Class Action Lawsuit Alleges Right to Inpatient Hospital Stays: Hospitals Are Damned If They Do…and Don’t!
Hospitals – “Lend me your ears; I come to warn you, not to praise RACs. The evil that RACs do lives after them; The good is oft interred with their appeals; So let it be with lawsuits.” – Julius Caesar, with modifications by me.
A class action lawsuit is pending against U.S. Health and Human Services (HHS) alleging that the Center for Medicare and Medicaid Services (CMS) encourages (or bullies) hospitals to place patients in observation status (covered by Medicare Part B), rather than admitting them as patients (covered by Medicare Part A). The Complaint alleges that the treatments while in observation status are consistent with the treatments if the patients were admitted as inpatients; however, Medicare Part B reimbursements are lower, forcing the patient to pay more out-of-pocket expenses without recourse.
The United States District Court for the District of Connecticut refused to dismiss the class action case on February 8, 2017, giving the legal arguments within the Complaint some legal standing, at least, holding that the material facts alleged warrant investigation.
The issue of admitting patients versus keeping them in observation has been a hot topic for hospitals for years. If you recall, Recovery Audit Contractors (RACs) specifically target patient admissions. See blog and blog. RAC audits of hospital short-stays is now one of the most RAC-reviewed issues. In fiscal year 2014, RACs “recouped” from hospitals $1.2 billion in allegedly improper inpatient claims. RACs do not, however, review outpatient claims to determine whether they should have been paid as inpatient.
On May 4, 2016, CMS paused its reviews of inpatient stays to determine the appropriateness of Medicare Part A payment. On September 12, 2016, CMS resumed them, but with more stringent rules on the auditors’ part. For example, auditors cannot audit claims more than the six-month look-back period from the date of admission.
Prior to September 2016, hospitals would often have no recourse when a claim is denied because the timely filing limits will have passed. The exception was if the hospital joined the Medicare Part A/Part B rebilling demonstration project. But to join the program, hospitals would forfeit their right to appeal – leaving them with no option but to re-file the claim as an outpatient claim.
With increased scrutiny, including RAC audits, on hospital inpatient stays, the class action lawsuit, Alexander et al. v. Cochran, alleges that HHS pressures hospitals to place patients in observation rather than admitting them. The decision states that “Identical services provided to patients on observation status are covered under Medicare Part B, instead of Part A, and are therefore reimbursed at a lower rate. Allegedly, the plaintiffs lost thousands of dollars in coverage—of both hospital services and subsequent skilled nursing care—as a result of being placed on observation status during their hospital stays.” In other words, the decision to place on observation status rather than admit as an inpatient has significant financial consequences for the patient. But that decision does not affect what treatment or medical services the hospital can provide.
While official Medicare policy allows the physicians to determine the inpatient v. observation status, RAC audits come behind and question that discretion. The Medicare Policy states that “the decision to admit a patient is a complex medical judgment.” Ch. 1 § 10. By contrast, CMS considers the determination as to whether services are properly billed and paid as inpatient or outpatient to be a regulatory matter. In an effort to avoid claim denials and recoupments, plaintiffs allege that hospitals automatically place the patients in observation and rely on computer algorithms or “commercial screening tools.”
In a deposition, a RAC official admitted that if the claim being reviewed meets the “commercial screening tool” requirements, then the RAC would find the inpatient status is appropriate, as long as there is a technically valid order. No wonder hospitals are relying on these commercial screening tools more and more! It is only logical and self-preserving!
This case was originally filed in 2011, and the Court of Appeals overturned the district court’s dismissal and remanded it back to the district court for consideration of the due process claims. In this case, the Court of Appeals held that the plaintiffs could establish a protected property interest if they proved their allegation “that the Secretary—acting through CMS—has effectively established fixed and objective criteria for when to admit Medicare beneficiaries as ‘inpatients,’ and that, notwithstanding the Medicare Policy Manual’s guidance, hospitals apply these criteria when making admissions decisions, rather than relying on the judgment of their treating physicians.”
HHS argues that that the undisputed fact that a physician makes the initial patient status determination on the basis of clinical judgment is enough to demonstrate that there is no due process property interest at stake.
The court disagreed and found too many material facts in dispute to dismiss the case.
Significant discovery will be explored as to the extent to which hospitals rely on commercial screening tools. Also whether the commercial screening tools are applied equally to private insureds versus Medicare patients.
Significant discovery will be explored on whether the hospital’s physicians challenge changing a patient from inpatient to observation.
