Category Archives: Provider Appeals of Adverse Decisions for Medicare and Medicaid
Since the inception of the Medicaid MCOs in North Carolina, we have discussed that the MCO terminations of providers’ Medicaid contracts have consistently and disproportionately been African American-owned, behavioral health care providers. Normally the MCOs terminate for “purported various reasons,” which was usually in error. However, these provider companies had one thing in common; they were all African American-owned. On this blog, I have generally reported that MCO terminations were just based on inaccurate allegations against the providers. The truth may be more bias. – Knicole Emanuel
- Written by Ryan Hargrave, associate at Practus.
George Floyd; Breyonna Taylor; Eric Garner; Tamir Rice; Jordan Davis, these are all names that we know, all-too-well, for such horrendous reasons. Not for the brilliance, that these young African-American men and women possessed; nor for the accolades they had accumulated throughout their short-lived experiences on this earth. We recognize these names through a disastrous realization that brought communities and our nation together for a singular purpose; to fight racism.
A global non-profit organization, United Way, recognizes four types of racism.
- Internalized Racism—a set of privately held beliefs, prejudices, and ideas about the superiority of whites and the inferiority of people of color.
- Interpersonal Racism—the expression of racism between individuals. Occurring when individuals interact and their private beliefs affecting their interactions.
- Institutional Racism—the discriminatory treatment, unfair policies and practices, and inequitable opportunities and impacts within organizations and institutions, all based on race, that routinely produce racially inequitable outcomes for people of color and advantages for white people.
- Structural Racism—a system in which public policies, institutional practices, cultural representations and other norms work in various, often reinforcing, ways to perpetuate racial group inequality.
These various types of racism can be witnessed in every state, city, county, suburb, and community, although it isn’t always facially obvious. Racism can even be witnessed in the health care community. Recently in 2020, NC Governor Roy Cooper signed executive order 143 to address the social, environmental, economic, and health disparities in communities of color that have been exacerbated by the COVID-19 Pandemic. Machelle Sanders, NC Department of Administration Secretary, was quoted stating that “Health inequities are the result of more than one individual choice or random occurrence—they are the result of the historic and ongoing interplay of inequitable structures, policies, and norms that shape lives.” Governor Cooper went on to include that there is a scarcity of African-American healthcare providers, namely behavioral healthcare providers, available to the public.
Noting this statement from the Governor of our great state, its troublesome to know that entities that provide federal funding to these healthcare providers have been doing their absolute best to rid the remaining African-American behavioral healthcare providers. For years, Managed Care Organizations (“MCOs”) have contracted with these providers to fund the expenses pursuant Medicaid billing. MCOs have repeatedly attempted to terminate these contracts with African-American providers without cause, unsuccessfully; until recently. In the past few years, Federal Administrative Law Judges (“ALJ’s”) have been upholding “termination without cause” contracts between MCOs and providers. This is nothing less of an escape route for MCOs, allowing them to keep the federal funds, that they receive each year based upon the number of contracts they have with providers, as profit. This is an obvious incentive to terminate contracts after receiving these funds. Some may refer to this as a business loophole, while most Americans would label this an unconstitutional form of structural racism. It has been estimated that 99% of behavioral healthcare providers in NC that have been terminated have ONE thing in common. You guessed it. They are African-American owned. Once terminated, most healthcare providers cannot operate without these Federal Medicaid Funds and, ultimately, are forced to close their respective practices.
Why is this not talked about? The answer is simple. Most Americans who are on Medicaid don’t even understand the processes and intricate considerations that go into Medicaid, let alone the general public. And what’s the craziest thing? The craziest thing is the fact that these Americans on Medicaid don’t know that the acts of racism instituted against their providers, trickle down and limit their ability to obtain healthcare services. Think about it. If I live in a rural town and have a healthcare provider that I know and love is terminated and forced to close, I lose access to said healthcare provider and must potentially go to an out-of-town provider. The unfortunate fact is that most healthcare providers who operate with a “specific” specialty, such as autistic therapy, can have waitlists up to 12 months! The ramifications of these financially-greedy, racist acts of the MCOs ultimately affect the general population.
