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Medicaid Forecast: Cloudy with 100% Chance of Trump

Regardless how you voted, regardless whether you “accept” Trump as your president, and regardless with which party you are affiliated, we have a new President. And with a new President comes a new administration. Republicans have been vocal about repealing Obamacare, and, now, with a Republican majority in Congress and President, changes appear inevitable. But what changes?

What are Trump’s and our legislature’s stance on Medicaid? What could our future health care be? (BTW: if you do not believe that Medicaid funding and costs impact all healthcare, then please read blog – and understand that your hard-working tax dollars are the source of our Medicaid funding).

WHAT IS OUR HEALTHCARE’S FORECAST?

The following are my forecasted amendments for Medicaid:

  1. Medicaid block grants to states

Trump has indicated multiple times that he wants to put a cap on Medicaid expenses flowing from the federal government to the states. I foresee either a block grant (a fixed annual amount per state) or a per capita cap (fixed dollar per beneficiary) being implemented.

What would this mean to Medicaid?

First, remember that Medicaid is an entitlement program, which means that anyone who qualifies for Medicaid has a right to Medicaid. Currently, the federal government pays a percentage of a state’s cost of Medicaid, usually between 60-70%. North Carolina, for example, receives 66.2% of its Medicaid spending from Uncle Sam, which equals $8,922,363,531.

While California receives only 62.5% of its Medicaid spending from the federal government, the amount that it receives far surpasses NC’s share – $53,436,580,402.

The federal funding is open-ended (not a fixed a mount) and can inflate throughout the year, but, in return, the states are required to cover certain health care services for certain demographics; e.g., pregnant women who meet income criteria, children, etc. With a block grant or per capita cap, the states would have authority to decide who qualifies and for what services. In other words, the money would not be entwined with a duty that the state cover certain individuals or services.

Opponents to block grants claim that states may opt to cap Medicaid enrollment, which would cause some eligible Medicaid recipients to not get coverage.

On the other hand, proponents of per capita caps, opine that this could result in more money for a state, depending on the number of Medicaid eligible residents.

2. Medicaid Waivers

The past administration was relatively conservative when it came to Medicaid Waivers through CMS. States that want to contract with private entities to manage Medicaid, such as managed care organizations (MCOs), are required to obtain a Waiver from CMS, which waives the “single state entity” requirement. 42 CFR 431.10. See blog.

This administration has indicated that it is more open to granting Waivers to allow private entities to participate in Medicaid.

There has also been foreshadowing of possible beneficiary work requirements and premiums.Montana has already implemented job training components for Medicaid beneficiaries. However, federal officials from the past administration instructed Montana that the work component could not  be mandatory, so it is voluntary. Montana also expanded its Medicaid in 2015, under a Republican governor. At least for one Medicaid recipient, Ruth McCafferty, 53, the voluntary job training was Godsend. She was unemployed with three children at home. The Medicaid job program paid for her to participate in “a free online training to become a mortgage broker. The State even paid for her 400-mile roundtrip to Helena to take the certification exam. And now they’re paying part of her salary at a local business as part of an apprenticeship to make her easier to hire.” See article.

The current administration may be more apt to allow mandatory work requirements or job training for Medicaid recipients.

3. Disproportionate Share Hospital

When the ACA was implemented, hospitals were at the negotiating table. With promises from the past administration, hospitals agreed to take a cut on DSH payments, which are paid to hospitals to help offset the care of uninsured and Medicaid patients. The ACA’s DSH cut is scheduled to go into effect FY 2018 with a $2 billion reduction. It is scheduled to continue to reduce until FY 2025 with a $8 billion reduction. The reason for this deduction was that the ACA would create health coverage for more people and with Medicaid expansion there would be less uninsured.

If the ACA is repealed, our lawmakers need to remember that DSH payments are scheduled to decrease next year. This could have a dramatic impact on our hospitals. Last year, approximately 1/2 of our hospitals received DSH. In 2014, Medicaid paid approximately $18 billion for DSH payments, so the proposed reductions make up a high percentage of DSH payments.

4. Physician payment predictability

Unlike the hospitals, physicians got the metaphoric shaft when the ACA was implemented. Many doctors were forced to provide services to patients, even when those patients were not covered by a health plan. Many physicians had to  increase the types of insurance they would accept, which increased their administrative costs and the burden.

