Category Archives: North Carolina
On September 18, Cardinal filed a Petition at the Office of Administrative Hearings (OAH) challenging the State’s authority to set executive compensation limits. In other words, Cardinal is suing the State of NC to keep paying Toppings $635,000.00 with our tax dollars. See below:
On Tuesday (October 10, 2017) legislators blasted Cardinal Healthcare and strongly urged DHHS Secretary Mandy Cohen to terminate its contract with Cardinal. The legislators challenged the impressive and questionably-needed administrative costs of the managed care organizations (MCOs), including exorbitant salaries, office parties, and private jets. Cardinal’s CEO Richard Topping, who became CEO in July 2015, was compensated at $635,000.00 this year. His total compensation was over $1.2 million in 2016 and 2017 (for a government job; i.e., our tax dollars. So we all may own a portion of his home). See blog. and blog. The State Auditor also reported excessive spending and mismanagement of funds. Let’s keep in mind, people, these funds are earmarked to provide medically necessary services to our most needy population suffering from mental illness, substance abuse, and developmentally disabilities. But Toppings wants a Porsche. (Disclaimer – my opinion).
And if we weren’t enraged enough about the obscene salary of Cardinal’s CEO, Cardinal decided to spend more tax dollars…on attorneys’ fees to litigate maintaining its CEO’s salary. When I heard this, I hoped that Cardinal, with our tax dollars, paid an internal general counsel, who would litigate the case. I mean, an in-house counsel gets a salary, so it wouldn’t cost the taxpayers extra money (over and beyond his/her salary) to sue the State. But, no. I was woefully disappointed. Cardinal hired one of the biggest law firms in the State of NC – Womble Carlyle – the only firm downtown Raleigh with its signage on the outside of the skyscraper. I am sure that costs a pretty penny. Please understand – this is nothing against Womble Carlyle. It is a reputable firm with solid lawyers, which is why Cardinal hired them. But they ain’t cheap.
Cardinal is a Local Management Entity/Managed Care Organization (LME/MCO) created by North Carolina General Statute 122C. IT IS NOT A PRIVATE COMPANY, LIKE BCBS. Cardinal is responsible for managing, coordinating, facilitating and monitoring the provision of mental health, developmental disabilities, and substance abuse services in 20 counties across North Carolina. Cardinal is the largest of the state’s seven LME/MCOs, serving more than 850,000 members. Cardinal has contracted with DHHS to operate the managed behavioral healthcare services under the Medicaid waiver through a network of licensed practitioners and provider agencies. State law explicitly states Cardinal’s core mission as a government
Cardinal’s most significant funding is provided by Medicaid (85%). Funding from Medicaid totaled $567 million and $587 million for state fiscal years 2015 and 2016, respectively. Medicaid is a combination of federal and state tax dollars. If you pay taxes, you are paying for Toppings’ salary and the attorneys’ fees to keep that salary.
North Carolina General Statute 122C-123.1 states: “Any funds or part thereof of an area authority that are transferred by the area authority to any entity including a firm, partnership, corporation, company, association, joint stock association, agency, or nonprofit private foundation shall be subject to reimbursement by the area authority to the State when expenditures of the area authority are disallowed pursuant to a State or federal audit.” (Emphasis Added).
Our State Auditor, in its audit of Cardinal, already found that Cardinal’s spending of its funds is disallowed:
Not only has the State Auditor called Cardinal out for excessive salaries, in a letter, dated August 10, 2017, the Office of State Human Resources told Cardinal that “Based on the information you submitted, the salary of your Area Director/CEO is above this new rate and, therefore, out of compliance. Please work to adjust the Area Director/CEO salary accordingly and notify us of how you have remedied this situation. In the future, please ensure that any salary adjustment complies with the
provisions of G.S. 122C-121- the Mental Health, Developmental Disabilities, and Substance Abuse Act of 1985.” (emphasis added). In other words – follow the law! What did Cardinal do? Sued the Office of State Human Resources.
Concurrently, Cardinal is terminating provider contracts in its closed network (which keeps Cardinal from having to pay those providers), decreasing and denying behavioral health care services to Medicaid recipients (which keeps Cardinal from having to pay for those services). — And now, paying attorneys to litigate in court to keep the CEO’s salary of $635,000.00. Because of my blog, I receive emails from parents who are distraught because Cardinal is decreasing or terminating their child’s services. Just look at some of the comments people have written on my blog. Because of my job, I see firsthand the providers that are getting terminated or struck with alleged overpayments by Cardinal (and all the MCOs).
My questions are – if Cardinal has enough money to pay its CEO $635,000.00, why doesn’t Cardinal increase reimbursement rates to providers? Provide more services to those in need? Isn’t that exactly why it exists? Oh, and, let’s not forget Cardinal’s savings account. The State Auditor found that “For FY 2015 and 2016, Cardinal accumulated approximately $30 million and $40 million, respectively, in Medicaid savings.” Cardinal, and all the MCOs, sit in a position that these government entities could actually improve mental health in NC. They certainly have the funds to do so.