Significant discovery will be explored as to the extent that CMS policy influences hospital decision-making.
Hospitals need to follow this case closely. If, in fact, RAC audits and CMS policy is influencing hospitals to issue patients as observation status instead of inpatient, expect changes to come – regardless the outcome of the case.
As for inpatient hospital stays, could this lawsuit give Medicare patients the right to appeal a hospital’s decision to place the patient in observation status? A possible, future scenario is a physician places a patient in observation. The patient appeals and gets admitted. Then hospital’s claim is denied because the RAC determines that the patient should have been in observation, not inpatient. Will the hospitals be damned if they do, damned if they don’t?
In the meantime:
Hospitals and physicians at hospitals: Review your policy regarding determining inpatient versus observation status. Review specific patient files that were admitted as inpatient. Was a commercial screening tool used? Is there adequate documentation that the physician made an independent decision to admit the patient? Hold educational seminars for your physicians. Educate! And have an attorney on retainer – this issue will be litigated.
Our newly appointed DHHS Secretary comes with a fancy and distinguished curriculum vitae. Dr. Mandy Cohen, DHHS’ newly appointed Secretary by Gov. Roy Cooper, is trained as an internal medicine physician. She is 38 (younger than I am) and has no known ties to North Carolina. She grew up in New York; her mother was a nurse practitioner. She is also a sharp contrast from our former, appointed, DHHS Secretary Aldona Wos. See blog.
Prior to the appointment as our DHHS Secretary, Dr. Cohen was the Chief Operating Officer and Chief of Staff at the Centers for Medicare and Medicaid Services (CMS). Prior to acting as the COO of CMS, she was Principal Deputy Director of the Center for Consumer Information and Insurance Oversight (CCIIO) at CMS where she oversaw the Health Insurance Marketplace and private insurance market regulation. Prior to her work at CCIIO, she served as a Senior Advisor to the Administrator coordinating Affordable Care Act implementation activities.
Did she ever practice medicine?
Prior to acting as Senior Advisor to the Administrator, Dr. Cohen was the Director of Stakeholder Engagement for the CMS Innovation Center, where she investigated new payment and care delivery models.
Dr. Cohen received her Bachelor’s degree in policy analysis and management from Cornell University, 2000. She obtained her Master’s degree in health administration from Harvard University School of Public Health, 2004, and her Medical degree from Yale University School of Medicine, 2005.
She started as a resident physician at Massachusetts General Hospital from 2005 through 2008, then was deputy director for comprehensive women’s health services at the Department of Veterans Affairs from July 2008 through July 2009. From 2009 through 2011, she was executive director of the Doctors for America, a group that promoted the idea that any federal health reform proposal ought to include a government-run “public option” health insurance program for the uninsured.
Again, I was perplexed. Did she ever practice medicine? Does she even have a current medical license?
This is what I found:
It appears that Dr. Cohen was issued a medical license in 2007, but allowed it to expire in 2012 – most likely, because she was no longer providing medical services and was climbing the regulatory and political ladder.
From what I could find, Dr. Cohen practiced medicine (with a fully-certified license) from June 20, 2007, through July 2009 (assuming that she practiced medicine while acting as the deputy director for comprehensive women’s health services at the Department of Veterans Affairs).
Let me be crystal clear: It is not my contention that Dr. Cohen is not qualified to act as our Secretary to DHHS because she seemingly only practiced medicine (fully-licensed) for two years. Her political and policy experience is impressive. I am only saying that, to the extent that Dr. Cohen is being touted as a perfect fit for our new Secretary because of her medical experience, let’s not make much ado of her practicing medicine for two years.
That said, regardless Dr. Cohen’s practical medical experience, anyone who has been the COO of CMS must have intricate knowledge of Medicare and Medicaid and the essential understanding of the relationship between NC DHHS and the federal government. In this regard, Cooper hit a homerun with this appointment.
Herein lies the conundrum with Dr. Cohen’s appointment as DHHS Secretary:
Is there a conflict of interest?
During Cooper’s first week in office, our new Governor sought permission, unilaterally, from the federal government to expand Medicaid as outlined in the Affordable Care Act. This was on January 6, 2017.
To which agency does Gov. Cooper’s request to expand Medicaid go? Answer: CMS. Who was the COO of CMS on January 6, 2017? Answer: Cohen. When did Cohen resign from CMS? January 12, 2017.
