Medicare is the largest payor of clinical lab services in the nation. Clinical lab services include everything from blood counts to urinalyses, and every letter of the alphabet in between. Lab services are performed by hospitals, independent labs, physicians, or other institutions.
Medicare Part B (which covers lab services) has had increased enrollment over the past few years, but the amount billed to Part B over the past few years has increased at a much higher rate. In other words, the amount of lab services billed to Part B has increased disproportionately to the increase in enrollment. Any number of factors could contribute to this: defensive practice of medicine, more reliance on laboratory testing, more labs…
Regardless, the higher billing amounts in lab services has now won the prestigious award of “Increased CMS Scrutiny!” (sarcasm, people). And the crowd goes wild!!!!
Mid-2014, the U.S. Office of Inspector General (OIG) published a study entitled, “Questionable Billing for Medicare Part B Clinical Laboratory Services.” OIG determined that Medicare allowed $1.5 billion to be paid for claims with questionable billing. It recommended that CMS: (1) review the labs identified with questionable billing and take appropriate action; (2) review program integrity strategies and determine whether such strategies are adequate; and (3) ensure that claims with invalid and ineligible ordering-physician numbers are not being paid.
In normal and expectant government time frames, the “dinosauric beast” has now determined, a little over a year later, that laboratory service claims warrant enhanced scrutiny. And a little over 85 years after its discovery, we finally determine that Pluto isn’t a planet.
CMS zoomed in their lens of scrutiny on lab services multiple times over a decade ago. Each “CMS zoom” resulted in millions and millions of money given to the federal government, which perpetuates the feds to zoom more and more…it’s easy money.
For example, in 2000, OIG issued Project LabScam, which resulted in substantial settlements against Laboratory Corporation of America Holdings, SmithKline Beecham, Met/Path, Damon, Roche, and Allied.
In 2002, OIG found that Medicare incorrectly paid $7.4 million for lab services with invalid ordering UPINs and $15.3 million for lab service claims with inactive ordering UPINs.
What does this mean to providers of lab services today?
It means you need to be prepared for an audit.
When I was young, one of my favorite games was “Red Rover.” Children would grasp arms and form a straight line facing the other team, which was doing the same. I would yell, “Red River, Red Rover, send Holly right over!” At which time, little Holly would be released from her line and prepare to run, full speed, into my line of little kids’ arms. Inevitably, once we saw where Holly was running, we would tighten up our grasps on one another’s arms to prepare for the impact.
Similarly, in preparation for upcoming audits, lab service providers need to tighten up.
How?
The best way to be certain of your risks in a potential audit is to hire a professional consultant or an experienced attorney to review a large sample of your documents. This allows an outsider to provide an unbiased opinion as to your risk. You may have the best billing manager in the world, but, when it comes to a self audit, he or she already believes that his or her documentation is stellar and that the organization of such documents is self evident. Having an outsider audit your records is worth its weight in gold and the best way to tighten up pre-audit.
The second best way to be certain of your risks in a potential audit is to self audit. Even if you hire a consultant or an attorney for a one time, third-party audit, you still want to self-audit multiple times a year. Every now and then you need to kick the old tires.
How do you self audit?
FYI: My general explanation of how to self audit will be appropriate for all health care service provider types. I will describe some more detailed ways to self audit that will be specific to lab services.
In order to self audit, I teach the IAKA method, not to be confused with IKEA.
Identify common risks
Audit a sample of your documents
Keep record of each step of your audit, including findings
Act on the findings.
Identify
What are the common red flags in your industry?
For lab services, common red flags may be high average allowed amounts per ordering physician, high percentage of claims with ineligible ordering-physician numbers, high percentage of claims with compromised beneficiary numbers, and high percentage of duplicate lab tests.
Here’s an area to look into that you may not otherwise consider in a self audit: what percentage of your lab clients live outside 100 miles? This may sound hoaky, but I had a lab service client flagged because 92% of the clients resided over 150 miles away. There was a perfectly reasonable explanation for such anomaly, the lab was located in a large, prestigious hospital in a rural area and people came from miles away to the hospital, but the statistic still flagged it.
Another specific item to review is, on average, how much does each physician bill in the laboratory? Do you have 4 physicians who bill, on average, $60,000+ per ordering physician? Because, for an independent lab, that would be very high.
Audit
For the actual self audit, you want to break up the audit into two categories: standards and procedures and document compliance.
For standards and procedures, you are reviewing whether you are properly orienting new hires, the specific training you implement, your criminal background check procedures, HIPAA training, your license renewal processes, your certification renewal processes, etc.
For document compliance, you are reviewing for physician signatures and dates.
NOTE: It is not required, but it is extremely prudent to print the name of the signator underneath all signatures. I have seen auditors ding providers on “physicians not being licensed/credentialed” because the auditor could not read the name of the physician.
You are also reviewing for medical necessity, eligible ordering-physician numbers, distance the client is to the lab, amount prescribed to that particular client, amount prescribed by that particular physician, whether that test prescribed for the same client within a 12 month period, coding compliance, etc.
Keep Record
It is imperative that you keep meticulous records while you conducting the audits. You want to be able to show an auditor that you caught a mistake andthat you implemented a plan of correction to remedy the mistake going forward. Andthat, in actuality, you remedied the mistake going forward. This documentation is essential for possible defenses to alleged potential overpayments, false claims, and, even, alleged criminal actions. Your documentation skills could be the difference between paying millions in penalties, or, in the extreme case, jail.