According to a blog follower, Cardinal pays lower reimbursement rates than other MCOs:
Psychiatric Diagnostic Eval. (Non-Medical) 90791
Cardinal MCO Pays $94.04
Partners MCO Pays 185.90
Medicare Pays 129.60
SC Medicaid Pays 153.94
Psychotherapy 60 minutes (in-home) 90837
Cardinal MCO Pays $74.57
Partners MCO Pays 112.00
Medicare Pays 125.93
SC Medicaid Pays 111.90
According to the Petition, Cardinal’s argument is that it is not a government entity. That its employees, including Toppings, does not receive state government benefits and are not part of the state retirement program. It also states in its Petition that Cardinal hires external consultants (with our tax dollars) to conduct a market compensation study every two years. (cough!). Cardinal complains, in the Petition, that “If forced to reduce its CEO’s salary to a level well below market rate for the leader of an organization of Cardinal Innovations’ size and complexity, Cardinal Innovations would be likely to immediately lose its current CEO and would be at a significant market disadvantage when trying to replace its current CEO with one of similar experience and expertise in the industry, as is necessary to lead Cardinal Innovations. This would result in immediate and irreparable harm to Cardinal Innovations and reduce the organization’s ability to fulfill its mission.” Wow – Toppings must be unbelievable…a prodigy…the picture of utopia…
The State has informed Cardinal that a salary is more appropriate at $194,471.00 with the possibility of a 5% exception up to $204,195.00.
In its Petition, Cardinal calls the statutorily required salary cap “an irrationally low salary range.” If I take out 50% for taxes, which is high, Toppings is paid $26,458.33 per month. In comparison, the Medicaid recipients he serves get the following per month (at the most):
Disgusted? Angry? Contact your local representative. Don’t know who your representative is? Click here. I wonder how the IRS would react if I protested by refusing to pay taxes… Don’t worry. I’m not going to go all Martha Stewart on you.
On July 13, 2017, Attorney General Jeff Sessions and Department of Health and Human Services (HHS) Secretary Tom Price, M.D., announced the Department of Justice’s (DOJ) biggest-ever health care fraud takedown. 412 health care providers were charged with health care fraud. In total, allegedly, the 412 providers schemed and received $1.3 billion in false billings to Medicare, Medicaid, and TRICARE. Of the 412 defendants, 115 are physicians, nurses, and other licensed medical professionals. Additionally, HHS has begun the suspension process against 295 health care providers’ licenses.
The charges include allegations of billing for medically unnecessary treatments or services that were not really provided. The DOJ has evidence that many of the defendants had illegal kickback schemes set up. More than 120 of the defendants were charged with unlawfully or inappropriately prescribing and distributing opioids and other narcotics.
While this particular sting operation resulted from government investigations, not all health care fraud is discovered through government investigation. A great deal of fraud is uncovered through private citizens coming forward with incriminating information. These private citizens can file suit against the fraudulent parties on behalf of the government; these are known as qui tam suits.
Being a whistleblower goes against what most of us are taught as children. We are taught not to be a tattletail. I have vivid memories from elementary school of other kids acting out, but I would remain silent and not inform the teacher. But in the health care world, tattletails are becoming much more common – and they make money for blowing that metaphoric whistle.
What is a qui tam lawsuit?
Qui tam is Latin for “who as well.” Qui tam lawsuits are a type of civil lawsuit whistleblowers (tattletails) bring under the False Claims Act, a law that rewards whistleblowers if their qui tam cases recover funds for the government. Qui tam cases are a powerful weapon against Medicare and Medicaid fraud. In other words, if an employee at a health care facility witnesses any type of health care fraud, even if the alleged fraud is unknown to the provider, that employee can hire an attorney to file a qui tam lawsuit to recover money on behalf of the government. The government investigates the allegations of fraud and decides whether it will join the lawsuit. Health care entities found guilty in a qui tam lawsuit will be liable to government for three times the government’s losses, plus penalties.
The whistleblower is rewarded for bringing these lawsuits. If the government intervenes in the case and recovers funds through a settlement or a trial, the whistleblower is entitled to 15% – 25% of the recovery. If the government doesn’t intervene in the case and it is pursued by the whistleblower team, the whistleblower reward is between 25% – 30% of the recovery.
These recoveries are not low numbers. On June 22, 2017, a physician and rehabilitative specialist agreed to pay $1.4 million to resolve allegations they violated the False Claims Act by billing federal health care programs for medically unreasonable and unnecessary ultrasound guidance used with routine lab blood draws, and with Botox and trigger point injections. If a whistleblower had brought this lawsuit, he/she would have been awarded $210,000 – 420,000.
On June 16, 2017, a Pennsylvania-based skilled nursing facility operator agreed to pay roughly $53.6 million to settle charges that it and its subsidiaries violated the False Claims Act by causing the submission of false claims to government health care programs for medically unnecessary therapy and hospice services. The allegations originated in a whistleblower lawsuit filed under the qui tam provisions of the False Claims Act by 7 former employees of the company. The whistleblower award – $8,040,000 – 16,080,000.
There are currently two, large qui tam cases against United Health Group (UHG) pending in the Central District of California. The cases are: U.S. ex rel. Benjamin Poehling v. UnitedHealth Group, Inc. and U.S. ex rel. Swoben v. Secure Horizons, et al. Both cases were brought by James Swoben, who was an employee and Benjamin Poehling, who was the former finance director of a UHG group that managed the insurer’s Medicare Advantage Plans. On May 2, 2027, the U.S. government joined the Poehling lawsuit.
The charges include allegations that UHG:
- Submitted invalid codes to the Center for Medicare and Medicaid Services (CMS) that it knew of or should have known that the codes were invalid – some of the dates of services at issue in the case are older than 2008.
