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A Brave New World With Mergers and Acquisitions of Behavioral Health Care Providers: Not Always Happily Ever After!

Unintentionally, I misrepresented the Benchmark panel discussion on which I appeared last Thursday. See blog.  I thought that I would be sitting on the panel along with MCO representatives. I honestly cannot tell you from where I got this idea. Maybe it was a subconscious desire. Regardless, the panel discussion was about merges and acquisitions among behavioral health care providers. While the subject of managed care organizations (MCOs) did come up, managed care was not the primary subject.  And the only MCO representative that I saw was Smokey Mountain’s attorney.

panelpic2

Nevertheless, the panel discussion went fantastic and was informative for those who attended.  I will summarize the panel discussion here for those who could not attend.  First, if you are a behavioral health care provider in NC, joining an association, such as Benchmarks, is an asset.  Not only do you get the benefit of attending educational programs, but you also have the opportunity to meet other behavioral health care providers across the state at the events.  You never know the potential relationships that could be created by attending a Benchmark event.

Going back to the panel…

There were 5 people sitting on the panel.  Besides myself, the panel consisted of Robert Shaw, Senior Counsel with me at Gordon & Rees, Frank Williams, a broker who facilitates mergers and acquisitions for health care providers, and two CEOs of health care providers who have undergone successful mergers and/or acquisitions.

The general consensus of the panel was that the future of behavioral health care will be larger companies which offer multiple services, instead of mom and pop shops that provide few types of services.  The panel was intended to bring potential mergers/acquisitions together in one venue and to educate the providers on “Do’s and Don’ts of Merging/Acquiring,” which is summarized below.

This consensus is generally derived from the MCO atmosphere here in NC.  Right or wrong, the MCOs are operating in closed networks and have the financial incentives to save money by contracting with fewer providers and decreasing authorizations for Medicaid services requested by Medicaid recipients.  See blog. And blog. And blog.

The MCOs seem to be terminating or refusing to contract with smaller health care providers, which, in turn, incentivize small health care providers to join other providers in order to grow its footprint.

Merging or acquiring a company is similar to partnering with another person in marriage.  Both parties have to familiarize themselves with the other’s habits, expectations, learn the other’s faults/liabilities, and, ultimately, have to work together on projects, issues and other matters.  And as we can discern from today’s high divorce rate, not everyone lives happily ever after.

Some marriages, as well as mergers, simply do not work.  Others live happily ever after.

The two provider panelists shared successful merger/acquisition stories.  Both shared experiences in creating new and larger entities effectively.  Both panelists were happy with the mergers/acquisitions and hopeful as to what the future will bring both new entities.

But all mergers and acquisitions do not have happy endings.  The two entities do not always live happily ever after.

Robert and I shared a story of an acquisition from Hades. There is no other way to describe the outcome of the acquisition.

The story of these two companies begins with the fact that the companies leased space in the same building.  One company was on floor 2 and the other was on floor 1.  The staff knew each other in passing.

The problem with the merger of these companies stemmed from a difference in culture.

Theoretically, the two companies did everything right.  The owner of the company getting acquired agreed to stay and work for the company buying it in order to ensure consistency. The buying company agreed to hire all the seller’s employees at their current salaries.  The acquisition was to be seamless.

The problems arose when news of the acquisition passed to the employees.  There was genuine discontentment with the arrangement.  The employees from the seller reacted with hostility and resentment.  Prior to the acquisition, the seller was fairly lax in regulatory compliance.  For example, if a service note was not drafted and filed the date of services….eh?…not that big of a deal.  Well, the buyer had strict document compliance rules for daily service notes.  Anytime more stringent policies are enacted on employees, there is sure to be a negative reaction.  The buyer also expected the seller’s employees to provide more services for the same salary received before the acquisition.

There was no legal or logical step omitted in the acquisition of the one company to the other.  On paper, the acquisition should have been successful.  But, then, personalities got in the way of happily ever after.

The other panelists offered great advice as to mergers and acquisitions, both from the providers’ view and a broker’s view.  I have compiled the advice that I recall below.  I have taken the liberty to provide analogous dating advice, as well, since marriages and mergers/acquisitions are so similar.  Hope it helps!!

Do’s and Don’ts of Mergers/Acquisitions

  • Do not let the secret out.

One provider panelist explained that if your employees learn of a possible merger/acquisition, they will kill the deal. Confide only in the CEO of the firm of which you are looking to merge, acquire, or sell.  Those dating: Never tell other that you want to marry (until the appropriate time).

  • Look outside your catchment area.

The reason companies merge/acquire is to grow.  Think of potential companies outside your own catchment area to grow even more.  For example, if you are in Alliance’s catchment area, think of merging with a company in ECBH/Eastpointe’s area.  Those dating: Have you exhausted your resources? Think of others, such as church, Match.com, etc.

  • Do your due diligence

This is a task as important as the oxygen you breath.  The last thing that you want is to acquire or merge with a company that owes $500,000 in employment taxes or an alleged overpayment.  Part of due diligence will be to check the credentials of every single staff member.  If someone is acting in the role of a LCAS, ensure the person is appropriately licensed.  Those dating: Is he/she employed? Have significant debt?

  • Review the other company’s documentation policies

This could be lumped into the due diligence section, but I think its importance is worth emphasizing.  Whatever service(s) the other company provides, what are its policies as to documentation? Does the provider have a computer program to maintain electronic health records (EHR)? Does it employ paper copies? Does the other company require the providers to submit daily service notes? Look at your own documentation policies.  Contemplate whether your own documentation policies would mesh well with the other company’s policies.  Those dating: How does your potential partner document spending, taxes, and calendared events?

  • Analyze both company’s corporate culture

Merging or acquiring a company is difficult in many ways, but it’s also hard on staff.  Imagine walking into work one day and you notice that the staff had doubled…or tripled.  And you and your colleagues are being told what to do by someone you never met.  This is not an uncommon occurrence with mergers and acquisitions.  Sometimes accepting change of supervision or team members can be a bitter pill to swallow.  How will you work through employee issues?  Personality clashes?  Ego fights?  Those dating: Analyze both person’s personalities, dispute resolutions, religion and beliefs.  Do you like his/her friends?

In addition to the potential conflicts with employees that stay with the merged entity, you also need to contemplate which employees, if any, may, potentially leave the new entity.  Disgruntled employees are a liability.  Those dating: How does he/she treat ex-partners?

  • Research the company’s relationship with its MCO

In our current MCO atmosphere, it is imperative to know, before merging or acquiring, whether the company has a good relationship with its MCO.  What if you acquire the company and its MCO refuses to continue to contract with the new entity.  Knowing the company’s relationship with the MCO is not an absolute.  As in, the company may believe it to have a good relationship with the MCO, while, in truth, it does not.  Ask to review some correspondence between the company and the MCO to discern the tone of the communications.  Those dating: How does he/she treat his/her mother/father?

  • Surround yourself with knowledge

Have a broker and an attorney with expertise in Medicaid.  Those dating: What do your friends think?

