast Region). Contracts are slated to begin on Sept. 1, 2018. This is a big change to Texas Medicaid.
Utah: Utah did not expand Medicaid. On March 9, 2018, Utah legislators passed a limited Medicaid expansion bill. The legislation would cover approximately 70,000 individuals who earn under 100 percent of the federal poverty level and impose a work requirement and spending cap for enrollees.
Vermont: Vermont expanded Medicaid. One hospital here recently paid $1.6 million to resolve allegations that it violated the False Claims Act (FCA). According to the government, between January 2012 and September 2014, Brattleboro Memorial knowingly submitted a number of outpatient laboratory claims that lacked proper documentation. On another note, Vermont only has 188 beds in its mental health system, and patients are placed on waiting lists or forced to rely on hospital ERs. This is an ongoing problem for patients and hospitals.
Virginia: Virginia did not expand Medicaid. On March 2, 2018, Gov. Ralph Northam told state budget legislators to include Medicaid expansion spending plans or he would add the expansion as a budget amendment. In state audit news, Program Integrity’s spotlight is shining on long-term care facilities, durable medical equipment, transportation, and hospitals.
Washington: Washington expanded Medicaid. On Feb. 20, 2018, the state announced that it approved all nine Accountable Communities of Health (ACH) Medicaid Transformation Project Plans. The Medicaid Transformation Project is the state’s Section 1115 waiver, approved by the Centers for Medicare & Medicaid Services (CMS) in 2017. Under the waiver, the first initiative involves transforming Medicaid delivery in each regional service area through ACHs. The newly approved project plans will look to improve the overall health of Medicaid beneficiaries by tackling the opioid crisis and integrating behavioral health, among other aims.
West Virginia: West Virginia expanded Medicaid. On March 6, 2018, it was announced that Medicaid funding could be at risk after Gov. James Justice signed a bill increasing state workers’ and teachers’ pay by 5 percent following a statewide teachers’ strike. According to West Virginia Senate Finance Chairman Craig Blair, the pay raises could be funded through cuts to Medicaid, among other areas; however, the Governor stated that the Medicaid budget would not be cut. The strike was in response to low pay and rising health insurance costs. The raises are expected to cost the state treasury approximately $110 million a year.
Wisconsin: Wisconsin did not expand Medicaid. The state covers adults up to 100 percent of the federal poverty line in Medicaid, but it did not adopt the Patient Protection and Affordable Care Act (PPACA) expansion. Still, managed care will soon be mandatory. The state’s Department of Health Services reported that through June 2018, it will roll out mandatory enrollment for many Supplemental Security Income (SSI) beneficiaries in Medicaid managed care. Approximately 28,000 beneficiaries may be impacted. The change impacts members who live an SSI managed care service area, are age 19 or older, and have a Medicaid SSI or SSI-related disability. Previously, SSI beneficiaries could opt out of managed care after two months. Up to two-thirds of eligible beneficiaries typically opt out of managed care.
Wyoming: Wyoming did not expand Medicaid. A bill that would have required able-bodied Medicaid recipients in Wyoming to work at a job, go to school, or do volunteer work died this month in a House committee. The state’s Department of Health is partnering with Medicity to develop a new health information exchange for the state. The Wyoming Frontier Information Exchange will be a centralized repository of clinical data for participating patients, powered in part by Medicity’s data aggregation and interoperability technology.

 

Medicare and Medicaid Providers: Administrative Law 101 and Hiring an Attorney from Out-of-State

What in the world is administrative law???? If you are a Medicare or Medicaid provider, you better know!

Most of my blogs are about Medicare and Medicaid providers and the tangled web of regulatory rules and regulations that they must abide by in order to continue providing medically necessary services to our most-needy and elderly populations. This time, however, I am going to blog about (1) administrative law 101 (which I am coming to the realization that few providers understand); and (2) out-of-state attorneys – and why you may need to seek out an attorney from another state from which you live (and why it is possible). Attorneys are licensed state-by-state and, lately, I’ve gotten a lot of questions about “how can you represent me in Nevada when you are in NC?” and when I Googled this topic – I found that there is very little information out there. I am here to teach and teach I will. Read on if you want to learn; close this browser if you do not. The other goal of this blog is to educate you on administrative law. Because administrative law is vastly different than normal law, yet it pertains to Medicare and Medicaid providers, such as you. My last goal with this blog is to educate you on the expense of hiring an attorney and why, in some instances, it may be more costly than others. Whew! We have a lot to go through!

