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A Federal Regulation Violates the U.S. Constitution and Ruins Careers; Yet It Sits…Vaguely

There is a federal regulation that is putting health care providers out of business. It is my legal opinion that the regulation violates the U.S. Constitution. Yet, the regulation still exists and continues to put health care providers out of business.

Why?

Because so far, no one has litigated the validity of the regulation, and I believe it could be legally wiped from existence with the right legal arguments.

How is this important?

Currently, the state and federal government are legally authorized to immediately suspend your Medicare or Medicaid reimbursements upon a credible allegation of fraud. This immense authority has put many a provider out of business. Could you survive without any Medicare or Medicaid reimbursements?

The federal regulation to which I allude is 42 CFR 455.23. It is a federal regulation, and it applies to every single health care provider, despite the service type allowed by Medicare or Medicaid. Home care agencies are just as susceptible to an accusation of health care fraud as a hospital. Durable medical equipment agencies are as susceptible as dentists. Yet the standard for a “credible allegation of fraud” is low. The standard for which the government can implement an immediate withhold of Medicaid/care reimbursements is lower than for an accused murderer to be arrested. At least when you are accused of murder, you have the right to an attorney. When you are accused to health care fraud on the civil level, you do not receive the right to an attorney. You must pay 100% out of pocket, unless your insurance happens to cover the expense for attorneys. But, even if your insurance does cover legal fees, you can believe that you will be appointed a general litigator with little to no knowledge of Medicare or Medicaid regulatory compliance litigation.

42 USC 455.23 states that:

The State Medicaid agency must suspend all Medicaid payments to a provider after the agency determines there is a credible allegation of fraud for which an investigation is pending under the Medicaid program against an individual or entity unless the agency has good cause to not suspend payments or to suspend payment only in part.

(2) The State Medicaid agency may suspend payments without first notifying the provider of its intention to suspend such payments.

(3) A provider may request, and must be granted, administrative review where State law so requires.”

In the very first sentence, which I highlighted in red, is the word “must.” Prior to the Affordable Care Act, this text read “may.” From my years of experience, every single state in America has used this revision from “may” to “must” for governmental advantage over providers. When asked for good cause, the state and or federal government protest that they have no authority to make a decision that good cause exists to suspend any reimbursement freeze during an investigation. But this protest is a pile of hooey.

In reality, if anyone could afford to litigate the constitutionality of the regulation, I believe that the regulation would be stricken an unconstitutional.

Here is one reason why: Due Process

The Fifth and Fourteenth Amendments to the Bill of Rights provide us our due process rights. Here is the 5th Amendment:

“No person shall be held to answer for a capital, or otherwise infamous crime, unless on a presentment or indictment of a Grand Jury, except in cases arising in the land or naval forces, or in the Militia, when in actual service in time of War or public danger; nor shall any person be subject for the same offense to be twice put in jeopardy of life or limb; nor shall be compelled in any criminal case to be a witness against himself, nor be deprived of life, liberty, or property, without due process of law; nor shall private property be taken for public use, without just compensation.”

There have been a long and rich history of interpretation of the due process clause. The Supreme Court has interpreted the due process clauses to provide four protections:  (1) procedural due process (in civil and criminal proceedings), (2) substantive due process, (3) a prohibition against vague laws, and (4) as the vehicle for the incorporation of the Bill of Rights.

42 CFR 455.23 violates procedural due process.

Procedural due process requires that a person be allowed notice and an opportunity to be heard before a government official takes a person’s life, liberty, or property.

Yet, 42 CFR 455.23 allows the government to immediately withhold reimbursements for services rendered based on an allegation without due process and taking a provider’s property; i.e., money owed for services rendered. Isn’t this exactly what procedural due process was created to prevent???? Where is the fundamental fairness?

42 CFR 455.23 violates substantive due process.

The Court usually looks first to see if there is a fundamental right, by examining if the right can be found deeply rooted in American history and traditions.