Act
I got ahead of myself in the prior section by saying that you need to document the way in which you fix the mistake. But I cannot emphasize it enough. Acting on your findings is important, obviously, but documenting the actions is more important. Ever hear the saying, “If it isn’t documented, it didn’t happen?” Take that as gospel.
DHHS is under criminal investigation by the federal government for allegedly overpaying employees without a bid process, and, simply, mismanaging and overspending our Medicaid tax dollars. Seeblog.
When I first started writing this blog, I opined that the federal investigation should be broadened. While I still believe so, the results of broadening the scope of a federal investigation could be catastrophic for our Medicaid providers and recipients. So I am metaphorically torn between wanting to shine light on tax payer waste and wanting to shield NC Medicaid providers and recipients from the consequences of penalties and sanctions on NC DHHS. Because, think about it, who would be harmed if NC lost federal funding for Medicaid?
[BTW, of note: These subpoenas were received July 28, 2015. Aldona Wos announced her resignation on August 5, 2015, after receipt of subpoenas. The Subpoenas demand an appearance on August 18, 2015, which, obviously, has already passed, yet we have no intel as to the occurrences on August 18, 2015. If anyone has information, let me know.]
Let’s explore:
Does this criminal investigation go far enough? Should the feds investigate more Medicaid mismanagement over and above the salaries of DHHS employees? What are the potential consequences if NC is sanctioned for violating Medicaid regulations? How could a sanction affect providers and recipients?
DHHS’ employees are not the only highly compensated parties when it comes to our Medicaid dollars! It is without question that the contracts with vendors with whom DHHS contracts contain astronomically high figures. For example, DHHS hired Computer Sciences Corporation (CSC) to implement the NCTracks software for $265 million. Furthermore, there is no mention of the lack of supervision of the managed care organizations (MCOs) and the compensation for executives of MCOs being equal to that of the President of the United States in the Subpoenas.
The subpoenas are limited in scope as to documents related to hiring and the employment terms surrounding DHHS employees. As I just said, there is no mention of violations of bid processes for vendors or contractors, except as to Alvarez & Marsal, and nothing as to the MCOs.
Specifically, the subpoena is requesting documents germane to the following:
Les Merritt, a former state auditor who stepped down from the North Carolina State Ethics Commission after WRAL News raised questions about potential conflicts of interest created by his service contract with DHHS;
Thomas Adams, a former chief of staff who received more than $37,000 as “severance” after he served just one month on the job;
Angie Sligh, the former director of the state’s upgraded Medicaid payment system who faced allegations of nepotism and the waste of $1.6 million in payments to under-qualified workers for wages, unjustified overtime and holiday pay in a 2015 state audit;
Joe Hauck, an employee of Wos’ husband who landed a lucrative contract that put him among the highest-paid workers at DHHS;
Alvarez & Marsal, a consulting firm overseeing agency budget forecasting under a no-bid contract that has nearly tripled in value, to at least $8 million;
Most likely, the penalties imposed would be more civil in nature and encompass suspensions, recoupments, and/or reductions to the federal matching. Possibly a complete termination of all federal matching funds, at the worst.
42 CFR Part 430, Subpart C – of the Code of Federal Regulations (CFR) covers “Grants; Reviews and Audits; Withholding for Failure To Comply; Deferral and Disallowance of Claims; Reduction of Federal Medicaid Payments”
The Center for Medicare and Medicaid Services (CMS) is charged with the oversight of all 50 states’ management of Medicaid, which makes CMS very busy and with solid job security.
“The Department’s Office of Inspector General (OIG) periodically audits State operations in order to determine whether—(1)The program is being operated in a cost-efficient manner; and
(2)Funds are being properly expended for the purposes for which they were appropriated under Federal and State law and regulations.” 42 CFR 430.33.
CMS may withhold federal funding, although reasonable notice and opportunity for a hearing is required (unlike the reimbursement suspensions from providers upon “credible” (or not) allegations of fraud).
If the Administrator of a hearing finds North Carolina non compliant with federal regulations, CMS may withhold, in whole or in part, our reimbursements until we remedy such deficiency. Similar to health care providers’ appeals, if the State of North Carolina is dissatisfied with the result of the hearing, NC may file for Judicial Review. Theoretically, NC could go all the way to the U.S. Supreme Court.
Other penalties could include reductions of (1) the Federal Medical Assistance Percentage; (2) the amount of State expenditures subject to FFP; (3) the rates of FFP; and/or (4) the amount otherwise payable to the state.
As a reminder, the penalties listed above are civil penalties, and NC is under criminal investigation; however, I could not fathom that the criminal penalties would differ far from the civil allowable penalties. What are the feds going to do? Throw Wos in jail? Highly unlikely.
The subpoena was addressed to:
NC DHHS, attention the Custodian of Records. In NC, public records requests go to Kevin V. Howell, Legal Communications Coordinator, DHHS.
But is the federal government’s criminal investigation of DHHS too narrow in scope?
If we are investigating DHHS employees’ salaries and bid processes, should we not also look into the salaries of DHHS’ agents, such as the salaries for employees of MCOs? And the contracts’ price tags for DHHS vendors?
Turning to the MCOs, who are the managers of a fire hose of Medicaid funds with little to no supervision, I liken the MCOs’ current stance on the tax dollars provided to the MCOs as the Lion, who hunted with the Fox and the Jackal from Aesop’s Fables.