To watch the video of me speaking as a panelist for Benchmark, click here.  Scroll down until you see the video with Robert and me.

Otherwise, I hope you live happily ever after!

Knicole Emanuel: Panel Discussion – David Is To Goliath As NC Behavioral Health Care Providers Are To MCOs

Isn’t that analogy apropos? (And it’s not mine…its Benchmarks’)

I will be sitting on a panel today in Raleigh, NC.  See below.

A wonderful association, Benchmarks, is hosting a panel discussion for behavioral health care providers. While it is meant for smaller providers, in my own humble opinion, all behavioral health care providers would benefit from this panel discussion.

Senior Counsel, Robert Shaw, and I will be sitting on the panel…with managed care organizations (MCO) representatives.  It is without question that I have not been a big fan of the MCOs.  If I were to suggest otherwise, I believe that my blog followers would scoff. However, I am interested in hearing these MCO representatives’ side of the argument.

Will these MCO reps merely parrot? Or will they truly engage in worthwhile conversations to understand what it is like for a behavioral health care provider in NC today?

Feel free to join the discussion at 12:30-2:30.  Below is the Evite: 3801 Hillsborough St.

david and goliath

NC MCOs and Consolidation: “When the Music Stops? Nobody Knows!”

Our General Assembly is pushing for the managed care organizations (MCOs) to consolidate and/or morph.  Consolidating the MCOs makes fiscal sense for our state, but if I were executive management at an MCO, I would be be anxiously awaiting direction from our General Assembly.  A metaphoric 3-4 chair game of”Musical Chairs” is proceeding with 9 (now 8) players.  Five to six players will have no chairs when the music stops.

What are MCOs?  See blog and blog.

Multiple bills have been proposed.

Senate Bill 703 proposes 3 statewide MCOs. Senate Bill 574 seems to incorporate provider-led capitated health plans, but is unclear as to the exact model. Senate Bill 696 seems to create a symphony of provider-led and nonprovider-led, risk-based entities. Senate Bill 568 contemplates licensed commercial health insurers offering health care plans.

No one really knows how many MCOs will remain in the end…if any. Regardless, what the number of existing MCOs in the future will be, there is little dispute that the number will be fewer than the number of MCOs that exist now.

In an atmosphere where there is supposition that there are too many people or companies and that only a few will remain, competition brews. People/companies are forced to strategize if they want to survive.

Think about the childhood game, “Musical Chairs.” You start with a large group of people, but with one less chair than the number of people. The music plays and the players meander around at a relatively slow pace, around and around, until the music stops. And what happens when the music stops? The people scramble for a chair.  The person left standing is “out” and must sit on the sideline.

We have 9, soon to be 8, MCOs in NC right now. And the music is playing. But which MCOs will be left standing when the music stops?

Here is a map of our current MCOs:

2014 mco

 

As of July 1, CoastalCare and East Carolina Behavioral Healthcare (ECBH) will be merged. We will be down to 8 MCOs. Which means that the light blue on the bottom right hand side of the map will merge with the bright yellow on top right hand side of the map.

Mecklenburg county, which houses most of the Charlotte area, was not always light purple. It recently merged with Cardinal Innovations.

Partners (light yellow) and Smokey Mountain (dark blue) had serious discussions of a merger until, recently, when both walked away from negotiations of merger.

Why should it matter which MCOs are in existence or how many? Theoretically, it shouldn’t. These MCOs are created in order to manage behavioral health care (Medicaid services for those suffering from substance abuse, mental illness, and developmentally disabled), not to make a profit, right? The only issue of importance should be that medically necessary behavioral health care services are rendered to Medicaid recipients in the most efficient and most effective manner.

Yet competing interests come into play.

Think about it…each MCO employs hundreds of people. Each MCO has a CEO, who is not working for free. Generally, unless other arrangements have been negotiated, there can only be one CEO per MCO. When there are 2+ MCOs merging with 2 CEOs and only 1 “chair” for 1 CEO, it can seem like “Musical Chairs.” Multiple people are vying for one “chair.”

The money at issue for behavioral health care in NC is not a small amount. It is likened to a fire hose spouting money. We have a Medicaid budget in NC of approximately 14 billion dollars. To put it in perspective, with $14 billion dollars, you could purchase the LA Lakers 14 times. This is how much money we spend on Medicaid every year. It is really quite staggering when you think about it.

As every North Carolinian learns in the 6th grade, North Carolina is composed of 100 counties. The estimated Medicaid budget of $14 billion is allocated across 100 counties and among approximately 1.9 million Medicaid recipients.

When it was decided to implement the MCOs across the state, about 2012-ish (we actually obtained permission from CMS for the waiver years prior to 2012, but we began with a pilot and did not implement the MCOs statewide until 2012-13), we found ourselves, initially, with eleven MCOs, and now we have 9…soon to be 8.

The newly merged entity of CoastalCare and ECBH (CC+ECBH) will manage state funds and Medicaid dollars for behavioral health services across 24 counties in eastern North Carolina. In other words almost ¼ of the Medicaid budget will be handed to CC+ECBH, leaving approximately ¾ of the Medicaid budget for 7 other MCOs (the budget is determined by number of recipients, so I am assuming, for the purpose of this blog, that more counties mean more people).

The amount of counties controlled by the remaining 7 MCOs are as follows:

Smokey: 23
Partners: 8
Centerpointe: 4
Cardinal: 16
Sandhills: 9
Eastpointe: 12
Alliance: 4

chart for mcos

Looking at the chart above, it would appear that Smoky and CC+ECBH will manage almost 1/2 the state’s behavioral health care for Medicaid.

Prior to the 1915 b/c Waiver allowing the MCOs to manage behavioral services for Medicaid recipients in NC, DHHS managed it. (Obviously ValueOptions and other vendors had a part in it, but not with actual management).  As the single state agency for Medicaid, DHHS cannot delegate administrative duties to contracted parties without a “Waiver,” or permission for an exception from the federal government, or, more specifically, the Center for Medicare and Medicaid Services (CMS).

Prior to the 1915 b/c Waiver, we did not have 9 companies with hundreds of employees managing behavioral health care for Medicaid recipients. We had DHHS, which employs approximately 18,000 employees.  To my knowledge DHHS did not terminate those employees who were in charge of behavioral health care issues in order to compensate the creation of new companies/employees.  In other words, say 1000 people at DHHS devoted their time to issues arising our of behavioral health care. Once we had an additional 9 (well, 11, at first), those 1000 employees were not asked to join the MCOs. Maybe some did, but, to my knowledge, there was no suggestion or incentive or requirement to leave DHHS and go to an MCO (to shift the administrative burden).

When we created an additional 9 (well, 11 at first) companies to, essentially, take over behavioral health care…

We created more administrative costs, in order to lift the risk of overspending the Medicaid budget off the state.  It is estimated that America wastes $190 billion in excess administrative costs per year.

Waste in health care

In theory, consolidating the MCOs would decrease administrative costs by having fewer paid employees, not dissimilar to why MCOs want a closed network.  See blog. Again, in theory, having fewer MCOs may create a more consistent statewide manner in managing behavioral health care.

