Category Archives: Beth Wood
Our State Auditor Beth Wood’s most recent audit finds that The Public Schools of Robeson County failed to spend approximately $1 million in Medicaid dollars intended for special needs children in schools!!
See audit report.
“The Public Schools of Robeson County (School District) did not use approximately $1 million per year in Medicaid administrative reimbursements to provide required services to students with disabilities. The School District missed this opportunity to better serve students with disabilities because it was unaware of a contractual requirement to use the Medicaid reimbursements to provide required services.
Over the last three years, the School District reported that it used $26,780 out of $3.16 million in Medicaid administrative reimbursements to provide services to students with disabilities.
The amounts reportedly spent each year are as follows:
• $ 8,969 out of $1,010,397 (0.89%) in 2013
• $12,043 out of $872,299 (1.38%) in 2012
• $ 5,768 out of $1,278,519 (0.45%) in 2011”
The question that I have after reading the audit report is…WHERE IS THE MONEY?
Was this $1 million given to the school system and spent on items other than services for children? Is the school district sitting on a surplus of money that was unspent? Or was this amount budgeted to the school system and the remainder or unspent money is sitting in our state checking account?
To me, it is relatively unclear from the audit report which of the above scenarios is an accurate depiction of the facts. If anyone knows, let me know.
Last week I traveled to Houston, Dallas, and Denver to meet with other health care attorneys of Gordon & Rees. It was a great trip and I met some wonderful colleagues. But I was happy to get home to my family, including our new addition of 9 peacock eggs.
Yes, 9 peacock eggs!!
Here is a pic:
(I know that there are 10 eggs in the picture, but we will not talk about the 10th. Just know that we have high hopes that the other 9 are viable and survive!! As of today, at 1:00 pm, all 9 eggs are chirping, but no cracks yet!!)
Oh, and, before I forget…Watch ABC news tonight. I was interviewed for a story about one of my clients.
Anyway, while I was gone, I was unable to post a blog regarding the State Auditor’s most recent audit report regarding Eastpointe. So here it is…
As the managed care organizations (MCOs) continue to accuse health care providers of fraud, waste, and abuse (FWA), it seems from a recent State Auditor report that, at least, one of the MCOs itself is guilty of the very accusation that they are alleging against providers. See blog. And blog.
There is an old story:
A wolf, passing by, saw some shepherds in a hut eating for their dinner a haunch of mutton. Approaching them, he said: What a clamor you would raise, if I were to do as you are doing!
Men are too apt to condemn in others the very things they practice themselves
The audit findings beg the questions…Is it only Eastpointe? Or all 9 MCOs? How much Medicaid money is lining the pockets of MCO executives, instead of paying for medically necessary services for Medicaid recipients? Beth Wood only audited Eastpointe. Is this only the tip of the iceberg?
According to our State Auditor, Eastpointe former executive has lined his pockets with $547,595+…
Here are the key findings from the NC State Auditor’s report regarding Eastpointe:
- Former CFO facilitated apparent kickbacks totaling $547,595 from two Eastpointe contractors
- Former CFO purchased three vehicles totaling $143,041 without a documented business purpose
- Former CFO purchased $18,600 of equipment for personal use
- Former CFO, Chief Executive Officer (CEO), and other employees used Eastpointe credit cards to make $157,565 of questionable purchases
- Inadequate CEO and area board oversight contributed to operational failures
Eastpointe is one of 9 MCOs in NC charged with managing and supervising Medicaid behavioral health care services. So what do we do when the entity IN CHARGE of managing Medicaid money is mismanaging tax dollars???
Where is the supervision??
Over the last few years, since the MCOs went live across the state, I have seen the MCOs terminate Medicaid providers for no cause, claim providers owed money, penalties, plans of corrections (POC), and/or refuse to contract with providers for reasons as silly as:
- Failing to put shoes on a paraplegic (no feet), because the assessment included that the patient required help dressing;
- Using green ink (a personal favorite) on a service note;
- Having signatures on service notes that are difficult to read (so the auditors assume that the person doesn’t have the correct licenses).
