Category Archives: Transparency
Recently, Eastpointe Human Services’ board voted unanimously to consolidate with Cardinal Innovations Healthcare, which would make the merged entity the managed care organization (MCO) overseeing 1/3 of NC’s Medicaid, behavioral health services – 32 counties, in all.
The Board’s decision is subject to the approval of the Secretary, but Eastpointe hopes to consolidate by July 1st.
Whether a consolidation between Eastpointe and Cardinal is good for Medicaid recipients and/or our community, I have no opinion.
But the reason that I have no opinion is because the negotiations, which all deal with public funds, have occurred behind closed doors.
Generally, it is our public policy that public bodies’ actions are to be conducted openly. This is why you can stroll on over to our courthouse and watch, virtually, any case be conducted. There are rare cases in which the court will “seal” or close the record, such as to protect privileged health information or the identity of children. Our public policy that strongly encourages open sessions for public entities exists for good reason. As tax payers, we expect full disclosure and transparency as to how our tax dollars are being used. In a way, all tax paying NC residents are shareholders of NC. Those who spend our tax dollars owe us a fiduciary duty to manage our tax dollars in a reasonable and responsible manner, and we should be able to attend all board meetings and review all meeting minutes. The MCOs are the agents of the single state entity, Department of Health and Human Services (DHHS), charged with managing behavioral health care for the Medicaid and state-funded population suffering with mental health/developmentally disabled /substance abuse (MR/DD/SA) issues. As an agent of the state, MCOs are public entities.
But, as I am researching the internet in search of Eastpointe and Cardinal board meeting minutes, I realize that the MCOs are initiating closed meetings and quoting N.C. Gen. Stat. § 143-318.11, ” Closed sessions” as the basis for being able to conduct closed sessions. And the number of closed sessions that I notice is not a small number.
The deliberations of a merger between two MCOs are highly important to the public. The public needs to know whether the board members are concerned about improving quality and quantity of care. Whether the deliberations surround a more inclusive provider network and providing more services to those in need. Whether the deliberations consider using public funds to create playgrounds or to fund more services for the developmentally disabled. Or are the board members more concerned with which executives will remain employed and what salaried are to be compensated?
You’ve heard of the saying, “Give him an inch and he’ll take a mile?” This is what is going through my mind as I review the statute allowing public bodies to hold closed sessions. Is the statute too open-ended? Is the closed session statute a legal mishandling that unintentionally, and against public policy, allows public meetings to act privately? Or are the MCOs misusing the closed session statute?
So I ask myself the following:
1. Is N.C. Gen. Stat. § 143-318.11 applicable to MCOs, or, in other words, can the MCOs conduct closed sessions? and, if the answer to #1 is yes, then
2. Are the MCOs overusing or misusing its ability to hold closed sessions? If the answer to #3 is yes, then
3. What can be done?
These are the three questions I will address in this blog.
Is N.C. Gen. Stat. § 143-318.11 applicable to MCOs, or, in other words, can the MCOs conduct closed sessions?
According to the statute, “”public body” means any elected or appointed authority, board, commission, committee, council, or other body of the State, or of one or more counties, cities, school administrative units, constituent institutions of The University of North Carolina, or other political subdivisions or public corporations in the State that (i) is composed of two or more members and (ii) exercises or is authorized to exercise a legislative, policy-making, quasi-judicial, administrative, or advisory function.”
The MCOs are bodies or agents of the state that are composed of more than 2 members and exercises or is authorized to exercise administrative or advisory functions to the extent allowed by the Waivers.
I determine that, in my opinion, N.C. Gen. Stat. § 143-318.11 is applicable to the MCOs, so I move on to my next question…
Are the MCOs overusing or misusing its ability to hold closed sessions?
As public policy dictates that public bodies act openly, there are enumerated, statutory reasons that a public body may hold a closed session.
A public body may hold a closed session only when a closed session is required:
- “To prevent the disclosure of information that is privileged or confidential pursuant to the law of this State or of the United States, or not considered a public record within the meaning of Chapter 132 of the General Statutes.
- To prevent the premature disclosure of an honorary degree, scholarship, prize, or similar award.