This go-around, physicians may have the ear of the HHS Secretary-nominee, Tom Price, who is an orthopedic surgeon. Dr. Price has argued for higher reimbursement rates for doctors and more autonomy. Regardless, reimburse rate predictability may stabilize.

Dealing with Medicaid/Medi-Cal Temporary Suspensions in California – Tips Based on Our Firm’s Experience

Josh Urquhart, a fellow health care attorney at Gordon & Rees’ Denver office, wrote an addendum to my blog from Monday. His comments are on-point and worth reading.

You can find his blog here.

He offers several, specific California- and DHCS-specific tips. However, these tips are analogous to all states and all dentists who accept any government-funded insurance, especially Medicaid.

Here is his last paragraph:

“I know that some of this might be frightening. My first thought after putting pen to paper on this post was to that scene in Empire Strikes Back, when Luke tells Yoda he isn’t afraid, and Yoda tells him ominously “you will be.”  But there is a reason for my sturm und drang. As Knicole says, state Medicaid agencies have a good bit of leverage in these overpayment and fraud and abuse investigations, and in my opinion, DHCS falls towards the very top end of that list. This isn’t a time for providers to put their heads in the sand and figure that they’ll deal with any problems with DHCS later down the line if and when something happens. By that point, it very well might be too late – or at the very least, the providers will have missed the best chance (or even the second best chance) to prevent or resolve any problems cheaply and quickly.”

I have to say…it is so nice being a part of a firm with such an amazing wealth of knowledge about health care…and across the entire nation!!  At GR, I am now part of a “deep bench” of experienced health care attorneys. (Sorry to toot our horn, but it is really nice!!)

Plus, I learned something new from Josh’s blog.  Who knew that “sturm und drang” is an actual phrase and not a sad oversight of spellcheck?? I started to let Josh know of the misspelled phrase until I googled it.  Maybe I will try these words on Words with Friends.

OIG Finds Questionable Billing! California Medicaid Dentists: Expect Withholdings or Other Penalties!

Currently, dentists who accept Medicaid are ripe for pickings as targets for regulatory audits from both the federal and state governments. Actually, this is true for any provider that accepts Medicaid. It just happens that, recently, I have noticed an uptick in dental audits both in North Carolina and nationwide. Some dentists, who accept pregnancy Medicaid, may even bear the burden of determining pregnancy prior to a teeth cleaning…however, that is a topic for another day.  Although, I tell you what, if my dentist asked whether I were pregnant prior to cleaning my teeth, he may have an abnormally red cheek the remainder of the day and I may join Crossfit.

Moving on….

Generally, dentists tend to not accept Medicaid. The reimbursement rates barely cover overhead. Add high regulatory compliance requirements, the likelihood of undergoing audits, and the government’s robust and zealous desire to tackle fraud, waste, and abuse (FWA), and it is no wonder why most dentists opt to not accept Medicaid. See blog. And blog.

Those dentists (and other providers) that do make the decision to accept Medicaid, these brave and noble souls, are subject to onerous audits; the result of a recent California audit is probably sending shock waves through the California dental community.

335 dental providers in California have been targeted by OIG as having questionable billing issues. Sadly, this is only the beginning for these 335 providers. Now the state will audit the providers, and these 335 providers may very well become the subject of a payment withhold in the near future.

What will happen next?

I will look into my crystal ball, otherwise known as experience, and let you know.

First, the Office of Inspector General (OIG) recently published a report called: “QUESTIONABLE BILLING FOR MEDICAID PEDIATRIC DENTAL SERVICES IN CALIFORNIA.

One can only imagine by the title that OIG found alleged questionable billing. Otherwise the title may have been, “A Study into Medicaid Billing for Medicaid Pediatric Dental Services,” instead of “Questionable Billing.” With such a leading title, a reader knows the contents before reading one word.

What is questionable billing?

Importantly, before addressing what IS questionable billing, what is NOT questionable billing? Questionable billing is not abhorrent billing practices. Questionable billing is not wasteful billing or abusive billing. And questionable billing is certainly not fraudulent billing. That is not to say that some of these questionable billing will be investigated and, perhaps, fall into one the aforementioned categories. But not yet. Again, these dentists have a long journey ahead of them.

