Category Archives: Office of Administrative Hearings
There’s no getting around it. Four years after Gov. Susana Martinez’s administration charged 15 behavioral health organizations with potentially defrauding the state’s Medicaid program, its case has experienced a slow-motion unraveling.
No Medicaid fraud was ever found. And those eye-popping estimates that added up to $36 million the organizations had overbilled Medicaid?
In the summer of 2017, the Human Services Department (HSD) is seeking drastically lower reimbursements for overbilling the public health insurance program for low-income residents, a review of public records and state court documents has found.
Now exonerated by the state Attorney General’s Office, many organizations are challenging even those much-lower estimates in administrative hearings or in state court.
Consider Teambuilders Counseling Services, one of the accused behavioral health providers.
Last fall it received a new estimate from the New Mexico Human Services Department. Previous numbers had varied from as high as $9.6 million to as low as $2 million. But the new figure deviated sharply from earlier calculations when Chester Boyett, an administrative law judge in the state agency’s Fair Hearings Bureau, ruled Teambuilders owed only $896.35.
Boyett argued his agency had built its $2 million estimate of Medicaid overbilling on faulty analysis, according to his 12-page decision.
Nancy Smith-Leslie, the department’s director of the Medical Assistance Division, ignored Boyett’s recommendation. In a Jan. 6 letter she said the agency’s analysis was sound, even though she seemed to confirm Boyett’s critique in a Nov. 2 memo in which she had noted the inaccuracy of the extrapolated amount. In that memo Teambuilders and its attorney had not “sufficiently disputed” the method of extrapolation, however, she wrote.
In her Jan. 6 letter, Smith-Leslie sought to clear up matters. She amended her previous statement, saying the extrapolation referred to in her Nov. 2 memo indeed was correct.
Teambuilders and its attorney, Knicole Emanuel, appealed HSD’s ruling over whether Teambuilders overbilled Medicaid and by how much to state court, where three other former behavioral health organizations are fighting HSD’s extrapolated overpayments.
Boyett’s finding that Teambuilders owed hundreds rather than millions of dollars — even if it was ignored — represents a compelling data point given where things stand with other providers.
And last September HSD closed the books on another organization — Las Cruces-based Families and Youth Inc. — without demanding any reimbursements for overbilling and releasing $1.4 million in Medicaid dollars the state had suspended. The action represented a reversal after a state-ordered 2013 audit that found $856,745 in potential Medicaid overbilling by FYI.
In fact, a review of state and court documents by New Mexico In Depth reveals a pattern regarding the state agency’s overbilling estimates: In many cases, they are moving targets, usually on a downward trajectory.
Like Southwest’s, some have dropped spectacularly. Setting aside Boyett’s figure of $896, even the $2 million HSD claims Teambuilders owes is far smaller than a high of $12 million.
Hogares Inc., another organization accused of fraud, watched last year as the state revised its overbilling estimates five times over six months, starting at $9.5 million in January and ending with $3.1 million in June, according to state court documents.
Meanwhile, Easter Seals El Mirador, initially accused of $850,000 in potential Medicaid overbilling, now stands accused of $127,000.
Emanuel and Bryan Davis, another attorney representing many of the formerly accused organizations, said the constantly changing estimates are due to HSD.
The state agency is examining a sampling of each organization’s Medicaid claims and asking the organizations for documentation to prove the government program was properly billed, they said.
“In most cases (the overbilling estimates) are dropping precipitously” as organizations submit the documents requested by HSD, Davis said.
To cite one example, HSD’s latest overbilling estimate for Counseling Associates, Inc. is $96,000, said Davis, who represents the organization. That compares to $3 million in potential overbilling a 2013 state-ordered audit found.
It is a perplexing situation, given that the Human Services Department found “‘credible allegations of fraud” against the 15 organizations using that 2013 audit, which was performed by Massachusetts-based Public Consulting Group Inc.
“They threw PCG’s audit in the trash,” Davis said of HSD, noting the cost. HSD agreed to pay PCG up to $3 million for the study in February 2013.
The current situation caused Davis to wonder “why PCG didn’t have these documents in the first place,” he said.
Emanuel offered a pointed answer.
“HSD did not allow PCG to gather all the documents,” she said.
A spokesperson for HSD did not respond multiple requests for comment for this story.
Repercussions of the Medicaid crackdown
The fight over Medicaid overbilling isn’t the only legacy left from the Medicaid crackdown, which happened the last week of June 2013.
The Martinez administration’s decision affected lives. Many lives if you listen to behavioral health advocates and officials in the 15 organizations.
Charging the organizations with fraud and then suspending Medicaid payments to many of them disrupted mental health and addiction services for tens of thousands of New Mexicans. It created chaos for employees. And four years on it has left a number of business failures in its wake, with many of the accused organizations unable to survive long-term without Medicaid dollars.
Teambuilders, which once operated 52 locations in 17 New Mexico counties, is no longer in business, according to Emanuel. Neither is Las Cruces-based Southwest Counseling Center. Or Hogares.
At the same time a gap in care has opened up after three of five Arizona companies the Martinez administration brought in to care for the vulnerable populations have departed the state, leaving New Mexico to pick up the pieces.