On January 14, 2017, a federal judge stayed any action to expand Medicaid pending a determination of Cooper’s legal authority to do so. But Gov. Cooper had already announced his appointment of Dr. Cohen as Secretary of DHHS, who is and has been a strong proponent of the ACA. You can read one of Dr. Cohen’s statements on the ACA here.
In fact, regardless your political stance on Medicaid expansion, Gov. Cooper’s unilateral request to expand Medicaid without the General Assembly is a violation of NC S.L. 2013-5, which states:
SECTION 3. The State will not expand the State’s Medicaid eligibility under the Medicaid expansion provided in the Affordable Care Act, P.L. 111-148, as amended, for which the enforcement was ruled unconstitutional by the U.S. Supreme Court in National Federation of Independent Business, et al. v. Sebelius, Secretary of Health and Human Services, et al., 132 S. Ct. 2566 (2012). No department, agency, or institution of this State shall attempt to expand the Medicaid eligibility standards provided in S.L. 2011-145, as amended, or elsewhere in State law, unless directed to do so by the General Assembly.
Obviously, if Gov. Cooper’s tactic were to somehow circumvent S.L. 2013-5 and reach CMS before January 20, 2017, when the Trump administration took over, the federal judge blockaded that from happening with its stay on January 14, 2017.
But is it a bit sticky that Gov. Cooper appointed the COO of CMS, while she was still COO of CMS, to act as our Secretary of DHHS, and requested CMS for Medicaid expansion (in violation of NC law) while Cohen was acting COO?
You tell me.
I did find an uplifting quotation from Dr. Cohen from a 2009 interview with a National Journal reporter:
“There’s a lot of uncompensated work going on, so there has to be a component that goes beyond just fee-for service… But you don’t want a situation where doctors have to be the one to take on all the risk of taking care of a patient. Asking someone to take on financial risk in a small practice is very concerning.” -Dr. Mandy Cohen
Scenario: You have an arrangement with your local hospital. You are a urologist and your practice owns a laser machine. You lease your laser machine to Hospital A, and your lease allows you to receive additional, but fair market value, money depending on how often your machine is used. Legal?
A new Final Ruling from the Centers for Medicare and Medicaid Services (CMS) provides murky guidance.
CMS finalized the 2017 Medicare Physician Fee Schedule (PFS) rule, which took effect on January 1, 2017. There have been few major revisions to the Stark Law since 2008…until now. The Stark Law is named for United States Congressman Pete Stark (D-CA), who sponsored the initial bill in 1988. Politicians love to name bills after themselves!
Absent an exception, the Stark Law prohibits a physician from referring Medicare patients for certain designated health services (“DHS”), for which payment may be made under Medicare, to any “entity” with which the physician (or an immediate family member) has a “financial relationship.” Conversely, the statute prohibits the DHS-furnishing entity from filing claims with Medicare for those referred services.
Despite the general prohibition on potentially self-interested referrals, the Stark Law permits Medicare referrals by physicians to entities in which they have a financial interest in certain limited circumstances. But these circumstances are limited and must be followed precisely and without deviation.
These exceptions are created by legally excluding some forms of compensation agreements and ownership interests from the definition of “financial relationship,” thus allowing both the relationships and the referrals. See 42 U.S.C. § 1395nn(b)-(e).
One of such exceptions to the Stark Law is the equipment lease exception.
This equipment lease exception to Stark law allows a financial relationship between physicians and hospitals for the lease of equipment, only if the lease (1) is in writing; (2) assigns the use of the equipment exclusively to the hospital; (3) lasts for a term of at least one year; (4) sets rental charges in advance that are consistent with fair market value and “not determined in a manner that takes into account the volume or value of any referrals or other business generated between the parties”; (5) satisfies the standard of commercial reasonableness even absent any referrals; and (6) meets “such other requirements as the Secretary may impose by regulation as needed to protect against program or patient abuse.”
For example, like the scenario above, a urology group owns and leases a laser machine to Hospital A. As long as the lease meets the criteria listed above, the urologists may refer Medicare patients to Hospital A to their hearts’ content – even though the urologists benefit financially from their own referrals.
However, what if the monetary incentive is tied to the amount the machine is actually used – or the “per-click lease?”
In a court case decided in January 2015, Council for Urological Interests v. Burwell, a D.C. circuit court decided that CMS’ ban on per-click leases was unreasonable.