Here, we have the State Auditor finding that Eastpointe’s former CFO unilaterally hired two contractors to improve Eastpointe’s building (paid for with Eastpointe’s funding), but the former CFO accepting over half a million dollars. This is no green ink! This is no insignificant finding!!
What is Eastpointe’s funding?
As you can see, 72.7% of Eastpointe’s funding is pure Medicaid money. When Eastpointe’s former CFO received $547,595 in kickbacks, 72%, or $394,268.40, should have been used to provide Medicaid behavioral health care services.
These are our tax dollars, people!! These are our tax dollars budgeted to aid our most needy population with behavioral health care services!! These are our tax dollars budgeted to provide psychiatric services, substance abuse services, and services for those with developmental disabilities!!!!
Our State Auditor states in her report, “The former CFO may have violated several state laws including fraud, misrepresentation, and obtaining property by false pretenses.”
Let’s look at a couple of those statutes that may have been violated:
42 U.S. Code § 1320a–7b imposes criminal penalties for acts involving Federal health care programs, and federal dollars pay a portion of our Medicaid program.
North Carolina General Statute § 14-234 states: “No public officer or employee who is involved in making or administering a contract on behalf of a public agency may derive a direct benefit from the contract except as provided in this section, or as otherwise allowed by law.”
The question becomes was the former CFO of Eastpointe, at the time of the receipt of kickbacks a “public officer” or “employee who is involved in making or administrating a contract on behalf of a public agency?” I believe the answer is yes, at least as to the latter.
Here is the point in this blog that my personal views will be aired. I find the former CFO’s behavior significantly opprobrious and reprehensible.
Here we have an MCO which is in charge of behavioral health care for our most vulnerable and needy populations…not just those in poverty, but those in poverty suffering from mental illness, substance abuse, and/or developmental disabilities (MH/SA/DD). Obviously, those Medicaid recipients suffering from MH/SA/DD will not have the means to hire a private attorney to defend their interests. When they receive denials for authorizations or reductions in services, they are defenseless. Sure, some children have strong advocate parents, but, on the whole, those suffering from MH/SA/DD have little to no advocates.
Juxtapose someone sitting in the role of a CFO…a chief financial officer of a company. Think he or she can hire a private attorney?? Think he or she has advocates or means to hire advocates??
How can someone in power abuse that power to the detriment of the under-privileged and sleep at night? I find the State Auditor’s audit findings repugnant beyond comprehension.
We are left with a former CFO who may or may not have committed criminal activity, but, who, at least according to the State Auditor, has received kickbacks. We are left with questions.
Is it only Eastpointe? Or all 9 MCOs? How much Medicaid money is lining the pockets of MCO executives, instead of paying for medically necessary services for Medicaid recipients? Will there be justice?
We can only hope that this audit is a catalyst to consequences.
New State Auditor report investigates the Office of Medicaid Management Information Systems Services (OMMISS) within the North Carolina Department of Health and Human Services (DHHS).
With DHHS’ emphasis on detecting health care providers’ fraud, waste, and abuse (FWA) across the state, it seems ironic that its own agency is deemed guilty of wastefulness by our State Auditor. What’s that about glass houses……??
What exactly does OMMISS do? Well, for one, OMMISS works with Computer Sciences Corporation (CSC) regarding NCTracks. We all know how wonderfully NCTracks has operated since inception….See blog. And blog.
State Auditor Beth Wood finds:
At least $1.6 million wasted through excessive wages and commissions, unjustified overtime, and
holiday pay to ineligible employees
OMMISS Director engaged in or allowed nepotism
OMMISS Director received unauthorized compensatory time that may result in inflated retirement
Reports to General Assembly omitted at least $260,000 of overtime and compensatory time
Lack of adequate oversight of OMMISS despite findings in prior audit reports
Ok, so it took me a couple of days to free up some time to discuss the most recent Performance Audit by our State Auditor. This time of year is CRAZY! We had to get our daughter ready for the 4th grade, which entails buying an absurd amount of school supplies. Thank goodness we don’t have to do “back to school” clothes shopping, because she wears uniforms. Yesterday was her first day of school and, apparently, everything went well.