“It’s a mess. It’s disgusting,” said James Kerlin, executive director of The Counseling Center of Alamogordo, which no longer sees clients. Like Teambuilders, Hogares, Southwest Counseling and others, it was unable to stay in business without the flow of Medicaid dollars the state suspended. “I want the public to know where we’re at and what’s been done to us. I’m going to start making a lot of noise. This is ridiculous.”
Kerlin’s organization was the first of the 15 organizations exonerated by then Attorney General Gary King in early 2014. And it offered the earliest glimpse of the weaknesses in the Martinez administration’s case against the behavioral health providers.
First signs of weakness in the state’s case
HSD hired PCG to audit all 15 organizations and it found $655,000 in potential Medicaid overbilling by the Counseling Center.
PCG reached that conclusion after finding $1,873 in questionable Medicaid claims and then extrapolating from those claims that the center could have overbilled Medicaid by more than $600,000 based on the size of its Medicaid business over several years.
But during its fraud investigation the AG’s office flagged fewer Counseling Center claims than PCG and found a much lower cost of potential overbillings. It resolved some of the issues by reviewing records and interviewing staff.
In many cases, auditors give staff of audited organizations an opportunity to refute findings or address misunderstandings before finalizing their findings. For example, most state and local governmental agencies are audited annually in New Mexico. Staff within those agencies are afforded the chance to see and respond to audit findings within a certain amount of time before audits are made public.
Kerlin did not get that opportunity during the PCG audit.
PCG later confirmed to NMID that it is the firm’s standard procedure to give companies a chance to respond before issuing official audit findings. A PCG spokesperson would not tell NMID why that didn’t happen in New Mexico.
By the time HSD held a hearing for the Counseling Center, the state agency had lowered its Medicaid overbillings estimate to $379,135. And Kerlin finally was able to hear the accusations against his organization.
Counseling Center submitted evidence to rebut the state agency’s claims, but the hearing officer sided with HSD. The Counseling Center appealed to state court.
In late 2015, State District Court Judge Francis Mathew ruled in favor of Kerlin’s organization, calling HSD’s hearing decision “arbitrary, capricious or otherwise not in accordance with law.”
In addition, the judge found the administrative law judge had shifted the burden of proof from HSD to the Counseling Center and then set too high a standard for the organization. Citing portions of the administrative law judge’s ruling, Mathew noted the Counseling Center had “offered certain amount of credible evidence in opposition” to HSD’s findings but not as much as the hearing officer required: a “100 percent audit” of records, which the state district judge found “unreasonable.”
HSD appealed the judge’s decision to the state Court of Appeals.
Examples of rejected claims
The overly stringent standards for documentation — and even a basic lack of understanding by HSD staff of Medicaid billing requirements — can be found in cases involving other organizations that are contesting the department’s charges of overbilling, a review of court documents found.
In a motion appealing the administrative law judge’s ruling that it owed the state $127,240, Easter Seals disputed seven claims, including one HSD had rejected because there was no medication consent form in place, even though the patient and parent had signed a general informed consent form and the patient’s parent was present when the medication was prescribed.
According to the court document, “There was no dispute that the service was medically necessary and was provided to J.A. There is no question as to quality of care provided to the recipient of services.”
Another claim was rejected because there was no doctor’s signature on a psychosocial assessment, however the state could provide no legal requirement for the signature, according to Easter Seals’ appeal. “A signature might be best practice, or advisable, but it is not a requirement,” the filing argued.
Also in the appeal, Easter Seals noted that the Human Service Department’s coding witness not only could not cite rules disallowing two services to be delivered during the same time period, but also appeared to be using a coding manual from Medicare, the insurance for seniors, and not Medicaid. And furthermore, she did not even realize there was a manual for Medicaid.
HSD ignored evidence in 2013 that refuted overbilling claims
Even those organizations that have avoided administrative hearings and court battles have stories to tell about HSD and its actions.
It wasn’t an easy decision, its CEO said this week, and it shouldn’t be construed as agreement with the state’s conclusions.
“We agree to disagree” is how Steven Hansen put it.
Until Presbyterian began negotiating an agreement, in fact, it had not seen the findings of the PCG audit.
During the negotiations PMS officials found documents they thought could refute PCG’s audit findings, Hansen and other PMS officials told state lawmakers in October 2014.
Presbyterian tried to give the files to PCG and the Human Services Department as proof that they had properly billed Medicaid for payment. The consulting firm said it would review the documentation if directed to by HSD, but PCG later told Presbyterian Medical Services the state agency “did not want to accept those records.”
“We believe there is a strong argument that nothing was owed back to HSD,” Presbyterian’s general counsel told lawmakers in 2014.
At that point, Presbyterian had to make a choice: Settle with the state or fight and possibly run out of money.
Presbyterian settled, paying the $4 million.
The decision has worked out for the organization.
“We’re doing more business than we did before” the 2013 crackdown, Hansen said.
That’s because as the Arizona providers the Martinez administration brought in have left New Mexico, Presbyterian Medical Services has taken over mental health and addiction services.
Presbyterian has added Carlsbad, Alamogordo, Deming, Espańola, Grants, Artesia, Santa Fe and Rio Rancho to the places it provides behavioral health services, Hansen said, adding it’s “bits and pieces” of areas formerly serviced by three of the five Arizona companies.