Fundamental rights include the right to vote, right for protection from pirates on the high seas (seriously – you have that right), and the right to constitutional remedies. Courts have held that our right to property is a fundamental right, but to my knowledge, not in the context of Medicare/caid reimbursements owed; however, I see a strong argument.

If the court establishes that the right being violated is a fundamental right, it applies strict scrutiny. This test inquires into whether there is a compelling state interest being furthered by the violation of the right, and whether the law in question is narrowly tailored to address the state interest.

Where the right is not a fundamental right, the court applies a rational basis test: if the violation of the right can be rationally related to a legitimate government purpose, then the law is held valid.

Taking away property of a Medicare/caid provider without due process violates substantive due process. The great thing about writing your own blog is that no one can argue with you. Playing Devil’s advocate, I would anticipate that the government would argue that a suspension or withhold of reimbursements is not a “taking” because the withhold or suspension is temporary and the government has a compelling reason to deter health care fraud. To which, I would say, yes, catching health care fraud is important – I am in no way advocating for fraud. But important also is the right to be innocent until proven guilty, and in civil cases, our deeply-rooted belief in the presumption of innocence is upheld by the action at issue not taking place until a hearing is held.

For example, if I sue my neighbor and declare that he is encroaching on my property, the property line is not moved until a decision is in my favor.

Another example, if I sue my business partner for breach of contract because she embezzled $1 million from me, I do not get the $1 million from her until it is decided that she actually took $1 million from me.

So to should be – if a provider is accused of fraud, property legally owned by said provider cannot just be taken away. That is a violation of substantive due process.

42 CFR 455.23 violates the prohibition against vague laws

A law is void for vagueness if an average citizen cannot understand it. The vagueness doctrine is my favorite. According to census data, there are 209.3 million people in the US who are over 24-years. Of those over 24-years-old, 66.9 million have a college degree. 68% do not.

Although here is a quick anecdote: Not so sure that a college degree is indicative of intelligence. A recent poll of law students at Columbia University showed that over 60% of the students, who were polled, could not name what rights are protected by the 1st Amendment. Once they responded “speech,” many forgot the others. In case you need a refresher for the off-chance that you are asked this question in an impromptu interview, see here.

My point is – who is to determine what the average person may or may not understand?

Back to why 42 CFR 455.23 violates the vagueness doctrine…

Remember the language of the regulations: “The State Medicaid agency must suspend all Medicaid payments to a provider after the agency determines there is a credible allegation of fraud…”

“Credible allegation of fraud” is defined as an allegation, which has been verified by the State, from any source, including but not limited to the following:

  • Fraud hotline complaints.
  • Claims data mining.
  • Patterns identified through provider audits, civil false claims cases, and law enforcement investigations. Allegations are considered to be credible when they have indicia of reliability and the State Medicaid agency has reviewed all allegations, facts, and evidence carefully and acts judiciously on a case-by-case basis.”

With a bit of research, I was able to find a written podcast published by CMS. It appears to be a Q and A between two workers at CMS discussing whether they should suspend a home health care agency’s reimbursements, similar to a playbook. I assume that it was an internal workshop to educate the CMS employees considering that the beginning of the screenplay begins with a “canned narrator” saying “This is a Medicaid program integrity podcast.”

2018-08-07 -- pic of cms podcast

The weird thing is that when you pull up the website – here – you get a glimpse of the podcast, but, at least on my computer, the image disappears in seconds and does not allow you to read it. I encourage you to determine whether this happens you as well.

While the podcast shimmered for a few seconds, I hit print and was able to read the disappearing podcast. As you can see, it is a staged conversation between “Patrick” and “Jim” regarding suspicion of a home health agency falsifying certificates of medical necessity.

On page 3, “Jim” says, “Remember the provider has the right to know why we are taking such serious action.”

But if your Medicare/caid reimbursements were suddenly suspended and you were told the suspension was based upon “credible allegations of fraud,” wouldn’t you find that reasoning vague?