Now, I want to discuss the recent Performance Audit published by Beth Wood, our NC State Auditor, regarding provider eligibility. Prior to going any further, let me voice my opinion that Beth Wood as our State Auditor rocks. She is smart, courageous, and a force of nature. Any comment that may be negative in nature as to the most recent audit is NOT negative as to the audit itself, but to the possible consequences of such an audit. In other words, I do not believe that the Performance Audit as to Medicaid Provider Eligibility is incorrect; I am only concerned as to the possible consequences of such an audit on the Department of Health and Human Services (DHHS) and health care providers.
The Medicaid Provider Eligibility Performance Audit found that “deficiencies in the enrollment process increase the risk of unqualified providers participating in the Medicaid Program.”
And DHHS’ “enrollment review procedures do not provide reasonable assurance that only qualified providers are approved to participate in the NC Medicaid program.”
And “quality assurance reviews were not conducted or were ineffective.”
Basically, the Performance Audit (in layman’s terms) says that DHHS, again, has little to no oversight, lacks supervision over providers, has program deficiencies, and lacks the ability to manage Medicaid provider eligibility requirements adequately. Considering that DHHS is the single agency charged with managing Medicaid in North Carolina, the Performance Audit is yet another blow to the ability of DHHS to do its job.
Gov. McCrory appointed Sec. Aldona Wos as the head of DHHS, effective January 5, 2013. With Sec. Wos at its helm, DHHS has been riddled by the media with stories of management difficulties, high-level resignations, and mismanaged tax dollars. With the amount of media attention shining on DHHS, it is amazing that Sec. Wos has only been there almost a year and a half. Oh, how time flies.
While, again, I do not discount the accuracy of the Medicaid Provider Eligibility Performance Audit, I am fearful that it will spur DHHS to almost another “Salem witch hunt” extravaganza by pushing the already far-swung pendulum of attacks on providers, in the direction of more attacks. DHHS, through its contractors, agents and vendors, has increased its regulatory audits and heightened its standards to be compliant as a provider for a number of reasons:
1. The U. S. Supreme Court’s Olmstead case;
2. The DOJ settlement as to ACTT providers;
3. More oversight by CMS;
4. The ACA’s push for recovery audit contractors (RACs);
5. General need to decrease the Medicaid budget;
6. Increased fraud, waste, and abuse detection standards in the ACA;
7. Monetary incentives on managed care organizations (MCOs) to decrease the number of providers;
Imagine a pendulum swinging…or, better yet, imagine a child swinging on a swing. Before the child reaches the highest point of the swing, an adult runs behind the child and pushes the child even higher, in order to get a little more “umphf” on the swing. And the child goes even higher and squeals even more in excitement. But that’s not always a great idea. Sometimes the child goes flying off.
I am afraid that the Performance Audit will be that adult pushing the child on the swing. The extra little push…the extra little “umphf” to make the pendulum swing even higher.
As with any Performance Audit, DHHS is allowed to respond to Ms. Wood’s findings. One response is as follows:
“In September 2013, DMA established and implemented Management Monitoring Quality Controls (Monitoring Plan) for reviewing approval and denial decisions related to provider applications referred to it by the Contractor due to a potential concern. The Monitoring Plan established standardized policies and procedures and ensures that staff adheres to them in making enrollment determinations.”
In other words, recently DHHS has put forth a more aggressive oversight program as to health care providers and it will only get more aggressive.
In the last year or so, we have seen more aggressive oversight measures on health care provider that accept Medicaid. More audits, more desk reviews, more fraud investigation…and most (that I have seen) are overzealous and incorrect.
Believe me, I would be fine with increased oversight on health care providers, if the increased oversight was conducted correctly and in compliance with federal and state rules and regulations. But the audits and oversight to which I have been privy are over-bearing on providers, incorrect in the findings, and lacking much of due process for, much less respect to the providers.
I am concerned that the extra little “umphf” by this Performance Audit will impact health care providers’ decisions to accept or not to accept Medicaid patients. See my past blogs on the shortage of health care providers accepting Medicaid. “Shortage of Dentists Who Accept Medicaid: The Shortage Continues.” “Provider Shortage for Medicaid Recipients.” And “Prisons and Emergency Rooms: Our New Medicaid Mental Health Care Providers.”