- To consult with an attorney employed or retained by the public body in order to preserve the attorney-client privilege between the attorney and the public body, which privilege is hereby acknowledged. General policy matters may not be discussed in a closed session and nothing herein shall be construed to permit a public body to close a meeting that otherwise would be open merely because an attorney employed or retained by the public body is a participant. The public body may consider and give instructions to an attorney concerning the handling or settlement of a claim, judicial action, mediation, arbitration, or administrative procedure. If the public body has approved or considered a settlement, other than a malpractice settlement by or on behalf of a hospital, in closed session, the terms of that settlement shall be reported to the public body and entered into its minutes as soon as possible within a reasonable time after the settlement is concluded.
- To discuss matters relating to the location or expansion of industries or other businesses in the area served by the public body, including agreement on a tentative list of economic development incentives that may be offered by the public body in negotiations, or to discuss matters relating to military installation closure or realignment. Any action approving the signing of an economic development contract or commitment, or the action authorizing the payment of economic development expenditures, shall be taken in an open session.
- To establish, or to instruct the public body’s staff or negotiating agents concerning the position to be taken by or on behalf of the public body in negotiating (i) the price and other material terms of a contract or proposed contract for the acquisition of real property by purchase, option, exchange, or lease; or (ii) the amount of compensation and other material terms of an employment contract or proposed employment contract.
- To consider the qualifications, competence, performance, character, fitness, conditions of appointment, or conditions of initial employment of an individual public officer or employee or prospective public officer or employee; or to hear or investigate a complaint, charge, or grievance by or against an individual public officer or employee. General personnel policy issues may not be considered in a closed session. A public body may not consider the qualifications, competence, performance, character, fitness, appointment, or removal of a member of the public body or another body and may not consider or fill a vacancy among its own membership except in an open meeting. Final action making an appointment or discharge or removal by a public body having final authority for the appointment or discharge or removal shall be taken in an open meeting.
- To plan, conduct, or hear reports concerning investigations of alleged criminal misconduct.
- To formulate plans by a local board of education relating to emergency response to incidents of school violence or to formulate and adopt the school safety components of school improvement plans by a local board of education or a school improvement team.
- To discuss and take action regarding plans to protect public safety as it relates to existing or potential terrorist activity and to receive briefings by staff members, legal counsel, or law enforcement or emergency service officials concerning actions taken or to be taken to respond to such activity.”
Option 1 clearly applies, in part, to privileged health information (PHI) and such. So I would not expect that little Jimmy’s Medicaid ID would be part of the board meeting issues, and, thus, not included in the minutes, unless his Medicaid ID was discussed in a closed session.
I cannot fathom that Option 2 would ever be applicable, but who knows? Maybe Alliance will start giving out prizes…
I would assume that Option 3 is used most frequently. But notice:
“General policy matters may not be discussed in a closed session and nothing herein shall be construed to permit a public body to close a meeting that otherwise would be open merely because an attorney employed or retained by the public body is a participant.”
Which means that: (1) the closed session may only be used to talk about specific legal strategies and not general policies. For example, arguably, an MCO could hold a closed session to consult with its attorney whether to appeal a specific case, but not to discuss whether, generally, the MCO intends to appeal all unsuccessful cases.
(2) the MCO cannot call for a closed session “on the fly” and only because its attorney happens to be participating in the board meeting.
As I am rifling through random board meeting minutes, I notice the MCO’s attorney is always present. Now, I say “always,” but did not review all MCO meeting minutes. There may very well be board meetings at which the attorneys don’t attend. However, the attorney is present for the minutes that I reviewed.
Which begs the question…Are the MCOs properly using the closed sessions?
Then I look at Options 4, and 5, and 6, and 7, and 8, and 9…and I realize, Geez, according to one’s interpretation, the statute may or may not allow almost everything behind closed doors. (Well, maybe not 9). But, seriously, depending on the way in which each Option is interpreted, there is an argument that almost anything can be a closed session.
Want to hold a closed session to discuss why the CEO should receive a salary of $400,000? N.C. Gen. Stat. § 143-318.11(5)(ii).
Want hold a closed session to discuss the anonymous tip claim that provider X is committing Medicaid fraud? N.C. Gen. Stat. § 143-318.11(7).