In CMS’ Final Ruling, effective January 1, 2017, CMS again re-issued the per-click lease ban. But CMS’ revised ban appears to be more parochial in scope. CMS states that it “did not propose and [is] not finalizing an absolute prohibition on rental charges based on units of service furnished” and that “[i]n general, per-unit of service rental charges for the rental of office space or equipment are permissible.” As CMS had previously stated, the per-click ban applies only “to the extent that such charges reflect services provided to patients referred by the lessor to the lessee.”
Considering how unclear the Final Rule is – We are banning per-click leases, but not absolutely – expect lawsuits to clarify. In the meantime, re-visit your equipment leases. Have your attorney review for Stark compliance – because for the first time since 2008, major amendments to Stark Law became effective January 1, 2017.
Come one! Come all! Step right up to be one of the first 6 states to test the new Medicare-Medicaid Affordable Care Act (ACO) pilot program.
Let your elderly population be the guinea pigs for the Center for Medicare and Medicaid Services (CMS). Let your most needy population be the lab rats for CMS.
On December 15, 2016, CMS announced its intent to create Medicare/caid ACOs. Currently, Medicare ACOs exist, and if your physician has opted to participate in a Medicare ACO, then, most likely, you understand Medicare ACOs. Medicare ACOs are basically groups of physicians – of different service types – who voluntarily decide (but only after intense scrutiny by their lawyers of the ACO contract) to collaborate care with the intent of higher quality and lower cost care. For example, if your primary care physician participates in a Medicare ACO and you suffer intestinal issues, your primary care doctor would coordinate with a GI specialist within the Medicare ACO to get you an appointment. Then the GI specialist and your physician would share medical records, including test results and medication management. The thought is that the coordination of care will decrease duplicative tests, ensure appointments are made and kept, and prevent losing medical records or reviewing older, moot records.
Importantly, the Medicare beneficiary retains all benefits of “normal” Medicare and can choose to see any physician who accepts Medicare. The ACO model is a shift from “fee-for-service” to a risk-based, capitated amount in which quality of care is rewarded.
On the federal level, there have not been ACOs specially created for dual-eligible recipients; i.e., those who qualify for both Medicare and Medicaid…until now.
The CMS is requesting states to volunteer to participate in a pilot program instituting Medicare/Medicaid ACOs. CMS is looking for 6 brave states to participate. States may choose from three options for when the first 12-month performance period for the Medicare-Medicaid ACO Model will begin for ACOs in the state: January 1, 2018; January 1, 2019; or January 1, 2020.
Any state is eligible to apply, including the District of Columbia. But if the state wants to participate in the first round of pilot programs, intended to begin 2018, then that state must submit its letter of intent to participate by tomorrow by 11:59pm. See below.
I tried to research which states have applied, but was unsuccessful. If anyone has the information, I would appreciate it if you could forward it to me.
Participating in an ACO, whether it is only Medicare and Medicare/caid, can create a increase in revenue for your practices. Since you bear some risk, you also reap some benefit if you able to control costs. But, the decision to participate in an ACO should not be taken lightly. Federal law yields harsh penalties for violations of Anti-Kickback and Stark laws (which, on a very general level, prohibits referrals among physicians for any benefit). However, there are safe harbor laws and regulations specific to ACOs that allow exceptions. Regardless, do not ever sign a contract to participate in an ACO without an attorney reviewing it.
Food for thought – CMS’ Medicare/caid ACO Model may exist only “here in this [Obama] world. Here may be the last ever to be seen of [healthcare.gov] and their [employee mandates]. Look for it only in [history] books, for it may be no more than a [Obamacare] remembered, a [health care policy] gone with the wind…”
As, tomorrow (January 20, 2017) is the presidential inauguration. The winds may be a’changing…
One of our clients in New Mexico had an alleged Medicaid recoupment of over $12 million!! Actually, $12,015,850.00 – to be exact. (See below). After we presented our evidence and testimony, the Judge found that we owe $896.35. I call that a win!
In this case, the Human Services Department (HSD) in New Mexico had reviewed 150 random claims. Initially, HSD claimed that 41 claims out of 150 were noncompliant.
But, prior to the hearing, we saved over $10 million by pointing out HSD’s errors and/or by providing additional documentation.
And then the ALJ’s decision after we presented our evidence and testimony –
Boom! Drop the mike…
…………………………….not so fast…
……………………………………………..picking the mike back up…
You see, in New Mexico, the administrative law judges (ALJs) cannot render decisions. Look in the above picture. You see where it reads, “Recommendation?” That is because the ALJs in New Mexico can only render recommendations.