Let’s get started…

A lot of potential clients often ask me how are you able to represent me in Nebraska when you live in North Carolina? Or Alaska? (yes, I have a client in Alaska). I figured I should clear up the confusion. (The “administrative law class” portion of this blog is interwoven throughout the blog – not my best blog, organizational-wise; but we cannot all be perfect).

There are three ways in which an attorney can represent an out-of-state client if that attorney does not have the State’s Bar license for the State in which you reside. Just in case you didn’t know, attorneys get licensed on a state-by-state basis. For example, I have my Bar licenses in North Carolina and Georgia. It is similar to how physicians have to get State licenses. However, I represent healthcare providers in approximately 30 states. I don’t have a client in Iowa yet, so any healthcare providers in Iowa – Hello!! Now we need to understand – how is this possible?

Let’s take a step back, in case there are those who are wondering what a Bar license is; it is a license to practice law and, literally, means that you can go past the bar in a courtroom.

courtroom.jpg

Number One

The first way in which in attorney can represent an out-of-state client is because most Medicaid and Medicare provider appeals must be brought before Administrative Court. In North Carolina, our Administrative Court is called the Office of Administrative Hearings (OAH). OAH is the administrative agency for the Judicial Branch. An Administrative Court is the type of court specializing in administrative law, particularly in disputes concerning the exercise of public power. Their role is to ascertain that official/governmental acts are consistent with the law. Such courts are considered separate from general courts. For most state’s Administrative Courts, attorneys do not have to be licensed in that state. Most people don’t know the difference between Administrative Courts versus normal civil courts, like Superior and District courts. Or Magistrate Courts, for example, where Judge Judy would be. I certainly didn’t know what administrative law was even after I graduated law school. Quite frankly, I didn’t take the administrative law class in law school because I had no idea that I would be doing 89.125% administrative law in my real, adult life (I still file federal and state injunctions and sue the government in civil court, but the majority of my practice is administrative).

Administrative laws, which are applicable to Medicare and Medicaid providers, are laws pertaining to administrative agencies (seems self-defining). Administrative court is defined as a court that specializes in dealing with cases relating to the way in which government bodies exercise their powers.

There are literally hundreds of federal administrative agencies, including the Environmental Protection Agency, known as the EPA. If I have a pollution complaint, I contact the EPA. Another example is the Equal Employment Opportunity Commission, known as the EEOC. This agency is responsible for enforcing federal laws that make it illegal to discriminate a job applicant or employee. If I have a discrimination complaint, I contact the EEOC. Another example is the Consumer Product Safety Commission, known as CPSC, which is the independent agency that oversees the safety of products sold in the United States. If I have a problem with the safety of the product that I bought, I contact the CPSC. Complaints to government agencies, such as the EPA, do not go to normal, civil court. These complaints, otherwise known as petitions for contested case hearings, go to Administrative Court and are overseen by Administrative Law Judges (“ALJs”). Same is true for Medicare and Medicaid provider disputes. You cannot go to Superior Court until you have gone through Administrative Court otherwise your case will be kicked out because of an esoteric legal doctrine known as “exhaustion of administrative remedies.” See blog.

Here is a picture of North Carolina’s Raleigh OAH. You can see, from the picture below, that it does not look like a normal courthouse. It’s a beautiful building – don’t get me wrong. But it does not look like a courthouse.

OAH

Our OAH is located at 1711 New Hope Church Road, Raleigh NC, 27609. OAH used to be downtown Raleigh and one of the historic houses, but that got a little cramped.

Complaints about Medicare and Medicaid regulatory compliance issues go to Administrative Court because these complaints are against a government agency known as the Health Service Department or the Department of Health and Human Services, depending on which state within you live – the names may differ, but the responsibility does not.

Bringing a lawsuit in Administrative Court with an out-of-state attorney is the cheapest method. There is no need to pay local counsel to file pleadings. There is no need to pay to be pro hac-ed in (see below). Sure, you have to pay for travel expenses, but as we all know, you get what you pay for. If you don’t have an expert in Medicare or Medicaid in your state you need to look elsewhere. [Disclaimer – I am not saying you have to hire me. Just hire an expert].