Want to hold a closed session to discuss how an MCO can position itself to take over the world? N.C. Gen. Stat. § 143-318.11(4).
In an atmosphere in which there is little to no supervision of the actions of the MCOs, who is monitoring whether the MCOs are overusing or misusing closed sessions?
What can you do if you think that an MCO is holding closed sessions over and above what is allowed by N.C. Gen. Stat. § 143-318.11?
According to N.C. Gen. Stat. § 143-318.16A, “[a]ny person may institute a suit in the superior court requesting the entry of a judgment declaring that any action of a public body was taken, considered, discussed, or deliberated in violation of this Article. Upon such a finding, the court may declare any such action null and void. Any person may seek such a declaratory judgment, and the plaintiff need not allege or prove special damage different from that suffered by the public at large.”
Plus, according to N.C. Gen. Stat. § 143-318.16A, “[w]hen an action is brought pursuant to G.S. 143-318.16 or G.S. 143-318.16A, the court may make written findings specifying the prevailing party or parties, and may award the prevailing party or parties a reasonable attorney’s fee, to be taxed against the losing party or parties as part of the costs. The court may order that all or any portion of any fee as assessed be paid personally by any individual member or members of the public body found by the court to have knowingly or intentionally committed the violation; provided, that no order against any individual member shall issue in any case where the public body or that individual member seeks the advice of an attorney, and such advice is followed.”
In sum, if you believe that an MCO is conducting a closed session for a reason not enumerated above, then you can institute a lawsuit and request attorneys’ fees if you are successful in showing that the MCO knowingly or intentionally committed the violation.
We should also appeal to the General Assembly to revise, statutorily, more narrowly drafted closed session exceptions.
How many times have I blogged about the unsupervised, unharnessed actions of the managed care organizations (MCOs) in our State, which happen to be managing billions of our tax dollars for Medicaid behavioral health care? These MCOs, which are in the process of consolidating to create even larger MCOs and to handle even more tax dollar money, are running rampant and unsupervised by the Department of Health and Human Services (DHHS). See blog. And blog.
DHHS is the single state agency charged with managing Medicaid for NC. According to federal law, the single state agency may not delegate certain duties. Our 1915 b/c Waiver allows DHHS to waive some duties related to behavioral health, but not all. For example, it is, ultimately, DHHS’ duty to ensure that our Medicaid recipients have access to care.
It is, ultimately, DHHS’ duty to ensure that the MCOs are following the law.
However, recently, that duty was picked up by the State Bureau of Investigation (SBI). Thank goodness someone is reviewing the MCO’s books!
SBI arrested former Eastpointe CFO William Robert Canupp on December 16, 2015, for nine charges of financial fraud and embezzlement. Eastpointe is one of our MCOs and manages behavioral health care for Medicaid and state-funded programs in 12 counties. These allegations of fraud and embezzlement are from when Canupp worked at Eastpointe.
This recent arrest demonstrates a real need for accountability at the MCOs. While Eastpointe and the other MCOs are terminating health provider contracts and denying/reducing services, who is reviewing these decisions. Apparently, not DHHS.
What can you do?
As you should know, the MCOs are not private entities. They are agents of the state and receive funding from county, state, and federal funds. In other words, the MCOs manage and spend our tax dollars. Therefore, these entities are liable to us for all expenditures and are subject to the Freedom of Information Act or FOIA. The FOIA allows any one of you to request any financial record, any document showing access to care, any document showing monies spent on actual care versus administrative costs, or any other information you desire and the MCOs must provide it to you.
Here is a link to a sample public records request.
The MCOs are bound by NC General Statute, Chapter 132 and must allow you to examine any requested documents within a reasonable time.
Use the FOIA to get answers!
With the recent passing of the torch from Aldona Wos to Rick Brajer (see blog), I’ve been thinking about…
What are the qualifications of a Secretary of DHHS?