“We feel like it’s going in a good direction for us,” Hansen said. “That’s hard for us to say because there were so many great organizations that are no longer in the state. But we’ve had to move on.”
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.
What if you had to appeal traffic citations through the police officer who pulled you over before you could defend yourself before an impartial judge? That would be silly and a waste of time. I could not fathom a time in which the officer would overturn his/her own decision.
“No, officer, I know you claim that I was speeding, but the speed limit on Hwy 1 had just increased to 65. You were wrong when you said the speed limit was 55.”
“Good catch, citizen. You’re right; I’m wrong. Let’s just rip up this speeding ticket.”
Not going to happen.
The same is true when it comes to decisions by the Department of Health and Human Service (DHHS) to sanction or penalize a Medicaid provider based on alleged provider abuse (otherwise known as documentation errors). If DHHS determines that you owe $800,000 because your service notes are noncompliant, I am willing to bet that, upon its own reconsideration, the decision will be upheld. Asking for reconsideration review from the very same entity that decided the sanction or penalty is akin to doing something over and over and expecting different results (definition of insanity?).
But – are informal reconsideration reviews required by law to fight an adverse decision before you may appear before an administrative law judge?
The reason that you should care whether the reconsideration reviews are required by law is because the process is time consuming, and, often, the adverse determination is in effect during the process. If you hire an attorney, it is an expensive process, but one that you will not (likely) win. Generally, I am adverse to spending time and money on something that will yield nothing.
Before delving into whether reconsideration reviews are required by law, here is my caveat: This issue has not been decided by our courts. In fact, our administrative court has rendered conflicting decisions. I believe that my interpretation of the laws is correct (obviously), but until the issue is resolved legally, cover your donkey (CYA), listen to your attorney, and act conservatively.
Different laws relate to whether the adverse decision is rendered by the DHHS or whether the adverse decision is rendered by a managed care organization (MCO). Thus, I will divide this blog into two sections: (1) reconsiderations to DHHS; and (2) reconsiderations to an MCO.
Appealing DHHS Adverse Determinations
When you receive an adverse decision from DHHS, you will know that it is from DHHS because it will be on DHHS letterhead (master of the obvious).
10A NCAC 22F .0402 states that “(a) Upon notification of a tentative decision the provider will be offered, in writing, by certified mail, the opportunity for a reconsideration of the tentative decision and the reasons therefor. (b) The provider will be instructed to submit to the Division in writing his request for a Reconsideration Review within fifteen working days from the date of receipt of the notice. Failure to request a Reconsideration Review in the specified time shall result in the implementation of the tentative decision as the Division’s final decision.”
As seen above, our administrative code recommends that a Medicaid provider undergo the informal reconsideration review process through DHHS to defend a sanction or penalty before presenting before an impartial judge at the Office of Administrative Hearings (OAH). I will tell you, having gone through hundreds upon hundreds of reconsideration reviews, DHHS does not overturn itself. The Hearing Officers know who pay their salaries (DHHS). The reconsideration review ends up being a waste of time and money for the provider, who must jump through the “reconsideration review hoop” prior to filing a petition for contested case.
Historically, attorneys recommend that provider undergo the reconsideration review for fear that an Administrative Law Judge (ALJ) at OAH would dismiss the case based on failure to exhaust administrative remedies. But upon a plain reading of 10A NCAC 22F .0402, is it really required? Look at the language again. “Will be offered” and “the opportunity for.” And what is the penalty for not requesting a reconsideration review? That the tentative decision becomes final – so you can petition to OAH the final decision.
My interpretation of 10A NCAC 22F .0402 is that the informal reconsideration review is an option, not a requirement.
Now, N.C. Gen. Stat. 150B-22 states that “[i]t is the policy of this State that any dispute between an agency and another person that involves the person’s rights, duties, or privileges, including licensing or the levy of a monetary penalty, should be settled through informal procedures. In trying to reach a settlement through informal procedures, the agency may not conduct a proceeding at which sworn testimony is taken and witnesses may be cross-examined. If the agency and the other person do not agree to a resolution of the dispute through informal procedures, either the agency or the person may commence an administrative proceeding to determine the person’s rights, duties, or privileges, at which time the dispute becomes a “contested case.””
It is clear that our State’s policy is that a person who has a grievance against an agency; i.e., DHHS, attempts informal resolution prior to filing an appeal at OAH. Notice that N.C. Gen. Stat. 150B-22 is applicable to any dispute between “an agency and another person.” “Agency” is defined as “an agency or an officer in the executive branch of the government of this State and includes the Council of State, the Governor’s Office, a board, a commission, a department, a division, a council, and any other unit of government in the executive branch. A local unit of government is not an agency.”
Clearly, DHHS is an “agency,” as defined. But an MCO is not a department; or a board; or a commission; or a division; or a unit of government in the executive branch; or a council. Since the policy of exhausting administrative remedies applies to DHHS, are you required to undergo an MCO’s reconsideration review process?
Appealing an MCO Adverse Determination
When you receive an adverse decision from an MCO, you will know that it is from an MCO because it will be on the MCO’s letterhead (master of the obvious).