In this context, questionable billing seems to mean that the OIG report identifies dentists who perform a higher number of services per day. OIG analyzed rendering dental providers’ NPI numbers to determine how many services each rendering provider was providing per day. Then OIG compared the average Medicaid payment per kid, number of services per day, and number of services provided per child per visit. OIG determined a “threshold” number for each category and cited questionable billing practices for those dentists that fell egregiously outside the thresholds. Now, obviously, this is a simplistic explanation for a more esoteric procedure, but the explanation is illustrative.

This study of California Medicaid dentists is not first dental study OIG has undertaken. Recently, OIG studied Medicaid dentists in New York, Louisiana, and Indiana. What stands out in the California Medicaid dental study is the volume of dentists involved in the study. In Indiana, OIG reviewed claims for 787 dentists; in New York it reviewed claims for 719 dentists, and in Louisiana, OIG studied 512 dentists’ claims, all of whom rendered services to over 50 Medicaid children.

In California, OIG studied 3,921 dentists.

Why such a difference?

Apparently, California has more dentists than the other three states and more dentists who accept Medicaid. So, if you are Medicaid dentists, apparently, there is more competition in California.

Juxtapose that, in California, in 2012, only 3 periodontists, 3 prosthodontists, 2 endodontists, and 1 oral pathologist provided services to 50 or more children with Medicaid in California.

Going back to the audit findings…

OIG considered dentists who exceeded its identified threshold for one or more of the seven measures to have questionable billing.

The result?

OIG identified 329 general dentists and 6 orthodontists out of 3,921 providers as having with questionable billing. But these findings are only the beginning of what will, most likely, become a long and tedious legal battle for these 335 providers. Lumping together so many dentists and claiming questionable billing practices will inevitably include many dentists who have done nothing irregular. Many other dentists, will have engaged in unintentional billing errors and may owe recoupments. But I foresee a very small number of these dentists to actually have committed fraudulent billing.

Here is an example found in the OIG’s report, OIG identified that 108 dentists provided stainless steel crowns to 18% of the children served by these dentists, compared to an average of only 5% of children receiving stainless steel crowns by those served by all general dentists (non-Medicaid).

Another example is that 98 dentists provided pulpotomies to 18% of the children, while the statewide percentage is 5% to undergo pulpotomies.

Do these examples show that 108 dentists providing stainless steel crowns and that 98 dentists providing pulpotomies are improperly billing?

Of course not.

It is only logical that dentists who accept Medicaid would have a significantly higher number of pulpotomies compared to dentists who service the privately insured. Usually, although not always, a Medicaid recipient will have more issues with their teeth than those privately insureds. In order to qualify for Medicaid, the family must live in poverty (some more than others with the expansion of Medicaid in some states). Some of kids in this population will have parents who do not harp on the importance of dental hygiene, thus allowing many kids in this population to have decay in their teeth. Obviously, this is a generalization; however, I am confident that many studies exist to back up this generalization.

Therefore, if you accept  my generalization, it makes sense that Medicaid dentists perform more pulpotomies than private insurance dentists.

And stainless steel crowns go hand in hand with pulpotomies. Unless you extract the tooth after the removal of the decay, you will need to provide a stainless steel crown to protect the tooth from future damage.

What will happen next?

OIG admits in its report that “our findings do not prove that providers either billed fraudulently or provided medically unnecessary services, providers with extreme billing patterns warrant further scrutiny.”

Which is precisely what will happen next…”further scrutiny”…

The OIG report recommends to California that it:

• Increase its monitoring of dental providers to identify patterns of questionable billing
• Closely monitor billing by providers in dental chains
• Review its payment processes for orthodontic services
• Take appropriate action against dental providers with questionable billing

It is that last recommendation, taking appropriate action, which will determine the future course for these 335 Medicaid providers. Because, as many of you know if you have followed my blog, the California Department of Health Care Services (DHCS) has a large toolbox with a considerable amount of tools for which it may yield its power against these providers…right or wrong. The same goes for all state Medicaid agencies. When it comes to a Medicaid provider and a Medicaid state agency, there is no balance of powers, in fact, there is only one power. Instead the scales of justice have one arm on the ground and the other raised in the air. There is an imbalance of power, unless you arm yourself with the right allies.

Possible future actions by DHCS:

• Payment suspensions
• Withholds of all reimbursements
• Post payment review
• Prepayment review

And combinations thereof.

DCHS stated that “it will review the dental providers referred by OIG and will determine by December 2015 what appropriate action may be warranted. Should there exist any provider cases not previously evaluated by existing program monitoring efforts, DHCS will take appropriate action through the available channels.”