The Lion went once a-hunting along with the Fox, the Jackal, and the Wolf. They hunted and they hunted till at last they surprised a Stag, and soon took its life. Then came the question how the spoil should be divided. “Quarter me this Stag,” roared the Lion; so the other animals skinned it and cut it into four parts. Then the Lion took his stand in front of the carcass and pronounced judgment: The first quarter is for me in my capacity as King of Beasts; the second is mine as arbiter; another share comes to me for my part in the chase; and as for the fourth quarter, well, as for that, I should like to see which of you will dare to lay a paw upon it.”
“Humph,” grumbled the Fox as he walked away with his tail between his legs; but he spoke in a low growl:
Moral of Aesop’s Fable: “You may share the labours of the great, but you will not share the spoil.”
At least as to DHHS employees’ salaries, the federal government is investigating any potential mismanagement of Medicaid funds due to exorbitant salaries, which were compensated with tax dollars.
Maybe this investigation is only the beginning of more forced accountability as to mismanaging tax dollars with Medicaid administrative costs.
One can hope…(but you do not always want what you wish for…because the consequences to our state could be dire if the investigation were broadened and non compliance found).
Possible Ramifications:
Let us quickly contemplate the possible consequences of any of the above-mentioned penalties, whether civil or criminal in nature, on Medicaid recipients.
To the extent that you believe that the reimbursement rates are already too low, that medically necessary services are not being authorized, that limitations to the amount services are being unduly enforced…Imagine that NC lost our federal funding completely. We would lose approximately 60% of our Medicaid budget.
All our “voluntary” Medicaid-covered services would, most likely, be terminated. Personal care services (PCS) is an optional Medicaid-covered service.
With only 40% of our Medicaid budget, I could not imagine that we would have much money left to pay providers for services rendered to Medicaid recipients after paying our hefty administrative costs, including overhead,payroll, vendor contracts, MCO disbursements, etc. We may even be forced to breach our contracts with our vendors for lack of funds, which would cause us to incur additional expenses.
All Medicaid providers could not be paid. Without payments to providers, Medicaid recipients would not receive medically necessary services.
Basically, it would be the next episode of “Fear the Walking Dead.”
Hopefully, because the ramifications of such penalties would be so drastic, the federal government will not impose such sanctions lightly. Sanctions of such magnitude would be a last resort if we simply refused to remedy whatever deficiencies are found.
Otherwise, it could be the zombie apocalypse, but the Lion’s would be forced to share.
RALEIGH, N.C. — The U.S. Attorney’s Office has launched an investigation into high-dollar consulting contracts and salary payments at the North Carolina Department of Health and Human Services.
According to documents provided by DHHS on Friday afternoon, U.S. Attorney Thomas Walker subpoenaed the department for information on more than 30 employees, as well as bidding and payment information for administrative contracts, as part of a criminal investigation. The subpoenas came in late July, about a week before the resignation of former DHHS Secretary Aldona Wos in early August.
The investigation was first reported by The News & Observer.
DHHS spokeswoman Kendra Gerlach said Wos decided to resign before the subpoenas.
“The current secretary had been selected prior to any knowledge of this government inquiry,” Gerlach said.
Walker’s office did not return phone calls seeking comment.
Gerlach said the department is cooperating with the federal government, but she declined to comment further about the investigation.
“We will continue to respect the confidentiality of the process by the federal government to protect the integrity and fairness of this review,” she said in an emailed statement.
The Governor’s Office has not responded to requests for comment.
Among the targets of the subpoena are the records of state employees and contractors who have come under fire in the past, both by North Carolina legislators and the State Auditor’s Office.
That includes:
Les Merritt, a former state auditor who stepped down from the North Carolina State Ethics Commission after WRAL News raised questions about potential conflicts of interest created by his service contract with DHHS
Thomas Adams, a former chief of staff who received more than $37,000 as “severance” after he served just one month on the job
Angie Sligh, the former director of the state’s upgraded Medicaid payment system who faced allegations of nepotism and the waste of $1.6 million in payments to under-qualified workers for wages, unjustified overtime and holiday pay in a 2015 state audit
Joe Hauck, an employee of Wos’ husband who landed a lucrative contract that put him among the highest-paid workers at DHHS
Alvarez & Marsal, a consulting firm overseeing agency budget forecasting under a no-bid contract that has nearly tripled in value, to at least $8 million
State lawmakers have grilled DHHS leadership in the past in response to the contracts and audits, often publicly in legislative oversight meetings.
Rep. Justin Burr, co-chairman of the Joint Legislative Oversight Committee on DHHS, said Friday that he was recently made aware of the federal investigation into DHHS.
“It’s a concern, but it covers several areas that our oversight committee has expressed concerns about,” Burr, R-Stanly, said.
Oversight hearings during Wos’ tenure questioned the qualifications of contractors hired by DHHS, as well as the size of those contracts.
“Depending on which one you’re talking about, there was no sort of bid or effort to find the most qualified person,” Burr said. “They were just hand-picking individuals.”
This is a copy of the WRAL article. MORE TO COME FROM ME!!!!
The limitations apply to Medicare Audit Contractors (MACs) and Qualified Independent Contractors (QICs). This new instruction will apply to audits conducted on or after August 1, 2015, and will not be applied retroactively. Important to note: this instruction does not apply to prepayment review, only post payment reviews.