Number Two

Very few states require administrative attorneys to have the State Bar license in which they are practicing. For those few States that do require a State Bar license, even for administrative actions, the second alternative to hire an attorney out-of-state is for the attorney to pro hac into that State. Pro hace vice is a fancy Latin phrase which means, literally, “for on this occasion only.” It allows out-of-state attorneys a way to ask the court to allow them to represent a client in a state in which they do not have a license. Again, the reason why this is important is that in a extremely, niche practices, there may not be an attorney with the expertise you need in your state. I know there are not that many attorneys that do the kind of law that I do, [possibly because it is emotionally-draining (because all your clients are financial and emotional distress), extremely esoteric, yet highly-rewarding (when you keep someone in business to continue to provide medically necessary services), but, at times, overwhelming and, without question, time-consuming]. Did someone say, “Vacation?” “Pro hac-ing in” (defined as the attorney asking the court to allow them to represent a client in a state for which they do not have a license for one-time only) is also helpful when I appear in state or federal courts.

Most states have a limit of how many times an attorney can pro hac. For example, in New Mexico, out-of-state attorneys can only pro hac into New Mexico State courts four times a year. The fee for an attorney to pro hac into a state court varies state-by-state, but the amount is nominal when you compare the fee against how much it would cost to hire local counsel.

Number Three

Thirdly, is by hiring local counsel. Some cases need to be escalated to federal or state court, and, in these instances, a Bar license in the state in which the case is being pursued is necessary. An example of why you would want to bring a lawsuit in federal or state court instead of an Administrative Court would be if you are asking for monetary damages. An Administrative Court does not have the jurisdiction to award such damages.

This is the scenario that I dislike the most because the client has to pay for another attorney only because their warm body possesses a State Bar license. Generally, local counsel does not do much heavy lifting. As in, they don’t normally contribute to the merits of the case. Because they have the State Bar license, they are used to file and sign-off on pleadings.

Cost

The first scenario – in which I represent a out-of-state client in Administrative Court, and do not need to hire local counsel or to get my pro hac, is the cheapest method for clients. As an aside, I spoke with an attorney from a bigger city yesterday and was amazed at his or her billable rates. Apparently, I’m steal.

The second most inexpensive way to hire an attorney from out-of-state is to have them get pro hac-ed in. There is a filing fee of, usually, a few hundred dollars in order to get pro hac-ed in. But, in some states, you don’t have to hire local counsel when you are pro hac-ed in.

The most expensive way to hire an out-of-state attorney is needing to hire local counsel as well. Let’s be honest – attorneys are expensive. Adding another into the pot just ups the ante, regardless how little they do. When attorneys charge $300, $400, or $500 an hour, very few hours add up to a lot of money (or $860/hour….what…zombies?).

If you do not agree with the decision that the Administrative Law Judge renders, then you can appeal to, depending in which state you reside, Superior Court or District Court. If you do not agree with the decision you receive in District Court or Superior Court, you then appeal to the Court of Appeals. On the appellate level, out-of-state attorneys would need to either be pro hac-ed on or hire local counsel.

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

Article in the Winston Salem Journal today:

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

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

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

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

shhhhtoppings

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

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

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

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

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

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

_______________________________________________________________________________

Now to my opinion:

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

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

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

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

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

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

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

The Reality of Prepayment Review and What To Do If You Are Tagged – You’re It!

Prepayment review is a drastic tool (more like a guillotine) that the federal and state governments via hired contractors review the documentation supporting services for Medicare and Medicaid prior to the provider receiving reimbursement. The providers who are placed on prepayment review are expected to continue to render services, even if the provider is not compensated. Prepayment review is a death sentence for most providers.

The required accuracy rating varies state to state, but, generally, a provider must meet 75% accuracy for three consecutive months.

In the governments’ defense, theoretically, prepayment review does not sound as Draconian as it is. Government officials must think, “Well, if the provider submits the correct documentation and complies with all applicable rules and regulations, it should be easy for the provider to meet the requirements and be removed from prepayment review.” However, this false reasoning only exists in a fantasy world with rainbows and gummy bears. Real life prepayment review is vastly disparate from the rainbow and gummy bears prepayment review.

In real life prepayment review:

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

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

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

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

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

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

  • The accuracy ratings are inaccurate.

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

  • The communication between provider and auditor do not exist.

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

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

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

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

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

“Read the policy.”

“Not helpful.”