What exactly are the qualities that would make a great Secretary of DHHS? Remember, in Mary Poppins, when the children draft their requirements for a nanny? Or, better yet, what are the “Seven Habits of a Highly Effective” Secretary for DHHS? Or…in this case, the “Nine Habits”…
Here are my “Nine Habits of a Highly Effective Secretary of DHHS;” our Secretary of DHHS should have the following:
- A health care background
- A successful track record of his/her ability to manage large companies or agencies
- An understanding of the Medicaid system, and, maybe, even have first-hand knowledge of how the system affects recipients and providers
- A relationship with someone on Medicaid or a parent of someone on Medicaid
- A working knowledge of clinical coverage policies, reimbursement rates, and regulations surrounding Medicaid
- Both the capacity to listen and speak and do both eloquently and genuinely
- True empathy about the physical and mental health of Medicaid recipients and about providers, plus have the patience to handle all types of demographic differences
- An understanding that he/she is handling tax payers’ money, that redundancy in staff is excess administrative costs, and ability to trim the fat
- An ability to communicate with both the Senate and the House and to be frank with both
Let us analyze the qualifications of Wos that we came to witness over the last few years, as well as, review the qualifications of soon-to-be Sec. Brajer with information to which we are privy.
Let’s see if both, either, or neither have these “Nine Habits of a Highly-Effective Secretary for DHHS.”
- Health care background:
Wos: Yes. And, yet, maybe not. She is an M.D. Although I do not know whether she ever practiced medicine in North Carolina. According to Wikipedia, (which is never wrong) Wos “prides herself on her work in the field of preventing HIV and AIDS.” However, I was unable to find a single clinic in which Wos provided services. While, generally, an “M.D.” automatically bestows a certain aura of understanding health care, I question whether this “M.D.” automatically has a working knowledge of billing for and receiving reimbursements under Medicaid in North Carolina.
Brajer: Hmmmm. This one is more tricky. The two companies that Brajer owned, Pro-nerve LLC and LipoScience Inc., are health care related, in that Pro-nerve was an intraoperative neuromonitoring (IONM) company and LipoScience sold a diagnostic tool to health care providers. Arguably, both companies are health care related, at least, in an ancillary way. However, Brajer is not a health care professional, and, to my knowledge, has never rendered health care services. Furthermore, neither of Brajer’s companies was successful; quite the opposite is true, in fact. From my understanding, one company declared bankruptcy and the other was not far behind. Which brings us to the next category…
2. A successful track record of his/her ability to manage large entities:
Wos: Prior to acting as the Secretary to DHHS, Wos served as the Ambassador to Estonia until 2006. What she did besides political functions between 2006 and 2012, I do not know. Acting as an Ambassador does not entail managing large entities. The most managerial skills that I can find in her background, prior to being appointed Secretary, are related to political fund-raising. Since I would not call her brief reign as Secretary of DHHS a success, I give Wos a “two thumbs down” on this criterion.
Brajer: He managed two companies. We can bicker as to whether these companies should be considered large…neither employed 17,000 employees. Regardless, the “successful” criterion appears to be lacking.
3. An understanding of the Medicaid system:
Wos: “You’re asking me without having all the data available to answer a question,” she told lawmakers on October 8, 2013. In her defense, she responded as such when asked whether the State was moving toward privatization for Medicaid. No one could know the answer, except, maybe, McCrory.
On the other hand, the implementation of NCTracks was nothing short of a catastrophe of epic proportion. See blog. See blog. Anyone with nominal knowledge of the Medicaid system would have, at least, paused to consider keeping HP Enterprises under contract during the switch to NCTracks or pushed back the go-live date.
Answer: Here’s to hoping that Brajer does. I’m cheering for you! Go! Fight! Win!
4. A relationship with someone on Medicaid or a parent of someone on Medicaid:
Wos: Unknown. If I were shaking a proverbial “8 Ball,” it would read, “Doubtful.”
Brajer: Unknown. Perhaps one of his former employees at Pro-nerve, LLC and LipoScience, Inc. is on Medicaid.
Answer: Gimme a ‘B’! B! Gimme a ‘R’! R! Gimme a ‘A’! A! Gimme a ‘J’! J! Gimme a ‘E’! E! Gimme a ‘R’! R! Whats that spell? Brajer!!