Because Medicaid has a “single state agency” rule; i.e., that only one agency may render discretionary decisions regarding Medicaid, and HSD is the single state agency in New Mexico charged with managing Medicaid, only HSD may render a discretionary decision. So in NM, the ALJ makes a recommendation and then the Secretary of HSD has the choice to either accept or reject the decision.
Guess whether HSD accepted or rejected the ALJ’s recommendation?
Now we will have to appeal the Agency’s Decision to overturn the ALJ recommendation.
Here, in NC, we obtained a waiver from the Centers of Medicare and Medicaid Services (CMS) to allow our ALJs to render Decisions. See blog.
I still consider this a win.
All Medicare/Caid Health Care Professionals: Start Contracting with Qualified Translators to Comply with Section 1557 of the ACA!!
Being a health care professional who accepts Medicare and/ or Medicaid can sometimes feel like you are Sisyphus pushing the massive boulder up a hill, only to watch it roll down, over and over, with the same sequence continuing for eternity. Similarly, sometimes it can feel as though the government is the princess sleeping on 20 mattresses and you are the pea that is so small and insignificant, yet so annoying and disruptive to her sleep.
Well, effective immediately – that boulder has enlarged. And the princess has become even more sensitive.
On May 18, 2016, the Department of Health and Human Services (HHS) published a Final Rule to implement Section 1557 of the Affordable Care Act (ACA). Section 1557 of the ACA has been on the books since the ACA’s inception in 2010. However, not until 6 years later, did HSD finally implement regulations regarding Section 1557. 81 Fed. Reg. 31376.
The Final Rule became effective July 18, 2016. You are expected to be compliant with the rule’s notice requirements, specifically the posting of a nondiscrimination notice and statement and taglines within 90 days of the Final Rule – October 16, 2016. So you better giddy-up!!
First, what is Section 1557?
Section 1557 of the ACA provides that an individual shall not, on the basis of race, color, national origin, sex, age, or disability, be
- excluded from participation in,
- denied the benefits of, or
- subjected to discrimination under
all health programs and activities that receive federal financial assistance through HHS, including Medicaid, most Medicare, student health plans, Basic Health Program, and CHIP funds; meaningful use payments (which sunset in 2018); the advance premium tax credits; and many other programs.
Section 1557 is extremely broad in scope. Because it is a federal regulation, it applies to all states and health care providers in all specialties, regardless the size of the practice and regardless the percentage of Medicare/caid the agency accepts.
HHS estimates that Section 1557 applies to approximately 900,000 physicians. HHS also estimates that the rule will cover 133,343 facilities, such as hospitals, home health agencies and nursing homes; 445,657 clinical laboratories; 1300 community health centers; 40 health professional training programs; Medicaid agencies in each state; and, at least, 180 insurers that offer qualified health plans.
So now that we understand Section 1557 is already effective and that it applies to almost all health care providers who accept Medicare/caid, what exactly is the burden placed on the providers? Not discriminating does not seem so hard a burden.
Section 1557 requires much more than simply not discriminating against your clients.
Section 1557 mandates that you will provide appropriate aids and services without charge and in a timely manner, including qualified interpreters, for people with disabilities and that you will provide language assistance including translated documents and oral interpretation free of charge and in a timely manner.
In other words, you have to provide written materials to your clients in their spoken language. To ease the burden of translating materials, you can find a sample notice and taglines for 64 languages on HHS’ website. See here. The other requirement is that you provide, for no cost to the client, a translator in a timely manner for your client’s spoken language.
In other words, you must have qualified translators “on call” for the most common 15, non-English languages in your state. You cannot rely on friends, family, or staff. You also cannot allow the child of your client to act as the interpreter. The clients in need of the interpreters are not expected to provide their own translators – the burden is on the provider. The language assistance must be provided in a “timely manner. “Further, these “on call” translators must be “qualified,” as defined by the ACA.
I remember an English teacher in high school telling the class that there were two languages in North Carolina: English and bad English. Even if that were true back in 19XX, it is not true now.
Here is a chart depicting the number of non-English speakers in North Carolina in 1980 versus 2009-2011:
As you can see, North Carolina has become infinitely more diverse in the last three decades.
And translators aren’t free. According to Costhelper Small Business,
It seems likely that telehealth may be the best option for health care providers considering the cost of in-person translations. Of course, you need to calculate the cost of the telehealth equipment and the savings you project over time to determine whether the investment in telehealth equipment is financially smart.