-written by Todd Yoho, my paralegal, who has worked closely with me for over a decade. He knows more about Medicare and Medicaid than he probably cares to, but no one could contest that he doesn’t know his stuff!
There is a film almost everyone in the legal field has seen at least once. A comedic drama from 1973 titled, The Paper Chase. It follows the journey of a first year law student at Harvard Law School, and his particular frustrations with his Contracts course and professor. Contracts are one of the first things a law student studies, and some attorneys spend their career reviewing, drafting, revising, and negotiating contracts. They are that important.
In the health care, provider world, contracts are the lifeblood of your company. Contracts are how you secure work, ensure rates for revenue, and contain vital information should someone act contrary to the contract. If you have a dispute with an entity, your first act should be to consult an attorney and provide them with a copy of your contract. There should be a section about dispute resolution, which you should carefully scrutinize before signing any contract. It may be mandatory arbitration, it may stipulate a particular venue, or it may cite specific rules and statutes that, if you are not an attorney, may read like obtuse, dense, “word salad” put together by people who do not have to live and operate under the very laws they enact.
But, what if you don’t have a copy of your contract? You signed it years ago, your business has moved several times, or it just disappeared in the hectic daily life of daily operations. Your recourse is that you have to ask the very entity you have a dispute with to provide you with a copy. We’ve seen providers in situations like this, and sometimes the other entity complies immediately. Other times they say it will take 30 days, or 60 days, and you are already on your heels. Without a copy of that contract, you and your attorney may not know what your first step towards resolution will be. Worse if you are on a time limit you don’t know exists.
So, what do you do to avoid this kind of situation? You need to have a document retention policy. Know how long you are required to keep documents, Create an important document archive in a secure location that you update every time you execute a business related document. And make a copy to be kept in a separate, secure location. Then make another copy. It used to be this could be a notebook, a folder, or a file box in your CEO’s office, manager’s office, or with another person trusted with corporate responsibility. A copy could be kept at the CEO’s home in a locked file cabinet. And it still could be. There’s nothing wrong with keeping a hard copy archive, but this is the digital era.
Because we are in the digital era, you should absolutely keep your archive backed up to the cloud. Cloud data services can be cheap, and will pay enormous dividends if you suffer a catastrophic document loss. But, you have to preserve them first. Don’t let them get misplaced. Much like your important family documents, your important business documents are vital pieces of information. You may not need them every day, but the day you do need them, you want to have them quickly and easily available. They are that important. You don’t want to find yourself at an inopportune moment chasing paper.
Some helpful links include the following:
Knicole here. Sorry for the duplicative links. I don’t know how to delete them.
In litigation, there are two opposing sides, like football. It wouldn’t be much of a game if one side didn’t show up. In Medicare provider appeals, only one side shows up and I am asking – how is that fair? Let me explain:
You, as a provider receive a notice of Medicare overpayment in the mail. NGS or Palmetto or whoever claims you owe $4 million dollars. Of course the amount is extrapolated.
You decide to appeal. The first level is a redetermination at the Medicare Administrative Contractor. It is a desk review; you do not have the opportunity to question the other side. It’s just a 2nd look at the audit. The second level is the same as the first but performed by a QIC, and it’s called a reconsideration. The third level you finally get before an administrative law judge. Here, you envision the auditor presenting its evidence in support of why you owe $4 million dollars, and you presenting evidence and support that you don’t owe the money.
You would be wrong.
The auditors may participate in an ALJ Hearing. However, in my experience, the auditors never show up. They don’t provide evidence that their extrapolation was accurate or that their clinical findings are precise. No one substantiates the allegation that you owe $4 million. Instead, you get a soliloquy of why you don’t owe the money. The Judge may ask you questions, but you won’t be cross examined nor will you have the opportunity to cross examine the auditor.
The Medicare provider appeal process flies in the face of America’s judicial system. Our rules allow the accused to confront the accuser. At no time during your Medicare appeal do you get to challenge the auditor nor does the auditor have to back up his or her work. The audits are accepted as true without any verification.
This process needs to be amended. Medicare auditors should have to prove that their audits are accurate. They should have to prove that the documents didn’t support the claim billed and why. They should not be allowed to hide behind generic, cut-and-pasted denials without having to explain their reasoning, if there were any.