5. A working knowledge of clinical coverage policies, reimbursement rates, and regulations surrounding Medicaid.
Wos: Unknown. Whatever Wos’ knowledge of regulations and clinical coverage policies is or lacked, she, initially, made up for any knowledge lacked with the key hire and quick resignation of Carol Steckel. Unfortunately, Steckel’s experience was never replaced.
January 2013: “I am pleased to say that we are already taking steps to address some of these issues,” Wos said. “Now, the most important of this is that we have hired Ms. Carol Steckel, a nationally recognized — nationally recognized — expert in Medicaid to run our Medicaid program for the state. Carol is already moving ahead with systemic reviews of operations in this division. She is reviewing and establishing new policies and procedures.”
Answer: B! R! A! J! E! R! Let’s go, Brajer!
6. Both the capacities to listen and speak and do both eloquently.
Wos: Wos brandished an ability to speak publicly with ease. Listening, on the other hand….eh?
Answer: I think you can, I think you can, I think you can…
7. Genuine concern about the physical and mental health of Medicaid recipients AND about providers PLUS have the patience to handle all types of demographic differences
Wos: She seems to think so. Her country club does not discriminate.
Answer: Go! Go! Go! Go! Go, Brajer!!
8. An understanding that he/she is handling tax payers money and that redundancy in staff is excess administrative costs and trim the meat
Wos: “My obligation as secretary is to find the best possible team in order to get the job done.” Les Merritt served as CFO of DMA on a $300,000-plus contract. Joe Hauck was paid over $228,000 for 6 months of advise to Wos. Matt McKillip was paid $87,500 to serve as chief policy maker without any health care background. Ricky Diaz pulled in $85,000 as communications director. Id. Wos has handed out $1.7 million in pay hikes to 280 staffers, many with “no career or educational experience for the jobs they hold.” Id. The implementation of the MCOs also fell under Wos’ watchful eye. The MCO system has created thousands upon thousands of high-paying jobs with our Medicaid dollars. I believe that in the “trim the fat” category, Sec. Wos scores a goose egg.
Answer: Please, Brajer! For the love of Pete!
9. Ability to communicate with both the Senate and the House and to be frank with both.
In April 2013: “I think the word transparency can get pretty dangerous,” Wos said. “Because what does transparency mean? If transparency means that we’re in a planning process and you’re asking us, ‘Tell us all the things you’re planning,’ well, my goodness, allow us to work, and then we’ll give you everything that you want.”
Answer: Brajer, Brajer, He’s our man! If he can’t do it…[gulp].
It concerns me that so many of future Sec. Brajer’s core abilities/habits to run and manage DHHS and the Medicaid program in a highly effective manner are unknown. Nothing like placing all your money on red! But we have HIGH hopes for Brajer!!! Don’t let us down!!
The whole point of this blog is to pause and really contemplate what characteristics would comprise a great Secretary for DHHS. Obviously, the Governor has the full authority to appoint the Secretary, meaning that we taxpayers have little to no input as to whether we deem a person qualified, except in the indirect method of voting or not voting for the Governor.
Call this blog an exercise in examining what habits, if in existence, would make the most highly effective Secretary of DHHS and an opinion as to whether these habits exist in our former and future Secretaries.
We are cheering for Brajer! But…
One fact about the future is that it is unknown.
Given how long the Medicaid reform discussions have been going on at the legislature, you may be glazed over by now. Give me the memo when they pass something, right? Fair enough, let’s keep it brief. Where do things stand right now?
Last Wednesday, the Senate staked out its position in the ongoing debate between the House and the McCrory administration.
The Senate’s newest proposal is an unusual mix of different systems and new ideas. Not willing to commit to one model for the whole Medicaid program, the latest version of the bill includes something new called Provider Led Entities, or “PLEs.” PLEs are yet the latest in the alphabet soup of different alternatives to straight fee-for-service billing for Medicare/Medicaid. You’ve all heard of HMOs, PPOs, MCOs, and ACOs. PLEs appear to be similar to ACOs, but perhaps for political reasons the Senate bill sponsors saw the need to call the idea something different. See Knicole Emanuel’s blog.
In any event, as the name suggests, such organizations would be provider-led and would be operated through a capitated system for managing the costs of the Medicaid program. The Senate bill would result in up to twelve PLEs being awarded contracts on a regional basis.