- Intentionally avoided learning that some diagnoses codes or categories of codes submitted to their plans by providers were invalid, despite acknowledging in 2010 that it should evaluate the results of its blind chart reviews to find codes that need to be deleted.
- Failed to follow up on and prevent the submissions of invalid codes or submit deletion for invalid codes.
- Attested to CMS each year that the data they submitted was true and accurate while knowing it was not.
UHG would not be in this expensive, litigious pickle had it conducted a self audit and followed the mandatory disclosure requirements.
What are the mandatory disclosure requirements? Glad you asked…
Section 6402(a) of the Affordable Care Act (ACA) creates an express obligation for health care providers to report and return overpayments of Medicare and Medicaid. The disclosure must be made by 60 days days after the date that the overpayment was identified or the date any corresponding cost report is due, if applicable. Identification is defined as the point in which the provider has determined or should have determined through the exercise of due diligence that an overpayment exists. CMS expects the provider to proactively investigate any credible information of a potential overpayment. The consequences of failing to proactively investigate can be seen by the UHG lawsuits above-mentioned. Apparently, UHG had some documents dated in 2010 that indicated it should review codes and delete the invalid codes, but, allegedly, failed to do so.
How do you self disclose?
According to CMS:
“Beginning June 1, 2017, providers of services and suppliers must use the forms included in the OMB-approved collection instrument entitled CMS Voluntary Self-Referral Disclosure Protocol (SRDP) in order to utilize the SRDP. For disclosures of noncompliant financial relationships with more than one physician, the disclosing entity must submit a separate Physician Information Form for each physician. The CMS Voluntary Self-Referral Disclosure Protocol document contains one Physician Information Form.”
“Bye Felicia” – Closing Your Doors To a Skilled Nursing Facility May Not Be So Easy – You Better Follow the Law Or You May Get “Sniffed!”
There are more than 15,000 nursing homes across the country. Even as the elderly population balloons, more and more nursing homes are closing. The main reason is that Medicare covers little at a nursing home, but Medicare does cover at-home and community-based services; i.e., personal care services at your house. Medicare covers nothing for long term care if the recipient only needs custodial care. If the recipient requires a skilled nursing facility (SNF), Medicare will cover the first 100 days, although a co-pay kicks in on day 21. Plus, Medicare only covers the first 100 days if the recipient meets the 3-day inpatient hospital stay requirement for a covered SNF stay. For these monetary reasons, Individuals are trying to stay in their own homes more than in the past, which negatively impacts nursing homes. Apparently, the long term care facilities need to lobby for changes in Medicare.
Closing a SNF, especially if it is Medicare certified, can be tricky to maneuver the stringent regulations. You cannot just be dismissive and say, “Bye, Felicia,” and walk away. Closing a SNF can be as legally esoteric as opening a SNF. It is imperative that you close a SNF in accordance with all applicable federal regulations; otherwise you could face some “sniff” fines. Bye, Felicia!
Section 6113 of the Affordable Care Act dictates the requirements for closing SNFs. SNF closures can be voluntary or involuntary. So-called involuntary closures occur when health officials rule that homes have provided inadequate care, and Medicaid and Medicare cut off reimbursements. There were 106 terminations of nursing home contracts in 2014, according to the federal Centers for Medicare and Medicaid Services (CMS).
Regardless, according to law, the SNF must provide notice of the impending closure to the State and consumers (or legal representatives) at least 60 days before closure. An exception is if the SNF is shut down by the state or federal government, then the notice is required whenever the Secretary deems appropriate. Notice also must be provided to the State Medicaid agency, the patient’s primary care doctors, the SNF’s medical director, and the CMS regional office. Once notice is provided, the SNF may not admit new patients.
Considering the patients who reside within a SNF, by definition, need skilled care, the SNF also has to plan and organize the relocation of its patients. These relocation plans must be approved by the State.
Further, if the SNF violates these regulations the administrator of the facility and will be subject to civil monetary penalty (CMP) as follows: A minimum of $500 for the first offense; a minimum of $1,500 for the second offense; and a minimum of $3,000 for the third and subsequent offenses. Plus, the administrator could be subject to higher amounts of CMPs (not to exceed ($100,000) based on criteria that CMS will identify in interpretative guidelines.
If you are contemplating closing a SNF, it is imperative that you do so in accordance with the federal rules and regulations. Consult your attorney. Do not be dismissive and say, “Bye, Felicia.” Because you could get “sniffed.”
The Office of Inspector General (OIG) recently disseminated hundreds of recoupment letters to providers in New York who had percentage-based contracts with billing agents. OIG is seeking recoupment for services spanning a five-year period, plus 9% interest. See example redacted letter from OIG.
42 CFR 447.10 prohibits the re-assignment of provider claims and applies only to Medicaid. It is recommended that you pay your billing agent a flat fee or on a time basis.
North Carolina Medical Society also discourages fee splitting. On the NCMS website, the Society warns that “Except in instances permitted by law (N.C. Gen. Stat. § 55B-14(c)), it is the position of the Board that a licensee cannot share revenue on a percentage basis with a non-licensee. To do so is fee splitting and is grounds for disciplinary action.”
Not all States prohibit fee splitting, and if Medicare or Medicaid is not involved, then we look to state law. But if Medicare or Medicaid is involved, then federal law matters. Some States prohibit fee splitting for doctors, chiropractors, and hospitals, while other states do not prohibit fee splitting for massage therapists. So it is important to know your State’s laws.