42 CFR 455.23 violates the right to apply the Bill of Rights to me, as a citizen

This esoteric doctrine only means that the Bill of Rights apply to State governments. [Why do lawyers make everything so hard to understand?]

Health Care Fraud Liability: With Yates Fired – What Happens to the Memo?

“You’re fired!” President Trump has quite a bit of practice saying this line from The Apprentice. Recently, former AG Sally Yates was on the receiving end of the line. “It’s not personal. It’s just business.”

The Yates Memo created quite a ruckus when it was first disseminated. All of a sudden, executives of health care agencies were warned that they could be held individually accountable for actions of the agency.

What is the Yates Memo?

The Yates Memo is a memorandum written by Sally Quillian Yates, former Deputy Attorney General for the U.S. Dept. of Justice, dated September 9, 2015.

It basically outlines how federal investigations for corporate fraud or misconduct should be conducted  and what will be expected from the corporation getting investigated. It was not written specifically about health care providers; it is a general memo outlining the investigations of corporate wrongdoing across the board. But it is germane to health care providers.

See blog.

January 31, 2017, Sally Yates was fired by Trump. So what happens to her memo?

With Yates terminated, will the memo that has shaken corporate America that bears her name go as well? Newly appointed Attorney General Jeff Sessions wrote his own memo on March 8, 2017, entitled “Memorandum for all Federal Prosecutors.” it directs prosecutors to focus not on corporate crime, but on violent crime. However, investigations into potential fraud cases and scrutiny on providers appear to remain a top priority under the new administration, as President Donald Trump’s proposed budget plan for fiscal year 2018 included a $70 million boost in funding for the Health Care Fraud and Abuse Control program.

Despite Sessions vow to focus on violent crimes, he has been clear that health care fraud remains a high priority. At his confirmation, Sessions said: “Sometimes, it seems to me, Sen. Hirono, that the corporate officers who caused the problem should be subjected to more severe punishment than the stockholders of the company who didn’t know anything about it.” – a quote which definitely demonstrates Sessions aligns with the Yates Memo.

By law, companies, like individuals, are not required to cooperate with the Justice Department during an investigation.  The Yates Memo incentivizes executives to cooperate. However, the concept was not novel. Section 9-28.700 of the U.S. Attorneys’ Manual, states: “Cooperation is a potential mitigating factor, by which a corporation – just like any other subject of a criminal investigation – can gain credit in a case that otherwise is appropriate for indictment and prosecution.”

Even though Trump’s proposed budget decreases the Department of Justice’s budget, generally, the increase in the budget for the Health Care Fraud and Abuse Control program is indicative of this administration’s focus on fraud, waste, and abuse.

Providers accused of fraud, waste, or abuse suffer extreme consequences. 42 CFR 455.23 requires states to suspend Medicaid reimbursements upon credible allegations of fraud. The suspension, in many instances, lead to the death of the agency – prior to any allegations being substantiated. Just look at what happened in New Mexico. See blog. And the timeline created by The Santa Fe New Mexican.

When providers are accused of Medicare/caid fraud, they need serious legal representation, but with the suspension in place, many cannot afford to defend themselves.

I am “all for” increasing scrutiny on Medicare/caid fraud, waste, and abuse, but, I believe that due process protection should also be equally ramped up. Even criminals get due process.

The upshot regarding the Yates Memo? Firing Yates did not erase the Yates Memo. Expect Sessions and Trump to continue supporting the Yates Memo and holding executives personally accountable for health care fraud – no more hiding behind the Inc. or LLC. Because firing former AG Yates, did nothing to the Yates Memo…at  least not yet.

New Federal Legislation Proposed to Increase Due Process for Health Care Providers!

Every once in a blue moon, I am actually happy with the actions of our government. One of these rare occasions occurred on March 17, 2016. Happy St. Patty’s Day!