PLEs are not the only addition to the Medicaid alphabet soup that the Senate is proposing in its version of HB 372. The Senate has also renewed its interest in taking Medicaid out of the hands of the N.C. Department of Health and Human Services entirely and creating a new state agency, the Department of Medicaid (“DOM”).
(One wonders whether the continual interest in creating a new Department of Medicaid independent of the N.C. Department of Health and Human Services had anything to do with embattled DHHS Secretary Wos stepping down recently.)
The Senate also proposes creating a Joint Legislative Oversight Committee on Medicaid (“LOC on Medicaid”).
But creating the DOM and using new PLEs to handle the provision of Medicaid services is not the whole story. Perhaps unwilling to jump entirely into a new delivery system managed by a wholly new state agency, the Senate bill would keep LME/MCOs for mental health services in place for at least another five years. Private contractor MCOs would also operate alongside the PLEs. The North Carolina Medicaid Choice coalition, a group which represents commercial MCOs in connection with the Medicaid reform process, is pleased.
One very interesting item that the Senate has included in its proposed legislation is the following requirement: “Small providers shall have an equal opportunity to participate in the provider networks established by commercial insurers and PLEs, and commercial insurers and PLEs shall apply economic and quality standards equally regardless of provider size or ownership.” You can thank Senator Joel Ford of Mecklenburg County for having sponsored this amendment to the Senate version of House Bill 372.
By pulling the Medicaid reform proposal out of the budget bill, the matter appears headed for further negotiation between the House and the Senate to see if the two can agree this year, unlike last year.
By legislative standards, that counts as forward progress… Here come the legislative discussion committees to hash it out more between the two chambers. We will keep a close eye on the proposals as they continue to evolve.
By Robert Shaw
The 2015 Legal Blog Contest is here!
For all you that follow this blog, thank you! I hope that you agree that I provide you with valuable and up-to-date information on Medicaid/care regulatory issues. At least, that is my hope in maintaining this blog. And maintaining this blog takes a lot of time outside my normal, hectic legal career and my time as a mom and wife. Don’t get me wrong…I love blogging about these issues because these issues are near and dear to my heart. I am passionate about health care, health care providers, Medicaid and Medicare, and access to quality care.
If you are a follower, then you know that I try to keep my readers current on Medicaid/care fraud, federal and state laws, legal rights for health care providers, bills in the General Assembly germane to health care, extrapolation issues, CMS rulings, managed care matters, reimbursement rates, RAC audits and much, much more!
If you enjoy my blog, I ask a favor. Please consider nominating my blog for the 2015 Best Legal Blog Contest.
If you want to nominate my blog, please click here.
Scroll down until you see this:
Enter your name, email address, my blog address. which is:
For category, click on “Niche and Specialty.” I do not believe the other categories correctly describe my blog.
And type a reason why you enjoy my blog. Much appreciated!
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.
Medicaid Providers: Do Not Omit Information on Your Medicaid Application or NC Ct of Appeals Says, “You Can Lose Your Medicaid Contract Without Notice.”
We’ve all told our share of little, white lies, right? “Yes, honey, you look fantastic in that dress!” Or… “I never think about my ex-boyfriend!” But omissions are also lies. People have told me in the past that omissions are not lies, but they are, obviously, wrong. Even in the court of law, a nonverbal action (or omission) can be used against you.
For example, if your neighbor comes up to you and accuses you of killing his cat and you say nothing except shut the door, you better believe that when your neighbor testifies in court that your “nonassertion” or “non- dispution” (I know, not a word) his allegation will be admitted into the court, or at least the attempt will be made. Even though the “nonassertion” would be considered hearsay.
Hearsay is an out of court statement made by someone other than the testifying witness to be admitted to prove the truth of the matter asserted. For example, if I were on the stand and I said, “My neighbor told me that he killed my cat.” If, in fact, I was testifying in a trial in which I was trying to prove that my neighbor killed my cat, then my statement would be hearsay and not admitted into evidence. The same would be true if I were testifying that I accused my neighbor of killing my cat and he said nothing. His nonadmission would be hearsay as well…because a normal person would protest to killing the cat if accused and innocent.