Lawyers also have fee-splitting prohibitions. To split fees with a nonlawyer constitutes the practice of law without a license (and probably multiple other ethical concerns).
Physicians, group practices and management services organizations should continue to carefully examine their current and proposed arrangements to ensure compliance with the fee-splitting prohibition applicable to your State. If you are unsure, consult an attorney.
OIG may have started these audits in New York, but, as New York State says “Excelsior” – ever upward – we can be sure that OIG will continue across the country.
Is this the end of the managed care organizations (MCOs)?
If the Senate’s proposed committee substitute (PCS) to House Bill 403 (HB 403) passes the answer is yes. The Senate’s PCS to House Bill 403 was just favorably reported out of the Senate Health Care Committee on June 15, 2017. The next step for the bill to advance will be approval by the Senate Rules Committee. Click here to watch its progress.
As my readers are well aware, I am not a proponent for the MCOs. I think the MCOs are run by overpaid executives, who pay themselves too high of bonuses, hire charter flights, throw fancy holiday parties, and send themselves and their families on expensive retreats – to the detriment of Medicaid recipients’ services and Medicaid providers’ reimbursement rates. See blog. And blog.
Over the last couple days, my email has been inundated by people abhorred with HB 403 – urging the Senators to retain the original HB 403, instead of the PCS version. As with all legislation, there are good and bad components. I went back and re-read these emails, and I realized multiple authors sat on an MCO Board. Of course MCO Board members will be against HB 403! Instead of hopping up and down “for” or “against” HB 403, I propose a (somewhat) objective review of the proposed legislation in this blog.
While I do not agree with everything found in HB 403, I certainly believe it is a step in the right direction. The MCOs have not been successful. Medically necessary behavioral health care services have been reduced or terminated, quality health care providers have been terminated from catchment areas, and our tax dollars have been misused.
However, I do have concern about how quickly the MCOs would be dissolved and the new PHPs would be put into effect. There is no real transition period, which could provide safety nets to ensure continuity of services. We all remember when NCTracks was implemented in 2013 and MMIS was removed on the same day. There was no overlap – and the results were catastrophic.
The following bullet points are the main issues found in HB 403, as currently written.
- Effective date – MCOs dissolve immediately (This could be dangerous if not done properly)
Past legislation enacted a transition time to dissolve the MCOs. Session Law 2015-245, as amended by Session Law 2016-121, provided that the MCOs would be dissolved in four years, allowing the State to implement a new system slowly instead of yanking the tablecloth from the table with hopes of the plates, glasses, and silverware not tumbling to the ground.
According to HB 403, “on the date when Medicaid capitated contracts with Prepaid Health Plans (PHPs) begin, as required by S.L. 2015-245, all of the following shall occur:…(2) The LME/MCOs shall be dissolved.”
Session Law 2015-245 states the following timeline: “LME/MCOs shall continue to manage the behavioral health services currently covered for their enrollees under all existing waivers, including the 1915(b) and (c) waivers, for four years after the date capitated PHP contracts begin. During this four-year period, the Division of Health Benefits shall continue to negotiate actuarially sound capitation rates directly
with the LME/MCOs in the same manner as currently utilized.”
HB 403 revises Session Law 2015-245’s timeline by the following: “
LME/MCOs shall continue to manage the behavioral health services currently covered for their enrollees under all existing waivers, including the 1915(b) and (c) waivers, for four years after the date capitated PHP contracts begin. During this four-year period, the Division of Health Benefits shall continue to negotiate actuarially sound capitation rates directly with the LME/MCOs in the same manner as currently utilized.”
Instead of a 4-year transition period, the day the PHP contracts are effective, the MCOs no longer exist. Poof!! Maybe Edward Bulwer-Lytton was right when he stated, “The pen is mightier than the sword.”
Again, I am not opposed to dissolving the MCOs for behavioral health care; I just want whatever transition to be reasonable and safe for Medicaid recipients and providers.
With the MCOs erased from existence, what system will be put in place? According to HB 403, PHPs shall manage all behavioral health care now managed by MCOs and all the remaining assets (i.e., all those millions sitting in the savings accounts of the MCOs) will be transferred to DHHS in order to fund the contracts with the PHPs and any liabilities of the MCOs. (And what prevents or does not prevent an MCO simply saying, “Well, now we will act as a PHP?”).
What is a PHP? HB 403 defines PHPs as an entity, which may be a commercial plan or provider-led entity with a PHP license from the Department of Insurance and will operate a capitated contract for the delivery of services. “Services covered by PHP:
- Physical health services
- Prescription drugs
- Long-term care services
- Behavioral health services
The capitated contracts shall not cover:
Behavioral health Dentist services
- The fabrication of eyeglasses…”
It would appear that dentists will also be managed by PHPs. As currently written, HB 403 also sets no less than three and no more than five contracts between DHHS and the PHPs should be implemented.
Don’t we need a Waiver from the Center for Medicare and Medicaid Services (CMS)?
Yes. We need a Waiver. 42 CFR 410.10(e) states that “[t]he Medicaid agency may not delegate, to other than its own officials, the authority to supervise the plan or to develop or issue policies, rules, and regulations on program matters.” In order to “Waive” this clause, we must get permission from CMS. We had to get permission from CMS when we created the MCO model. The same is true for a new PHP model.