  • The financial burden on the provider is devastating.

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

Ok, now we know that prepayment review can be a death sentence for a health care provider. How can we prepare for prepayment review and what do we do if we are placed on prepayment review?

  1. Create a separate “what if” savings account to pay for attorneys’ fees. The best defense is a good offense. You cannot prevent yourself from being placed on prepayment review – there is no rhyme or reason for such placement. If you believe that you will never get placed on prepayment review, then you should meet one of my partners. He got hit by lightning – twice! (And lived). So start saving! Legal help is a must. Have your attorney on speed dial.
  2. Self-audit. Be proactive, not reactive. Check your documents. If you use an electronic records system, review the notes that it is creating. If it appears that all the notes look the same except for the name of the recipient, fix your system. Cutting and pasting (or appearing to cut and paste) is a pitfall in audits. Review the notes of the highest reimbursement code. Most likely, the more the reimbursement rate, the more likely to get flagged.
  3. Implement an in-house policy about opening the mail and responding to document requests. This sounds self evident, but you will be surprised how many providers have multiple people getting and opening the mail. The employees see a document request and they want to be good employees – so they respond and send the documents. They make a mistake and BOOM – you are on prepayment review. Know who reviews the mail and have a policy for notifying you if a document request is received.
  4. Buck up. Prepayment review is a b*^%$. Cry, pray, meditate, exercise, get therapy, go to the spa, medicate…whatever you need to do to alleviate stress – do it.
  5. Do not think you can get off prepayment review alone and without help. You will need help. You will need bodies to stand at the copy machine. You will need legal help. Do not make the mistake of allowing the first three months pass before you contact an attorney. Contact your attorney immediately.

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.

dodgeball.jpg

“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.

soapbox

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:

stock-vector-cartoon-boy-getting-pelted-by-dodge-balls-189985841

 

OIG Finds PCG Inappropriately Altered Medicaid Documents!

Our old friends from Public Consulting Group (PCG) were found to have accepted improper Medicaid payments in New Jersey.

Those of you who have followed my blog will remember that PCG has been the “watchdog” and auditor of Medicaid claims in many, many states, including North Carolina, New Mexico, and New York. The story of PCG’s motus operandi is like an old re-run of Friends – it never seems to end. PCG audits health care provider records, usually about 150 claims, and determines an error rate based on a desk review by an employee who may or may not have the requisite experience in health care or regulatory compliance issues. The error rates are normally high, and PCG extrapolates the number across a universe of three years (generally). The result is an alleged overpayment of millions of dollars. Of course, it varies state to state, but PCG is paid on a contingency basis, usually 12 – 15%. See blog.

In a November 2017 Office of Inspector General (OIG) Report, OIG found that, in New Jersey, PCG, which was the contractor for New Jersey doctored records.

Isn’t that called fraud?

OIG found that New Jersey did not follow Federal regulations and the Centers for Medicare and Medicaid Services’ (CMS) guidance when it developed its payment rates for Medicaid school-based services and, as a result, claimed $300.5 million in unallowable costs. Among OIG’s findings, OIG determined that PCG improperly altered school employees’ responses to time studies to timestudies to indicate that their activities were directly related to providing Medicaid services when the responses indicated the activities were unrelated.

OIG recommended that New Jersey repay $300.5 million in federal Medicaid reimbursements. If you are a taxpayer in New Jersey,

Screen Shot 2018-02-07 at 4.04.46 PM

you know that you are hanging Sec. Carole Johnson in effigy…at least, in your mind.

According to the New Jersey Medicaid website, PCG receives and processes billing agreements from newly Medicaid-enrolled LEAs, which is the acronym for “Local Education Agency.”

Here are PCG’s duties:

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The New Jersey State Agency claims Federal Medicaid reimbursement for health services provided by schools under Individuals With Disabilities Education Act (IDEA) through its Special Education Medicaid Initiative (SEMI). The State Department of Treasury (Treasury), the administrative manager for SEMI, hired PCG, on a contingency fee basis (shocker) to develop SEMI payment rates and submit claims on behalf of schools, which are overseen by the State Department of Education (DOE). Figure 1 (below) illustrates how New Jersey processes and claims Medicaid school-based services.

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But notice the last bullet point in the list of PCG’s duties above. “provides ongoing Medicaid legal and regulatory compliance monitoring.” Of itself?