Assume for the purpose of this blog that each MCO employs 100 people (which is a very low number) and each employee is paid $50,000, then the administrative cost associated with delegating behavioral health care to MCOs equals $500,000, counting only employee salaries. Multiple that number by 9 (number of current MCOs) and you get an increased administrative cost of approximately $4.5 million dollars per year, not counting the additional overhead each MCO bears (rent/mortgage, equipment, salary benefits, health care benefits, etc.). Plus you have to include the top management’s salaries, because you know the executives are receiving more than $50,000/year.

What motivated us to implement a MCOs system? With an MCO system, the General Assembly is able to allocate funds for Medicaid and place the risk of going over the budget on the MCOs, not the state. This is a completely understandable and reasonable objective. It is without question that the Medicaid budget is swelling to the point of unsustainability.

However, are we trading “control/supervision” for “knowability?” Are we also trading “risk” for “higher administrative costs,” which, in turn, equals less Medicaid dollars for providers and Medicaid recipients? Every dollar paid to an MCO employee is a dollar not going to a health care provider to reimburse for services.

For these reasons, the government’s push for consolidation of the MCOs is astute. Fewer MCOs = less administrative costs. Fewer MCOs = easier supervision by DHHS.

Less administrative costs = more Medicaid dollars going to providers…to serve our most needy. Because, at the end of the day, the most important issue when it comes to Medicaid is providing quality care for recipients.

It is no matter which entity controls/manages behavioral health care for Medicaid, because regardless the entity, that entity should be managing our tax dollars in the most efficient way that provides the best quality to services to those in need.

“Around and around we go, when we stop? Nobody knows…”  But we do know this…when the music stops, there will be scrambling!

Knicole Emanuel to Appear on UNC-TV Tonight! Tune In at 7:30pm!

Heather Burgiss, a UNC-TV journalist, created a 3-part television series called, “Mental Health Services in NC.” Part 1 will air tonight on UNC-TC at 7:30, and I will be discussing the important topic of the current status of our mental health system in NC.  So tune in to watch!!!!

The three-part series is intended to educate North Carolinians on the current state of mental health in NC, as well as discuss the upcoming Medicaid reform consisting of the Accountable Care Organizations (ACOs) for physical health services.

P.S. It is intimidating how UNC-TV interviews you, so forgive any bad grammar, etc. 🙂  During the interview, they cut off all the lights and shine a bright light on you.  It creates a strange environment in which you can hear the person asking you questions, but you cannot see him or her.  Plus, the light is super hot.

But, we will see, Heather was very nice in dealing with my novice handling of the interview.

And, BTW, when you see the scene during which I am walking down the hall of my law firm, I had a strange sensation to start doing the MC Hammer.  But I did not succumb.

The NC MCOs: Jurisdiction Issues and Possible Unenforceable Contract Clauses with Medicaid Providers

According to NC Superior Court, OAH (and I) has (have) been right all along…OAH does have jurisdiction over the MCOs.  And you cannot contract away protections allowable by statute.

Before I went to law school, I do not recall ever thinking about the word “jurisdiction.”  Maybe in an episode of Law and Order I would hear the word thrown around, but I certainly was not well-versed in its meaning. While I was in law school, the word “jurisdiction” cropped up incessantly.

“Jurisdiction” is extremely important to North Carolina Medicaid providers.  Jurisdiction, in the most basic terms, means in which court to bring the lawsuit or appeal of an adverse determination.

In this blog, I am mostly referring to terminations/refusals to contract with providers by the managed care organizations (MCOs), which manage behavioral health, developmental disability, and substance abuse services for North Carolina. Recently, there have been a slew of providers terminated or told that they would not receive a renewed contract to provide Medicaid services. The MCOs tell the providers that, per contract, the providers have no rights to continued participation in the Medicaid system.

The MCOs also tell the providers that the providers cannot appeal at OAH… That the providers have no recourse… That the providers’ contracts are terminable at will (at the MCO’s will)…. I have been arguing all along that this is simply not true. And now a Superior Court decision sides with me.

The MCO have been arguing in every case that OAH does not have jurisdiction over the actions of the MCOs.  The MCOs have pointed to NC Gen. Stat. 108D and Session Law 2013-397, which amends NC Gen. Stat. 150B-23 to read:

“Solely and only for the purposes of contested cases commenced as Medicaid managed care enrollee appeals under Chapter 108D of the General Statutes, a LME/MCO is considered an agency as defined in G.S. 150B-2(1a). The LME/MCO shall not be considered an agency for any other purpose.”

A termination or denial to participate in the Medicaid program is an adverse determination. Adverse determination is defined in NC Gen. Stat. 108C-2 as, “A final decision by the Department to deny, terminate, suspend, reduce, or recoup a Medicaid payment or to deny, terminate, or suspend a provider’s or applicant’s participation in the Medical Assistance Program.”

The Department is defined as, “The North Carolina Department of Health and Human Services, its legally authorized agents, contractors, or vendors who acting within the scope of their authorized activities, assess, authorize, manage, review, audit, monitor, or provide services pursuant to Title XIX or XXI of the Social Security Act, the North Carolina State Plan of Medical Assistance, the North Carolina State Plan of the Health Insurance Program for Children, or any waivers of the federal Medicaid Act granted by the United States Department of Health and Human Services.”

Obviously, per statute, any entity that is acting on behalf of DHHS would be considered the “Department.” Any adverse act by any entity acting on behalf of DHHS, including terminating a provider’s participation in the Medical Assistance Program is considered an adverse determination.

The MCOs have been arguing that the above-referenced amendment to 150B means that the MCOs are not agents of the state; therefore, OAH has no jurisdiction over them.

Until March 7, 2014, these issues have been argued within OAH and no Superior Court judge had ruled on the issue.  Most of the Administrative Law Judges (ALJ), even without Superior Court’s guidance, has, in my opinion, correctly concluded that OAH does have jurisdiction over the MCOs.  A couple of the ALJs vacillate, but without clear guidance, it is to be expected.

On or about March 7, 2014, the Honorable Donald W. Stephens, Senior Resident Superior Court Judge ruled that OAH does have jurisdiction over the MCOsYelverton’s Enrichment Services, Inc. v. PBH, as legally authorized contractor of and agent for NC Department of Health and Human Services (DHHS).

If these MCOs are acting on DHHS’ behalf in managing the behavioral health Medicaid services, it would be illogical for OAH to NOT have jurisdiction over the MCOs.

In the Yelverton Order, Judge Stephens writes, “OAH did not err or exceed its statutory authority in determining that it had jurisdiction over Yelverton’s contested case.”

The Order also states that the MCO, in this case, PBH (now Cardinal Innovations), agreed that only DHHS had the authority to terminate provider enrollment. The MCO argued that, while only DHHS can terminate provider enrollment, the MCOs do have the authority “to terminate the participation of the provider in the Medical Assistance Program.”

Talk about splitting hairs! DHHS can terminate the enrollment, but the MCO can terminate the participation? If you cannot participate, what is the point of your enrollment?