Technically, HB 403 is mandating DHHS to implement a PHP model before we have permission from the federal government. HB 403 does instruct DHHS to submit a demonstration waiver application. Still, there is always concern and hesitancy surrounding implementation of a Medicaid program without the blessing of CMS.
- The provider network (This is awesome)
HB 403 requires that all contracts between PHPs and DHHS have a clause that requires PHPs to not exclude providers from their networks except for failure to meet objective quality standards or refusal to accept network rates.
- PHPs use of money (Also good)
Clearly, the General Assembly drafted HB 403 out of anger toward the MCOs. HB 403 implements more supervision over the new entities. It also disallows use of money on alcohol, first-class airfare, charter flights, holiday parties or similar social gatherings, and retreats, which, we all know these are precisely the activities that State Auditor Beth Wood found occurring, at least, at Cardinal. See Audit Report.
HB 403 also mandates that the Office of State Human Resources revise and update the job descriptions for the area directors and set limitations on salaries. No more “$1.2 million in CEO salaries paid without proper authorization.”
- Provider contracts with the PHPs (No choice is never good)
It appears that HB 403 will not allow providers to choose which PHP to join. DHHS is to create the regions for the PHPs and every county must be assigned to a PHP. Depending on how these PHPs are created, we could be looking at a similar situation that we have now with the MCOs. If the State is going to force you to contract with a PHP to provide Medicaid services, I would want the ability to choose the PHP.
In conclusion, HB 403 will re-shape our entire Medicaid program, if passed. It will abolish the MCO system, apply to almost all Medicaid services (both physical and mental), open the provider network, limit spending on inappropriate items, and assign counties to a PHP.
Boy, what I would give to be a fly on the wall in all the MCO’s boardrooms (during the closed sessions).
Eastpointe Sues DHHS, Former Sec. Brajer, Nash County, and Trillium Claiming Conspiracy! (What It Means for Providers)
In HBO’s Game of Thrones, nine, noble, family houses of Westeros fight for the Iron Throne – either vying to claim the throne or fighting for independence from the throne.
Similarly, when NC moved to the managed care organizations for Medicaid behavioral health care services, we began with 12 MCOs (We actually started with 23 (39 if you count area authorities) LME/MCOs, but they quickly whittled down to 11). “The General Assembly enacted House Bill 916 (S.L. 2011-264) (“H.B. 916) to be effective June 23, 2011, which required the statewide expansion of the 1915(b)/(c) Medicaid Waiver Program to be completed within the State by July 1, 2013.” Compl. at 25. Now the General Assembly is pushing for more consolidation.
Now we have seven (7) MCOs remaining, and the future is uncertain. With a firehose of money at issue and the General Assembly’s push for consolidation, it has become a bloody battle to remain standing in the end, because, after all, only one may claim the Iron Throne. And we all know that “Winter is coming.”
Seemingly, as an attempt to remain financially viable, last week, on Thursday, June 8, 2017, Eastpointe, one of our current MCOs, sued the Department of Health and Human Services (DHHS), Nash County, Trillium Health Resources, another MCO, and former secretary Richard Brajer in his individual and former official capacity. Since the Complaint is a public record, you can find the Complaint filed in the Eastern District of NC, Western Division, Civil Action 5:17-CV-275. My citations within this blog correspond with the paragraphs in the Complaint, not page numbers.
Eastpointe’s Complaint wields a complex web of conspiracy, government interference, and questionable relationships that would even intrigue George R. R. Martin.
The core grievance in the lawsuit is Eastpointe alleges that DHHS, Trillium, Nash County, and Brajer unlawfully conspired and interfered with Eastpointe’s contract to manage behavioral health care services for its twelve (12) county catchment area, including Nash County. In 2012, Nash County, as part of the The Beacon Center, signed a contract and became part of a merger with Eastpointe being the sole survivor (Beacon Center and Southeastern Regional Mental Health were swallowed by Eastpointe). At the heart of Eastpointe’s Complaint, Eastpointe is alleging that Nash County, Trillium, DHHS, and Brajer conspired to breach the contract between Eastpointe and Nash County and unlawfully allowed Nash County to join Trillium’s catchment area.
In June 2013, the General Assembly, pursuant to Senate Bill 208 (S.L. 2013-85 s. 4.(b)), appended N.C.G.S. § 122C-115 to include subparagraph (a3), permitting a county to disengage from one LME/MCO and align with another with the approval of the Secretary of the NCDHHS, who was required by law to promulgate “rules to establish a process for county disengagement.” N.C.G.S. § 122C-115(a3) (“Rules”) (10A N.C.A.C. 26C .0701-03).
Why does it matter whether Medicaid recipients receive behavioral health care services from providers within Trillium or Eastpointe’s catchment area?? As long as the medically necessary services are rendered – that should be what is important – right?
Wrong. First, I give my reason as a cynic (realist), then as a philanthropist (wishful thinker).
Cynical answer – The MCOs are prepaid. In general and giving a purposely abbreviated explanation, the way in which the amount is determined to pre-pay an MCO is based on how many Medicaid recipients reside within the catchment area who need behavioral health care services. The more people in need of Medicaid behavioral health care services in a catchment area, the more money the MCO receives to manage such services. With the removal of Nash County from Eastpointe’s catchment area, Eastpointe will lose approximately $4 million annually and Trillium will gain approximately $4 million annually, according to the Complaint. This lawsuit is a brawl over the capitated amount of money that Nash County represents, but it also is about the Iron Throne. If Eastpointe becomes less financially secure and Trillium becomes more financially secure, then it is more likely that Eastpointe would be chewed up and swallowed in any merger.