There is a reason that I am emphasizing the letterhead. It is because DHHS contracts with a number of vendors. For example, DHHS contracts with Public Consulting Group (PCG), The Carolina Center for Medical Excellence (CCME), HMS, Liberty, etc. You could get a letter from any one of DHHS’ contracted entities – a letter on their letterhead. For example, you could receive a Tentative Notice of Overpayment on PCG letterhead. In that case, PCG is acting on behalf of DHHS. So the informal reconsideration rules would be the same. For MCOs, on the other hand, we obtained a Waiver from the Center for Medicare and Medicaid Services (CMS) to “waive” certain rules and to create the MCOs. Different regulations apply to MCOs than DHHS. In fact, there is an argument that N.C. Gen. Stat. 150B-22 does not apply to the MCOs because the MCOs are not an “agency.” Confusing, right? I call that job security.
Are you required to undergo the MCO’s internal reconsideration review process prior to filing a petition for contested case at OAH?
Your contract with the MCO certainly states that you must appeal through the MCO’s internal process. The MCO contracts with providers have language in them like this:
Dispute Resolution and Appeals: “The CONTRACTOR may file a complaint and/or appeals as outlined in the LME/PIHP Provider Manual promulgated by LME/PIHP pursuant to N.C. Gen. Stat. 122C-151.3 and as provided by N.C. Gen. Stat. Chapter 108C.”
I find numerous, fatal flaws in the above section. Whoever drafted this section of the contract evidently had never read N.C. Gen. Stat. 122C-151.3, which plainly states in subsection (b) “This section does not apply to LME/MCOs.” Also, the LME/PIHP does not have the legal authority to promulgate – that is a rule-making procedure for State agencies, such as DHHS. The third fatal flaw in the above section is that the LME/MCO Provider Manual is not promulgated and certainly was not promulgated not pursuant to N.C. Gen. Stat. 122C-151.3, does not apply to LME/MCOs.
Just because it is written, does not make it right.
If N.C. Gen. Stat. 150B-22 does not apply to MCOs, because MCOs are not an agency, then the State policy of attempting to resolve disputes through informal methods before going to OAH does not apply.
There is no other statute or rule that requires a provider to exhaust an MCO’s internal review process prior to filing a petition for contested case.
What does that mean IN ENGLISH??
What it means is that the MCOs contract and provider manual that create an informal one or two-step reconsideration process is not required by law or rule. You do not have to waste your time and money arguing to the MCO that it should overturn its own decision, even though the reconsideration review process may be outlined in the provider manual or your procurement contract.
OAH has agreed…and disagreed.
In Person-Centered Partnerships, Inc. v. NC DHHS and MeckLINK, No. 13 DHR 18655, the court found that “[n]either the contractual provisions in Article II, Section 5.b of the Medicaid Contract nor MeckLINK’s “Procedures for implementation of policy # P0-09 Local Reconsideration Policy” states that reconsideration review is mandatory and a prerequisite to filing a contested case.”
In another case, OAH has held that, “[c]ontract provisions cannot override or negate the protections provided under North Carolina law, specifically the appeal rights set forth in N.C. Gen. Stat. Chapter 108C. Giesel, Corbin on Contracts § 88.7, at 595 (2011) (When the law confers upon an individual a right, privilege, or defense, the assumption is that the right, privilege or defense is conferred because it is in the public interest. Thus, in many cases, it is contrary to the public interest to permit the holder of the right, privilege, or defense to waive or to bargain it away. In these situations, the attempted waiver or bargain is unenforceable.”)” Essential Supportive Services, LLC v. DHHS and its Agent Alliance Behavioral Healthcare, No. 13 DHR 20386 (NCOAH) (quoting Yelverton’s Enrichment Services, Inc., v. PBH, as legally authorized contractor of and agent for N.C. Department of Health and Human Services, 13-CVS-11337, (7 March 2014)).
However, most recently, OAH ruled in the opposite way. A provider was terminated from an MCO’s catchment area, and we immediately filed a preliminary injunction to cease the termination. As you can see from the above-mentioned cases, OAH had not considered the reconsideration review mandatory. But, this time, the Judge found that the “contractual provision in [the MCO’s] contract with Petitioner, which provides for a local reconsideration review, is a valid and binding provision within the contract.”
So, again, the law is as clear as two and two adding up to five.
For now, when you are disputing an adverse determination by an MCO requesting a reconsideration review before going to OAH is a good CYA.
Going back to the traffic example at the beginning of the blog, my husband was pulled for speeding a few weeks ago. I was surprised because, generally, he does not speed. He is a usually conscientious and careful driver. When the officer came to his window, he was genuinely confused as to the reason for the stop. In his mind, he was driving 73 mph, only 3 miles over the speed limit. In fact, he had the car on cruise control. Turns out he confused the sign for HWY 70, as a speed limit sign. The speed limit was actually 55 mph.
We did not appeal the decision.
Hospital is shocked to learn that its Medicare contract with Health and Human Services may be terminated by April 16, 2017. Medicaid services may also be adversely affected. The hospital was notified of the possible Medicare contract termination on March 27, 2017, and is faced with conceivably losing its Medicare contract within a month of notification. Legal action cannot act fast enough – unless the hospital requests an emergency temporary restraining order, motion to stay, and preliminary injunction and files it immediately upon learning that its Medicare contract is terminated.