Judge Stephens did not buy the MCO’s argument.

On March 7, 2014, Judge Stephens upheld ALJ Donald Overby’s Decision that OAH has jurisdiction over the MCOs for terminating provider contracts.

I anticipate that the MCOs will argue in future cases that the Yelverton case was filed prior to Session Law 2013-397, so Yelverton does not apply to post-Session Law 2013-397 fillings. However, I find this argument also without merit. The Yelverton Order expressly contemplates NC Gen. Stat. 108D and House Bill 320.

House Bill 320 was the bill contemplated by the General Assembly in the last legislative session that expressly stated that OAH does not have jurisdiction over the MCOs. It did not pass.

In Yelverton, the MCO argued that the MCO contracts with the providers allow the MCO to terminate without cause and without providing a reason.

Judge Stephens notes that the General Assembly did not pass House Bill 320. The Yelverton Order further states that no matter what the contracts between the providers and the MCOs states, “[c]ontract provisions cannot override or negate the protections provided under North Carolina law, specifically appeal rights set forth in NC Gen. Stat. 108C.”

Will the MCO appeal? That is the million dollar question…

The Doctrine of Exhaustion of Administrative Remedies and Medicare/caid Providers

What is the doctrine of exhaustion of administrative remedies?  And why is it important?

If you are a Medicaid or Medicare provider (which, most likely, you are if you are reading this blog), then knowing your administrative remedies is vital.  Specifically, you need to know your administrative remedies if you receive an “adverse determination” by the “Department.”  I have placed “adverse determination” and the “Department” in quotation marks because these are defined terms in the North Carolina statutes and federal regulations.

What are administrative remedies? If you have been damaged by a decision by a state agency then you have rights to recoup for the damages.

However, just like in the game of Chess, there are rules…procedures to follow…you cannot bring your castle out until the pawn in front of it has moved.

Similarly, you cannot jump to NC Supreme Court without beginning at the lowest court.

What is an adverse determination?

In Medicaid, NCGS 108C-2 defines “Adverse determination” as “a final decision by the Department to deny, terminate, suspend, reduce, or recoup a Medicaid payment or to deny, terminate, or suspend a provider’s or applicant’s participation in the Medical Assistance Program.”

In Medicare, sometimes the phrase “final adverse action” applies.  But, basically an adverse determination in Medicaid and Medicare is a decision by [whatever entity] that adversely affects you, your Medicare/caid contract or reimbursements.

What is the definition of the Department? 

NCGS 108C-2 defines the “Department,” as “The North Carolina Department of Health and Human Services, its legally authorized agents, contractors, or vendors who acting within the scope of their authorized activities, assess, authorize, manage, review, audit, monitor, or provide services pursuant to Title XIX or XXI of the Social Security Act, the North Carolina State Plan of Medical Assistance, the North Carolina State Plan of the Health Insurance Program for Children, or any waivers of the federal Medicaid Act granted by the United States Department of Health and Human Services.”

On the federal level, the Department would be the Centers for Medicare and Medicaid (CMS) and its agents, contractors and/or vendors.

So, an adverse decision is any final decision by DHHS….OR any of its vendors (Public Consulting Group (PCG), Carolinas Center for Medical Excellence (CCME), HMS, Computer Sciences Corporation (CSC), or any of the 10 managed care organizations (MCOs) (Alliance, Centerpointe, Smokey Mountain Center, Sandhills, East Carolina Behavioral Health, MeckLink, Cardinal Innovations, Eastpointe, CoastalCare, and Partners).

For example, PCG tells a dentist that he/she owes $500,000 in overpayments to the State.  The notice of overpayment is an adverse determination by the Department as defined in the general statutes.

For example, Smokey Mountain Center (SMC) tells a provider that it will no longer contract with the provider as of March 15, 2014.  SMC’s decision to not contract with the provider is an adverse determination by the Department as defined in the general statutes.

For example, CCME tells you that you are subject to prepayment review under NCGS 108C-7, which results in DHHS withholding Medicaid reimbursements.  The notice of suspension of payments is an adverse determination by the Department, as defined in the general statutes (not the fact that you were placed on prepayment review because the placement on prepayment review is not appealable, but the determination that Medicaid reimbursements will be withheld).

The doctrine of exhaustion of administrative remedies is, in essence,  a party must satisfy five conditions before turning to the courts: “(1) the person must be aggrieved; (2) there must be a contested case; (3) there must be a final agency decision; (4) administrative remedies must be exhausted; and (5) no other adequate procedure for judicial review can be provided by another statute.”  Huang v. N.C. State Univ., 107 N.C. App. 710, 713, 421 S.E.2d 812, 814 (1992) (citing Dyer v. Bradshaw, 54 N.C. App. 136, 138, 282 S.E.2d 548, 550 (1981)

Move your pawn before moving your castle.

Typically, if a party has not exhausted its administrative remedies, the party cannot bring a claim before the courts.  However, NC courts have recognized two exceptions that I will explain in a moment.

If you bring a lawsuit based on the adverse determination by the Department, do you go to state Superior Court?  No.

In North Carolina, we are lucky to have the Office of Administrative Hearings (OAH).  OAH is fantastic because the judges at OAH, Administrative Law Judges (ALJs) have immense Medicaid experience.  OAH is a court of limited jurisdiction, meaning that only if a NC statute allows OAH to hear the case is OAH allowed to hear the case.  One facet of OAH’s jurisdiction is adverse determinations by DHHS, its agents, vendors or independent contractors.  Not all states have an administrative court system, and we are lucky to have an accomplished administrative court system.  Our ALJs are well-versed in Medicaid, so, most likely, your issue you bring to OAH will be one already heard by the court.

Another great thing about OAH, is that OAH publishes some opinions.  So you can review some published opinions prior to your hearing.  For the most part, the ALJs are quite consistent in rulings.  For the published opinions of OAH, click here.  And, BTW, if you want to review only cases involving the Department of Health and Human Services, scroll down to the cases with the acronym: DHR.  As you can see, OAH listens to cases involving many different state agencies.

So, let’s review:

If you receive an adverse determination by any state or federal agency, its contractors, vendors and/or independent contractors, you have the right to appeal the adverse determination.  However, you MAY need to exhaust your administrative remedies prior to bringing the action in OAH.  In other words, if the agency’s contractor, vendor, and/or independent contractor notifies you of an adverse determination, check with the contractor, vendor and/or independent contractor for informal appeals. 

There are, however, some small exceptions. (Remember the knights can jump over your pawns.  So can the Queen).

Number 1: Inadequacy.

If the informal administrative appeal process would be inadequate for your remedies then you are not required to exhaust the administrative remedies prior to going to the courts.

A remedy is inadequate “unless it is ‘calculated to give relief more or less commensurate with the claim.’”  Huang v. N.C. State Univ., 107 N.C. App. 710, 713, 421 S.E.2d 812, 814 (1992) (citing Dyer v. Bradshaw, 54 N.C. App. 136, 138, 282 S.E.2d 548, 550 (1981).

An example of inadequacy would be if you are seeking monetary damages and the agency is powerless to grant such relief.