Philanthropic answer – Allowing Nash County to disengage from Eastpointe’s catchment area would inevitably disrupt behavioral health care services to our most fragile and needy population. Medicaid recipients would be denied access to their chosen providers…providers that may have been treating them for years and created established trust. Allowing Nash County to disembark from Eastpointe would cause chaos for those least fortunate and in need of behavioral health care services.
Eastpointe also alleges that DHHS refused to approve a merger between Eastpointe and Cardinal purposefully and with the intent to sabotage Eastpointe’s financial viability.
Also in its Complaint, Eastpointe alleges a statewide, power-hungry, money-grubbing conspiracy in which Brajer and DHHS and Trillium are conspiring to pose Trillium as the final winner in the “MCO Scramble to Consolidate,” “Get Big or Die” MCO mentality arising out of the legislative push for MCO consolidation. Because, as with any consolidation, duplicate executives are cut.
Over the last couple years, Eastpointe has discussed merging with Cardinal, Trillium, and Sandhills – none of which occurred. Comparably, Joffrey Lannister and Sansa Stark discussed merging. As did Viserys and Illyrio wed Daenerys to Khal Drogo to form an alliance between the Targaryens.
Some of the most noteworthy and scandalous accusations:
Leza Wainwright, CEO of Trillium and director of the NC Council of Community MH/DD/SA Programs (“NCCCP”) (now I know why I’ve never been invited to speak at NCCCP). Wainwright “brazenly took actions adverse to the interest of Eastpointe in violation of the NCCCP mission, conflicts of interest policy of the organization, and her fiduciary duty to the NCCCP and its members.” Compl. at 44.
Robinson, Governing Board Chair of Trillium, “further informed Brajer that he intended for Trillium to be the surviving entity in any merger with Eastpointe and that “any plan predicated on Trillium and Eastpointe being coequal is fundamentally flawed.”” Compl. at 61.
“On or about May 11, 2016, Denauvo Robinson (“Robinson”), Governing Board Chair of Trillium wrote Brajer, without copying Eastpointe, defaming Eastpointe’s reputation in such a way that undermined the potential merger of Eastpointe and Trillium.” Compl. at 59.
“Robinson, among other false statements, alleged the failure to consummate a merger between Eastpointe, CoastalCare, and East Carolina Behavioral Health LMEs was the result of Eastpointe’s steadfast desire to maintain control, and Eastpointe’s actions led those entities to break discussions with Eastpointe and instead merge to form Trillium.” Compl. at 60.
“Trillium, not Nash County, wrote Brajer on November 28, 2016 requesting approval to disengage from Eastpointe and to align with Trillium.” Compl. at 69.
Dave Richards, Deputy Secretary for Medical Assistance, maintains a “strong relationship with Wainwright” and “displayed unusual personal animus toward Kenneth Jones, Eastpointe’s former CEO.” Compl. at 47.
Brajer made numerous statements to Eastpointe staff regarding his animus toward Jones and Eastpointe. “Brajer continued to push for a merger between Eastpointe and Trillium.” Compl. at 53.
“On December 5, 2016, the same day that former Governor McCrory conceded the election to Governor Cooper, Brajer wrote a letter to Trillium indicating that he approved the disengagement and realignment of Nash County.” Compl. at 72.
“On March 17, 2016, however, Brajer released a memorandum containing a plan for consolidation of the LME/MCOs, in which NCDHHS proposed Eastpointe being merged with Trillium.” Compl. at 55.
Brajer’s actions were “deliberately premature, arbitrary, and capricious and not in compliance with statute and Rule, and with the intent to destabilize Eastpointe as an LME/MCO).” Compl. at 73.
“Brajer conspired with Nash County to cause Nash County to breach the Merger Agreement.” Compl. at 86.
Brajer “deliberately sought to block any merger between Eastpointe and other LME/MCOs except Trillium.” Compl. at 96.
“Brajer and NCDHHS’s ultra vires and unilateral approval of the Nash County disengagement request effective April 1, 2017 materially breached the contract between Eastpointe and NCDHHS. Equally brazen was Brajer’s calculated failure to give Eastpointe proper notice of the agency action taken or provide Eastpointe with any rights of appeal.” Compl. at 101.
Against Nash County
“To date, Nash County is Six Hundred Fifty Three Thousand Nine Hundred Fifty Nine Thousand and 16/100 ($653,959.16) in arrears on its Maintenance of Efforts to Eastpointe.” Compl. at 84.
“While serving on Eastpointe’s area board, Nash County Commissioner Lisa Barnes, in her capacity as a member of the Nash County Board of Commissioners, voted to adopt a resolution requesting permission for Nash County to disengage from Eastpointe and realign with Trillium. In so doing, Barnes violated her sworn oath to the determent of Eastpointe.” Compl. at 85.
What Eastpointe’s lawsuit could potentially mean to providers:
Eastpointe is asking the Judge in the federal court of our eastern district for a Temporary Restraining Order and Preliminary Injunction prohibiting Nash County from withdrawing from Eastpointe’s catchment area and joining Trillium’s catchment area. It is important to note that the behavioral health care providers in Eastpointe’s catchment area may not be the same behavioral health care providers in Trillium’s catchment area. There may be some overlap, but without question there are behavioral health care providers in Trillium’s catchment area that are not in Eastpointe’s catchment area and vice versa.