In addition to agencies having access to qualified translators, agencies with over 15 employees must designate a single employee who will be responsible for Section 1557 compliance and to adopt a grievance procedure for clients. Sometimes this may mean hiring a new employee to comply.
The Office of Civil Rights (“OCR”) at HHS is the enforcer of Section 1557. OCR has been enforcing Section 1557 since its inception in 2010 – to an extent.
However, expect a whole new policing of Section 1557 now that we have the Final Rule from HHS.
Don’t we have due process in America? Isn’t due process something that our founding fathers thought important, essential even? Due process is in our Constitution.
The Fourteenth (governing state governments) and the Fifth Amendment (governing federal government) state that no person shall be “deprived of life, liberty, or property without due process of law.”
Yet, apparently, if you accept Medicaid or Medicare, due process is thrown out the window. Bye, Felicia!
How is it possible that criminals (burglars, murderers, rapists) are afforded due process but a health care provider who accepts Medicaid/care does not?
Surely, that is not true! Let’s look at some examples.
In Tulsa, a 61-year-old man was arrested for killing his Lebanese neighbor. He pled not guilty. In news articles, the word “allegedly” is rampant. He allegedly killed his neighbor. Authorities believe that he may have killed his neighbor.
And prior to getting his liberty usurped and getting thrown in jail, a trial ensues. Because before we take a person’s liberty away, we want a fair trial. Doesn’t the same go for life and property?
Example A: I recently received a phone call from a health care provider in New Jersey. She ran a pediatric medical daycare. In 2012, it closed its doors when the State of New Jersey accused it of an overpayment of over $12 million and suspended its funds. With its funds suspended, it could no longer pay staff or render services to its clients.
Now, in 2016, MORE THAN FOUR YEARS LATER, she calls to ask advice on a closing statement for an administrative hearing. This tells me (from my amazing Murdoch Mysteries (my daughter’s favorite show) sense of intuition): (1) she was not provided a trial for FOUR YEARS; (2) the state has withheld her money, kept it, and gained interest on it for over FOUR YEARS; (3) in the beginning, she did have an attorney to file an injunction and a declaratory judgment; and (4) in the end, she could not afford such representation (she was filing her closing argument pro se).
Examples B-P: 15 New Mexico behavioral health care agencies. On June 23, 2013, the State of New Mexico accuses 15 behavioral health care agencies of Medicaid fraud, which comprised 87.5% of the behavioral health care in New Mexico. The state immediately suspends all reimbursements and puts most of the companies out of business. Now, MORE THAN THREE YEARS LATER, 11 of the agencies still have not undergone a “Fair Hearing.” Could you imagine the outrage if an alleged criminal were held in jail for THREE YEARS before a trial?
Example Q: Child psychiatrist in rural area is accused of Medicaid fraud. In reality, he is not guilty. The person he hired as his biller is guilty. But the state immediately suspends all reimbursements. This Example has a happy ending. Child psychiatrist hired us and we obtained an injunction, which lifted the suspension. He did not go out of business.
Example R: A man runs a company that provides non-emergency medical transportation (NEMT). One day, the government comes and seizes all his property and freezes all his bank accounts with no notice. They even seize his fiance’s wedding ring. More than TWO YEARS LATER – He has not stood trial. He has not been able to defend himself. He still has no assets. He cannot pay for a legal defense, much less groceries.
Apparently the right to speedy trial and due process only applies to alleged burglars, rapists, and murderers, not physicians and health care providers who render medically necessary services to our most fragile and vulnerable population. Due process??? Bye, Felicia!
What can you, as a health care provider, do if you are accused of fraud and your reimbursements are immediately suspended?
- Prepare. If you accept Medicare/caid, open an account and contribute to it generously. This is your CYA account. It is for your legal defense. And do not be stupid. If you accept Medicaid/care, it is not a matter of if; it is a matter of when.
- Have your attorney on speed dial. And I am not talking about your brother’s best friend from college who practices general trial law and defends DUIs. I am talking about a Medicaid/care litigation expert.
- File an injunction. Suspension of your reimbursements is a death sentence. The two prongs for an injunction are (a) likelihood of success on the merits; and (b) irreparable harm. Losing your company is irreparable harm. Likelihood of success on the merits is on you. If your documents are good – you are good.
It is a timeless joke. What goes down, but never goes up? Medicaid rates!
Having a Medicaid card is as useful as holding a lottery ticket. Sure, maybe you’ll hit the jackpot and find a quality health care provider with whom you share some common connection, but, most likely, you will receive nothing but false hope. 10% of nothing is nothing.