MLN Matters® Number: SE1521 was published in response to the overwhelming, increasingly, mushroomed backlog of Medicare appeals at the Administrative Law Judge (ALJ) level. Six years ago, prior to the Affordable Care Act (ACA), the number of Medicare appeals at the ALJ level was sustainable. Six years later, in 2015, the Medicare appeal backlog has skyrocketed to numbers beyond the comprehension of any adversely affected health care provider, i.e., over 547 days for adjudication!
So in order to combat these overwhelming, bottle-necked and “anything but speedy Medicare appeals,” CMS attempted to rectify the situation by setting new limitations (among other measures) as to the scope of authority that MACs and QICs may present on an audit. However, these new limitations remind me of the hole that is in my front yard. Yes, a hole. The title of this story is “Inertia: What is Easy to Keep Going, Is Impossible to Pull Back” or “I love my husband’s intentions, but the result looks like the Medicare backlog.”
My wonderful husband and I purchased a small farm at the beginning of the year. If you have been following my blog over the past year, you will know that we have horses, peacocks, a micro pig, two dogs, and a 10-year-old. It is a whirlwind of fun.
Well, included in our purchase was a very shallow, very mosquito-ridden pond. It was about 4-5 inches deep and I never really thought about it. It was a pond. It was not beautiful, but it was not ugly. It was just there.
My husband tells me one day that he is going to “clean out the pond.”
BEFORE (except he already tore up the grass, so I do not have a true before picture):
Every day, for three months, I come home to a deeper and deeper pond.
“I’m bound to hit a spring,” he would say. Or “Leroy says that there is a lot of water under our ground.” How Leroy came to this conclusion, I do not know. But, slowly, and almost unperceptively, each day the hole grows wider and deeper.
Until, one day, I come home to this:
AFTER:
It would be funny if it were in your yard. (BTW: For scale, check out the horses (one is white, one is brown) in the top left corner.)
“I love my husband’s intentions, but the result looks like the Medicare backlog.”
You cannot undo digging a hole in your front yard that could swallow an elephant..or maybe two or three elephants. Just like you cannot undo a Medicare appeal backlog that could, potentially, fill my hole with its paperwork. You just have to make do, sit on your front porch, and admire the meteor-like hole that resides in your front lawn.
We (He) have (has) high hopes that our hole will become a lake or a swimming hole. In order to help the cause, I spit in it every time I walk by it. In the alternative, we sometimes aim the sprinkler toward the hole and let it run for a few hours. These are examples of our attempts of reconciling our hole into a beautiful swimming hole.
Similarly, when CMS created these MACs and QICs for Medicare audits, at first, it seemed that the MACs and QICs had no limits as to their scopes of authority to audit. Due to these overzealous and, sometimes, overreaching audits, the appeal backlog increased in number, then multiplied. Similar to the construction of my hole, the appeal backlog grew slowly, at first, then exponentially until the backlog is out of hand and uncontrollable. Seeblog.
One example of the seemingly limitless authority that the MACs and QICs wielded was that the auditors would provide reasons why claims were noncompliant, the defect could be cured, and the MACs and/or QICs would deny the claim for an entirely different reason.
The auditor would, in essence, be moving the goalposts after you kicked the ball. And the appeal backlog continued to swell.
The ability for the auditors to expand the review of claims beyond which was initially reviewed contributed the massive backlog of Medicare appeals at the ALJ level because more providers appeal an audit with which they disagree (common sense). Just like my hole in my front yard, the backlog of appeals grew, then ballooned until the number of Medicare appeals stuck in the backlog could possibly fill my hole. Seeblog for the Medicare appeal process and appeal deadlines.
According to the most current statistics available, there is a Medicare appeal backlog of approximately 870,000 appeals. The average processing time for appeals decided in fiscal year 2015 is 547.1 days.
Look at the balloon effect of “average processing time by fiscal year.” In 2009, the average processing time was 94.9 days (a little over 3 months). Now it is over 540 days (almost a year and a half)!!
“I love my husband’s intentions, but the result looks like the Medicare backlog.”
In an attempt to clear the backlog, CMS released MLN Matters® Number: SE1521, on August 1, 2015, in which “CMS has instructed MACs and QICs to limit their review to the reason(s) the claim or line item at issue was initially denied.” (emphasis added).
An exception, however, is if claims are denied for insufficient documentation and the provider submits documents, the claim may still be denied for lack of medical necessity if the documents submitted do not support medical necessity.
This new instruction found in MLN Matters No. SE1521 is an attempt by CMS to reconcile the huge backlog of Medicare appeals at the ALJ level. It is a small gesture. Quite frankly, this instruction should be self-evident as it is inherently unfair to providers to move the goalposts during an audit. I liken this gesture to my husband aiming the sprinkler toward the hole.
In other words, in my opinion, this feeble gesture alone, will not solve the problem. But, in the meantime, it will benefit providers who have been suffering from the goalposts being moved during an audit.
Once something is so big…
“I love my husband’s intentions, but the result looks like the Medicare backlog.”
Maybe the backlog will be fixed when my hole has transformed to a swimming hole.
I have a dental client, who was subject to a post payment review by Public Consulting Group (PCG). During the audit, PCG reviewed claims that were 5 years old. In communication with the state, I pointed out that PCG surpassed its allowable look back period of 3 years. To which the Assistant Attorney General (AG) said, “This was not a RAC audit.” I said, “Huh. Then what type of audit is it? MIC? ZPIC? CERT?” Because the audit has to be one of the known acronyms, otherwise, where is PCG’s authority to conduct the audit?