Only costs related to providing Medicaid-covered services may be included in payment rates for Medicaid services. But, remember, PCG is paid on contingency. See below.

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So is it surprising that PCG raised the reimbursement rates? Why wouldn’t they? If you were paid on contingency, wouldn’t you determine the rates to be higher?

OIG’s report states that New Jersey, through a contractor (PCG), increased the payment rates retroactively to July 2003 from $552 to $1,451 for evaluation services and from $21 to $50 for rehabilitation services. This significant increase raised the question of whether the State was again using unallowable costs.

According to OIG, out of 1,575 responses from school employees, PCG recoded 235 employee responses in order to receive payment from Medicaid. Of those 235 recoded responses, OIG determined that 203 claims were incorrectly recoded by PCG. My math isn’t the best, but I am pretty sure that is approximately a 85% error rate. Shall we extrapolate?

Examples of improper activity code alterations included a social worker indicated that they were “scheduling students to see the [social worker].” Social worker coded this activity as “general administration” – correctly by the way. PCG altered the code to indicate that the employee was providing health care services in order to get paid for that time.

PCG incorporated learning disabilities teacher-consultant salaries in the evaluation rate. These salaries are unallowable because teacher-consultants provide special education services, not health-related services.

In a description of its rate-setting methodology, PCG stated that it excluded costs associated with learning disabilities teacher-consultants because they do not perform any medical services and are not medical providers as customarily recognized in the State’s Medicaid program. However, OIG found that PCG did not remove all learning disabilities teacher-consultant salaries when calculating payment rates

OIG calculated the amount of just that one issue – learning disabilities teacher-consultant salaries incorrectly incorporated – as more than $61 million. What’s 13% of $61 million (assuming that PCG’s contingency rate is 13%)? $7,930,000.

OIG recommended that New Jersey Medicaid:

  • refund $300,452,930 in Federal Medicaid reimbursement claimed based on payment rates that incorporated unallowable costs,
  • work with CMS to determine the allowable amount of the remaining $306,233,377 that we have set aside because the rates included unallowable costs that we cannot quantify, and
  • revise its payment rates so they comply with Federal requirements.

PCG disagreed with OIG’s findings.

Another recommendation that OIG SHOULD have found – Get rid of PCG.

 

Exciting News!! Knicole Emanuel and Team Joins Potomac Law Group!!

My team and I have transferred to Potomac Law Group! This was such a huge decision for us, but we are so super excited about the move. Nothing much will change – I will still be in Raleigh and will still maintain this blog. In fact, I will be able to blog more often, because Potomac does not require ungodly amount of billable hours! See below for more. Woot! Woot!

Plus, I am joining a team of attorneys who are amazing and talented.

My new contact information is kemanuel@potomaclaw.com, and my telephone number is (919) 219-9319.

  • Knicole Emanuel | Partner | Potomac Law Group, PLLC
  • 1300 Pennsylvania Avenue, NW, Suite 700
  • Washington, D.C. 20004
  • *Admitted to practice in NC and GA
  • Tel: (919) 219-9319 | Fax: (202) 318-7707

kemanuel@potomaclaw.com | www.potomaclaw.com

  • Raleigh, NC Office
  • 3613 Bentgrass Ct.
  • Apex, NC 27539

Introducing the Potomac Health Care Group:

We have:

Me.

Obviously.

Harry Silver

He has 40 years of experience advising clients on healthcare issues and handling complex litigation at trial and on appeal. He has briefed and argued appeals in 10 of the 12 U.S. Circuit Courts of Appeal, written briefs and cert. petitions in the U.S. Supreme Court, briefed and argued appeals in various state appellate courts. Impressive!

Susan Hendrix

She also focuses her practice on healthcare, investigations and litigation.  Ms. Hendrix provides compliance advice, and conducts internal investigations, with respect to health care regulations, health care guidance, and health care-related company policies.

Richard McHugh

With over 30 years of legal experience, Mr. McHugh also provides consultation and advice regarding legislative and regulatory developments affecting the employee benefits industry, including retirement, health care and executive compensation matters and related human resource issues.