For health care providers that do accept Medicaid – how many of you are accepting new patients? Or maybe the better question is – how many of you are profitable from your Medicaid patients?
Because we live in a society in which we need money to live, if Medicaid pays less than the cost, health care providers will not accept Medicaid. And you cannot blame them. It’s happening all over the country. In Utah, dentists are un-enrolling in Medicaid, i.e., refusing their Medicaid patients. See article. Pennsylvania has a shortage of psychiatrists..even more so who accept Medicaid. See article. “Some 55% of doctors in major metropolitan areas refuse to take new Medicaid patients, according to a 2014 report by Merritt Hawkins. The Department of Health and Human Services reported that same year that 56% of Medicaid primary-care doctors and 43% of specialists weren’t available to new patients.” See article.
Medicaid is failing our most vulnerable and many more. Medicaid, as it exists now, fails every taxpayer, every health care provider who accepts it, and every family member of a developmentally disabled person who is dependent on Medicaid.
The cost of the Medicaid program is expected to rise from $500 billion to $890 billion by 2024, according to the Center for Medicare and Medicaid Services (CMS). Yet – throwing more money at a dysfunctional program does not equate to Medicaid recipients gaining access to quality care. The increased money is not going to the services for Medicaid recipients. The ballooned Medicaid budget is not earmarked to elevate the current, inadequate Medicaid reimbursements, which would induce more health care providers to accept Medicaid. The higher the cost of Medicaid, the more the government slashes the reimbursement rates. Yet our government is willing to throw Medicaid dollars at managed care organizations (MCOs) to release the burden of managing such shortfalls and turn a blind eye when our taxpayers’ money is not used to provide Medicaid medically necessary services to recipients, but to compensate CEOs $400,000 or allow alleged extortion.
For example, in obstetrics, if the national Medicaid reimbursement rate for ob/gyn visits is $1.00, here, in NC, Medicaid reimburses ob/gyns 88¢. Which is why only 34% of North Carolina ob/gyns accept Medicaid.
If it is imperative for the Medicaid reimbursements to increase (to, at the very least, cost, if not a slight profit), then how do we accomplish such an insurmountable task?
There are two options: (1) lobbying (which, obviously, has not been successful thus far); and (2) litigation.
Section 30(A) of the Medicaid Act requires that a state provide Medicaid reimbursement rates at a level to “assure that payments are consistent with efficiency, economy, and quality of care and are sufficient to enlist enough providers so that care and services are available under the plan at least to the extent that such care and services are available to the general population…”
In an article entitled “Nurse Staffing Levels and Medicaid Reimbursement Rates in Nursing Facilities,” written by Charlene Harrington, James H. Swan, and Helen Carrillo, the authors found that the Medicaid nursing home reimbursement rates were linked to quality of care, as to both RN hours and total nursing hours.
“Resident case mix was a positive predictor of RN hours and a negative predictor of total nursing hours. Higher state minimum RN staffing standards was a positive predictor of RN and total nursing hours while for-profit facilities and the percent of Medicaid residents were negative predictors.” Id.
Numerous other articles have been published in the last few years that cite the direct correlation between reimbursement rates and quality of care.
How do we stop Medicaid reimbursement rates from dropping and the executives of those companies charged with managing Medicaid funds from lining their own pockets?
According to the Supreme Court, suing under the Supremacy Clause is not the answer.
In Armstrong v. Exceptional Child Services, providers of habilitative Medicaid services sued the State of Idaho for Medicaid reimbursements rates being too low as to violate Section 30(A) of the Medicaid Act.
In the Armstrong decision from last year, the Supreme Court, Scalia found that, in enacting §1902(a)(30)(A) Congress had empowered the HHS Secretary to withhold all Federal funds from states that violate federal law. According to Armstrong, this “express provision of an administrative remedy” shows that Congress intended that the Secretary be the enforcer – not the courts. In other words, the Supreme Court held that
“The sole remedy Congress provided for a State’s failure to comply with Medicaid’s requirements—for the State’s “breach” of the Spending Clause contract—is the withholding of Medicaid funds by the Secretary of Health and Human Services.” Armstrong.
In other words, according to Armstrong, the sole remedy for health care providers who demand higher Medicaid reimbursement rates, will be for the Secretary of HHS to withhold Medicaid funds from the state. Such a drastic measure would undoubtedly cause the state such a budgetary shortfall that the state would soon be in a position in which it could not reimburse health care providers at all. Therefore, the providers go from receiving woefully low reimbursement rates to receiving none at all. That seems hardly the situation that the Supreme Court would want.