However, in the law, there are always grey areas. Sometimes when the “statement” is nonverbal, the hearsay objection will be overlooked. Attorneys argue that the hearsay rule is almost always, in the abstract, phrased in terms of “statements” or “utterances” and the possible application of the rule to “conduct” may not be immediately apparent.
However, CAVEAT, In the world of Medicaid, omissions can cost you your Medicaid contract.
In a recent North Carolina Court of Appeals decision, Powell’s Medical Facility v. NC DHHS, the NC Court of Appeals upheld the trial court’s decision to uphold the Division of Medical Assistance’s (DMA) termination of Dr. Eddie N. Powell’s (I know, really? Who’s name is legally Eddie and not Edward?) Medicaid contract based on Dr. Powell’s omission on his Medicaid verification packet to Computer Sciences Corporation (CSC).
In 2009, CSC began to re-verify Medicaid providers in an effort to determine that all Medicaid providers met criteria as a Medicaid provider (yes, folks, this is the very same CSC that has catastrophically rolled-out NCTracks).
In Dr. Powell’s case, DMA informed him, in the termination letter, that if a provider were convicted of a criminal offense or made “any mistatement…or omission while submitting the provider application” that DMA had the authority to terminate a provider without notice.
Dr. Powell’s attorneys argued that the termination was erroneous because “the sole basis for DMA’s decision to terminate Dr. Powell’s participation in Medicaid is the mere existence of Dr. Powell’s criminal conviction.” (emphasis in the original)(Notice, people, that I have not told you what the criminal offense was…that is on purpose. Once I read the criminal conviction, I was tainted for the remainder of the Court’s opinion. So you will find out the criminal conviction at the end. Those of you impatient readers, can scroll down. But, for now, imagine that the criminal conviction is for stealing a loaf of bread for his family. See “Les Miserables” by Victor Hugo.)
The Court, however, disagreed.
A witness for the Respondent (DMA) testified on recross that Dr. Powell’s termination was based on (1) the conviction (of stealing bread); and (2) the OMISSION to disclose his conviction (of stealing bread) on his application.
Supposedly, the result of the this opinion is that if you were convicted of a criminal offense and it does not involve something really, really, bad (such as stealing bread) and you DO disclose it on the Medicaid application that you would not be terminated.
Moral of the story? Disclose everything!
If you were convicted of littering when you were 18, disclose it.
The problem with Dr. Powell? He was not convicted of littering when he was 18. He also was not convicted of stealing bread for his starving family like Jean Valjean.
He was convicted of the felonies of incest and taking liberties with a minor, who is his stepdaughter. (To which my husband, asked, “Is it incest if it was his stepdaughter?” To which, I said, “Hmmmmm. I don’t know. I am not a criminal attorney.”)
Regardless, Dr. Powell is a convicted sex offender.
Interestingly, one issue before the NC Court of Appeals was whether a Medicaid contract is a “property right” to a provider. That is a HUGE issue for NC Medicaid providers!!! This issue goes back to the whole “is a Medicaid contract terminable at will?” Obviously, DMA and the managed care organizations want the Medicaid contracts to be terminable at will so they can terminate a contract without due process.
But the NC Court of Appeals did not rule as to this very important issue. The Court ruled that “even assuming, arguendo, that Dr. Powell’s enrollment was not terminable at will, DMA had substantial evidence to terminate the contract.
However, the moral is obvious. We don’t need Aesop to tell us the moral. If you are a Medicaid provider and have been convicted of a criminal offense in the past, disclose the conviction on all Medicaid applications. Period.
I cannot take credit for this blog. I cut and pasted the test from WRAL. But…WOW!!!!
Raleigh, N.C. — A state employee who helped oversee the construction and rollout of the NCTracks Medicaid billing system now works for Computer Sciences Corp., the contractor responsible for the troubled project. Paul Guthery was an IT manager at the Department of Health and Human Services, where he had worked since January 2010. At a hearing Wednesday, State Auditor Beth Wood described him as the agency’s “point person” for CSC, responsible for certifying NCTracks’ testing process. At least one good-government watchdog says his jump from supervising the company to working for it raises the appearance of a potential conflict of interest, one that the state should try to avoid in the future.