On March 17, 2016, Senior Senator John Thune from South Dakota introduced S.2736: A bill to require consideration of the impact on beneficiary access to care and to enhance due process protections in procedures for suspending payments to Medicaid providers.

How many times have I blogged about the nonexistence of due process for Medicaid providers??? I cannot even count. (Well,I probably could count, but it take quite some time). My readers know that I have been complaining for years that the federal regulations consider Medicaid provider guilty until proven innocent. See blog. And blog.

Well, finally, someone in Congress has taken notice.What is really cool is that my team at my law firm Gordon & Rees was asked to provide some input for this bill…pretty cool! Although I have to say, everything that we proposed is not included in the proposed bill. Apparently, some of our suggestions were too “pro provider” and “didn’t stand a chance to be passed.” Who would have thought? Baby steps, I was informed.

The bill, if enacted, would require the Secretary of Health and Human Services (HHS) to revise the Code of Federal Regulations, specifically the Title 42 of the CFR.

Currently, 42 CFR 455.23 reads: “the State Medicaid agency must suspend all Medicaid payments to a provider after the agency determines there is a credible allegation of fraud for which an investigation is pending under the Medicaid program against an individual or entity unless the agency has good cause to not suspend payments or to suspend payment only in part.” (emphasis added). Rarely has a state agency found “good cause” to not suspend payments. In fact, quite the opposite. I have seen state agencies use this regulation harshly and with intent to put providers out of business.

S.2736 would revise the above-mentioned language and require that a state agency take certain steps to ensure due process for the provider prior to implementing a suspension in payments.

Prior to implementing a payment suspension, this proposed bill would require the state agency to:

  • Consult with the Medicaid fraud unit for the state and receive written confirmation of such a consultation; and
  • Certify that the agency considered whether beneficiary access would be jeopardized or whether good cause exists, in whole or in part (according to the new, proposed manner of determining good cause)

We all know that the above bullet points supply more protection than we have now.

Furthermore, there are protections on the back end.

After a suspension is implemented, at the beginning of each fiscal quarter, the state Medicaid agency must:

  • certify to the Secretary that it has considered whether the suspension of payments should be terminated or modified due to good cause (as modified by S.2736); and
  • if no good cause is found, furnish to the provider the reasons for such determination.

S.2736 allow requires the agency to disclose the specific allegations of fraud that is being investigated (after a reasonable amount of time) and to evaluate every 180 days whether good cause exists to lift the suspension. Regardless, good cause not to continue the suspension will be deemed to exist after 18 months (with some other qualifying details).

According to a government track website, this bill has a 8% chance of getting past committee. And a 3% chance of being enacted.

The stats on all bills’ “pass-ability,” is that only 15% of bills made it past committee and only about 3% were enacted in 2013–2015.

So call your Congressman or woman! Support S.2736! It’s not perfect, but it’s better!!!

Accusations of Medicaid/care Fraud Run Rampant in SC: There Are Legal Remedies!

As if South Carolina didn’t have enough issues with the recent flooding, let’s throw in some allegations of Medicaid fraud against the health care providers. I’m imagining a provider under water, trying to defend themselves against fraud allegations, while treading water. It’s not a pretty picture.

Flash floods happen fast, as those in SC can attest.

So, too, do the consequences of allegations.

Shakespeare is no stranger to false accusations. In Othello, Othello is convinced that his wife is unfaithful, yet she was virtuous. In Much Ado About Nothing, Claudio believes Hero to be unfaithful and slanders her until her death. Interestingly, neither Othello and Claudio came to their respective opinions on their own. Both had a persuader. Both had a tempter. Both had someone else whisper the allegations of unfaithfulness in their ears and both chose to believe the accusation with no independent investigation. So too are accusations of Medicaid/care fraud so easily accepted without independent investigation.

With the inception of the Affordable Care Act (ACA), We have seen a sharp uptick on accusations of credible allegations of fraud.  See blog for the definition of credible allegation of fraud.