Neil Belson

Neil Belson is a business-savvy attorney with nearly thirty years experience creating, negotiating and closing innovative deals for the development, transfer and protection of critical technologies. For transactions issues… 

Daryl Anne Lander

Ms. Lander focuses her practice on tax and ERISA issues relating to tax-qualified pension and 401(k) plans, health plans, nonqualified deferred compensation plans, other executive compensation, and fringe benefits. For employments issues…

Katy Van Pelt

She is a Partner in the firm’s Regulatory, Food & Drug, Healthcare, and Life Sciences practice groups.  She provides advice on a range of regulatory issues relevant to manufacturers of prescription drugs, medical devices, in vitro diagnostic products, analyte-specific reagents, laboratory developed tests, infant formula, and food. For regulatory issues…

Sheetal Patel

Sheetal Patel is a patent law specialist with several years of experience litigating chemical, biotech, and pharmaceutical patent cases as well as developing enforcement strategies including invalidity and infringement analyses, and due diligence. For patent issues…

These are not all the attorneys at Potomac Law Group; there many other, extremely talented, experienced, and intelligent attorneys. Plus, Potomac Law Group was named one of the best law firms in 2018 according to U.S. News.

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And get this – Potomac Law was named, along with Google, Facebook, and Starbucks, as one of 20 innovative companies in the crucial areas of women’s advancement and work life integration.

According to “Working Mother,” which, by the way, I am, “This firm bucks the overwork tradition of Big Law by giving attorneys freedom and flexibility to work from any location, with most choosing home offices. Founder Benjamin Lieber began Potomac Law Group in 2011 by recruiting stay-at-home-mom lawyers to rejoin the working world at the level of intensity they preferred. Today, half of the firm’s attorneys, partners and management are women. The culture explicitly rejects minimum billable hour requirements and embraces working remotely as a way “to be more productive and efficient in balancing our professional and personal commitments.””

Out of all the companies in America, Potomac was named by Working Mother as the best for, well, working mothers – only 20 companies were named!!

I will need to update my tags and categories for Medicaidlaw-NC…

And here is the obligatory, legal disclaimer:

Legal Disclaimer and Note:   I welcome your feedback, thoughts, questions, and suggestions.  Just a reminder: These materials have been prepared by me for informational purposes only and are not legal advice. Internet followers and online readers should not act upon this information without seeking independent legal counsel.

This information is not intended to create, and receipt of it does not constitute, an attorney-client relationship. Please note that an attorney-client relationship, and corresponding confidentiality of information, does not arise until Potomac Law Group s has received an executed legal service agreement. Do not send us confidential information until you speak with one of our attorneys and get authorization to send that information to us. Potomac Law Group is pleased to receive inquiries from prospective clients regarding its services and its lawyers. However, an inquiry to Potomac Law Group should not disclose information about a particular matter prompting the inquiry.

While I try to update this site on a regular basis, I do not intend any information on this site to be treated or considered as the most current expression of the law on any given point, and certain legal positions expressed on this site, by passage of time or otherwise, may be superseded or incorrect. Readers should not consider the information provided to be an invitation for an attorney-client relationship, and should always seek the advice of independent legal counsel in the reader’s home jurisdiction.

The opinions expressed on this site are the opinions of the user, and do not necessarily reflect the opinions or positions of Potomac Law Group.

Accused of a Medicare or Medicaid Overpayment? Remember That You May Fall Into an Exception That Makes You NOT Liable to Pay!!

In today’s health care world, post-payment review audits on health care providers who accept Medicare and/or Medicaid have skyrocketed. Part of the reason is the enhanced fraud, waste, and abuse detections that were implanted under ObamaCare. Then the snowball effect occurred. The Centers for Medicare and Medicaid Systems (CMS), which is the single federal agency designated by the Secretary of Health and Human Services (HHS), via authority from Congress, to manage Medicare and Medicaid nationwide, started having positive statistics to show Congress.

Without question, the recovery audit contractors (RACs) have recouped millions upon millions of money since 2011, when implemented. Every financial report presented to Congress shows that the program more than pays for itself, because the RACs are paid on contingency.

Which pushed the snowball down the hill to get bigger and bigger and bigger…

However, I was reading recent, nationwide case law on Medicare and Medicaid provider overpayments reviews (I know, I am such a dork), and I realized that many attorneys that providers hire to defend their alleged overpayments have no idea about the exceptions found in Sections 1870 and 1879 of the Social Security Act (SSA). Why is this important? Good question. Glad you asked. Because of this legal jargon called stare decisis (let the decision stand). Like it or not, in American law, stare decisis is the legal doctrine that dictates once a Court has answered a question,the same question in other cases must elicit the same response from the same court or lower courts in that jurisdiction. In other words, if “Attorney Uneducated” argues on behalf of a health care provider and does a crappy job, that decision, if it is against the provider, must be applied similarly to other providers. In complete, unabashed, English – if a not-so-smart attorney is hired to defend a health care provider in the Medicare and/or Medicaid world, and yields a bad result, that bad result will be applied to all health care providers subsequently. That is scary! Bad laws are easily created through poor litigation.

