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

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

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

What is the Yates Memo?

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

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

See blog.

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

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

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

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

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

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

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

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

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

Exhaustion of Administrative Remedies: Futile as the Caucus-Race?

Answer – Sometimes.

How many of you have received Remittance Advices from NCTracks that are impossible to understand, include denials without appeal rights, or, simply, are erroneous denials with no guidance as to the next steps?  While these were most prevalent in the first couple years after NCTracks was rolled out (back in July 2013), these burdensome errors still exist.

You are allowed to re-submit a claim to NCTracks for 18 months. How many times do you have to receive the denial in order for that denial to be considered a “final decision?” And, why is it important whether a denial is considered a final decision?

  1. Why is it important that a denial be considered a “final decision?”

As a health care provider, your right to challenge the Department of Health and Human Services’ (via CSC or NCTracks’) denial instantly becomes ripe (or appealable) only after the denial is a final decision.

Yet, with the current NCTracks system, you can receive a denial for one claim over and over and over and over without ever receiving a “final decision.”

It reminds me of the Causus-race in Alice and Wonderlandalice“There was no ‘One, two, three, and away,’ but they began running when they liked, and left off when they liked, so that it was not easy to know when the race was over. However, when they had been running half an hour or so, and were quite dry again, the Dodo suddenly called out ‘The race is over!’ and they all crowded round it, panting, and asking, ‘But who has won?'” – Alice in Wonderland.

On behalf of all health care providers who accept Medicaid in North Carolina and suffered hardship because of NCTracks, at my former firm, I helped file the NCTracks class action lawsuit, Abrons Family Practice, et al., v. NCDHHS, et al., No. COA15-1197, which was heard before the NC Court of Appeals on June 12, 2015. The Opinion of the Court of Appeals was published today (October 18, 2016).

The Court of Appeals held that the plaintiffs were not required to “exhaust their administrative remedies” by informal methods and the Office of Administrative Hearings (OAH) prior to bringing a lawsuit in the State Court for damages because doing to would be futile – like the Caucus-race. “But who has won?” asked Alice.

Plaintiffs argued that, without a “final decision” by DHHS as to the submitted claims, it is impossible for them to pursue the denials before the OAH.

And the Court of Appeals, in a 2-1 decision, agrees.

The Abrons decision solidifies my contention over the past 4-5 years that a reconsideration review is NOT required by law prior to filing a Petition for Contested Case at OAH…. Boom! Bye, Felicia!

Years ago, I informed a client, who was terminated by an managed care organization (MCO), that she should file Petition for Contested Case at OAH without going through the informal reconsideration review. One – the informal reconsideration review was before the very agency that terminated her (futile); and two – going through two processes instead of one costs more in attorneys’ fees (burdensome).

We filed in OAH, and the judge dismissed the case, stating that we failed to exhaust our administrative remedies.

I have disagreed with that ruling for years (Psssst – judges do not always get it right, although we truly hope they do. But, in judges’ defenses, the law is an ever-changing, morphing creature that bends and yields to the community pressures and legal interpretations. Remember, judges are human, and to be human is to err).

However, years later, the Court of Appeals agreed with me, relying on the same argument I made years ago before OAH.

N.C. Gen. Stat. 150B-22 states that it is the policy of the State that disputes between the State and a party should be resolved through informal means. However, neither 150B-22 nor any other statute or regulation requires that a provider pursue the informal remedy of a reconsideration review. See my blog from 2013.

I love it when I am right. – And, according to my husband, it is a rarity.

Here is another gem from the Abrons opinion:

“DHHS is the only entity that has the authority to render a final decision on a contested medicaid claim. It is DHHS’ responsibility to make the final decision and to furnish the provider with written notification of the decision and of the provider’s appeal rights, as required by N.C. Gen. Stat. 150B-23(f).”

N.C. Gen. Stat. 150B-23(f) states, ” Unless another statute or a federal statute or regulation sets a time limitation for the filing of a petition in contested cases against a specified agency, the general limitation for the filing of a petition in a contested case is 60 days. The time limitation, whether established by another statute, federal statute, or federal regulation, or this section, shall commence when notice is given of the agency decision to all persons aggrieved who are known to the agency by personal delivery or by the placing of the notice in an official depository of the United States Postal Service wrapped in a wrapper addressed to the person at the latest address given by the person to the agency. The notice shall be in writing, and shall set forth the agency action, and shall inform the persons of the right, the procedure, and the time limit to file a contested case petition. When no informal settlement request has been received by the agency prior to issuance of the notice, any subsequent informal settlement request shall not suspend the time limitation for the filing of a petition for a contested case hearing.”