The Center for Medicare and Medicaid Services (CMS) threatened Greenville Memorial Hospital, part of Greenville Health System, in South Carolina, that Medicare reimbursements will cease starting April 16, 2017. According to CMS, Memorial’s emergency department is not compliant with Medicare regulations.
A public notice in the Greenville News says: “Notice is hereby given that effective April 15, 2017, the agreement between GHS Greenville Memorial Hospital, 701 Grove Road, Greenville, S.C. 29605 and the Secretary of Health and Human Service, as a provider of Hospital Services and Health Insurance for the Aged and Disabled Program (Medicare) is to be terminated. GHS Greenville Memorial Hospital does not meet the following conditions of participation. 42 CFR 482.12 Governing Body, 42 CFR 482.13 Patients’ Rights and 42 CFR 482.23 Nursing Services.”
“The Centers for Medicare and Medicaid Services has determined that GHS Greenville Memorial Hospital is not in compliance with the conditions of coverage. The Medicare program will not make payment for hospital services to patients who are admitted after April 16, 2017.”
The findings came after an onsite audit was conducted on March 13, 2017. Memorial was notified of the report on March 27, 2017.
Memorial must have submitted a corrective action plan by April 3, 2017, but it has not been released.
The emergency department at Memorial treats about 300 patients per day. An employee of Memorial estimates that the termination would lose net revenue from Medicare and Medicaid could potentially reach around $495 million. Greenville Memorial received $305 million in Medicare funding and $190 million from Medicaid in the most recent fiscal year, accounting for nearly six in 10 patients, officials said.
While CMS and Memorial refuse to discuss the details of the alleged noncompliance, CMS’ public notice cites three CFR cites: 42 CFR 482.12 Governing Body, 42 CFR 482.13 Patients’ Rights and 42 CFR 482.23 Nursing Services.
42 CFR 482.12 requires that hospitals have governing bodies and plans to follow Medicare regulations. Subsection (f) specifically requires that if a hospital has an emergency department that the hospital must follow 42 CFR 482.55 “Conditions of Participation,” which states that “The hospital must meet the emergency needs of patients in accordance with acceptable standards of practice.
(a) Standard: Organization and direction. If emergency services are provided at the hospital –
- The services must be organized under the direction of a qualified member of the medical staff;
- The services must be integrated with other departments of the hospital;
- The policies and procedures governing medical care provided in the emergency service or department are established by and are a continuing responsibility of the medical staff.
(b) Standard: Personnel.
- The emergency services must be supervised by a qualified member of the medical staff.
- There must be adequate medical and nursing personnel qualified in emergency care to meet the written emergency procedures and needs anticipated by the facility.”
The Memorial audit stemmed from a March 4, 2017, death of Donald Keith Smith, 48, who died as a result of traumatic asphyxiation. After an altercation, the patient was placed on a gurney, supposedly, face-down. South Carolina’s Department of Health and Environmental Controls Site Survey Agency investigated the hospital after the death and the audit found that hospital security officers improperly restrained Smith, strapping him face down to a gurney during an altercation, rendering him unable to breathe. The death was ruled a homicide.
Memorial terminated the security officers involved in the death.
Now the hospital is faced with its own potential death. The loss of Medicare and, perhaps, Medicaid reimbursements could financially kill the hospital. Let’s see what happens…
“No person shall be held to answer for a capital or otherwise infamous crime unless on presentment or indictment of a grand jury, except in cases arising in the land or naval forces, or in the militia, when in actual service in time of war or public danger; nor shall any person be subject for the same offense to be twice put in jeopardy of life or limb; nor shall be compelled in any criminal case to be a witness against himself, nor be deprived of life, liberty, or property without due process of law; nor shall private property be taken for public use without just compensation.” U.S. Constitution, 5th Amendment (emphasis added).
The first ten amendments to the U.S. Constitution, or, the Bill of Rights, were written by James Madison (for whom my daughter Madison was named).
Our managed care organizations (MCOs) and the government take the irritating position that providers have no right to be a Medicaid provider. And, often they quote the NC Administrative Code, which states that “All provider contracts with the North Carolina State Medicaid Agency are terminable at will. Nothing in these Regulations creates in the provider a property right or liberty right in continued participation in the Medicaid program.” 10A NCAC 22F .0605. However, as every attorney knows, when there is a rule, there is an exception. And when there is a rule, case law overrides it.
Despite 10A NCAC 22F .0605, a intelligent judge found that “Alliance contends that [the provider] has no right to be a Medicaid provider and therefore this Court cannot find that [the provider]’s rights have been substantially violated by its decision. Alliance also argues that [the provider]’s rights are solely contractual in nature and once the contract expired, the [provider] had no rights.
This contested case is not merely a contract case as Alliance contends. This contested case is about Alliance’s almost total disregard for Federal and State laws and regulations and its own policies. Based on the evidence, the process for the RFP seems almost like it began on a whim—ostensibly to fix problems that had no basis in fact. The result was a flawed RFP in which providers which might otherwise be comparable were treated differently, based in significant part on a subjective review.” Carolina Comm. Support Serv., Inc. v. Alliance Behavioral Healthcare, 14 DHR 1500, April 2, 2015.