The phrase “monetary damages” means that you are seeking money.  The agency owes you money and you are seeking the money.  Or if you were caused monetary damages because of the agencies actions.  For example, your Medicaid reimbursements were suspended. As a result, you fired staff and closed your doors.  You would want to sue for the money you lost as a result of the reimbursement suspension.  If the agency cannot give money damages or is powerless to give such money damages, then informal agency appeals would be in adequate to address you needs.

Number 2: Futility.

Futility refers to situations where an agency “has deliberately placed an impediment in the path of a party” or where agency policies “are so entrenched that it is unlikely that parties will obtain a fair hearing.”

For example, if by appealing informally within the administrative agency, you will not receive a fair hearing because no independent decision maker exists, you can make the argument that the informal appeal process would be futile.

Here’s the “small print:”

If you claim futility and/or inadequacy, then you must include the futility and/or inadequacy allegations in the Complaint; AND you bear the burden of proving futility and/or inadequacy.

If, however, you exhaust your adminastrative remedies, go to OAH.

Checkmate!

A Dose of Truth: If an MCO Decides Not to Contract With You, YOU DO HAVE RIGHTS!

It has come to my attention that the managed care organizations (MCOs) are spreading non-truths.  As to appeal rights and rights, in general, of a Medicaid provider.  You may not hear the truth elsewhere, but you will hear the truth here.

Supposedly, the truth shall set you free. If this is true, then why do so many people lie? I believe that people’s desire for money, power, status, greed and/or others to look at them with respect are the some of the catalysts of many lies.

Of course, our old friend Aesop told many tales of the virtue of honesty.  My favorite is the “Mercury and the Woodman.”

A Woodman was felling a tree on the bank of a river, when his axe,
glancing off the trunk, flew out of his hands and fell into the water.
As he stood by the water’s edge lamenting his loss, Mercury appeared
and asked him the reason for his grief. On learning what had happened,
out of pity for his distress, Mercury dived into the river and,
bringing up a golden axe, asked him if that was the one he had lost.
The Woodman replied that it was not, and Mercury then dived a second
time, and, bringing up a silver axe, asked if that was his. “No,
that is not mine either,” said the Woodman. Once more Mercury dived
into the river, and brought up the missing axe. The Woodman was
overjoyed at recovering his property, and thanked his benefactor
warmly; and the latter was so pleased with his honesty that he made
him a present of the other two axes. When the Woodman told the story
to his companions, one of these was filled with envy of his good
fortune and determined to try his luck for himself. So he went and
began to fell a tree at the edge of the river, and presently contrived
to let his axe drop into the water. Mercury appeared as before, and,
on learning that his axe had fallen in, he dived and brought up a
golden axe, as he had done on the previous occasion. Without waiting
to be asked whether it was his or not, the fellow cried, “That’s mine,
that’s mine,” and stretched out his hand eagerly for the prize: but
Mercury was so disgusted at his dishonesty that he not only declined
to give him the golden axe, but also refused to recover for him the
one he had let fall into the stream.

The moral of the story is “Honesty is the best policy.”

But is it?  In our world, we do not have fairies, Roman gods, good witches, fairy godmothers, wood sprites, or wizards to hold us accountable for our lies.  If George Washington never admitted that he chopped down the cherry tree, no wood nymph would have appeared, angered by his lie, only to throw his ax into the Potomac.

So who holds us accountable for lies?

As a Christian, I believe that I will be held accountable in my afterlife.  But, without getting too profound and soapbox-ish, I mean who…NOW…presently…in our lives…holds us accountable for lies?

Obviously, when we were children, our parents held us accountable.  Oh boy…the worst thing for me to hear growing up was for my father to say, “I am so disappointed in you.” 

What about the MCOs? Who or what holds the MCOs accountable? And what is this non-truth that the MCOs may or may not be telling providers that has spurred me to write this blog?

Recently, many MCOs have (1) terminated contracts with providers; (2) refused to renew contracts with providers; and (3) conducted desk reviews and interviews of providers only to decide to not contract with many providers; thus leaving many small businesses to bankruptcy and closure…not to mention severing the relationships between the Medicaid recipients and their providers.

It has come to my attention that, when the MCO is asked by a provider whether the provider can have a reconsideration review or whether the provider has any appeal rights as to the MCO’s adverse decision, that the MCOs are telling providers, “No.”  As in, you have no appeal rights as to the MCOs decision to not contract with you. 

This is simply not true.

There are so few providers in NC willing to accept Medicaid because of the administrative burden of Medicaid regulations and the already low reimbursement rates.  To then have the audacity to “willy nilly” or at its own whim subjectively decide that it [the MCO] does not want to contract with you and then tell you that its “willy nilly” or subjective whim cannot be challenged legally eats at the heart of this country’s core values.  Do we not applaud small business owners?  Do we not applaud those small business owners dedicated to serving the population’s most needy?  Do we not promote due process?  Do we not promote truth, justice and the American way?

Or are those promotions clouded when it comes to money, power, status, greed, and desire for respect?

So, I say to you [providers who have been denied a Medicaid contract with an MCO despite having a contract with the Department of Health and Human Services (DHHS) to provide Medicaid services throughout the state of North Carolina], YOU HAVE RIGHTS

You do not need to merely accept the decision of the MCO.  You do not need to simply close up shop…fire your staff…and try a new career.  You have a choice to fight…legally.

But you DO need to know a few things.

First, lawyers are expensive. Period and without question.  So whatever law firm you hire, understand that the cost will more than you ever expected.  (Please understand that I am not advocating you to hire my firm.  Parker Poe and Poyner Spruill both have fantastic attorneys in this area.  Just hire someone knowledgable.)  It’s even a good idea to have consultations with more than one firm.  Find an attorney you trust.

Second, call your liability insurance.  There is a chance that your liability insurance will cover all, or a portion of, your attorneys’ fees.  But do not allow your insurance company tell you whom to hire.  Because this area is specialized there are few attorneys well-versed.  Again, go to the firms I mentioned above.

Thirdly, you may not win.  While the success rate is extremely high, there are some clients who are simply not going to win.  For example, if your documentation is so poor.  Or, for example, you really are not a great provider.  Remember, the MCOs do have a point to try to only contract with great providers.  I only disagree with the way in which the MCOs are deciding to not contract with providers.  It seems “willy nilly” and subjectively arbitrary.  But, depending on your exact circumstances, you do have a chance of success.

Fourth, you will have to testify.  I know it is scary, but I can think of very few circumstances during which the provider would not testify.  The judge needs to hear your story….why you should be allowed to continue to provide Medicaid services.

Fifth, the lawsuit will not shield you from future issues with the MCO.  Until DHHS decides to actually supervise the MCOs properly (or maybe even after that), the MCOs seem to wield the power.

So why even fight legally?  You certainly aren’t guaranteed success.  It will certainly cost you a pretty penny. 

Maybe the answer for you is to not fight.  Only you can make that decision.  But I hope someone holds the MCOs accountable for telling providers that the providers have no recourse…no appeal rights…for the MCOs simply not contracting with the provider.