There are still litigation options for health care providers to sue in order to increase the Medicaid reimbursement rate. Just not through the Supremacy Clause.
I have a joke: What goes down, but never goes up?
Throughout the history of health care, payors and payees of Medicare/caid have existed in separate silos. In fact, the two have combated – the relationship has not always been stellar.
Looking into my crystal ball; however, all will not be as it is now [that’s clear as mud!].
Now, and in the upcoming years, there will be a massive shift to integrate payors and payees under the same roof. Competition drives this movement. So does the uncertainty in the health care market. This means that under one umbrella may be the providers and the paying entities.
Why is this a concern? First – Any healthcare entity that submits claims to the federal government, whether it be a provider or payor, must comply with the fraud and abuse statutes. As such, there is a potential to run afoul of federal and state regulations regulating the business of health care. Payors know their rules; providers know their rules…And those rules are dissimilar; and, at times, conflicting. The opportunity to screw up is endemic.
Second – With the new responsibilities mandated by the Yates Memo, these new relationships could create awkward situations in which the head of the payor department could have knowledge (or should have knowledge) of an [alleged] overpayment, but because of the politics at the company or self-interest in the preservation of his or her career, the head may not want to disclose such overpayment. With the 60-day rule, the head’s hesitation could cost the company.
The Affordable Care Act (ACA) reinvented health care in so many ways. Remember, the ACA is supposed to be self-funding. Taxes were not to increase due to its inception. Instead, health care providers fund the ACA through post payment and prepayment audits, ZPIC audits, CERTs, MFCU, MICs, RACs, and PERMs.
The ACA also made a whole new commercially-insured population subject to the False Claims Act. False statements are now being investigated in connection with Medical Loss Ratios, justifications for rate increases, risk corridor calculations, or risk adjustment submissions.
CMS imposes a duty to detect fraud, waste, and abuse (FWA). But what if you’re looking at your own partners?
The chart above depicts “old school” Medicare payment options for physicians and other health care providers. In our Brave New World, the arrows will be criss-crossed (applesauce), because when the payors and the payees merge, the reimbursements, the billing, and the regulatory supervision will be underneath the same roof. It’ll be the game of “chicken” taken to a whole new level…with prison and financial penalties for the loser.
Since 2011, kickback issues have exponentially grown. The Anti-Kickback Statute makes it a criminal offense for a provider to give “remuneration” to a physician in order to compensate the physician for past referrals or to induce future referrals of patients to the provider for items or services that are reimbursed, in whole or in part, by Medicare or Medicaid.
Imagine when payors and payees are owned by the same entity! Plus, the ACA amended the kickback statutes to eliminate the prong requiring actual knowledge or intent. Now you can be convicted of anti kickback issues without any actual knowledge it was ever occurring!!
Now we have the “one purpose test,” which holds that a payment or offer of remuneration violates the Anti-Kickback Statute so long as part of the purpose of a payment to a physician or other referral source by a provider or supplier is an inducement for past or future referrals. United States v. Borrasi, 2011 WL 1663373 (7th Cir. May 4, 2011).
There are statutory exceptions. But these exceptions differ depending on whether you are a payor or payee – see the potential criss-cross applesauce?
And, BTW, which types of health care services are bound by the anti kickback statutes?
- Clinical laboratory services;
- Physical therapy services;
- Occupation therapy services;
- Radiology services (including MRIs, Ultrasounds, and CAT scans);
- Radiation therapy and supplies;
- Durable medical equipment and supplies;
- Parenteral and enteral nutrients, equipment, and supplies;
- Prosthetics, orthotics, and prosthetic devices and supplies;
- Home health services;
- Outpatient prescription drugs; and
- Inpatient and outpatient hospital services.
Imagine a building. Inside is a primary care physician (PCP), a pediatrician, a home health agency, and a psychiatrist. Can the PCP refer to the home health agency? Can a hospital refer to a home care agency? What if one of the Board of Directors sit on both entities?
The keys to avoiding the anti kickback pitfalls is threefold: (1) fair market value (FMV); (2) arm’s length transactions; and (3) money cannot be germane to referrals.
However, there is no one acceptable way to determine FMV. Hire an objective appraiser. While hiring an objective appraiser does not establish accuracy, it can demonstrate a good faith attempt.
Number One Rule for Merging/Acquiring/Creating New Partnerships in our new Brave New World of health care?