2. How many times do you have to receive the denial in order for that denial to be considered a “final decision”?

There is no magic number. But the Court of Appeals in Abrons makes it clear that the “final decision” must be rendered by DHHS, not a contracted party.

So which we ask – What about terminations by MCOs? Do MCOs have the authority to terminate providers and render final decisions regarding Medicaid providers?

I would argue – no.

Our 1915b/c Waiver waives certain federal laws, not state laws. Our 1915 b/c Waiver does not waive N.C. Gen. Stat. 150B.

“But who has won?” asked Alice.

“At last the Dodo said, ‘everybody has won, and all must have prizes.'” – Only in Wonderland!

Sometimes, you just need to stop running and dry off.

Medicaid Auditors, Nitpicky Nonsense, and Journalistic Mistakes

In my experience with regulatory audits of health care providers, which is substantial, the auditors have zero incentive to perform audits conservatively…or even properly, if I am being completely honest. The audit companies themselves are for-profit entities with Boards of Directors, sometimes with shareholders, and definitely with executives who are concerned with the corporate bottom lines. The actual auditors are salaried employees (or contractors) who are given an audit checklist, which may or may not be correct) and instructions as to which companies to audit.

Think about it – you are hired as an auditor…what happens if you come back to your boss, saying, “Nope. I found no documentation errors.”I liken it to me hiring a housekeeper and that housekeeper showing up at my house and saying, “Your house is so clean. There is nothing for me to clean.” First of all, for those who know me, you know that no housekeeper would ever say that my house did not to be cleaned, but that is neither here nor there. The analogy remains. No employee or hired contractor will tell you that you do not need to hire him or her because he or she is not needed. It is only human nature and logic. Will a dog trainer tell you that your dog is fully trained? Will a personal trainer tell you are perfectly fit? Will a rug maker tell you that you don’t need a rug? Will an auditor tell you that your documents are perfect? If so, they would render themselves obsolete.

Disagree with my opinions on this blog all you want, but if you disagree with the principle that an employee will not argue himself or herself out of a job, then you are living in a fantasy land made up of rainbows and gummy bears.

So let’s begin with the basic logical principles: 2+2=4 and auditors have incentives to find errors.

Now, knowing the basic, underlying fact that auditors have incentives to locate documentation errors, an article was recently published entitled, “Audit says home health care companies overbilled Mass. Medicaid by $23m.” While I am not in a position to critique a journalist’s writing, I disagree with the broad, overreaching statements found in this article. While the article claims that 9 home health companies owe the State of Massachusetts $23 million, my guess is that (if the companies hire a competent attorney) the companies do not owe such a large amount. In my experience, there are many legal defenses to safeguard against allegations in an audit.

The follow-up article may be entitled, “Audit of Home Health Agencies Found to Be Erroneous.”

Here is the first paragraph of that article claiming home care agencies overbilled Medicaid for $23 million:

“The state’s Medicaid program was routinely billed for home health care services that were never provided or were not medically necessary. Providers submitted documents with missing dates and signatures. Sometimes basic information like a patient’s medical history was nowhere to be found.”

Let’s dissect.

First sentence: “The state’s Medicaid program was routinely billed for home health care services that were never provided or were not medically necessary.”

I call bull feces on this one. First, the audit, which is the topic of this article, only audited 9 home health agencies. Unless only 10 home health agencies exist in Massachusetts, an audit of 9 agencies can hardly be considered “routinely billing” Medicaid.

Second, who is making these determinations that the home health services are not medically necessary??? Considering that, in order to render home health services, the provider must obtain prior authorization that the services are medically necessary, I find it a hard pill to swallow that the rendered services are not medically necessary. These are prior authorized services!!

Third, providing home health services is anything but routine. Life happens. The assertion that home health care services were never provided fails to take into consideration – life. For example, a home health aide could present at the client’s home at the regularly scheduled time, but the consumer’s son is present. The son brought McDonald’s, in which case, the aide may render all services, but does not prepare a meal for the client. Or, perhaps, the consumer’s plan states that the aide must bathe the consumer. But the consumer recently had surgery and cannot take a bath or shower for a certain amount of time. In the above examples, services were not rendered, that is true, but did some sort of aberrant billing or fraud occur? I would argue, no.

Second sentence: “Providers submitted documents with missing dates and signatures.”