The threshold for credible allegation of fraud incredibly low. A mere accusation from a disgruntled employee, a mere indicia of credibility, and/or even a computer data mining program can incite an allegation of fraud. Hero was, most likely, committing Medicare/acid fraud too.

The consequences of being accused of fraud is catastrophic for a  health care provider regardless whether the accusation is accurate. You are guilty before proving your innocence! Your reimbursements are immediately suspended! Your entire livelihood is immediately crumbled! You are forced to terminate staff! Assets can be seized, preventing you even the ability to hire an attorney to defend yourself!

I have seen providers be accused of credible allegations of fraud and the devastation that follows. In New Mexico. In North Carolina. See documentary. Many NC providers serve SC’s population as well. The Medicaid reimbursement rates are higher in SC.

Obviously, The ACA is nationwide, federal law. Hence, the increase in allegations/accusations of health care fraud is nationwide.

Recently, South Carolina health care providers have been on the chopping block. Othello and Claudio are in the house of Gamecocks!

South Carolina’s single state agency, DHHS, required Medicaid recipients to get a 2nd prior approval before receiving health care services for “rehabilitative behavioral health” services, such as behavioral health care services for substance abuse and mental illness (could you imagine the burden if this were required here in NC?).

Then, last year, SC DHHS eliminated such 2nd prior approval requirement.

With fewer regulations and red tape in which to maneuver, SC saw a drastic uptick of behavioral health care services. Othello and Claudio said, “Fraud! More services with only one prior approval must be prima fracie fraud!”

Hence, behavioral health care providers in SC are getting investigated. But, mind you, during investigations reimbursements are suspended. You say, “Well, Knicole, how will these health care provider agencies afford to defend themselves without getting paid?” “Good question,” I say. “They cannot unless they have a stack of cash on hand for this exact reason.”

“What should these providers do?” You ask.

Hire an attorney and seek an injunction lifting the suspension of payments during the investigation.

Turn a Shakespearean tragedy into a comedy! Toss in a dingy!

Judges have lifted the suspensions. Read the case excerpt below:

order

As you can read in the above-referenced case, despite 42 455.23(a) mandating a suspension of payments upon credible allegations of fraud, this Judge found that the state failed to carefully weigh the evidence before suspending all payments.

There are legal remedies!!

Have an Inkling of a Possible Overpayment, You Must Repay Within 60 Days, Says U.S. District Court!

You are a health care provider.  You own an agency.  An employee has a “hunch” that…

maybe…

perhaps….

your agency was overpaid for Medicare/caid reimbursements over the past two years to the tune of $1 million!

This employee has been your billing manager for years and you trust her…but…she’s not an attorney and doesn’t have knowledge of pertinent legal defenses. You are concerned about the possibility of overpayments, BUT….$1 million? What if she is wrong?  That’s a lot of money!

According to a recent U.S. District Court in New York, you have 60 days to notify and refund the government of this alleged $1 million overpayment, despite not having a concrete number or understanding whether, in fact, you actually owe the money.

Seem a bit harsh? It is.

With the passage of the Affordable Care Act (ACA) on March 23, 2010, many new regulations were implemented with burdensome requirements to which health care providers are required to adhere.  At first, the true magnitude of the ACA was unknown, as very few people actually read the voluminous Act and, even fewer, sat to contemplate the unintentional consequences the Act would present to providers. For example, I daresay that few, if any, legislators foresaw the Draconian effect from changing the word “may” in 42 CFR 455.23 to “must.” See blog and blog and blog.

Another boiling frog in the muck of the ACA is the 60-Day Refund Rule (informally the 60-day rule).

What is the 60-Day Refund Rule?

In 2012, CMS proposed the “60-day Refund Rule,” requiring Medicare providers and suppliers to repay Medicare overpayments within 60 days of the provider or supplier identifying the overpayment.  Meaning, if you perform a self audit and determine that you think that you were overpaid, then you must repay the amount within 60 days or face penalties.