This nonsensical, three-ring-circle is why providers refuse to accept Medicare.
In 2020, one percent of non-pediatric physicians formally opted out of Medicare. Most of those opting out were psychiatrists – 42%.
This just goes to show you, qualifying for Medicare doesn’t guarantee that providers will accept you. It’s only going to get worse unless we change the appeal process for providers.
Today I’m going to answer a few inquiries about recovery audit contractor (“RAC”) audits from providers. A question that I get often is: “Do I have to submit the same medical records to my Medicare Administrative Contractor (“MAC”) that I submit to a RAC for an audit?” The answer is “No.” Providers are not required to submit medical records to the MAC if submitted to a RAC, but doing so is encouraged by most MACs. There is no requirement that you submit to the MAC what you submit to RACs. This makes sense because the MACs and the RACs have disparate job duties. One of the MACs, Palmetto, instructs providers to send records sent to a RAC directly to the Palmetto GBA Appeals Department. Why send the records for a RAC audit to a MAC appeals department? Are they forecasting your intentions? The instruction is nonsensical unless ulterior motives exist.
RAC audits are separate from mundane MAC issues. They are distinct. Quite frankly, your MAC shouldn’t even be aware of your audit. (Why is it their business?) Yet, many times I see the MACs cc-ed on correspondence. Often, I feel like it’s a conspiracy – and you’re not invited. You get audited, and everyone is notified. It’s as if you are guilty before any trial.
I also get this question for appeals – “Do I need to send the medical records again? I already sent them for the initial review. Why do I need to send the same documents for appeal?” I get it – making copies of medical records is time-consuming. It also costs money. Paper and ink don’t grow on trees. The answer is “Yes.” This may come as a shock, but sometimes documents are misplaced or lost. Auditors are humans, and mistakes occur. Just like, providers are humans, and 100% Medicare regulatory compliance is not required…people make mistakes; those mistakes shouldn’t cause financial ruin.
“Do the results of a RAC audit get sent to your MAC?” The answer is “Yes.” Penalties penalize you in the future. You have to disclose penalties, and the auditors can and will use the information against you. The more penalties you have paid in the past clear demonstrate that you suffer from abhorrent billing practices.
In fact, Medicare post-payment audits are estimated to have risen over 900 percent over the last five years. Medicare provider audits take money from providers and give to the auditors. If you are an auditor, you uncover bad results or you aren’t good at your job.
Politicians see audits as a financial win and a plus for their platform. Reducing fraud, waste, and abuse is a fantastic platform. Everyone gets on board, and votes increase.
Appealing your RAC audits is essential, but you have to understand that you won’t get a fair deal. The Medicare provider appeals process is an uphill battle for providers. And your MACs will be informed.
The first two levels, redeterminations and reconsiderations are, basically, rubber-stamps on the first determination.
The third level is the before an administrative law judge (ALJ), and is the first appeal level that is before an independent tribunal.
Moving to the False Claims Act, which is the ugly step-sister to regulatory non-compliance and overpayments. The government and qui tam relators filed 801 new cases in 2022. That number is down from the unprecedented heights reached in 2020 (when there were a record 922 new FCA cases), but is consistent with the pace otherwise set over the past decade, reflecting the upward trend in FCA activity by qui tam relators and the government since the 2009 amendments to the statute.
See the chart below for reference:
Attorney Ryan Hargrave joined the Practus Health Care Litigation team on June 1, 2022. Ryan comes from a career of litigation in the State of North Carolina. He began his career in 2016 as a Prosecutor for the State of North Carolina, Guilford County. There he gained valuable experience from which he used as he moved to defending clients. He served as the Lead Trial Attorney at Triad Legal Group before joining Graystar Legal as the Senior Associate Attorney.
Ryan obtained his undergraduate degree at Presbyterian College in Clinton, SC., where he received a B.A. in Political Science and a minor in Biology. Ryan has always had a keen interest in health care which has followed him throughout his career. He is locally known as the “Drug Lawyer” for his focus in the defense of drug-related crimes. He has a reputable proficiency in Cannabis Law, Criminal Law, and Civil Law across State and Federal Courts. Ryan has extensive trial experience that he brings to the Health Care Litigation team at Practus.