If Eastpointe is not successful in stopping Nash County from switching to Trillium’s catchment area, those providers who provide services in Nash County need to inquire – if you do not currently have a contract with Trillium, will Trillium accept you into its catchment area, because Trillium runs a closed network?!?! If Trillium refuses to include Nash County’s behavioral health care providers in its catchment area, those Nash County providers risk no longer being able to provide services to their consumers. If this is the case, these Nash County, non-Trillium providers may want to consider joining Eastpointe’s lawsuit as a third-party intervenor, as an interested, aggrieved person. Obviously, you would, legally, be on Eastpointe’s side, hoping to stay Nash County’s jump from Eastpointe to Trillium.
Even if Eastpointe is successful in stopping Nash County’s Benedict Arnold, then, as a provider in Eastpointe’s catchment area, you need to think ahead. How viable is Eastpointe? Eastpointe’s lawsuit is a powerful indication that Eastpointe itself is concerned about the future, although this lawsuit could be its saving grace. How fair (yet realistic) is it that whichever providers happen to have a contract with the biggest, most powerful MCO in the end get to continue to provide services and those providers with contracts with smaller, less viable MCOs are put out of business based on closed networks?
If Nash County is allowed to defect from Eastpointe and unite with Trillium, all providers need to stress. Allowing a county to abscond from its MCO on the whim of county leadership could create absolute havoc. Switching MCOs effects health care providers and Medicaid recipients. Each time a county decides to choose a new MCO the provider network is upended. Recipients are wrenched from the provider of their choice and forced to re-invent the psychological wheel to their detriment. Imagine Cherokee County being managed by Eastpointe…Brunswick County being managed by Vaya Health…or Randolph County being managed by Partners. Location-wise, it would be an administrative mess. Every election of a county leadership could determine the fate of a county’s Medicaid recipients.
Here is a map of the current 7 MCOs:
All behavioral health care providers should be keeping a close watch on the MCO consolidations and this lawsuit. There is nothing that requires the merged entity to maintain or retain the swallowed up entities provider network. Make your alliances because…
“Winter is coming.”
Buried within the Senate Appropriations Act of 2017 (on pages 189-191 of 361 pages) is a new and improved method to terminate Medicaid providers. Remember prepayment review? Well, if SB 257 passes, then prepayment review just…
Prepayment review is allowed per N.C. Gen. Stat. 108C-7. See my past blogs on my opinion as to prepayment review. “NC Medicaid: CCME’s Comedy of Errors of Prepayment Review” “NC Medicaid and Constitutional Due Process.”
N.C. Gen. Stat. 108C-7 states, “a provider may be required to undergo prepayment claims review by the Department. Grounds for being placed on prepayment claims review shall include, but shall not be limited to, receipt by the Department of credible allegations of fraud, identification of aberrant billing practices as a result of investigations or data analysis performed by the Department or other grounds as defined by the Department in rule.” Getting placed on prepayment review is not appealable. Relief can be attainable. See blog. (With a lawyer and a lot of money).
Even without the proposals found within SB 257, being placed on prepayment review is being placed in a torture chamber for providers.
With or without SB 257, being placed on prepayment review results in the immediate withhold of all Medicaid reimbursements pending the Department of Health and Human Services’ (DHHS) contracted entity’s review of all submitted claims and its determination that the claims meet criteria for all rules and regulations. If the majority of your reimbursements come from Medicaid, then an immediate suspension of Medicaid funds can easily put you out of business.
With or without SB 257, in order to get off prepayment review, you must achieve 70% accuracy (or clean claims) for three consecutive months. Think about that statement – The mere placement of you on prepayment review means that, according to the standard for being removed from prepayment review, you will not receive your reimbursements for, at least, three months. How many of you could survive without getting paid for three months. But that’s not the worst of it, the timing and process of prepayment review – meaning the submission of claims, the review of the claims, the requests for more documentation, submission of more documents, and the final decision – dictates that you won’t even get an accuracy rating the first, maybe even the second month. If you go through the prepayment review process, you can count on no funding for four to five months, if you are over 70% accurate the first three months. How many of you can sustain your company without getting paid for five months? How about 24 months, which is how long prepayment review can last?
The prepayment review process: (legally, which does not mean in reality)
Despite your Medicaid funds getting cut off, you continue to provide Medicaid services to your recipients (You also continue to pay your staff and your overhead with gummy bears, rainbows, and smiles). – And, according to SB 257, if your claims submissions decrease to under 50% of the prior three months before prepayment review – you automatically lose. In other words, you are placed on prepayment review. Your funding is suspended (with or without SB 257). You must continue to provide services without any money (with or without SB 257) and you must continue to provide the same volume of services (if SB 257 passes).
So, you submit your claims.
The Department of Health and Human Services (DHHS) or its contracted vendor shall process all clean claims submitted for prepayment review within 20 calendar days of submission by the provider. “To be considered by the Department, the documentation submitted must be complete, legible, and clearly identify the provider to which the documentation applies. If the provider failed to provide any of the specifically requested supporting documentation necessary to process a claim pursuant to this section, the Department shall send to the provider written notification of the lacking or deficient documentation within 15 calendar days of receipt of such claim the due date of requested supporting documentation. The Department shall have an additional 20 days to process a claim upon receipt of the documentation.”
Let’s look at an example:
You file your claim on June 1, 2017.