Instead of increasing overzealous audits on health care providers, maybe we should require DHHS, through its contractors, agents, and vendors, to conduct compliant, considerate, and constitutionally-correct audits and oversight. Maybe the “umphf” should be applied more toward DHHS.
A new audit by the State Auditor shows ANOTHER problem at DHHS. This comes on the heels of another audit earlier this month finding that NCTracks is problematic.
Here is the link: State Audit
More commentary to come this evening when I have time to write about the tomfoolery occurring at DHHS
This just in!!!!
Our State Auditor Beth Wood just released a new audit entitled, “Department of Health and Human Services-NCTRACKS-Federal Government Certification Status.”
More to come…
Here is an interesting article…
Article from Carolina Journal Online by Dan Way:
RALEIGH — With $2 billion in cost overruns the past four years, Medicaid continues to be North Carolina’s most volatile political conundrum, and now unanswered questions about its spending and growth threaten to delay passage of 2014-15 state budget adjustments before next Monday’s deadline.
Things got nasty in a Senate Appropriations Committee meeting last week, and one is left to wonder whether Gov. Pat McCrory and the state Department of Health and Human Services squandered political capital by snubbing budget writers struggling with alarming lapses in vital Medicaid data.
Medicaid “is the linchpin” to writing the 2014-15 budget, said an irritated Sen. Bob Rucho, R-Mecklenburg. “Would someone explain to me why we don’t have [Office of State Budget and Management] or staff people from DHHS here to help us get to an answer so that we can move this budget forward?”
If not a prairie fire, the meeting at least exposed the slow burn of senators handcuffed by a dearth of crucial budget numbers from DHHS. Capital press corps reporters instinctively asked one of their most oft-repeated questions: Is DHHS Secretary Aldona Wos to blame for yet another major Medicaid predicament?
Due to significant backlogs, DHHS cannot provide accurate Medicaid enrollment numbers, valid claims data, and categories into which new enrollees are entered. Without precise, up-to-date information for this fiscal year, drafting an accurate budget for 2014-15 is impossible.
That’s a tough corner to be backed into for McCrory and Wos, who have made Medicaid budget predictability a holy grail.
The exasperation of Sen. Tom Apodaca, R-Henderson, typified the level of lawmaker frustration.
“If push comes to shove,” he said, “we can always issue subpoenas and have the numbers come to us. So let’s not take that off the table.”
The irritability in Senate Appropriations was bipartisan.
“Will we ever know what we need to know?” Sen. Angela Bryant, D-Nash, asked incredulously. “Do we have to be completely at the mercy of executive branch agencies on an issue like this that is so critical to what we do?”
Senate leader Phil Berger, R-Rockingham, explained, in measured but heart-attack serious tones, why there is an elevated sense of urgency, and why he had wanted someone from the budget office at the Appropriations Committee meeting to explain Medicaid numbers that have swung from wildly varying to unaccounted for.
“Our feeling is we need to reach some understanding on the Medicaid number before we can realistically start talking about most of the other things,” including teacher pay raises and pay hikes for state workers, Berger said.
And then there was this jaw-dropping exchange between Sen. Joel Ford, D-Mecklenburg, and Susan Jacobs of the legislative Fiscal Research Division.
“Based upon the uncertainty and the lack of data, how can we say for certain that people are not being overpaid or underpaid?” Ford asked.
“We probably can’t say that,” responded Jacobs. She also dropped a bombshell that it could be “probably late next year” before all necessary numbers are completely and accurately obtained.
“To me that is a very disturbing scenario where we are taking taxpayer money with good intentions, but with no verification that we’re doing the right thing because of a broken system,” Ford said.
Whether he realized it, Ford’s characterization of Medicaid as a broken system oozed irony.
In one of their first official acts upon assuming office in January 2013, McCrory and Health and Human Services Secretary Aldona Wos lambasted the state’s Medicaid program as a chaotic, broken system. Eighteen months later and holding Swiss-cheese Medicaid reports, state senators are grumbling that the agency’s disarray persists.
Pressed by reporters, Berger stopped short of saying he has lost confidence in Wos’ leadership.
“I’ll leave it to others as to why they’re not able to provide that information,” he said, but he insisted this budgeting fiasco shows the need to remove Medicaid from Wos’ control and make it a standalone agency.