There has to be a federal and state regulation applicable to every audit. If there is not, the audit is not allowable.
So, with the state claiming that this post payment review is not a RAC audit, I looked into what it could be.
In order to address health care fraud, waste, and abuse (FWA), Congress and CMS developed a variety of approaches over the past several years to audit Medicare and Medicaid claims. For all the different approaches, the feds created rules and different acronyms. For example, a ZPIC audit varies from a CERT audit, which differs from a RAC audit, etc. The rules regulating the audit differ vastly and impact the provider’s audit results greatly. It can be as varied as hockey and football; both have the same purpose of scoring points, but the equipment, method of scoring, and ways to defend against an opponent scoring are as polar opposite as oil and water. It can be confusing and overwhelming to figure out which entity has which rule and which entity has exceeded its scope in an audit.
It can seem that we are caught swimming in a bowl of alphabet soup. We have RACs, ZPICs, MICs, CERTs, and PERMs!!
What are these acronyms??
This blog will shed some light on the different types of agencies auditing your Medicare and Medicaid claims and what restrictions are imposed on such agencies, as well as provide you with useful tips while undergoing an audit and defending the results.
First, what do the acronyms stand for?
Medicare Recovery Audit Contractors (RACs)
Medicaid RACs
Medicaid Integrity Contractors (MICs)
Zone Program Integrity Contractors (ZPICs)
State Medicaid Fraud Control Units (MFCUs)
Comprehensive Error Rate Testing (CERT)
Payment Error Rate Measurement (PERM)
Second, what are the allowable scope, players, and look back periods for each type of audit? I have comprised the following chart for a quick “cheat sheet” when it comes to the various types of audits. When an auditor knocks on your door, ask them, “What type of audit is this?” This can be invaluable information when it comes to defending the alleged overpayment.
SCOPE, AUDITOR, AND LOOK-BACK PERIOD
Name
Scope
Auditor
Look-back period
Medicare RACs
Focus:
Medicare zaqoverpayments and underpayments
Medicare RACs are nationwide. The companies bid for federal contracts. They use post payment reviews to seek over and under payments and are paid on a contingency basis.
Region A: Performant Recovery
Region B: CGI Federal, Inc.
Region C: Connolly, Inc.
Region D: HealthDataInsights, Inc.
Three years after the date the claim was filed.
Medicaid RACs
Focus:
Medicaid overpayments and underpayments
Medicaid RACs operate nationwide on a state-by-state basis. States choose the companies to perform RAC functions, determine the areas to target without informing the public, and pay on a contingency fee basis.
Each state contracts with a private company that operates as a Medicaid RAC.
In NC, we use PCG and HMS.
Three years after the date the claim was filed, unless the Medicaid RAC has approval from the state.
MICs
Focus:
Medicaid overpayments and education
MICs review all Medicaid providers to identify high-risk areas, overpayments, and areas for improvement.
CMS divided the U.S. into five MIC jurisdictions.
New York (CMS Regions I & II) – Thomson Reuters (R) and IPRO (A) • Atlanta (CMS Regions III & IV) – Thomson Reuters (R) and Health Integrity (A) • Chicago (CMS Regions V & VII) – AdvanceMed (R) and Health Integrity (A) • Dallas (CMS Regions VI & VIII) – AdvanceMed (R) and HMS (A) • San Francisco (CMS Regions IX & X) – AdvanceMed (R) and HMS (A)
MICs are not paid on a contingency fee basis.
MICs may review a claim as far back as permitted under the laws of the respective states (generally a five-year look-back period).
ZPICs
Focus:
Medicare fraud, waste, and abuse
ZPICs investigate potential Medicare FWA and refer these cases to other entities.
Not random.
CMS, which has divided the U.S. into seven ZPICs jurisdictions.
Onlyinvestigate potential fraud.
ZPICs are not paid on a contingency fee basis.
ZPICs have no specified look-back period.
MFCUs
Focus:
Medicaid fraud, waste, and abuse
MFCUs investigate and prosecute (or refer for prosecution) criminal and civil Medicaid fraud cases.
Each state, except North Dakota, has an MFCU.
Contact info for NC’s:
Medicaid Fraud Control Unit of North Carolina
Office of the Attorney General
5505 Creedmoor Rd
Suite 300
Raleigh, NC 27612
CERT companies indicate the rate of improper payments in the Medicare program in an annual report.
CMS runs the CERT program using two private contractors (which I am yet to track down, but I will).
The look back period is the current fiscal year (October 1 to September 30).
PERM
Focus:
Medicaid improper payment rate
PERM companies research improper payments in Medicaid and the Children’s Health Insurance Program. They extrapolate a national error rate.
CMS runs the PERM program using two private contractors(which I am yet to track down, but I will).
The look back period is the current fiscal year (the complete measurement cycle is 22 to 28 months).
As you can see, the soup is flooded with letters of the alphabet. But which letters are attached to which audit company determines which rules are followed.
It is imperative to know, when audited, exactly which acronym those auditors are
Which brings me back to my original story of my dental provider, who was audited by a “non-RAC” entity for claims 5 years old.
What entity could be performing this audit, since PCG was not acting as its capacity as a RAC auditor? Let’s review:
RAC: AG claims no.
MIC: This is a state audit, not federal. No.
MFCU: No prosecutor involved. No.