DHHS (or contractor) determines that it needs additional documentation. On June 16, 2017, DHHS sends a request for documentation, due by July 6, 2017 (20 days later).
But you are on the ball. You do not need 20 days to submit the additional documents (most likely, because you already submitted the records being requested). You submit additional records on June 26, 2017 (within 10 days).
DHHS has until July 16, 2017, to determine whether the claim is clean. A month and a half after you submit your claim, you will be told whether or not you will be paid, and that’s if you are on the ball.
Now imagine that you submit 100 claims per week, every week. Imagine the circular, exponential effect of the continual, month-and-a-half review for all the claims and the amount of documents that you are required to submit – all the while maintaining the volume of claims of, at least over 50% of your average from the three prior months before prepayment review.
Maintaining at least 50% of the volume of claims that you submitted prior to being placed on prepayment review is a new addition to the prepayment review torture game and proposed in SB 257.
If SB 257 does not pass, then when you are placed on prepayment review and your funding is immediately frozen, you can decrease the volume of claims you submit. It becomes necessary to decrease the volume of claims for many reasons. First, you have no money to pay staff and many staff will quit; thus decreasing the volume of claims you are able to provide. Second, your time will be consumed with submitting documents for prepayment review, receiving additional requests, and responding to the additional requests. I have had a client on prepayment review receive over 100 requests for additional documents per day, for months. Maintaining organization and a record of what you have or have not submitted for which Medicaid recipient for which date of service becomes a full-time job. With your new full-time job as document submitter, your volume of services decreases.
Let’s delve into the details of SB 257 – what’s proposed?
SB 257’s Proposed Torture Tactics
The first Catherine’s Wheel found in SB 257 is over 50% volume. Or you will be terminated.
As discussed, SB 257 requires to maintain at least 50% of the volume of services you had before being placed on prepayment review. Or you will be terminated.
Another heretics fork that SB 257 places in the prepayment review torture chamber is punishment for appeal.
SB 257 proposes that you are punished for appealing a termination. If you fail to meet the 70% accuracy for three consecutive months, then you will be terminated from the Medicaid program. However, with SB 257, if you appeal that termination decision, then “the provider shall remain on prepayment review until the final disposition of the Department’s termination or other sanction of the provider.” Normally when you appeal an adverse determination, the adverse determination is “stayed” until the litigation is over.
Another Iron Maiden that SB 257 proposes is exclusion.
SB 257 proposes that if you are terminated “the termination shall reflect the provider’s failure to successfully complete prepayment claims review and shall result in the exclusion of the provider from future participation in the Medicaid program.” Even if you voluntarily terminate. No mulligan. No education to improve yourself. You never get to provide Medicaid services again. The conical frame has closed.
Another Guillotine that SB 257 proposes is no withhold of claims.
SB 257 proposes that if you withhold claims while you are on prepayment review. “any claims for services provided during the period of prepayment review may still be subject to review prior to payment regardless of the date the claims are submitted and regardless of whether the provider has been taken off prepayment review.”
Another Judas Chair that SB 257 proposes is no new evidence.
SB 257 proposes that “[i]f a provider elects to appeal the Department’s decision to impose sanctions on the provider as a result of the prepayment review process to the Office of Administrative Hearings, then the provider shall have 45 days from the date that the appeal is filed to submit any documentation or records that address or challenge the findings of the prepayment review. The Department shall not review, and the administrative law judge shall not admit into evidence, any documentation or records submitted by the provider after the 45-day deadline. In order for a provider to meet its burden of proof under G.S. 108C-12(d) that a prior claim denial should be overturned, the provider must prove that (i) all required documentation was provided at the time the claim was submitted and was available for review by the prepayment review vendor and (ii) the claim should not have been denied at the time of the vendor’s initial review.”
The prepayment review section of SB 257, if passed, will take effect October 1, 2017. SB 257 has passed the Senate and now is in the House.
Here’s a little unabashed, yet well-deserved honor my firm recently obtained. Number 48!! Go Team G&RSM! #Medicaidatty #Medicareatty
“Gordon Rees Scully Mansukhani now ranks as the 48th largest law firm in the United States per Law360 in its annual rankings of the 400 largest law firms in the nation. The firm attained this distinction by moving up five spots from the prior year’s rankings and 23 positions from the 2015 list, and currently comprises some 733 attorneys and 304 partners throughout the U.S.
“This distinction represents an important milestone for the firm,” commented Firmwide Managing Partner Dion N. Cominos. “We continue to have good fortune in growing our platform with outstanding lawyers; most importantly, however, the growth has not occurred for its own sake but instead to allow us to best service our clients on a national stage.”
During the last three years, the firm has expanded its U.S. headcount by more than 26 percent and, since 2000, Gordon & Rees has added more than 30 new offices, and now has a major outpost in eight of the 10 largest cities in the United States. In 2017 alone, the firm has opened five new offices: Cincinnati and Columbus, Ohio; Oklahoma City, Oklahoma; Salt Lake City, Utah; and Milwaukee, Wisconsin.
Gordon & Rees is a national litigation and business transactions firm with more than 700 lawyers in 43 offices across the United States. Our lawyers provide full service representation to public and private companies ranging from the Fortune 500 to start-ups. Founded in 1974, Gordon & Rees is recognized among the fastest growing and largest law firms in the country and continues to climb the ranks of both The Am Law 200 and The National Law Journal.”