The Senate budget calls for $88 million more in Medicaid spending in 2014-15 than the House version. Berger said the Senate used higher, worst-case-scenario numbers.
Berger and his counterparts rightly expressed no appetite for once again using rosy projections only to find out halfway through the budget year that there is a whopping shortfall.
To make matters worse, Senate Majority Leader Harry Brown, R-Onslow, said Fiscal Research staff isn’t even confident the worst-case numbers are sufficiently high. “I think that’s important to make sure everyone understands it.”
Sen. Louis Pate, R-Wayne, co-chairman of the Senate Health and Human Services Appropriations Subcommittee, agreed with frustrated Fiscal Research staff that much of the problem with missing data stems from NC Tracks, the new but deeply flawed Medicaid billing system.
But he was quick to note that Republicans inherited the woefully underperforming computer system that was in development for years under Democratic administrations.
“I don’t know if they made up-to-date adjustments as they went along, and we don’t know if it was tested properly before it went live,” Pate said. Others, including State Auditor Beth Wood, warned last year that the nearly half-billion-dollar system was not ready to launch.
Wos lost control and never regained the upper hand in messaging after she defiantly promised she was going to drag the long-beleaguered NC Tracks over the July 1 finish line, and declared it sound when she did.
The bravado and exuberant can-do proclamations might have seemed politically appropriate for a new administration seeking to position itself as an intrepid change agent.
But Wos would have been wise to have tempered her rookie remarks with caveats about the huge challenges left behind by previous Democratic administrations, downplayed expectations, and more candidly acknowledged what IT skeptics already knew — the system was going to encounter plenty of rollout problems that would require a long time to correct.
Pate was among those declaring that the current Medicaid budgeting calamity further demonstrates the “critical necessity for reorganization” of the agency. But restructuring has been hampered by the unsteadiness of tectonic policy shifts.
Pate is among senators who continue to oppose the latest reform plan favored by McCrory and Wos, and now in bill form in the House. He said the proposal only tinkers around the edges of budget predictability and restraint.
This latest iteration is an accountable care model comprising networks of doctors and hospitals. It was rolled out after the administration’s stunning U-turn from months of championing full-risk managed care, and scoring a coup in recruiting Carol Steckel, a highly sought, nationally renowned expert on Medicaid managed care.
Steckel, former head of the National Association of State Medicaid Directors, left her $210,000-a-year job in North Carolina last September after only eight months working for Wos.
Whether there was a back-story to the swift departure of a highly heralded Medicaid reformer, much like what this year’s Medicaid numbers are, remains a guessing game.
Who would want state Medicaid dollars paying for services that are not medically necessary? What about services getting paid out for services rendered to dead people?
I mean, I am no doctor, but I fail to see why someone who is deceased would need dentures, dialysis, or a wheelchair.
Yet, the state of Illinois recently identified that it paid overpayments for Medicaid services to roughly 2,900 people after the date of their deaths, equaling approximately $12 million. See AP story.
How do state agencies verify eligibility for the multi-million number of Medicaid recipients within a state? Or, for that matter, how does the federal government determines eligibility for the nation’s Medicare population? Determining eligibility for Medicaid and Medicare is a large-scale, daunting task for both the federal government and the state government.
A key component of Medicaid and Medicare eligibility is that the person receiving the services is alive. Yet Illinois failed to check on the status of Medicaid recipients’ lives.
Improper payments of $12 million for Medicaid services delivered to the deceased are, obviously, disconcerting for taxpayers. We want Medicaid services to be provided to those people who need the services, and I cannot fathom what Medicaid services a deceased person would need.
Apparently, who determines Medicaid eligibility in Illinois has been a hotly, disputed and ideologically polarized debate. Illinois had hired Maximus Health Services, a private company, to verify Medicaid eligibility, including determining which recipients passed away. The company was said to be achieving a Medicaid eligibility-removal rate of 40 percent. Last year the contract between the state of Illinois and Maximus ended and the work was transferred into the hands of state employees.