ZPIC: This is a state audit, not federal. No allegation of fraud. No.
CERT:This is a state audit, not federal. No.
PERM: This is a state audit, not federal. No.
Hmmmm….
If it walks like a duck, talks like a duck, and acts like a duck, it must be a duck, right?
Recent article released by my firm (a little horn tooting…Toot! Toot!)
The continued national growth of Gordon & Rees has led to its recognition as the fastest growing law firm among the AmLaw 200 thus far in 2015. (The firm has grown 6.5% since the beginning of the year.)
The firm also leads the way among the nation’s top 200 grossing firms in net partner acquisitions since January and in associate gains over the last nine months. Lateral Link (the report’s author) declares the gain of lateral partners one of the most revealing measures of a firm’s health.
This year the firm has surpassed the 650-attorney mark, and over the past 10 years, lawyer count has grown by 230 percent, the number of offices has grown from eight to 35, and the firm’s national, regional, and local practices have quadrupled — all without merging with other firms or incurring any long-term debt.
Over the last decade, Gordon & Rees has climbed 50 spots in the AmLaw 200, landing at number 126 this past year. The firm is also currently the 71st largest law firm in the United States as recognized by Law360, and ranks No. 26 on the American Lawyer’s Diversity Scorecard.
I am extremely excited to announce that our Gordon & Rees Raleigh health care team just keeps growing!! Remember, this is just the Raleigh health care team…firm wide, we are a health care team of 40-50 attorneys. Now that is a bench as deep as NCSU, UNC, and Duke’s basketball teams put together!
Robin was a partner at Smith Anderson for over two decades. In 2011, Robin was named Managing Partner of the Raleigh office of Nexsen Pruet, where the oversaw the growth of that office from 5 to 23 lawyers in less than two years. In January of 2013, Robin joined forces with his life-long friend, Paul C. Creech, Esq., to form a boutique health care law and litigation firm until Paul retired in 2015 due to medical reasons. Robin now joins us with renewed entrepreneurial spirit and vigor to make this Raleigh office of Gordon Rees a very special place to practice law and service clients.
Robin began his practice in health care litigation and morphed into a health care transactional attorney. He has bought and sold more physicians’ practices than Imelda Marco had shoes. He has created affordable care organizations (ACOs), has written physician policy manuals, and dealt with antitrust issues and e-discovery issues, including electronic medical records issues. When it comes to health care law, he is the Christopher Michael Langan without the sub-par childhood.
Personally, I have never had a mentor in the health care industry, and I believe that he can learn me a thing or two.
Robert transitioned to GR with me from Williams Mullen. He is absolutely brilliant with an analytical mind, which probably stems from his tax law background. Yes, he can answer tax questions for health care providers as well!
His expertise in numbers makes him exceptionally well-suited to argue against extrapolations, as he actually understands that independent variables are just variables that have become teenagers and want out of the house.
DeeDee comes to us from Williams Mullen, as well. Prior to WM, DeeDee worked as a senior consultant for more than six years at Ascendient Healthcare Advisors. DeeDee is also a smarty pants…she earned a Master of Public Health degree from the UNC School of Public Health as well as a J.D. from the UNC School of Law. You can’t have too many acronyms, right? She also has expertise in CON law.
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That is our Raleigh health care team. Like I said, we have a wealth of knowledge nationwide with our healthcare team, and I would be remiss if I excluded a few of our super stars.
Our team is led by the brilliant Thomas Quinn out of the Denver office.
We also have a partner who is a registered nurse (RN), Linda Mullany, from the San Diego office.
And these are only a few attorneys that comprise our nationwide, talented health care team So, as you can see, I joined a rock star law firm with almost 700 attorneys in 35 offices nationwide. Gordon & Rees boasts the following statistics:
92% Trial Win Rate
10% Top Verdicts
Law360 California Powerhouse
Go-To Employment Law Firm
#71 Largest U.S. Law Firm
650 lawyers, 40 jurisdictions,
35 U.S. offices in 22 states
Top 10 Fastest-Growing Firm
We also ranked in the top 100 law firms for female attorneys, a ranking that I am especially proud of (sorry for ending a sentence with a preposition, but writing “of which I am especially proud” seemed way too pomp and circumstance).
I will make every effort going forward to NOT write blogs about how awesome my law firm is, but I had to just write one. So, please forgive me on this unabashed, shameless, self-serving blog. It will not happen again (I hope).
Look forward to my next blog…Administrative costs of the MCOs and our tax dollars hard at work.
And here is the legal disclaimer:
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While I try to update this site on a regular basis, I do not intend any information on this site to be treated or considered as the most current expression of the law on any given point, and certain legal positions expressed on this site, by passage of time or otherwise, may be superseded or incorrect. Readers should not consider the information provided to be an invitation for an attorney-client relationship, and should always seek the advice of independent legal counsel in the reader’s home jurisdiction.
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Remember July 1, 2013? Providers across North Carolina probably still suffer PTSD at the mention of the “go-live” date for NCTracks. If you remember July 1, 2013, you probably also remember that my former firm filed a class action lawsuit on behalf of the physicians in NC who suffered losses from NCTracks’ inception.
There was oral argument at the NC Business Court.