Ryan lives in North Carolina with his family, spending his time working out, making financial investments, and beginning his non-profit business, “Colored Money”. His non-profit will focus on teaching young boys and girls the value of money as a vehicle to achieve wealth, making smart investments, and how to achieve financial freedom. He is a big Georgia football fan and even has an English Bulldog that could serve as the team’s mascot.
Note from me:
I expect Ryan to dovetail and expand my Medicare and Medicaid regulatory compliance practice because his litigation experience will directly help me in litigation natters, but, also, his criminal litigation experience will also allow us to represent more White Collar Crime clients, including Medicare and Medicaid fraud accusations, False Claims Act, Stark, and Anti-Kickback alleged violations.
We are happy that he is here!
If you could light a torch to a Molotov Cocktail and a bunch of newspapers, you could not make a bigger explosion in my head than a recent Decision from a Medicare administrative law judge (“ALJ”). The extrapolation was upheld, despite an expert statistician citing its shortcomings, based on a CMS Ruling, which is neither law nor precedent. The Decision reminded me of the new Firestarter movie because everything is up in flames. Drew Barrymore would be proud.
I find it very lazy of the government to rely on sampling and extrapolations, especially in light that no witness testifies to its accuracy.
Because this ALJ relied so heavily on CMS Rulings, I wanted to do a little detective work as to whether CMS Rulings are binding or even law. First, I logged onto Westlaw to search for “CMS Ruling” in any case in any jurisdiction in America. Nothing. Not one case ever mentioned “CMS Ruling.” Ever. (Nor did my law school).
What Is a CMS Ruling?
A CMS Ruling is defined as, “decisions of the Administrator that serve as precedent final opinions and orders and statements of policy and interpretation. They provide clarification and interpretation of complex or ambiguous provisions of the law or regulations relating to Medicare, Medicaid, Utilization and Quality Control Peer Review, private health insurance, and related matters.”
But Are CMS Rulings Law?
No. CMS Rulings are not law. CMS Rulings are not binding on district court judges because district court judges are not part of HHS or CMS. However, the Medicare ALJs are considered part of HHS and CMS; thus the CMS Rulings are binding on Medicare ALJs.
This creates a dichotomy between the “real law” and agency rules. When you read CMS Ruling 86-1, it reads as if there two parties with oppositive views, both presented their arguments, and the Administrator makes a ruling. But the Administrator is not a Judge, but the Ruling reads like a court case. CMS Rulings are not binding on:
- The Supreme Court
- Appellate Courts
- The real world outside of CMS
- District Courts
- The Department of Transportation
- Civil Jurisprudence
- The Department of Education
- Etc. – You get the point.
So why are Medicare providers held subject to penalties based on CMS Rulings, when after the providers appeal their case to district court, that “rule” that was subjected against them (saying they owe $7 million) is rendered moot? Can we say – not fair, equitable, Constitutional, and flies in the face of due process?
The future does not look bright for providers going forward in defending overzealous, erroneous, and misplaced audits. These audits aren’t even backed up by witnesses – seriously, at the ALJ Medicare appeals, there is no statistician testifying to verify the results. Yet some of the ALJs are still upholding these audits.
In the “court case,” which resulted in CMS Ruling 86-1, the provider argued that:
- There is no legal authority in the Medicare statute or regulations for HCFA or its intermediaries to determine overpayments by projecting the findings of a sample of specific claims onto a universe of unspecified beneficiaries and claims.
- Section 1879 of the Social Security Act, 42 U.S.C. 1395pp, contemplates that medical necessity and custodial care coverage determinations will be made only by means of a case-by-case review.
- When sampling is used, providers are not able to bill individual beneficiaries not in the sample group for the services determined to be noncovered.
- Use of a sampling procedure violates the rights of providers to appeal adverse determinations.
- The use of sampling and extrapolation to determine overpayments deprives the provider of due process.
The CMS Ruling 86-1 was decided by Mr. Henry R. Desmarais, Acting Administrator, Health Care Financing Administration in 1986.
Think it should be upheld?
Whenever you receive correspondence with letterhead from the Department of Justice, Attorney General’s office, you know it’s important and you better take note.