First, December 2015 is a short timeframe for DCHS to audit 335 providers’ records and determine the proper course of action. So, expect a vendor for DCHS to be hired for this task. Also, expect that an audit of 335 providers in 7 months will have flaws.

These California dentists and orthodontists need to arm themselves with defense tools. And, quickly. Because it is amazing how fast 7 months will fly by!!

The report also states that OIG will be undertaking a study in the future to determine access to dental care issues.  I will be interested in the result of that study.

These possible penalties that I already enumerated above are not without defenses.

These 335 CA Medicaid dental providers have administrative remedies to prevent these possible penalties.   In other words, these 335 CA Medicaid dental providers do not have to take this lying down. Even though it appears that an imbalance of power exists between the state agency and the providers, these providers have appeal rights.

The second that any of these providers receive correspondence from DCHS, it is imperative that the provider contact its attorney.

Remember, some appeals have very short windows for which to appeal.  Do not miss an appeal deadline!!

NC is #1 in USA!! (For Highest Percentage Increase in Total Medicaid Spending)…and What About the Rest of the USA?

On October 21, 2013, the magazine Modern Healthcare published an article, “Medicaid budgets By State,” which showed each state’s total Medicaid spent in 2012, total number of Medicaid enrollees in 2012, and average spending per enrollee in 2012.

Where does North Carolina rank in terms of our Medicaid budget versus other states?  We hear constantly that we spend all this needless money on administrative costs of Medicaid.  But, in terms of our Medicaid budget, where do we rank?  And my next question…do we simply have more Medicaid recipients in NC in relation to other states?  Is NC’s average spending per Medicaid enrollee grossly higher or lower than the national average?

Inquiring minds want to know!

Surprisingly, at least to me, Alaska has the highest average spending per Medicaid enrollee: $13,073, on average, per enrollee.  But then I thought about, much of Alaska is rural…not only rural , but almost impossible to navigate due to the snow and ice.  I don’t know for sure, but I would imagine that getting to and from Medicaid recipients or getting recipients to services (while not always reimbursed by Medicaid) must impact some of the costs.

[Important to note: The average spending per enrollee, to my knowledge, does not mean actual money spent per enrollee.  I believe the authors took the total budget and divided it by the number of enrollees.  So the average spent per enrollee includes built-in, administrative costs.]

Or…Maybe Alaska has a low number of Medicaid recipients and that is why Alaska spends the most per enrollee…maybe Alaska has a huge Medicaid budget without many recipients on which to spend it…few people, big pie…

I looked.

Alaska had, in 2012, 109,000 Medicaid recipients.

The fewer people you have at Thanksgiving, the bigger the pie pieces.  However, interestingly enough, Alaska spent $1.425 million total in Medicaid in 2012.  Delaware spent $1.421 in Medicaid in 2012. (Close enough, right?).  Yet, Delaware spent $6831, on average, per enrollee.  Maybe the pie analogy doesn’t work.  Maybe sometimes, even with a big pie and few people, too many rats and ants nibble at the pie.

Out of 50 states, where do you think NC falls?  Top 10 highest spender?  Bottom 10?  Right in the middle?

Drum roll……..

#9.

The only 8 states that spend more than NC per Medicaid recipient are:

1. Alaska

2.  New Jersey (somehow that did not surprise me) ($11,433/recipient)

3. Rhode Island (that did surprise me…I mean, look how little RI is…how big a Medicaid budget can it have?) ($11,080/recipient)

4.  North Dakota (a less populous state (less tax dollars), I believe) ($10,969/recipient)

5.  Pennsylvania ($10,835/recipient)

6.  Minnesota (there are big cities there (more tax dollars), no surprise) ($10,080/recipient)

7.  Missouri  (I went to law school in Missouri. This number surprised me a bit).  ($10,022/recipient)

8.  Connecticut ($9883/recipient)

9.  NC ($9,430/recipient)

Crazy! What about Illinois? With the hugely populous, Windy City and it being Obama’s home state, surely, Medicaid spending per recipient is, at least, in the middle, right?

Wrong.  Illinois is dead last with only $5229, on average, per recipient being spent.

Probably because too many people were invited to Thanksgiving…in 2012, Illinois had 2.626 million Medicaid recipients enrolled….or too many rats and ants.