Because if honesty is the best policy, the MCOs’ policies leave much to be desired. Someone needs to throw their axes into the Potomac!

NC Medicaid: Freedom of Choice of Providers? Why Bother? Providers Are Fungible!…Right?

I found some interesting language in the 1915(b) Waiver last week (well, interesting to me).

What is the 1915(b) Waiver? In the simplest of terms, with the 1915(b) Waiver, NC has asked the federal government for an exception to certain mandatory statutes.  In order to request the exception or “waiver” of certain federal statutes, NC had to draft our 1915(b) Waiver and promise the federal government that, despite the fact that NC is not following certain federal statutes, that certain things about Medicaid will not change.  Even though we may have waived the federal statute requiring it.

For example, in our 1915(b) Waiver, NC asks to waive Medicaid recipients’ “freedom of choice of provider” provision.  As in, federal statute requires the states to allow a Medicaid recipient to have the freedom to choose whatever or whomever provider that recipient desires.  (Kind of like…”You like your doctor? You can keep your doctor!”)

Well, NC had to waive the freedom of choice of provider because the MCOs in NC are jurisdictional.  For example, if Dr. Norwood provides Medicaid services in Durham, there is no reason that she should have to contract with Smokey Mountain Center (SMC).  And because Dr. Norwood does not contract with SMC, a Medicaid recipient cannot choose to receive services from Dr. Norwood, which, obviously, limits Medicaid recipients’ freedom of choice of provider.

The thinking behind the waiver of Medicaid recipients’ freedom of choice of provider is that (in my opinion), realistically, even if we did not waive the provision mandating the freedom of choice of provider, how likely is it that a Medicaid recipient residing in Asheville would choose to receive services from a Medicaid provider in Durham, NC? Most likely, the Medicaid recipients in Asheville have never heard of the Medicaid providers in Durham.  So…waive the freedom of choice….it’s harmless.

However, in order for the feds to allow this waiver of the freedom of choice of provider, NC had to promise something.

Our promise is found in the 1915(b) Waiver.  The language of our promise reads, ”

1915(b)

Why is this important?

Because it is not true.  Our promise that we made to the federal government in order for the federal government to allow us to implement our managed care system for our mental health, substance abuse, and developmentally disabled population is not true.

“These providers support this initiative and consumers have at least as much choice in individual providers as they had in the pre-reform non-managed care environment.”

If the Waiver were Pinocchio, its nose would be circling the earth.

It reminds me of my grandma.  Grandma is the sweetest, most wonderful grandma in the world.  She and my grandpa lived in a home in Cary, NC for over five decades.  When grandpa passed and grandma’s health began to decline, grandma decided to sell her home and move into an assisted living facility.  Well, grandma’s home was near and dear to all 5 children’s hearts, as well as all 15+ grandchildren’s hearts (I know…I have a huge family).  I, personally, had so many wonderful memories there (fishing in the lake behind the house, playing pool and ping-pong in the basement, climbing up and down the laundry chute acting as if it were a secret passage way, and grandpa’s amazing tomato sandwiches, gumbo and cornbread).

Anyway, the point is that when grandma sold the house, there was a stipulation in the contract.  The buyer promised to not bulldoze the house and build a new home.  You see, this neighborhood was old…one of the oldest in Cary.  So the homes were built in the 70s.  It had become “posh” to buy an older home in this neighborhood because the lots were so large and the location was so great and to simply flatten the old house for a new one.

Well, grandma wouldn’t have it.  There was too much nostalgia in the home for some buyer to bulldoze the home.  So the contract to sell the house stipulated that the buyer would not bulldoze the house.  So grandma sold the home.

And the buyer bulldozed the home.

Of all the low-down, dirty tricks!!! To lie in a contract to my grandma! Needless to say, grandma was very upset.  She felt that a piece of her life vanished, which, obviously, it did.

Well, grandma has a number of attorneys in the family (including me).  So grandma’s kids began to talk about a lawsuit.  But grandma said that even if she sued the buyer that it would not bring back the house.  Money could not replace the memories at grandma’s house.

If I am remembering correctly, this new house was built 5-6 years ago. Maybe more.  I pass the neighborhood all the time.  To date, I still have not driven to see the house that replaced grandma’s house.  I don’t think I could take it.

What is worse than lying to a grandmother about her home?

In my opinion? Lying to the feds about the freedom of choice of Medicaid provider that our Medicaid recipients have here in NC.  Talk about a vulnerable population…our most needy citizens, but add to the vulnerability mental health issues, substance abuse issues, and/or developmentally disablement.  And, now, let’s lie about their freedom of choice.

So where am I getting my allegation that Medicaid recipients do not have “at least enough choice in individual providers as they had in pre-reform non-managed care?”

Normally I only blog as to facts that I can corroborate with some research.  However, this blog may not be corroborated by any independent research.  My allegation is based on my own experience as a Medicaid attorney, conversations with my clients, emails that I have received from providers across the state, memos I have read from the MCOs, and the very real fact that the MCOs are terminating (or not renewing) hundreds of provider contracts across the state.

For the sake of argument, let’s say I am right.  That Medicaid recipients do not have at least the same freedom of choice of provider as pre-MCOs.  What then?

If I am right, this is the situation in which we find ourselves today.  So what is happening today?

As the MCOs determine that fewer providers are needed within a catchment area, the MCOs are refusing to contract with “redundant and unnecessary” providers.  But are these providers really unnecessary?  Really redundant?  Are we to believe that mental health providers are fungible?  Meaning that one provider is just as good as the next…that nothing makes some provider “stick out?”  Are providers fungible like beach balls are fungible?

Let’s test that theory.

Abby is a suicidal teenager.  She has suffered from schizophrenia with auditory hallucinations since she was a child.  For the last six years, Abby has seen Dr. Norwood.  It took some time, but, eventually, Abby began to trust Dr. Norwood.  Dr. Norwood has developed a close relationship with Abby, even telling Abby to call her 24 hours a day, 7 days a week if she is in crisis.  Dr. Norwood resides in Durham, so Alliance Behavioral Healthcare (Alliance) is her MCO, and Dr. Norwood provides Abby with outpatient behavioral therapy (OBT).  But, in addition to the weekly therapy, Dr. Norwood also provides Abby with a sense of security.  Abby knows that, if needed, Dr. Norwood would be there for here under any circumstances.  In addition, Abby trusts Dr. Norwood because she is a female.  Abby has an intense distrust of males.  When Abby was 9, her step-father raped her over and over until child protective services stepped in, but not before Abby suffered 8 broken bones and has lost the ability to reproduce forever.

Then, Alliance held its RFPs a couple of months ago.  It’s “tryout.”

And Dr. Norwood was not awarded a contract with Alliance.  Dr. Norwood has no idea why Alliance did not award her a contract.  Only that, according to Alliance, Alliance has sufficient number of providers providing OBT within its catchment area and Dr. Norwood’s services are no longer needed.

Because mental health care providers are fungible, right?