According to public records, Guthery began working for the state on Jan. 1, 2010. His last salary was $126,500 per year. He stopped working for the state Aug. 27 and soon after began working for CSC as an executive account executive. Doctors, hospitals and others who render care for patients covered by Medicaid, the state-federal health insurance program for the poor and disabled, must use the CSC-built NCTracks system to get paid for those services. The system went live July 1 and soon after become the focus of controversy, with providers saying it was nearly impossible to submit claims and that payments were delayed by months. The delays threatened to drive some providers out of business and complicated care for thousands of patients.
Since then, the state and CSC have struggled to right the program. It was in late August, as providers bombarded lawmakers and the governor’s office with complaints about the system, that Guthery made the jump to the private sector.
Guthery declined via email to speak with WRAL News, deferring to his company’s corporate communications department. Michelle Sicola Herd, a spokeswoman for CSC, declined a request for an interview and was not willing to speak on the record about the circumstances of Guthery’s hiring.
Officials with DHHS downplayed Guthery’s part in the rollout of NCTracks, saying Thursday that he never occupied a position in which he would give the final word on the program going live. “One of the key things is that Paul was one of many people involved in this project, a very large project going on for a very long period of time,” said Ricky Diaz, a spkesman for the department. Diaz emphasized that an outside testing group reviewed the stability of the NCTracks system before state officials turned it on July 1.
But Wood blasted the role of that third-party overseer, saying the company hired for independent verification and validation of system testing had not actually conducted any independent verification. Rather, they merely collected information from DHHS and CSC and summarized it in a report.
During a hearing Wednesday, Sen. Jeff Tarte, R-Mecklenburg, asked Wood who was responsible for signing off on reports that system testing had been completed and was successful.
“The agency,” Wood answered, adding, “The point person that was at the agency is now working for CSC.” That person was Guthery.
Diaz said state personnel laws prevent him from talking about what, if any, steps were taken to try to keep Guthery as an employee. But he emphasized that the state had taken strides to get the system on track, pointing out that it has been under construction for more than 10 years.
“There have no doubt been challenges. This is a very large transition for the state of North Carolina,” he said. “The NCTracks project has, to date, paid $3.8 billion to North Carolina health care providers, as well as processing more than 78 million claims.” With regard to Guthery, Diaz said state law does not currently prohibit employees who work with a contractor from taking a job with that contractor. By contrast, had Guthery taken a job as a lobbyist, he would have needed to wait six months before working with the legislature or his old employer. No such cooling-off period applies to employees in other lines of work.
Jane Pinsky, with the North Carolina Coalition for Lobbying and Government Reform, says lawmakers should consider changing that. “If I’m a skeptical, cynical citizen, the question is, did he (Guthery) give them a pass and then they gave him a job?” Pinsky said. Earlier this year, another high-ranking DHHS staffer left for a private-sector job. Former state Medicaid director Carol Steckel was recruited to overhaul North Carolina’s system but left abruptly for a position with Wellpoint, a managed-care company based in Florida.
Pinsky pointed out that Wellpoint could end up bidding to run some or all of North Carolina’s Medicaid services under the McCrory administration’s planned reforms.
“In state government, and in DHHS, it is not unprecedented for employees to go work for vendors,” Diaz said.
Asked if he thought the Guthery situation could be viewed as a conflict of interest, Diaz said DHHS was being “very transparent” with regard to the situation. Asked if the agency would put any policy changes in place, Diaz referred to DHHS Secretary Aldona Wos’ efforts to improve contracting practices more broadly. “I think what you’ve seen is this secretary has placed a heavy emphasis on contract oversight and compliance,” he said. But Pinsky says the problem could be addressed in other ways. “One thing you can do is tell the contractor that, as a condition of the contract, they can’t hire anybody” in the agency, she said. She also suggested the possibility of a non-compete clause for employees hired to administer contracts.
In the meantime, she says, lawmakers should consider instituting a cooling-off period for high-level staffers. “Anybody who oversees a contract or supervises an industry shouldn’t be able to go to work for them the next day,” she said. “Does that affect any decisions they’re going to make in how they administer the contract?”