A Civil or Criminal Investigative Demand is serious. Getting any communication from the U.S. Department of Justice can be a bit unnerving. That’s particularly true for Medicare and Medicaid providers receiving a Civil Investigative Demand (“CID”) for documents and testimony.
A CID is a tool used by the Justice Department (“DOJ”) to investigate potential violations of the False Claims Act (“FCA”). See blog. The DOJ can issue a CID whenever the DOJ has “reason to believe that any person may be in possession, custody, or control of any documentary material or information relevant to a false claims law investigation.” The bottom line is that the DOJ uses CIDs to obtain documents and identify potential witnesses so they can bring FCA suits against the recipient or others.
What is the False Claims Act anyway?
It’s a broad statute that punishes many things, one of which is making false statements to the government in connection with a claim for payment from the government. The DOJ often uses CIDs to investigate medical providers who seek payment from Medicare and Medicaid.
Just because the Investigative Demand is labeled “civil” does not mean that the investigation is only civil; it could take a turn towards criminal. In other words, something sparked the DOJ’s attention, but, perhaps there were no allegations of criminal action, the investigation could start and the investigator could uncover something they consider criminal. An investigation earmarked as civil can turn criminal with the uncovering of one document.
On the other hand, the investigator could review all the documents and conclude that there is not even a civil violation. Very rarely, do the investigators contact you to tell you that the investigation is over and no violation was found. Most of the time, you are put on notice that you are being investigated, then hear nothing from the investigator in perpetuity.
Recently, I had an investigator inform me that the review of. my client was complete, and the file was being closed. But that’s the only time in 22 years that I was informed that nothing noncompliant was found. Usually, time just passes.
If you are found to have violated the FCA, the government can triple the amount of penalties, so the numbers get very high very quickly.
The Justice Department obtained more than $5.6 billion in settlements and judgments from civil cases involving fraud and false claims against the government in the fiscal year ending Sept. 30, 2021. This is the second largest annual total in False Claims Act history, and the largest since 2014. Settlement and judgments since 1986, when Congress substantially strengthened the civil False Claims Act, now total more than $70 billion.
A much lesser known provision of the FCA is the reverse one. Not to blow everyones’ minds, but there is also a “reverse false claims” provision of the False Claims Act. The reverse false claims provision permits the government or relators to pursue defendants who are alleged to have hidden or reduced an obligation to pay the government through false statements, or who have violated the 60-day payment rule’s obligation to return “identified overpayments.” These claims typically have been raised in the context of cost reporting, Medicare Part C, or related to alleged failures to fulfill obligations under the 60-day payment rule. The government and relators have increasingly relied on the reverse false claims provision to support stand-alone claims or have used it in conjunction with affirmative false claims. However, because the reverse false claims provision is very lightly used compared to affirmative false claims provisions, there is a dearth of case law defining it or exploring its parameters. The case law that does exist is primarily from district courts and, as the survey of case law contained herein illustrates, there is little guidance from the Circuit Courts or the U.S. Supreme Court.
Intent or deliberate disregard is required to prove the false claims act – reverse and regular.
Failure to respond to a CID completely could warrant criminal contempt. This is especially important to note, as civil investigate demand sounds much less important than a subpoena. But a CID is, in essence, a subpoena. Immediately, implement a “legal hold” upon receipt of the CID, and don’t forget to avoid producing privileged documents.
After the investigation is complete, if there are violations of the FCA uncovered, you will receive correspondence that states in “all-caps” and bold font:
Rule 408 FOR SETTLEMENT PURPOSES ONLY
FRE 408 prohibits the use of settlement negotiations as evidence. After reviewing the offer, get with your legal counsel to discuss next steps.
(On a personal note, I apologize for how long since it has been my last blog. I was in an accident and spent 3 days in the ICU.)
I’d like to write today about the sheer absurdity about how these RAC, ZPIC, MAC, and other types of audits are being held against health care providers. When an auditor requests documents from a provider and opines that the provider owes a million dollars in alleged overpayments, I would expect that the auditor will show up before an independent tribunal to defend its findings. However, for so many of these Medicare provider appeals, the auditor doesn’t appear to defend its findings.
In my opinion, if the entity claiming that you owe money back to the government does not appear at the hearing, the provider should automatically prevail. A basic legal concept is that the accused should be able to confront its accuser.