Compare to NC in 2012 – 1.471 million Medicaid recipients.

What was Alaska’s Medicaid budget/spending in 2012 that the average spending per enrollee was $13,073?

$1.425 million spent.  Up 10.3% from 2011.  And 109,000 Medicaid enrollees.

Here is NC:

Spending: $13.872 million. Up 22.8% from 2011. And 1.471 million recipients.

Here is a crazy one..Nevada:

In 2012, Nevada had 301,000 Medicaid enrollees.  A little under 3x Alaska.  Nevada spent $1.692 million on Medicaid (only 200,000-ish over Alaska), but Nevada’s average spending per enrollee was $5,621 (less than half of Alaska and the third lowest amount spent per enrollee).  Where did all Nevada’s Medicaid money go?? Rats and ants eating away the pie?

North Dakota has the very least number of Medicaid enrollees in 2012…66,000.  Wyoming is a close second with only 67,000 Medicaid enrollees in 2012.

North Dakota was the 4th highest state as to spending per enrollee with an average of $10,969/enrollee.

Wyoming was the 16th highest state as to spending per enrollee with an average of $8537/enrollee.

Guess which state had the highest total spending on Medicaid in 2012?

Drum roll…..

California. (Shocker!). California spent $47.726 million on Medicaid, up 4.2% from 2011.  California also had the highest number of enrollees on 2012 with 2.624 million enrollees (over a million more than NC).  California also spent the 5th lowest on average per enrollee, $6,065.

Having a high number of enrollees did not always have a direct correlation with spending the least, on average, per enrollee.  Oregon only had 569,000 Medicaid enrollees in 2012 and spent the 4th lowest amount, on average, per enrollee, $6,007.

New York is the closest state to spending and number of recipients to California, but New York succeeded in a much higher average spending per enrollee than California.

New York spent $39.257 million total on Medicaid (less than $8 million difference from California) in 2012.  New York had 5.004 million enrollees (2.8 million Medicaid enrollees less than California) and spent, on average, $7845/enrollee (absolute, dead-on-middle as compared to all states).

Georgia is, perhaps, the most comparable to North Carolina in terms of number of Medicaid enrollees in 2012.  NC = 1.471 million enrollees in 2012.  GA = 1.529 enrollees in 2012.

NC spent $13.872 million, while Georgia spent $8.497 million in 2012.  So, Georgia had MORE Medicaid enrollees and spent over $5 million less……

Is that good or bad?  Is Georgia more efficient?  Did Georgia spend less in administration costs?

Actually (albeit there may be other factors), Georgia spent significantly less, on average, on each Medicaid enrollee.

Georgia spent 2nd lowest, on average, per Medicaid enrollee.  Only Illinois surpassed Georgia in lowest spending, on average, per enrollee.  Georgia spent, on average, $5,229 per enrollee.

NC spent $9430, on average, per enrollee. (Which, BTW, is more than enough for my “A Modest Proposal”).

That is a huge difference!

One other number jumped out at me when I reviewed Modern Healthcare‘s article, “Medicaid Budgets By State.”  Remember I told you that NC spent $13.872 million on Medicaid in 2012…and that the amount spent was a 22.8% increase from 2011?

22.8% is a high percentage to increase in only one year!

I looked at the increases/decreases of the states.  North Carolina gets the award for the highest percentage growth in spending on Medicaid in the entire nation.  NC was the only state whose percentage “increase of Medicaid spending” percentage from 2011 to 2012 was in the 20s.

NC is #1 in the nation for percentage increase as to total Medicaid spending!!!! (Proud?)

The next state with the highest increase in spending on Medicaid is Mississippi with a 17.4% increase in spending from 2011.  Next in line is Alabama with a 14.7% increase in Medicaid spending.

Guess which states decreased its Medicaid spending the most from 2011 to 2012?

Drum roll…

Oregon (decrease of 23.2% spending) and Illinois (decrease of 15% spending).  Is it coincidental that Illinois spent the absolute least, on average, per Medicaid recipient and that Oregon spent the 4th lowest, on average, per Medicaid recipient?

Regardless the size of the pie, the number of guests, and the number of rats and ants, we need to make sure that the guests (Medicaid recipients) are benefitting most from the pie.

Sometimes a decrease in spending equals a decrease in services to Medicaid recipients…sometimes not…I guess it depends on the number of rats and ants.