If I had a nickel for each time a clients calls me and says, “Well, I THINK I may have been overpaid, but I’m not really sure,” and, subsequently, I explained how they did not owe the money, I’d be Kardashian rich.

It is easy to get confused. Some overpayment issues are esoteric, involving complex eligibility issues, questionable duplicity issues, and issues involving “grey areas” of “non”-covered services.  Sometimes a provider may think he/she owes an overpayment until he/she speaks to me and realizes that, by another interpretation of the same Clinical Coverage Policy that, in fact, no overpayment is owed. To know you owe an overpayment, generally, means that you hired someone like me to perform the self audit.  From my experience, billing folks are all too quick to believe an overpayment is owed without thinking of the legal defenses that could prevent repayment, and this “quick to find an overpayment without thinking of legal defenses” is represented in Kane ex rel. United States et al. v. Healthfirst et al., the lawsuit that I will be discussing in this blog.  And to the billings folks’ credit, you cannot blame them.  They don’t want to be accused of fraud. They would rather “do the right thing” and repay an overpayment, rather than try to argue that it is not due.  This “quick to find an overpayment without thinking of legal defenses” is merely the billing folks trying to conduct all work “above-board,” but can hurt the provider agency financially.

Nonetheless, the 60-day Refund Rule is apathetic as to whether you know what you owe or whether you hire someone like me.  The 60-Day Refund Rule demands repayment to the federal government upon 60-days after your “identification” of said alleged overpayment.

Section 1128(d)(2) of the Social Security Act states that:

“An overpayment must be reported and returned under paragraph (1) by the later of— (A) the date which is 60 days after the date on which the overpayment was identified; or (B) the date any corresponding cost report is due, if applicable.”

A recent case in the U.S. District Court of New York has forged new ground by denying a health care providers’ Motion to Dismiss the U.S. government’s and New York State’s complaints in intervention under the False Claims Act (FCA).  The providers argued that the 60-day rule cannot start without a precise understanding as to the actual amount of the overpayment. Surely, the 60-day rule does not begin to run on the day someone accuses the provider of a possible overpayment!

My colleague, Jennifer Forsyth, recently blogged about this very issue.  See Jennifer’s blog.

Basically, in Kane ex rel. United States et al. v. Healthfirst et al., three hospitals provided care to Medicaid patients. Due to a software glitch [cough, cough, NCTracks] and due to no fault of the hospitals, the hospitals received possible overpayments.  The single state entity for Medicaid in New York questioned the hospitals in 2010, and the hospitals took the proactive step of tasking an employee, Kane, who eventually became the whistleblower, to determine whether, if, in fact, the hospital did receive overpayments.

At this point, arguably, the hospitals were on notice of the possibility of overpayments, but had not “identified” such overpayments per the 60-day rule.  It was not until Kane made preliminary conclusions that the hospitals were held to have “identified” the alleged overpayments.  But very important is the fact that the Court held the hospitals liable for having “identified” the alleged overpayments prior to actually knowing the veracity of the preliminary findings.

Five months after being tasked with the job of determining any overpayment, Kane emails the hospital staff her findings that, in her opinion, the hospitals had received overpayments totaling over $1 million for over 900 claims.  In reality, Kane’s findings were largely inaccurate, as approximately one-half of her alleged findings of overpayments were actually paid accurately.  Despite the inaccurate findings, the Complaint that Kane filed as the whistleblower (she had been previously fired, which may or may not have contributed to her willingness to bring a whistleblower suit), alleged that the hospitals had a duty under the 60-day rule to report and refund the overpayments, even though there was no certainty as to whether the findings were accurate. And the Court agreed with Kane!

Even more astounding, Kane’s email to the hospitals’ management that contained the inaccurate findings contained phrases that would lead one to believe that the findings were only preliminary:

  • “further analysis would be needed to confirm his findings;” and
  • the spreadsheet provided “some insight to the magnitude of the problem” (emphasis added).