Judge McGuire, of the NC Business Court, dismissed the NCTracks class action lawsuit stating the providers failed to exhaust the administrative remedies. The Order reads, in part:
“Ultimately, the burden of proving that administrative remedies are inadequate in this action rests on Plaintiffs. Jackson, 131 N.C. App. at 186. Although sympathetic to the apparently difficult administrative process, the Court concludes that, particularly in light of the fact that not a single Plaintiff has attempted to use the available administrative procedures to resolve their Medicaid reimbursement claims, Plaintiffs have simply failed to satisfy this burden. Accordingly, Defendants’ Motions to Dismiss pursuant to Rule 12(b)(1) should be GRANTED.”
While I understand the logic applied to come to this decision, I do not necessarily agree with the outcome. There are exceptions to the exhaustion of administrative remedies, which, in my humble opinion, are present here.
(This blog contains my own opinions as to the NCTracks ruling and not those of my present or former firms. It is not intended to claim any ruling was incorrect or inconsistent with case law, rules, and statutes).
(Try to read the foregoing sentences in a fast-paced, tiny, whispery voice, like a pharmaceutical commercial).
Regardless, where does this decision leave the physicians in NC who suffered under an, admittedly, botched, beginning of NCTracks? (Even DHHS recognized the imperfections at the beginning).
First, what is the doctrine of failure of administrative remedies? (I was going to start with what is NCTracks, but you do not know what NCTracks is, you probably should begin reading some of my earlier blog posts: blog; and blog; and blog).
In a nutshell, the exhaustion doctrine dictates that if a party disagrees with an adverse action of a state agency that the party must exhaust its administrative remedies before asking for relief from a civil court judge.
What?
Law 101: The Office of Administrative Hearings (OAH) has limited jurisdiction. It only has jurisdiction over those matters specifically granted to it by statute. If you have an issue with a final adverse decision of a state agency, you sue at OAH. In other words, if you want to sue a state agency, such as DHHS, or any of its agents, like an MCO, you sue at OAH, not Superior Court. An Administrative Law Judge, or ALJ, presides over the court. While OAH is more informal than Superior Court, OAH follows the rules of civil procedure unless an administrative rule exists.
If a Superior Court were to find that the party failed to exhaust its administrative remedies, then the court would find that the party lacked subject matter jurisdiction; i.e., the court is holding that it does not have the authority to determine the legal question at issue.
You would be back to square one, and, potentially, miss an appeal deadline.
In the Medicaid world this is similar to a managed care organization (MCO) having an informal review process internally which would be required prior to bringing a Petition for Judicial Review at OAH.
Were you to bring a Petition for Judicial Review at OAH prior to attending an informal reconsideration review at the MCO, the ALJ would, most likely, dismiss the case for failure to exhaust your administrative remedies.
But in the NCTracks case, the Plaintiffs sued DHHS andComputer Science Corporation (CSC). CSC is, arguably, not a state agency. The only way in which you could sue CSC at OAH would be for an ALJ to determine that CSC is an agent of a state agency. And, who knows? Maybe CSC is an agent of DHHS. Judge McGuire does not address this issue in his Order.
Many of you may wonder why I opine that CSC is not an agent of the state, yet surmise that the MCOs are agents of DHHS. Here is my reasoning: DHHS, in order to bestow or delegate its powers of administering behavioral health to the MCOs, was required to request a Waiver from the federal government. Unlike with CSC, DHHS merely contracted with CSC; no Waiver was required. That Waiver (two Waivers, really, the 1915(b) and 1915(c)) allow the MCOs to step into the shoes of DHHS….to a degree…and only as far as was requested and approved by CMS…no more. I view CSC as a contractor or vendor of DHHS, while the MCOs are limited agents.
Going back to NCTracks…
One can surmise that, because Judge McGuire dismissed the entire lawsuit and did not keep CSC as a party, Judge McGuire opined that CSC is an agent of DHHS. But there is a possibility that the providers sue in OAH and an ALJ determines that OAH is not a proper venue for CSC. Then what? Back to Superior Court and/or Business Court?
Why do you have to exhaust your administrative remedies? It does seem too burdensome to jump through all the hoops.
Therationalebehindrequiringparties to exhausttheiradministrativeremedies is that those entities (such as OAH) that hear these specialized cases over and over and develop an expertise to decide the certain esoteric mattersthatariseundertheirjurisdiction.Also,thedoctrine of separation of powers dictatesthat an agencycreated by Congressshould be allowed to carryoutitsdutieswithoutundue interferencefromthejudiciary.
For example, Judges Don Overby and Melissa Lassiter, ALJs at the NC OAH have, without question, presided over more Medicaid cases than any Superior Court Judge in the state (unless a Superior Court is a former ALJ, like Judge Beecher Gray). The thinking is that, since Overby and Lassiter, or, ALJs, generally, have presided over more Medicaid cases than the average judge, that the ALJs have formed expertise in area. Which is probably true. It cannot be helped. When you hear the same arguments over and over, you tend to research the answers and form an opinion.
So there is the “why,” what about the exceptions?
There are exceptions to the general rule of having to exhaust your administrative remedies that may or may not be present in the NC tracks case. If you ask me, exceptions are present. If you ask Judge McGuire vis-à-vis his Order, there are no exceptions that were applicable.
One such exception to the general rule that you must exhaust your administrative remedies is if bringing a case at the informal administrative level would be futile. If you can prove futility, then you are not required to exhaust your administrative remedies. Another exception is if you are requesting monetary damages that cannot be awarded at the administrative law level.