So how can you have a property right in a Medicaid contract when the NCAC states that the contracts are terminable at will?
“In determining whether a property interest exists a Court must first determine that there is an entitlement to that property. Cleveland Bd. of Educ. v. Loudermill, 470 U.S. 532 (1985). Unlike liberty interests, property interests and entitlements are not created by the Constitution. Instead, property interests are created by federal or state law and can arise from statute, administrative regulations, or contract. Bowens v. N.C. Dept. of Human Res., 710 F.2d 1015, 1018 (4th Cir. 1983). Under North Carolina case law, the Fourth Circuit Court of Appeals has determined that North Carolina Medicaid providers have a property interest in continued provider status. Bowens, 710 F.2d 1018. In Bowens, the Fourth Circuit recognized that North Carolina provider appeals process created a due process property interest in a Medicaid provider’s continued provision of services, and could not be terminated “at the will of the state.” The court determined that these safeguards, which included a hearing and standards for review, indicated that the provider’s participation was not “terminable at will.” Id. The court held that these safeguards created an entitlement for the provider, because it limits the grounds for his termination such that the contract was not terminable “at will” but only for cause, and that such cause was reviewable. The Fourth Circuit reached the same result in Ram v. Heckler, 792 F.2d 444 (4th Cir. 1986) two years later. Since the Court’s decision in Bowen, a North Carolina Medicaid provider’s right to continued participation has been strengthened through the passage of Chapter 108C. Chapter 108C expressly creates a right for existing Medicaid providers to challenge a decision to terminate participation in the Medicaid program in the Office of Administrative Hearings. It also makes such reviews subject to the standards of Article 3 of the APA. Therefore, North Carolina law now contains a statutory process that confers an entitlement to Medicaid providers. Chapter 108C sets forth the procedure and substantive standards for which OAH is to operate and gives rise to the property right recognized in Bowens and Ram. Under Chapter 108C, providers have a statutory expectation that a decision to terminate participation will not violate the standards of Article 3 of the APA. The enactment of Chapter 108C gives a providers a right to not be terminated in a manner that (1) violates the law; (2) is in excess of the Department’s authority; (3) is erroneous; (4) is made without using proper procedures; or (5) is arbitrary and capricious. To conclude otherwise would nullify the General Assembly’s will by disregarding the rights conferred on providers by Chapter 108C. This expectation cannot be diminished by a regulation promulgated by the DMA which states that provider’s do not have a right to continued participation in the Medicaid program because under the analysis in Bowen the General Assembly created the property right through statutory enactment.” Carolina Comm. Support Serv, Inc., at 22.
Again – how can you have a property right in a Medicaid contract when the NCAC states that the contracts are terminable at will? The answer is – You have a property right in your Medicaid contract. The state or MCOs cannot arbitrarily terminate your contract – regardless what they say. Know your rights!!
When you have a Medicare appeal, it is not uncommon for the appeal process to last years and years – up to 3-6 years in some cases. There has been a backlog of approximately 800,000+ Medicare appeals (almost 1 million), which, with no change, would take 11 years to vet.
A Federal Court Judge says – that is not good enough!
Judge James Boasburg Ordered that the Medicare appeal backlog be eliminated in the following stages:
- 30% reduction from the current backlog by Dec. 31, 2017 (approximately a 300,000 case reduction within 1 year);
- 60% reduction from the current backlog by Dec. 31, 2018;
- 90% reduction from the current backlog by Dec. 31, 2019; and
- Elimination of the backlog of cases by Dec. 31, 2020;
A Medicare appeal has 5 steps. See blog. The backlog is at the Administrative Law Judge (ALJ) level – or, Level 3.
This backlog is largely attributable to the Medicare Recovery Audit Contractor (RAC) programs. In 2010, the federal government implemented the RAC program to recoup allegedly improper Medicare reimbursement payments. The RAC program (for both Medicare and Medicaid) has been criticized for being overly broad and burdensome and “nit picking,” insignificant paperwork errors. See blog.
While the RAC program has recovered a substantial sum of alleged overpayments, concurrently, it has cost health care providers an infinite amount of money to defend the allegations and has left Health and Human Services (HHS) with little funds to adjudicate the number of Medicare appeals, which increase every year. The number of Medicare appeals filed in fiscal year 2011 was 59,600. In fiscal year 2013, that number boomed to more than 384,000. Today, close to 1 million Medicare appeals stand in wait. The statutory adjudication deadline for appeals at the ALJ level is 90 days, yet the average Medicare appeal can last over 546 days.
The American Hospital Association (AHA) said – enough is enough!
AHA sued HHS’ Secretary Sylvia Burwell in 2014, but the case was dismissed. AHA appealed the District Court’s Decision to the Court of Appeals, which reversed the dismissal and gave the District Court guidance on how the backlog could be remedied.
Finally, last week, on December 5, 2016, the District Court published its Opinion and set forth the above referenced mandated dates for eliminating the Medicare appeal backlog.
While, administratively, the case was dismissed, the District Court retained “jurisdiction in order to review the required status reports and rule on any challenges to unmet deadlines.”
In non-legalese, the Court said “The case is over, but we will be watching you and can enforce this Decision should it be violated.”