Who cares whether Abby receives services from Dr. Norwood? She can get the same exact services from a large corporation…we will call it “Triangle Counseling.” (BTW: If a Triangle Counseling really exists, I apologize.  This is a fictitious company made up for my example).  Triangle Counseling employs 25+ psychiatrists and 30+ counselors.  When a Medicaid recipient is referred to Triangle, Triangle assigns a psychiatrist and a counselor to the recipient.  Oh, and if, for some reason, the Medicaid recipients needs crisis help outside business hours, Triangle provides “tele-care” so the Medicaid recipient can speak to a computer screen on which a person can be seen by a counselor.

Abby is now hospitalized.  Dr. Norwood filed bankruptcy, lost her 30 year+ career, and is receiving monetary support from the state.

I ask you, if Alliance (or any other MCO) has terminated even one provider, hasn’t that MCO restricted Medicaid recipients’ freedom of choice of provider beyond what was contemplated by the Waiver?  Is the clause in our Waiver that “freedom of choice of provider will be the same as before the implementation of MCOs?,” truthful?  What if the MCO has terminated 10 provider contracts?  50?  100? 

Yet, in order to implement the MCO system, we promised the federal government in our 1915(b) Waiver that “consumers have at least as much choice in individual providers as they had in the pre-reform non-managed care environment.”

Fact or fiction?

Are providers fungible?  Because my grandma knows from experience, houses sure are not.

MCOs Terminating Providers and Restricting the Freedom of Choice of Providers for Medicaid Recipients: Going To Far?

Who remembers Dennis Kozlowski?  He is the former CEO of Tyco International, and his net worth is estimated at $600 million.  However, his residence? A mansion? On his own island?

Nope.  He is currently serving 8.33 to 25 years at the Mid-State Correctional Facility in Marcy, New York.

In 2005 he was convicted of crimes related to $81 million in unauthorized bonuses and the payment by Tyco of a $20 million investment banking fee to Frank Walsh, a former Tyco director.  See Wikipedia.

So here you have this “rich-as-crap,” millionaire…going about his business, no doubt believing that he is smarter than anyone else and that he will never get caught.  Then all Hades breaks lose and he goes from Armani $10,000 suits to an orange, cotton jumpsuit.  Talk about riches to rags!

Now, I am by no means comparing Kozlowski’s criminal actions to NC managed care organizations (MCO).  By no means.  I am merely demonstrating that it is easy to continue doing the wrong thing…UNTIL you get caught.

Here’s a less dramatic example:

My eight-year-old has a hard time with food.  She eats slowly and we constantly have to tell her to eat.  (We think she has sinus problems and can’t taste the food…which we are looking into).  Anyway, last week when we cleaned her room, I found a stack of bags of carrots.  Like 10 bags of carrots.  I had been putting bags of carrots in her lunch and each day, she was hiding the carrots under the bed.  She didn’t want me to know that she wasn’t eating her carrots.  Again, she thought she wouldn’t get caught, so she kept doing the wrong thing….UNTIL she got caught.

Here in North Carolina, we have now set up this MCO system for Medicaid recipients needing behavioral health care services.

These MCOs have only gone live this past year.  These are new entities.  Our 1915 b/c Waiver (Waiver), which gives the MCOs the authority to do certain things is new. 

But, what if, these new entities are NOT following the Waiver?

Won’t they just keep not following the Waiver until they get caught?

That’s what Kozlowski did.  That’s what my 8-year-old did.

If you know Medicaid, you understand that federal law requires a “single state entity” to manage Medicaid.  In North Carolina the Department of Health and Human Services (DHHS), Division of Medical Assistance (DMA) is our “single state entity.” 

The Center for Medicare and Medicaid Services (CMS) is the federal agency that has to “ok” our State Plan and all Waivers.  The State Plan outlines the organization and function of DMA.  CMS has to authorize our State Plan, including each and every amendment to our State Plan.  Our State Plan is basically “The Law of Medicaid in NC.”  NC is required to follow the State Plan or risk losing federal funding for our Medicaid system.

Our Waivers, on the other hand, are our allowable exceptions to “The Law of Medicaid in NC.”  Think of the State Plan as the general rule and the Waivers as the exceptions.  Generally, all cars must stop at a red light.  The exceptions are police cars, ambulances and fire trucks with the sirens blaring and lights flashing.

Our State Plan states, generally, DHHS, DMA is the single state entity for Medicaid and must make all administrative and managerial decisions for the program.  The 1915 (b)/(c) Waiver says…well, the exception is that the local management entities (LMEs) or managed care organizations (MCOs) have SOME responsibilities. 

BTW: People in NC keep calling the MCOs:”LME/MCOs.”  In fact, I was at a meeting during which a a representative from DHHS called the MCOs “LME/MCOs.”  The woman asking the question with the microphone asked, “Why don’t we just drop the “LME” portion and call them “MCOs,” not “LME/MCOs?”  To which the gentleman answered, “Old habits are hard to break.”

Our 1915 b/c Waiver “waives” Section 1902(a)(4) of the Social Security Act, the freedom of choice of providers.  Generally, a Medicaid recipient has the freedom to choose a provider from whom he or she wants to receive services.  Our Waiver says, “Ok, Medicaid recipient, you can choose from any provider within your MCO’s catchment area.”  Meaning, if Sally the Medicaid recipient lives in Wake county, Sally could choose any provider within Alliance’s catchment area, Cumberland, Durham, Wake and Johnson counties.

But the Waiver does not stop there.

In order for the federal government to allow NC to place this restriction on Medicaid recipients, because it is a restriction, NC had to make some promises.

We promised in our Waiver to the feds:

“These providers support this initiative and consumers have at least as much choice in individual providers as they had in the non-managed care environment.”

Hmmmmmm.

I do not have exact numbers, but I would wager that Alliance has terminated, refused to contract with, or denied a contract to at least 100 providers.  Considering in the recent RFP Alliance chose so few providers to serve its catchment area, I can only imagine how many providers no longer can provider services within Alliance’s catchment area.  100? 200?  See my blog: “An Ominous Cloud Looms Over NC’s Mental Health System! And Radix Malorum Est Cupiditas!”

Is terminating providers giving the consumers as much choice as they had in the non-managed care environment?

I think not.

 But who is going to stop them from continuing down this path of eliminating choice of providers within the catchment areas?

Obviously, DHHS has proved itself to be incapable of such a feat.

So the MCOs are going about their businesses…thinking no one will ever catch them…that they are free to do whatever they want…just like Kozlowski (without the criminal behavior…we hope)…just like my daughter hiding the carrots….

It’s human nature.

We just keep doing the same things over and over…UNTIL someone tells us we have to change. 

Who will tell the MCOs to follow the Waiver?  Will it take a judge?

An Ominous Cloud Looms Over NC’s Mental Health System! And Radix Malorum Est Cupiditas!

“There is an ominous cloud over North Carolina’s mental health care system that many fear is limiting access to care and treatment by those who need it the most,” wrote Jason deBruyn in Friday’s Triangle Business Journal article titled, “Mental Health Block.”