Where the administrative remedy is inadequate, a plaintiff is not required to exhaust that remedy before turning to the courts. Shell Island, 134 N.C. App. at 222. The burden of establishing the inadequacy of an administrative remedy is on the party asserting inadequacy. Huang v. N.C. State Univ., 107 N.C. App. 110, 115 (1992).
What DHHS argued, in order to have the case dismissed for lack of subject matter jurisdiction, and Judge McGuire agreed with, is:
that adequate administrative remedies exist for all health care providers when NCTracks improperly denies claims.
This holding is not without questions.
Some providers re-bill denied claims over and over. There is a question as to when do you appeal? The first denial? The second? The Fourteenth? At which point do you accept the denial from NCTracks as a “final agency decision?” Do you use the “3 strikes and you’re out” rule? Do you give NCTracks a mulligan? Or do you wait until NCTracks “fouls out” with a 6th denial?
Another question that remains hanging in the wake of the NCTracks dismissal is how will providers handle the sheer volume of denials. Some providers receive voluminous denials. Some RAs can be hundreds of pages long.
Let’s contemplate this argument in a hypothetical. You run a nephrology practice. The bulk of your patients are Medicaid (90% Medicaid, although 50% are dual eligible with Medicaid/Medicare). You have approximately 500-700 patients, who come see your doctors because they are in need of dialysis. You know that if a person does not receive dialysis that there is a chance that the person can enter Stage 5 (end stage renal disease) and die quickly. However, upon July 1, 2013, when NCTracks went live, you stopped receiving Medicaid payments completely. Do you stop accepting and treating your Medicaid patients? Obviously you do not stop accepting Medicaid patients? But your practice cannot sustain itself. Even if you continue to treat Medicaid patients, at some point, you will be out of business, failing to meet payroll, and being forced to involuntarily not treat your patients.
Your patients in need of dialysis come to the office 3x per week. A single hemodialysis treatment typically costs up to $500 or more — or, about $72,000 or more per year for the typical three treatments per week.
Let’s approximate with 500 patients. 500 patients multiplied by 3x per week is 1,500 per week. That is 1,500 denials per week. What Judge McGuire is saying is that your office is burdened with appealing 1,500 denials per week. Or 6,000 denials per month. Or 72,000 appeals per year.
Which of your office staff will be charged with appealing at OAH 72,000 denials per year? The physicians? You, the office manager (because you obviously have nothing else to do)? The receptionist? Hire someone new? For how much? How will you recoup the cost of appealing 72,000 denials per year? How many hours does it cost to appeal one? Hire an attorney?
Obviously, my example is one of an extreme case with 100% denials. But the sentiment holds true even for 30%, 40%, or 50% of denials. The sheer volume would be overwhelming.
And you can imagine the backlog that would be created at OAH.
Judge McGuire’s decision that plaintiffs failed to exhaust their administrative remedies issue appears to be based, in part, that because no plaintiff had tried to go to OAH, plaintiffs could not convince him that the administrative remedy was non-functional.
“Significantly, none of the Plaintiffs even attempted to use the administrative procedures to address the failure to pay claims and other issues they allegedly encountered in attempting to use NCTracks. Instead, Plaintiffs allege that the administrative process would have been futile and inadequate to provide the relief they seek.” SeeAbrons Family Practice v. DHHS and CSC, ¶ 36 (emphasis added).
What now?
Well, first of all, when I moved to Gordon & Rees, I left this case in the capable hands of my former partners, so I have no special intelligence, but I wager that this is not the end.
There are choices. They could:
(1) Appeal the decision to the Court of Appeals;
(2) File an insurmountable number of petition’s at OAH; or
(3) Do nothing.
For some reason, I have my doubts that #3 will occur.
What do you think??? What should the Plaintiffs do now in the wake of this dismissal?
Josh Urquhart, a fellow health care attorney at Gordon & Rees’ Denver office, wrote an addendum to my blog from Monday. His comments are on-point and worth reading.
He offers several, specific California- and DHCS-specific tips. However, these tips are analogous to all states and all dentists who accept any government-funded insurance, especially Medicaid.
Here is his last paragraph:
“I know that some of this might be frightening. My first thought after putting pen to paper on this post was to that scene in Empire Strikes Back, when Luke tells Yoda he isn’t afraid, and Yoda tells him ominously “you will be.” But there is a reason for my sturm und drang. As Knicole says, state Medicaid agencies have a good bit of leverage in these overpayment and fraud and abuse investigations, and in my opinion, DHCS falls towards the very top end of that list. This isn’t a time for providers to put their heads in the sand and figure that they’ll deal with any problems with DHCS later down the line if and when something happens. By that point, it very well might be too late – or at the very least, the providers will have missed the best chance (or even the second best chance) to prevent or resolve any problems cheaply and quickly.”
I have to say…it is so nice being a part of a firm with such an amazing wealth of knowledge about health care…and across the entire nation!! At GR, I am now part of a “deep bench” of experienced health care attorneys. (Sorry to toot our horn, but it is really nice!!)
Plus, I learned something new from Josh’s blog. Who knew that “sturm und drang” is an actual phrase and not a sad oversight of spellcheck?? I started to let Josh know of the misspelled phrase until I googled it. Maybe I will try these words on Words with Friends.
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.
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.
Knicole C. Emanuel is a Partner at Nelson Mullins, LLP in Raleigh, NC where she concentrates on Medicare and Medicaid regulatory compliance litigation. See legal disclaimer @ "About Knicole."
Follow her on Twitter at @medicaidlawnc.
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