The above-mentioned comments would further the argument that the hospitals were not required to notify the Department and return the money 60 days from Kanes’ email because Kane’s own language within the email was so wishy-washy. Her language in her email certainly does not instill confidence that her findings are accurate and conclusive.

But…

The 60-day rule requires notification and return of the overpayments within 60 days of identification.  The definition of “identification” is the crux of Kane ex rel. United States et al. v. Healthfirst et al. [it depends on what the definition of “is” is].

The Complaint reads, that the hospitals “fraudulently delay[ed] its repayments for up to two years after the Health System knew” the extent of the overpayments” (emphasis added). According to the Complaint, the date that the hospitals “knew” of the overpayment was the date Kane emailed the inaccurate findings.

The hospitals filed a Motion to Dismiss based on the fact that Kane’s email and findings did not conclusively identify overpayments, instead, only provided a preliminary finding to which the hospitals would have needed to verify.

The issue in Kane ex rel. United States et al. v. Healthfirst et al. is the definition of “identify” under the 60-day rule. Does “identify” mean “possibly, maybe?” Or “I know I owe it?” Or somewhere in between?

The hospitals filed a Motion to Dismiss, claiming that the 60-day rule did not begin to run on the date that Kane sent his “preliminary findings.”  The U.S. District Court in New York denied the hospitals’ Motion to Dismiss and stated in the Order, “there is an established duty to pay money to the government, even if the precise amount due is yet to be determined.” (emphasis added).

Yet another heavy burden tossed upon health care providers in the ever-deepening, regulatory muck involved in the ACA.  As health care providers carry heavier burdens, they begin to sink into the muck.

Important take aways:

  • Caveat: Take precautions to avoid creating disgruntled, former employees.
  • Have an experienced attorney on speed dial.
  • Self audit, but self audit with someone highly experienced and knowledgeable.
  • Understand the ACA. If you do not, read it. Or hire someone to teach you.

Williams Mullen Hosts Its First Annual Healthcare Panel Discussion: Summary Below

I am currently sitting in a hotel in New Mexico.  I testified this morning before the New Mexico Behavioral Health Care Subcommittee regarding due process for health care providers upon “credible allegations of fraud.”

This past Sunday I ran and finished my very first half marathon.  And, yes, I am sore.  I signed up for the Bull City 1/2 marathon in Durham because it was being held in October and I thought the temperature would be cool.  But I failed to contemplate Durham’s hills…ouch!

Despite my jet lag and sore muscles, I wanted to blog about the health care panel discussion this past Thursday night hosted by Williams Mullen. Representative Nelson Dollar, Barbara Morales Burke, Blue Cross Blue Shield of NC, Stephen Keene, General Counsel for the NC Medical Society, and I presented as the healthcare panel.  As you can see below, we sat in the above-referenced order.

Panel4

with moderator

Below, I have outlined the questions presented and my personal recollection of each answer.  These answers were not recorded, so, if, by chance, I misquote someone, it is my own personal recollection’s fault, and I apologize.

Our Williams Mullen associate Robert Shaw, acted as the moderator and asked the following questions:

To Rep. Dollar:

Most of us have heard about the discussion in the General Assembly about moving North Carolina’s Medicaid program towards a more fully implemented managed care model or to one using accountable care organizations. Where do the House and Senate currently stand with respect to these models, and what are the prospects for passing Medicaid reform in next year’s long session of the General Assembly?

Summary: The House and the Senate are not in agreement.  The House put forth a Bill 1181 last session that encompasses the House’s ideas for Medicaid reform.  It was a bipartisan bill.  It was passed unanimously.  Medicaid reform should not be a bipartisan matter.  Our Bill did not fare well in the Senate, but the House believes Bill 1181 is the best we have so far.

To which Keene interjected: It is important that Bill 1181 was unanimous. The Medical Society endorses the bill. 

To Barbara Morales Burke:

As we head into open enrollment season under the Affordable Care Act, what are the biggest challenges you see from the insurer’s perspective in complying with Affordable Care Act requirements and meeting the needs of the marketplace?