This is a win for all health care providers that accept Medicare.
Knicole Emanuel Interviewed on Recent Success: Behavioral Health Care Service Still Locked in Overbilling Dispute with State
Last Thursday, I was interviewed by a reporter from New Mexico regarding our Teambuilders win, in which an administrative judge has found that Teambuilders owes only $896 for billing errors. Here is a copy of an article published in the Santa Fe New Mexican, written by Justin Horwath:
The true tragedy is that these companies, including Teambuilders, should not have been put out of business based on false allegations of fraud. Not only was Teambuilders cleared of fraud, but, even the ALJ agreed with us that Teambuilders does not owe $12 million – but a small, nominal amount ($896.35). Instead of having the opportunity to pay the $896.35 and without due process of law, Teambuilders was destroyed – because of allegations.
One of our clients in New Mexico had an alleged Medicaid recoupment of over $12 million!! Actually, $12,015,850.00 – to be exact. (See below). After we presented our evidence and testimony, the Judge found that we owe $896.35. I call that a win!
In this case, the Human Services Department (HSD) in New Mexico had reviewed 150 random claims. Initially, HSD claimed that 41 claims out of 150 were noncompliant.
But, prior to the hearing, we saved over $10 million by pointing out HSD’s errors and/or by providing additional documentation.
And then the ALJ’s decision after we presented our evidence and testimony –
Boom! Drop the mike…
…………………………….not so fast…
……………………………………………..picking the mike back up…
You see, in New Mexico, the administrative law judges (ALJs) cannot render decisions. Look in the above picture. You see where it reads, “Recommendation?” That is because the ALJs in New Mexico can only render recommendations.
Because Medicaid has a “single state agency” rule; i.e., that only one agency may render discretionary decisions regarding Medicaid, and HSD is the single state agency in New Mexico charged with managing Medicaid, only HSD may render a discretionary decision. So in NM, the ALJ makes a recommendation and then the Secretary of HSD has the choice to either accept or reject the decision.
Guess whether HSD accepted or rejected the ALJ’s recommendation?
Now we will have to appeal the Agency’s Decision to overturn the ALJ recommendation.
Here, in NC, we obtained a waiver from the Centers of Medicare and Medicaid Services (CMS) to allow our ALJs to render Decisions. See blog.
I still consider this a win.
“Always follow the Golden Rule. Always treat others how you want to be treated.”
What is so great about following rules? Do we have to follow all rules? What if other people do not follow the rules? What if the rules contradict? Are some rules more important than others?
The answer is – it depends.
When you sign your provider procurement agreement with NC to provide Medicaid services, there is a sentence in it that says, something to the effect, “The provider agrees to follow all applicable state and federal rules, laws, and regulations.” Yet, I am constantly shocked how many providers are completely oblivious to what are the “applicable state and federal rules, laws, and regulations” (although it does keep me in business).
The fact is, however, not all rules are created equal.
First, what is the difference between a policy, a regulation, and a law?
A law must be followed. If you break the law, you are punished. A regulation also must be followed; however, regulations are created by state agencies through a rule-making process. Usually, the public may comment on proposed regulations prior to being enacted.
On the other hand, a rule (that has not been formally adopted by the State) is policy or guidance. For example, the DMA Clinical Coverage Policies are rules or guidance. The Policies are not promulgated; i.e., they have not undergone the official rule-making process. Don’t get me wrong – you should follow the DMA Clinical Coverage Policies. My point is that a violation of a Clinical Coverage Policy will not/should not warrant the same punishment as violating a regulation or law.
Let’s think about this in a “real-life” hypothetical.
You receive a notice of overpayment in the amount of $450,000.00 because, allegedly, your service notes are signed electronically and you do not have an electronic signature policy.
There is no law or regulation that dictates that you must have an electronic signature policy. It is best practice to have an electronic signature policy. The Medicaid Billing Guide suggests that you maintain an electronic billing policy.
N.C. Gen. Stat. 150B sets forth the rule-making process. Any policy or rule that has not undergone the official rule-making process is considered nonbinding interpretative statements. N.C. Gen. Stat. 150B-18 states that “[a]n agency shall not seek to implement or enforce against any person a policy, guideline, or other nonbinding interpretative statement…if the statement has not been adopted as a rule in accordance with this Article.” (emphasis added).
Because there is no law or regulation requiring you to have an electronic signature policy, the State cannot punish you for not having one. In other words, the State cannot hold you to arbitrary criteria unless that criteria was formally adopted in the rule-making process.
How do you know if a policy or rule has been formally adopted?
Any policy or rule that is formally adopted will have a legal citation. For example, N.C. Gen. Stat 150B is a formal law. 10A NCAC 27G .0104 is a formal regulation – it is part of our administrative code. NC DMA Clinical Coverage Policies and the Medicaid Billing Guide are comprised of nonbinding, interpretative statements, as well as law and regulations. Usually, when a law or regulation is cited in the Policies or Billing Guide the formal, legal citation is also provided, but not always. I know, it’s confusing, yet extremely important.
You cannot and should not be punished for violating suggestions, policy, or nonbinding, interpretative statements. You should not be punished for not “treating others how you would like to be treated.” – That is not a law.