TBJ Pic

(Thanks, Jason, for the nice spread:) )

Two phrases that can never be good when linked together: “an ominous cloud” and “mental health care system.”  Upon reading “ominous cloud,” I get this dark (dare I say ominous?), dreary outlook on whatever the “ominous cloud” is  over.  Then to discover that the “ominous cloud” is over our mental health system here in NC, I get goosebumps and a pit in my stomach (and a bit of disgust at the sheer ineptness of the Department of Health and Human Services (DHHS)).

What is causing that “ominous cloud” over our mental health system? Well, according to Jason, the managed care organizations (MCOs) that were implemented across the state only this past year.

What are these MCOs you talk of?

The MCOs were established to manage the Medicaid mental health, developmentally disabled, and substance abuse services in NC.  If you want mental health services or are attempting to get prior authorization on behalf of a Medicaid recipient, then the buck stops with the MCO.  See my blog: “NC MCOs: The Judge, Jury and Executioner.” Or “NC MCOs: Accountability Must Be Somewhere!”

Here is a list of the MCOs along with the “correct toll free number” in case you wanted it:

LME-MCO CORRECT TOLL FREE NUMBER
Alliance Behavioral Health 1-800-510-9132
Cardinal Innovations Healthcare Solutions 1-800-939-5911
CenterPoint Human Services 1-888-581-9988
CoastalCare 1-855-250-1539
East Carolina Behavioral Health (ECBH) 1-877-685-2415
EastPointe 1-800-513-4002
MeckLINK 1-877-700-3001
Partners Behavioral Health Management 1-888-235-4673
Sandhills Center 1-800-256-2452
Smoky Mountain Center 1-800-849-6127
Western Highlands Network 1-800-951-3792

Going back to the “ominous cloud…”

Jason writes further that “under the state’s new payment system, MCOs have the unbridled authority to terminate providers in an attempt to keep costs down – with little accountability for the process.”

The only word I would change is “little” to “no.” But, then, maybe Jason was referring to the little accountability as arising from advocates such as myself who are fighting for the providers.

Have I not been saying this all along?  The MCOs can terminate providers with little (or no) accountability!! To save money!!

And who suffers?? The providers, yes.  And the Medicaid recipients!!   “Patients aren’t going to know where to go to access services,” Goldston says. “Those patients are going to suffer.”

Why? Why are these MCOs terminating providers and denying services to our most-needy population??  Have they no heart? No conscience?

One word answers all these questions:

Money

Radix malorum est cupiditas, meaning, in Latin, greed is the root of all evil.  In the Bible, 1 Timothy 6:10, starts “For the love of money is the root of all kinds of evil…”

“MCOs register as not-for-profit organizations and receive fixed amounts of money from the state, called their “capitation.” Unlike physical health care providers, when Medicaid patients receive mental health services, their providers bill these MCOs instead of the N.C. Department of Health and Human Services. If an MCO doesn’t spend up to its capitation level, it keeps the remainder. And therein lies the problem, say provider advocates,” writes Jason. (emphasis added).

And he is absolutely correct!

What was the MCOs’ response?

“The myth that we are trying to eliminate every provider in our network is not an accurate statement,” says Rob Robinson, chief operating officer for Alliance Behavioral Healthcare, the MCO that covers Wake, Durham, Johnston and Cumberland counties.

Mr. Robinson’s comment, however, is incorrect on, at least, two fronts: (1) the “myth” is not that the MCOs are trying to eliminate every provider; and (2) it is no myth.  The MCOs are, without question, terminating as many providers from the networks as possible without the appearance that services will not get rendered.  The MCOs need a certain number…just to appear that services are not getting cut.

So what is that magic number?

A client informed me a couple of months ago that Smokey Mountain Center (SMC) told him that SMC wants two providers per service per county.  If correct, hundreds and hundreds of providers will be put out of business.  And, hello…I thought the current Republican administration was pro small business!

Alliance has chopped its provider network recently.

Just recently, Alliance called for Requests for Proposals (RFPs) from all contracted providers within its catchment area.  Kinda like a tryout.  When I was in college at NCSU, I was on the cheerleading team.  I will never forget being a freshman and learning these routines that I would have to perform in front of a judge’s panel.  Literally hundreds of young men and women were all learning the same routine…all to perform for the tryouts.  In the middle of learning the routine with hundreds of people, I looked around and realized that only 8 girls and 8 guys would be chosen.  Which meant 90% of the people there would not be on the team.  I tried to remove the thought from my head.

When the D-Day arrived, there was simply a white piece of paper taped to the gymnasium’s window on the outside for anyone to see.  I had to walk up to the piece of paper, shuffle through the small crowd surrounding it, ignore others’ tears and congratulations, and look for my name.

Holding my breath, I searched for “Knicole Carson” (my maiden name). And I did not see it.  For a moment, I was crushed.  Then I saw “Nicole Carson.”  My name was on there, just misspelled.

What does college cheerleading tryouts have to do with NC Medicaid?

Alliance’s RFPs created a provider tryout.  Hundreds submitted.  Only a few were chosen.  Those few chosen were written on a piece of paper for all to see, and providers had to scan the list to see if they were chosen.

For Wake county, Alliance decided to award a 1 year contract for community support team (CST) to only 6 companies.  For the entire county of Wake, Alliance has determined that only 6 companies may provide CST to Medicaid recipients (with a 1 year contract).  Only 6 names were on the list.

For Durham county, Alliance decided to award a 1 year contract for CST to only 5 companies.  For the entire county of Durham, Alliance has determined that only 5 companies may provide CST (with a 1 year contract).  Only 5 names were on the list.

Now let’s go back to Mr. Robinson’s comment:

“The myth that we are trying to eliminate every provider in our network is not an accurate statement,” says Rob Robinson, chief operating officer for Alliance Behavioral Healthcare, the MCO that covers Wake, Durham, Johnston and Cumberland counties.

You are right, Mr. Robinson, you aren’t trying to eliminate “every provider.”  Just the ones that Alliance, in its subjective discretion, doesn’t want to deal with (I don’t care that I ended the sentence in a preposition).

Oh, and what about our State Plan?

Our State of North Carolina MH/DD/SA  Health Plan Renewal, states, in pertinent part, as an answer regarding concerns as to provider choice with MCOs, “network capacity studies and gap analyses were conducted by Cardinal Innovations Healthcare Solutions (CIHS) annually and prior to expansion the coverage area, and by the new PIHPs prior to start-up, as required. Access and provider choice appear to be as good as or better than it was prior to waiver implementation, although there is room for improvement in several areas.” (emphasis added).

Obviously, that was written a while ago and Cardinal, an MCO, was the entity conducting the study (cough, cough…bias…cough).  Regardless, we told the federal government that “provider choice appears to be as good or better than it was prior implementation.”  Are you kidding me???

How many providers didn’t make Alliance’s cut?

How many providers have MeckLINK terminated? Smokey Mountain?

Jason deBruyn was dead on when he said, “There is an ominous cloud over North Carolina’s mental health care system that many fear is limiting access to care and treatment by those who need it the most.”