Summary: BCBS, as all other insurance companies, faced unique times last year during the open enrollment and this year will be even more important because we will find out who will re-new the policies.  While BCBS was not perfect during last year’s open enrollment, we have learned from the mistakes and are ready for the upcoming enrollment.

To Steve Keene:

What concerns are you seeing from members of the North Carolina Medical Society regarding patients’ access to providers of their choice and your members’ participation in the major health insurance networks?

Summary: This has always an issue since he came to NC. He actually wrote a memo regarding the access to provider issue back in the 1990s.  The insurance need to come up with a known a published standard. BCBS actually has better relationships with providers than, say, for example, a United Healthcare.  If the insurance company decides to only use X number of ob/gyns, then it should be clear why the insurance company is only contracting with x number ob/gyns.

To Knicole Emanuel:

Under the Affordable Care Act, the standard for withholding payments in the event of a credible allegation of fraud has changed. What is the standard for a credible allegation of fraud and how does such an allegation affect Medicaid reimbursements?

Summary: The ACA was intended to be self-funding.  In drafting the ACA, 42 CFR 455.23 was amended from allowing states to choose whether to suspend Medicaid reimbursements upon credible allegations of fraud to mandating the states to suspend payments.  The basis for a suspension is credible allegations of fraud and only requires an indicia of reliability.  This indicia of reliability is an extremely low standard and, thus, adversely impacts health care providers who are accused of fraud without a basis, such as a disgruntled employee or anonymous and unfounded complaint.  

For more information on suspension of Medicaid payments, please see my blogs: “How the ACA Has Redefined the Threshold for “Credible Allegations of Fraud” and Does It Violate Due Process?” or “NC Medicaid Providers: “Credible Allegations of Fraud?” YOU ARE GUILTY UNTIL PROVEN INNOCENT!

To Keene and Burke: (ACA topic)

One of the concerns, or perhaps benefits depending on one’s perspective, about the implementation of the Affordable Care Act is the possible transition from our country’s employer-based health insurance model. Are you seeing any trends away from the employer-based health insurance model, or do you expect such a trend in the future?

Summary: (From Keene) He sees the employer-based health insurance model as a tax issue.  Employer-based health insurance is not going anywhere unless the related tax break is eliminated.  Keene does not have an opinion as to whether the employer-based health insurance model is good or bad; he just believes that it is not going anywhere.  On a side note, Keene mentioned that, with employer-based health insurance, the employee has a much smaller voice when it comes to negotiating any terms of the health insurance.  The employee is basically at the whim of the employer and health insurance company.

Dollar and Emanuel: (Medicaid reform)

Who are the major contributors to the legislative discussion on Medicaid funding and reimbursement rates? What stakeholders do legislators want or need to hear from more to make sound policy decisions about funding decisions?

Summary: (From Dollar) It is without question that the legislators are surrounded by lobbyists regarding the discussion as to Medicaid funding and reimbursement rates.  I stated that the reimbursement rates are too low and are a direct correlation as to quality of care.  Rep. Dollar stated that he is open to hearing from all.  Furthermore, Rep. Dollar believes that the Senate Bill on Medicaid reform is a good start for Medicaid reform. The Bill implements the Accountable Care Organizations (ACOs), and is supported by the NC Medical Society.

Summary: (From me) I support Medicaid reform that eliminates the MCOs in behavioral health care.  These MCOs are prepaid and have all the financial incentive to deny services and terminate providers.

Burke: (ACO)

How is Blue Cross Blue Shield of North Carolina working with providers to take advantage of the new Medicare Shared Savings Program? (E.g., partnership signed with WakeMed Key Community Care (an accountable care organization) in July.)

Summary: BCBS works very hard to maintain solid relationships with providers.  To which Keene agreed and stated that other private insurance does not.

The health care panel was great.  We hope to host a State of the State on Health Care panel discussion annually.