The question remains in my mind, however, who has the duty to inform the state that a Medicaid recipient has passed away? Is the burden on the state employees to discover the deaths, as it appears to be in Illinois? Are Medicaid providers continuing to bill for deceased recipients? Obviously the deceased person does not have the burden to inform the state of his or her passing. Where should the responsibility lie? And where does it lie?
Illinois Governor Pat Quinn blamed the managed care companies. He stated that, in most of the cases that managed care insurance companies incorrectly billed for Medicaid services for deceased people.
This brings up another entity on which the burden of discovering the deaths of Medicaid recipients may lie.
We, in North Carolina, have a messy, unsupervised managed care organization (MCO) system for those suffering with mental health issues, are developmentally disabled and suffer from substance abuse. We currently have 10 MCOs, which are all in the process of merging to form only 3-4. Are the MCOs responsible for knowing when Medicaid recipients die?
Our State Auditor, Beth Wood, has not conducted a similar audit in North Carolina, to my knowledge, but it would not surprise me if NC is also providing Medicaid services to the deceased.
To my knowledge, the federal government has not conducted an audit of the Medicare services to determine whether Medicare funds are being spent on the deceased. Again, I would not be surprised to discover that Medicare funding is being spent on those whom have passed.
This is yet again another example of how the failure of the state government to supervise itself and its contractors costs taxpayers money.
“The oldest and strongest emotion of mankind is fear, and the oldest and strongest kind of fear is fear of the unknown” H.P. Lovecraft, “Supernatural Horror in Literature.” I completely agree. The unknown scares me way more than the known.
The unknown is what creates fear, right? For example, my husband is scared of heights. It is not the “heights” per se that scare him. He says that when he is high up, he gets an abnormal and understandably disturbing sense to throw himself off the ledge. He is scared, not of heights, but of his reaction to heights. Similarly, remember when I had an anxiety attack while I repelled (fell without any control) down the 22-story Wells Fargo building to raise money for the Special Olympics? To see my disastrous descend off of the Wells Fargo building, see my blog: “The Future of Managed Care in Medicaid and the Fear of the Unknown.”
But unknowns to a Medicaid budget can be disastrous.
For those of you who live in North Carolina, you probably got some snow last Wednesday. I live in Raleigh, and we got about 3 inches. My law firm was actually closed Wednesday. While I have to say that it takes a lot of snow to close a law firm (I mean, come on, think of how much money we lost by having a non-productive day. Luckily, I work for a firm that cares more about the safety of its employees than the bottom line), I do live in the South. And snow scares us (actually, not snow per se (we aren’t actually scared of the little white flakes), but the fear of the unknown…what can happen because of snow?)
A few weeks ago snow was in the forecast (not on the ground) and my daughter’s school closed. Seriously, there was no snow, yet my daughter’s school was cancelled.. And Tuesday evening, the night before the Great Blizzard of 2014, the grocery store was slammed with people buying milk and bread (just in case we are stuck in our homes for weeks and could be on the brink of starvation due to the 3 inches of snow). My husband, being the good southerner that he is, keeps our water running all night to prevent freezing pipes. He also covers the vents outside with towels.
Needless to say our house was prepared for the snow.
But there are always unknowns. Especially when it comes to Medicaid budgets.
Our unknowns regarding the Great Blizzard of 2014? (1) No sled; and (2) Skinny, unpadded sleds = a bruised body.
We woke up Wednesday to 3 inches of snow and no sled. And our 8-year-old was aching to sled. How do we not have a sled? Hello…we are from the south. It snows here maybe every 3 years. So we run to Ace Hardware, because, according to my husband, it is family owned and run. Ace had 4 sleds left (obviously other southerners were quicker to think of sleds than we). Three of the sleds were very thin. Almost like a towel, but more stiff and made of plastic. One of the remaining sleds was thicker…a tad thicker than a boogey board with two yellow handles on each side. Of course, my daughter chose the thicker one, leaving me with the skinny, unpadded sled.
We drove to Shelley Lake at which there is a VERY steep, almost, straight-down hill. Seriously, I had to climb up on my knees because I couldn’t stand without sliding backward. And, due to the skinny, unpadded sled, as I shot down the hill, I felt every bump…every jolt…every drop….on my knees, elbows and belly. But it was fun, so we kept at it! My daughter yelled, “Best day ever!” (Which made me smile ear to ear).