A recent decision in the Central District of California (shocker), remanded the Medicare overpayment lawsuit back to the Administrative Law Judge (ALJ) level because the ALJ (or the provider’s attorney) failed to adequately assess whether the exceptions found in Sections 1870 and 1879 of the SSA applied to this individual provider. Prime Healthcare Servs.-Huntington Beach, LLC v. Hargan, 2017 U.S. Dist. LEXIS 205159 (Dec., 13, 2017).

The provider, in this case, was a California hospital. The overpayment was a whopping total of $5,380.30. I know, a small amount to fight in the court of law and expend hundreds of thousands of attorneys’ fees. But the hospital (I believe) wanted to make legal precedent. The issue is extremely important to hospitals across the county – if a patient is admitted as inpatient and a contractor of CMS determines in a post payment review that the patient should have been admitted as an outpatient – is the hospital liable for the difference between the outpatient reimbursement rate and the inpatient reimbursement rate? To those who do not know, the inpatient hospital rates are higher than outpatient. Because the issue was so important and would have affected the hospital’s reimbursement rates (and bottom line) in the future, the hospital appealed the alleged overpayment of $5,380.30. The hospital went through the five levels of Medicare appeals. See blog. It disagreed with the ALJ’s decision that upheld the alleged overpayment and requested judicial review.

Judicial review (in the health care context): When a health care providers presents evidence before an ALJ and the ALJ ruled against the provider.The provider appeals the ALJ decision to Superior Court, which stands in as if it is the Court of Appeals. What that means is – that at the judicial review level, providers cannot present new evidence or new testimony. The provider’s attorney must rely on the   official record or transcript from the ALJ level. This is why it is imperative that, at the ALJ level, you put forth your best evidence and testimony and have the best attorney, because the evidence and transcript created from the ALJ level is the only evidence allowed from judicial review.

The exceptions found in Sections 1870 and 1879 of the SSA allow for a provider to NOT pay back an alleged overpayment, even if medical necessity does not exist. It is considered a waiver of the provider’s overpayment. If a Court determines that services were not medically necessary, it must consider whether the overpayment should be waived under Sections 1870 and 1879.

Section 1879 limits a provider’s liability for services that are not medically necessary when it has been determined that the provider “did not know, and could not reasonably have been expected to know, that payment would not be made for such services.” 42 U.S.C. 1395pp(a). A provider is deemed to have actual or constructive knowledge of non-coverage based on its receipt of CMS notices, the Medicare manual, bulletins, and other written directives from CMS. In other words, if CMS published guidance on the issue, then you are out of luck with Section 1879. The Courts always hold that providers are responsible for keeping up-to-date on rules, regulations, and guidance from CMS. “Ignorance of the law is no defense.”

Section 1870 of the SSA permits providers to essentially be forgiven for overpayments discovered after a certain period of time so long as the provider is “without fault” in causing the overpayment. Basically, no intent is a valid defense.

Sections 1879 and 1870 are extraordinary, strong, legal defenses. Imagine, if your attorney is unfamiliar with these legal defenses.

In Prime Healthcare, the Court in the Central District of California held that the ALJ’s decision did not clearly apply the facts to the exceptions of Sections 1870 and 1879. I find this case extremely uplifting. The Judge, who was Judge Percy Anderson, wanted the provider to have a fair shake. Hey, even if the services were not medically necessary, the Judge wanted the ALJ to, at the least, determine whether an exception applied. I feel like these exceptions found in Sections 1870 and 1879 are wholly underutilized.

If you are accused of an overpayment…remember these exceptions!!!

Appeal! Appeal! Appeal!

Inpatient Rehabilitation Facility Stay Claim Denials – Appeal Those Findings!

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

Topics proposed for future audits:

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

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

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

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

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

medicaremac

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

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

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

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

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

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

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

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

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

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

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

APPEAL! APPEAL! APPEAL!