I had depositions the last two weeks for a case that involved an opiate treatment program. The two main accusers were Optum and ID Medicaid. When Optum was deposed, they testified that Optum did not conduct the audit of the facility. When ID Medicaid was deposed, it contended that Optum did conduct the audit at issue.
When not one person can vouch for the veracity of an audit, it is ludicrous to force the provider to pay back anything. Auditors cannot hide behind smoke and mirrors. Auditors need to testify to the veracity of their audits.
To poke holes in Medicare audits, you need to know the rules. You wouldn’t play chess without knowing the rules. Various auditor have disparate look-back period, which is the time frame the auditor is allowed to look back and review a claim. For example, RACs may only look back 3 years. Whereas ZPICs have no specific look back period, although I would argue that the older the claim, the less likely it is to be recouped. There is also the federal 48-month limit to look backs absent accusations of fraud.
When appealing the outcome of a MAC or RAC audit, it is necessary for providers to have a specific reason for challenging the auditors’ determinations. Simply being dissatisfied or having generalized complaints about the process is not enough. Some examples of potential grounds for challenging a MAC or RAC determination on appeal include:
- Application if inapplicable Medicare billing rules
- Misinterpretation of applicable Medicare billing rules
- Reliance on unsound auditing methodologies
- Failure to seek an expert opinion
- Ignoring relevant information disclosed by the provider
- Exceeding the MAC’s or RAC’s scope of authority
It is imperative that you arm yourself in defending a Medicare audit, but if the auditor fails to appear at any stage in litigation, then you should call foul and win on a “absent” technicality.
It’s hard enough to be one of the providers to accept Medicare and Medicaid. The regulatory oversight is burdensome. You are always getting metaphorically yelled at for upcoding or bundling. See blog, thanking providers.
One of the absolute, most-Draconian penalty against a Medicare or Medicaid provider is prepayment review.
Prepayment review is exactly as it sounds. Before you receive payment – for services rendered – an auditor reviews your claims to determine whether you should be reimbursed. Prepayment review is the epitome of being guilty until proven innocent. It flies in the face of American due process. However, no one has legally fought its Constitutionality. Yet many provider-companies have been put out of business by it.
Generally, to get off prepayment review, you have to achieve a 75% or 80% success rate for three consecutive months. It doesn’t sound hard until your auditors – or graders – fail to do their job correctly and fail you erroneously.
Usually, when a provider is placed on prepayment review, I say, “Well, you cannot appeal being placed on prepayment review, but we can get a preliminary injunction to Stay the withhold of reimbursements during the process.” It tends to work.
Most State statutes have language like this:
“(f) The decision to place or maintain a provider on prepayment claims review does not constitute a contested case under Chapter 150B of the General Statutes. A provider may not appeal or otherwise contest a decision of the Department to place a provider on prepayment review.”
However, in a recent case, Halikierra Community Services, LLC v. NCDHHS, the provider disputed being placed on prepayment review and accused NCDHHS of a malicious campaign against it.
Halikierra was the largest, in-home, Medicaid health care provider and it alleged that 2 specific, individuals at DHHS “personally detested” Halikierra because of its size. As an aside, I hear this all the time. I hear that the auditors or government have personal vendettas against certain providers. Good for Halikierra for calling them out!
According to the opinion, these 2 DHHS employees schemed to get Halikierra on prepayment review by accusing it of employing felons, which is not illegal. (Just ask Dave’s Killer Bread). Halikierra sued based on substantive due process and equal protection rights, but not before being forced to terminate its 600 employees and closing its doors because of being placed on prepayment review. It also asserted a claim of conspiracy in restraint of trade under NCG.S. §75-1 against the individual DHHS employees.
The Court held that “[t]he mere fact that an agency action is nonreviewable under the Administrative Procedure Act does not shield it from judicial review.” The upshot? Even if a statute states that you cannot appeal being placed on prepayment review, you can sue for that very determination.
FYI – This case was filed in the Industrial Commission, which has jurisdiction for negligence conducted by the state agencies. Exhaustion of administrative remedies was not necessary because, per the state statute, being placed on prepayment review does not constitute a contested case in administrative court.