My other unknown? Skinny, unpadded sleds equal a sore body with black and blue knees and elbows after 4-5 hours of sledding (and climbing up the steep hill). Again, chalk it up to me being a southerner. Literally, the last time I sledded was when Madison was 4…the Great Blizzard of 2010….and I didn’t have a skinny, unpadded sled then.
So here I am today, writing this, but unable to cross my legs or wear skirts above my knees or people would think that….hmmmm…..what would people think if they saw my swollen, bruised knees? That I jumped up and down on my knees? That something fell on my knees? That I fell on my knees? That someone beat me up…but only my knees? It is an odd thing to have bruised knees. They are very difficult to explain.
So too are Medicaid budgets. And Medicaid expenditures. Something always comes up. There is always grey (or black and blue). And they are very difficult to explain.
Think about it…we expect our legislature to come up with how much we will spend the future year based on the past. The General Assembly does not have a crystal ball (that I know of). Yet we expect the budget to be correct, and we expect to not exceed the budget. Otherwise we are over the budget. And bruised.
Last year, 2013, State Auditor Beth Wood stated that we had exceeded the State Medicaid budget by hundreds of millions of dollars for at least three years running. She estimated that going over the Medicaid budget by so much money cost the tax payers $1.2 billion. But how can you budget medical necessity for Medicaid recipients?
Well, NC is asking the feds for permission to decrease Medicaid spending by freezing Medicaid reimbursement rates. We have approximately 10 or more requests to the Center for Medicare and Medicaid Services (CMS) to freeze the Medicaid reimbursement rates for a range of Medicaid services.
How else do we try to decrease Medicaid spending? By hiring some managed care organizations (MCOs) to manage behavioral health and placing the risk of going over budget on the MCOs. Hello, people, rationally, how do you think that the risk-based model will be implemented by the MCOs. Surely the MCOs will be happy to have lots of providers in their catchment areas and happy to have lots of recipients so the MCO can pay out lots of money and receive little-to-no profit. And we live in Disneyland, and all the animals help us clean our homes!
The concept of MCOs managing behavioral health is not inherently bad. The WAY in which NC implemented MCOs and the pay-structure IS inherently bad. Even CMS agrees with me. See my blog: “CMS Declares the Payment Structure for the MCOs Violates A-87…”So what Happens Now?”
So, besides freezing reimbursement rates and outsourcing risk, how else could we manage Medicaid costs?
DECREASE ADMINISTRATIVE COSTS.
Medically necessary Medicaid services should not be decreased. Reimbursement rates should be raised, not slashed. Medicaid providers should have the incentive to accept Medicaid, not the converse.
Decreasing administrative costs accomplishes decreasing Medicaid expenditures without harming the medically necessary Medicaid services to Medicaid recipients.
On the national level, between 2010 and 2011, total Medicaid expenditures increased by 6.4%. However, in 2012, the federal Health and Human Services Department (HHS) estimates that Medicaid expenditures will increase only 1.1%. HHS opines that the slower growth of Medicaid expenditures is because of States’ efforts to limit growth in light of budget constraints and the knowledge that the States will be liable for more Medicaid recipients (if such state expands) after the temporary federal matching reimbursement under the Affordable Care Act (ACA). In other words, we are spending less on Medicaid services.
Just to get perspective on how important Medicaid is to our overall budget and tax dollars, total Medicaid spending in 2011 was $432.4 billion with the feds paying $275.1 billion or 64% and the states paying $157.3 billion or 36%. That is a lot of tax dollars!
In 2011, nationally, administration costs increased from 2010 by 8.7%. This increase in the highest percentage increase in administrative costs since 2003.
And North Carolina’s administrative spending is abnormally high.
Back in October 2013, our State Auditor Beth Wood was quoted saying, “The administrative spending for the state’s Medicaid program is 38 percent higher than the average of nine states with similarly sized Medicaid programs,” Wood maintained. “While those states on average have administrative costs of 4.5 percent, the state of North Carolina spent over 6 percent of its total budget on administrative cost. In real dollars that means that the state is spending $180 million more than the average of our peer states.”
