Category Archives: Petitions for Contested Cases
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 September 6, 2017, I appeared on the Besler Hospital Finance Podcast regarding:
Update on the Medicare appeals backlog [PODCAST]
Feel free to listen to the podcast, download it, and share with others!
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.
“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.
“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.
Another Win for the Good Guys! RAC Auditors Cannot Look Back Over 3 Years!!! (BTW: We Already Knew This -Shhhhh!)
I love being right – just ask my husband.
I have argued for years that government auditors cannot go back over three years when conducting a Medicaid/Care audit of a health care provider’s records, unless there are credible allegations of fraud. See blog.
42 CFR 455.508 states that “[a]n entity that wishes to perform the functions of a Medicaid RAC must enter into a contract with a State to carry out any of the activities described in § 455.506 under the following conditions:…(f) The entity must not review clams that are older than 3 years from the date of the claim, unless it receives approval from the State.”
Medicaid RAC is defined as “Medicaid RAC program means a recovery audit contractor program administered by a State to identify overpayments and underpayments and recoup overpayments.” 42 CFR 455. 504.
From the definition of a Medicaid RAC (Medicare RAC is similarly defined), albeit vague, entities hired by the state to identify over and underpayments are RACs. And RACs are prohibited from auditing claims that are older than 3 years from the date of the claim.
In one of our recent cases, our client, Edmond Dantes, received a Tentative Notice of Overpayment from Public Consulting Group (PCG) on May 13, 2015. In a Motion for Summary Judgment, we argued that PCG was disallowed to review claims prior to May 13, 2012. Of the 8 claims reviewed, 7 claims were older than May 13, 2012 – one even went back to 2009!
The Administrative Law Judge (ALJ) at the Office of Administrative Hearings (OAH) agreed. In the Order Granting Partial Summary Judgment, the ALJ opined that “[s]tatutes of limitation serve an important purpose: to afford security against stale demands.”
Accordingly, the ALJ threw out 7 of the 8 claims for violating the statute of limitation. With one claim left, the amount in controversy was nominal.
A note as to the precedential value of this ruling:
Generally, an ALJ decision is not binding on other ALJs. The decisions are persuasive. Had DHHS appealed the decision and the decision was upheld by Superior Court, then the case would have been precedent; it would have been law.
Regardless, this is a fantastic ruling , which only bolsters my argument that Medicaid/care auditors cannot review claims over 3 years old from the date of the claim.
So when you receive a Tentative Notice of Overpayment, after contacting an attorney, look at the reviewed claims. Are those reviewed claims over 3 years old? If so, you too may win on summary judgment.
Don’t we have due process in America? Isn’t due process something that our founding fathers thought important, essential even? Due process is in our Constitution.
The Fourteenth (governing state governments) and the Fifth Amendment (governing federal government) state that no person shall be “deprived of life, liberty, or property without due process of law.”
Yet, apparently, if you accept Medicaid or Medicare, due process is thrown out the window. Bye, Felicia!
How is it possible that criminals (burglars, murderers, rapists) are afforded due process but a health care provider who accepts Medicaid/care does not?
Surely, that is not true! Let’s look at some examples.
In Tulsa, a 61-year-old man was arrested for killing his Lebanese neighbor. He pled not guilty. In news articles, the word “allegedly” is rampant. He allegedly killed his neighbor. Authorities believe that he may have killed his neighbor.
And prior to getting his liberty usurped and getting thrown in jail, a trial ensues. Because before we take a person’s liberty away, we want a fair trial. Doesn’t the same go for life and property?
Example A: I recently received a phone call from a health care provider in New Jersey. She ran a pediatric medical daycare. In 2012, it closed its doors when the State of New Jersey accused it of an overpayment of over $12 million and suspended its funds. With its funds suspended, it could no longer pay staff or render services to its clients.
Now, in 2016, MORE THAN FOUR YEARS LATER, she calls to ask advice on a closing statement for an administrative hearing. This tells me (from my amazing Murdoch Mysteries (my daughter’s favorite show) sense of intuition): (1) she was not provided a trial for FOUR YEARS; (2) the state has withheld her money, kept it, and gained interest on it for over FOUR YEARS; (3) in the beginning, she did have an attorney to file an injunction and a declaratory judgment; and (4) in the end, she could not afford such representation (she was filing her closing argument pro se).
Examples B-P: 15 New Mexico behavioral health care agencies. On June 23, 2013, the State of New Mexico accuses 15 behavioral health care agencies of Medicaid fraud, which comprised 87.5% of the behavioral health care in New Mexico. The state immediately suspends all reimbursements and puts most of the companies out of business. Now, MORE THAN THREE YEARS LATER, 11 of the agencies still have not undergone a “Fair Hearing.” Could you imagine the outrage if an alleged criminal were held in jail for THREE YEARS before a trial?
Example Q: Child psychiatrist in rural area is accused of Medicaid fraud. In reality, he is not guilty. The person he hired as his biller is guilty. But the state immediately suspends all reimbursements. This Example has a happy ending. Child psychiatrist hired us and we obtained an injunction, which lifted the suspension. He did not go out of business.
Example R: A man runs a company that provides non-emergency medical transportation (NEMT). One day, the government comes and seizes all his property and freezes all his bank accounts with no notice. They even seize his fiance’s wedding ring. More than TWO YEARS LATER – He has not stood trial. He has not been able to defend himself. He still has no assets. He cannot pay for a legal defense, much less groceries.
Apparently the right to speedy trial and due process only applies to alleged burglars, rapists, and murderers, not physicians and health care providers who render medically necessary services to our most fragile and vulnerable population. Due process??? Bye, Felicia!
What can you, as a health care provider, do if you are accused of fraud and your reimbursements are immediately suspended?
- Prepare. If you accept Medicare/caid, open an account and contribute to it generously. This is your CYA account. It is for your legal defense. And do not be stupid. If you accept Medicaid/care, it is not a matter of if; it is a matter of when.
- Have your attorney on speed dial. And I am not talking about your brother’s best friend from college who practices general trial law and defends DUIs. I am talking about a Medicaid/care litigation expert.
- File an injunction. Suspension of your reimbursements is a death sentence. The two prongs for an injunction are (a) likelihood of success on the merits; and (b) irreparable harm. Losing your company is irreparable harm. Likelihood of success on the merits is on you. If your documents are good – you are good.