It is important to know the distinction because, apparently, those in charge of our Medicaid program, at times, do not.
Answer – Sometimes.
How many of you have received Remittance Advices from NCTracks that are impossible to understand, include denials without appeal rights, or, simply, are erroneous denials with no guidance as to the next steps? While these were most prevalent in the first couple years after NCTracks was rolled out (back in July 2013), these burdensome errors still exist.
You are allowed to re-submit a claim to NCTracks for 18 months. How many times do you have to receive the denial in order for that denial to be considered a “final decision?” And, why is it important whether a denial is considered a final decision?
- Why is it important that a denial be considered a “final decision?”
As a health care provider, your right to challenge the Department of Health and Human Services’ (via CSC or NCTracks’) denial instantly becomes ripe (or appealable) only after the denial is a final decision.
Yet, with the current NCTracks system, you can receive a denial for one claim over and over and over and over without ever receiving a “final decision.”
It reminds me of the Causus-race in Alice and Wonderland. “There was no ‘One, two, three, and away,’ but they began running when they liked, and left off when they liked, so that it was not easy to know when the race was over. However, when they had been running half an hour or so, and were quite dry again, the Dodo suddenly called out ‘The race is over!’ and they all crowded round it, panting, and asking, ‘But who has won?'” – Alice in Wonderland.
On behalf of all health care providers who accept Medicaid in North Carolina and suffered hardship because of NCTracks, at my former firm, I helped file the NCTracks class action lawsuit, Abrons Family Practice, et al., v. NCDHHS, et al., No. COA15-1197, which was heard before the NC Court of Appeals on June 12, 2015. The Opinion of the Court of Appeals was published today (October 18, 2016).
The Court of Appeals held that the plaintiffs were not required to “exhaust their administrative remedies” by informal methods and the Office of Administrative Hearings (OAH) prior to bringing a lawsuit in the State Court for damages because doing to would be futile – like the Caucus-race. “But who has won?” asked Alice.
Plaintiffs argued that, without a “final decision” by DHHS as to the submitted claims, it is impossible for them to pursue the denials before the OAH.
And the Court of Appeals, in a 2-1 decision, agrees.
The Abrons decision solidifies my contention over the past 4-5 years that a reconsideration review is NOT required by law prior to filing a Petition for Contested Case at OAH…. Boom! Bye, Felicia!
Years ago, I informed a client, who was terminated by an managed care organization (MCO), that she should file Petition for Contested Case at OAH without going through the informal reconsideration review. One – the informal reconsideration review was before the very agency that terminated her (futile); and two – going through two processes instead of one costs more in attorneys’ fees (burdensome).
We filed in OAH, and the judge dismissed the case, stating that we failed to exhaust our administrative remedies.
I have disagreed with that ruling for years (Psssst – judges do not always get it right, although we truly hope they do. But, in judges’ defenses, the law is an ever-changing, morphing creature that bends and yields to the community pressures and legal interpretations. Remember, judges are human, and to be human is to err).
However, years later, the Court of Appeals agreed with me, relying on the same argument I made years ago before OAH.
N.C. Gen. Stat. 150B-22 states that it is the policy of the State that disputes between the State and a party should be resolved through informal means. However, neither 150B-22 nor any other statute or regulation requires that a provider pursue the informal remedy of a reconsideration review. See my blog from 2013.
I love it when I am right. – And, according to my husband, it is a rarity.
Here is another gem from the Abrons opinion:
“DHHS is the only entity that has the authority to render a final decision on a contested medicaid claim. It is DHHS’ responsibility to make the final decision and to furnish the provider with written notification of the decision and of the provider’s appeal rights, as required by N.C. Gen. Stat. 150B-23(f).”
N.C. Gen. Stat. 150B-23(f) states, ” Unless another statute or a federal statute or regulation sets a time limitation for the filing of a petition in contested cases against a specified agency, the general limitation for the filing of a petition in a contested case is 60 days. The time limitation, whether established by another statute, federal statute, or federal regulation, or this section, shall commence when notice is given of the agency decision to all persons aggrieved who are known to the agency by personal delivery or by the placing of the notice in an official depository of the United States Postal Service wrapped in a wrapper addressed to the person at the latest address given by the person to the agency. The notice shall be in writing, and shall set forth the agency action, and shall inform the persons of the right, the procedure, and the time limit to file a contested case petition. When no informal settlement request has been received by the agency prior to issuance of the notice, any subsequent informal settlement request shall not suspend the time limitation for the filing of a petition for a contested case hearing.”
2. How many times do you have to receive the denial in order for that denial to be considered a “final decision”?
There is no magic number. But the Court of Appeals in Abrons makes it clear that the “final decision” must be rendered by DHHS, not a contracted party.
So which we ask – What about terminations by MCOs? Do MCOs have the authority to terminate providers and render final decisions regarding Medicaid providers?
I would argue – no.
Our 1915b/c Waiver waives certain federal laws, not state laws. Our 1915 b/c Waiver does not waive N.C. Gen. Stat. 150B.
“But who has won?” asked Alice.
“At last the Dodo said, ‘everybody has won, and all must have prizes.'” – Only in Wonderland!
Sometimes, you just need to stop running and dry off.