$180 million more than peer states spent on administrative costs…not services to Medicaid recipients…not reimbusements to providers accepting Medicaid….just for administrative costs.
On a national level, Medicaid administrative costs are only expected to increase.
Over the next 10 years, Medicaid expenditures are projected to increase at an average annual rate of 6.4% and to reach $795.0 billion by 2021. Average enrollment is projected to increase at an average annual rate of 3.4% over the next 10 years and to reach 77.9 million in 2021. See CMS report.
Because of the ACA , Medicaid expenditures are expected to increase by a total of $514 billion from 2012 through 2021. See id.
Nationally, Medicaid spending on program administration totaled $20.2 billion in 2011—$11.4 billion in Federal expenditures and $8.9 billion in State spending. See id.
Total Medicaid expenditures grew slightly faster in 2011 than in 2010, at a rate of 6.4 percent. Expenditures on benefits grew somewhat more slowly (6.3 percent) than in 2010, but administration expenditures increased at the fastest rate since 2003 (8.7 percent). See id.
Each year we have more citizens who qualify for Medicaid. Because of the ACA, we have the largest increase in the number of Medicaid recipients, quite possibly, ever in the history of Medicaid, except maybe during its inception.
Yet, the number of providers willing to accept Medicaid is not rising. “The average rate of acceptance among family physicians, dermatologists, cardiologists, orthopedic surgeons and obstetrician/gynecologists in all 15 markets surveyed was 45.7 percent last year, according to data gathered from nearly 1,400 medical offices last year.” “The 2014 survey showed a drop from 55.4 percent acceptance in 2009.” See 2014 Survey by Merritt Hawkins.
Here is the formula:
More Medicaid recipients + Higher administrative costs + Fewer providers accepting Medicaid = Catastrophe? Medicaid recipients not receiving the medically necessary services? The cost of administrating Medicaid takes away from medically necessary services to Medicaid recipients?
Black and blue Medicaid budgets?
Here in NC, we have opted to not expand Medicaid. However, not expanding does not equal less Medicaid recipients (obviously it means less than had we expanded), but regardless of expansion, the number of Medicaid recipients increase every year. Just like our general population grows.
While NC has not expanded, NC has not cut Medicaid administrative costs. Instead, we are freezing reimbursement rates and allowing the MCOs to cut mental health services and terminate providers. Yet, our Medicaid population continues to grow, despite not expanding Medicaid. More and more providers are opting to not accept Medicaid.
“North Carolina spent over 6 percent of its total budget on administrative cost. In real dollars that means that the state is spending $180 million more than the average of our peer states.” Beth Wood.
“We exceeded the State Medicaid budget by hundreds of millions of dollars for at least three years running.”
So what will become of our Medicaid state budget? Will our budget get black and blue from unexpected bumps in the road? Do we have a sled that is too skinny and unpadded?
The worst fear is the fear of the unknown.
My law partner Camden Webb and I filed a class action lawsuit today alleging on behalf of medical providers who accept Medicaid in North Carolina.
Williams Mullen Medicaid Litigation Team Files Class Action Lawsuit Against NCTracks
Raleigh, NC. (Jan. 16, 2013) – This morning, Williams Mullen attorneys Knicole Emanuel and Camden Webb filed a class action lawsuit on behalf of Medicaid providers in North Carolina against NCTracks, the system that processes Medicaid claims.
The suit alleges that NCTracks was launched before it was ready to be implemented, and its poor design has resulted in catastrophic losses for health care providers. NCTracks had over 3,200 software errors in the first few months of operation, and payments to Medicaid providers were delayed, unpaid, or “shorted” by over half a billion dollars in the first 90 days. In some instances, providers have decided not to accept Medicaid patients or have even closed their practices, and some of North Carolina’s most needy citizens have suffered a reduction in the health care resources available to them.
“We’re filing on behalf of health care providers, but we’re also serving the low-income Medicaid recipients of North Carolina that rely on these providers to receive care,” said Knicole Emanuel, a Litigation Partner“Since these providers have experienced financial hardship due to NCTracks, many of them are no longer able to serve the state’s most vulnerable population of health care consumers.”
About Williams Mullen
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