This sentence is also troubling. Let’s say that a consumer requires home health services and receives prior authorization. The home health aide renders the services. In the subsequent documentation, the home health aide forgets to date the service note. There is no question that the home health services were needed. There is no question that the services were rendered. There is only a missing date written on the service note. Does this circumstance warrant a 100% recoupment for a minor documentation error? If you answer, yes, you may have a fulfilling career as a Medicaid auditor in your future. You also may believe that a documentation error as egregious as a missing date should warrant tearing up the provider’s Medicaid contract and burning it. You may also hate puppy dogs and ice cream.

My answer is no. There are less drastic measures to be implemented other than a 100% recoupment – for example, a plan of correction could be required.

Third sentence: “Sometimes basic information like a patient’s medical history was nowhere to be found.”

I have major issues with this sentence. Ever hear of the saying, “You only get what you ask for?” All health care providers, including home health care providers, maintain massive amounts of documentation, whether it be electronic or paper. Furthermore, one client file could have years and years of documentation. When an auditor comes to an agency, the auditor normally presents with a list of consumer names and dates of service.

For example, the auditor wants to review the documentation for Barack Obama, date of service 11/8/12. The provider hands over the service note, the plan of care, the prior authorization, etc. Information not found on the documents provided to the auditor: place of birth, past drug use, including, marijuana and cocaine, smoking history, exercise regimen, marital status, immunizations, list of surgical procedures…you get the picture.

The article goes on to state, “Executives at all of the companies reached by the Globe said they are appealing the audit findings and chalked up most of the violations to minor paperwork issues that were overblown by state auditors.”

“There’s mistakes here, I understand that,” said Debra Walsh, administrator at Able Home Care. “[But] how did a missing address escalate to a sanction? That doesn’t make any sense.”

She’s right. It doesn’t make logical, reasonable, human sense. But it does make sense when you remember that the auditors are sent to the agencies with an audit checklist and a list of consumers with dates of service. If the checklist requires an address of the provider and the consumer to be present on the service note, regardless whether the regulations, rules or law require an address to be present on a service note, and there is no address present on the service note, then the auditor will find noncompliance. Strict adherence to the “Stepford Auditors’ Handbook” is required, not strict adherence to the law.

Looking at the sunny side – Most audit findings are easy-greasy to defend with legal arguments. Have you seen the TV show, “What Not To Wear?” The first, initial meeting of the targeted person on “What Not To Wear” is the original audit results “before a good legal defense.” It’s exaggerated, ugly, and quite shocking.

Then Stacy and Clinton come to the rescue and teach the scraggly, poorly-dressed individual fashion tips and the former frumpy individual is transformed into a fashionable chichi – or a much more palatable overpayment amount.

(In this analogy, my team and I are Stacy and Clinton. I will be Stacy).

One of my favorite examples of a “before” and “after” audit results is the following:

Before (frumpy individual):

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After (fashionable chichi):
photo (3)
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Next time you see an article claiming that a health care provider overbilled the government for Medicare or Medicaid reimbursements, check and see whether the determination was appealed by the provider(s).

The appeal may demonstrate an entirely new perspective on such alleged overpayments than the original audit, because, remember, an auditor would not maintain a job if he or she found compliance.

Medicaid Managed Care Organizations: They Ain’t No Jesus!

Many of my clients come to me because a managed care organization (MCO) terminated or refused to renew their Medicaid contracts. These actions by the MCOs cause great financial distress and, most of the time, put the health care provider out of business. My team and I file preliminary injunctions in order to maintain status quo (i.e., allow the provider to continue to bill for and receive reimbursement for services rendered) until an administrative law judge (ALJ) can determine whether the termination (or refusal to contract with) was arbitrary, capricious, or, even, authorized by law.

With so many behavioral health care providers receiving terminations, I wondered…Do Medicaid recipients have adequate access to care? Are there enough behavioral health care providers to meet the need? I only know of one person who could feed hundreds with one loaf of bread and one fish – and He never worked for the MCOs!

On April 25, 2016, the Centers for Medicare and Medicaid Services released its massive Medicaid and Children’s Health Insurance Program (CHIP) managed care final rule (“Final Rule”).

Network adequacy is addressed. States are required to develop and make publicly available time and distance network adequacy standards for primary care (adult and pediatric), OB/GYN, behavioral health, adult and pediatric specialist, hospital, pharmacy, and pediatric dental providers, and for additional provider types as determined by CMS.

Currently, 39 states and the District of Columbia contract with private managed care plans to furnish services to Medicaid beneficiaries, and almost two thirds of the 72 million Medicaid beneficiaries are enrolled in managed care.

Access to care has always been an issue. Our Code of Federal Regulations require adequate access to quality health care coverage for Medicaid/care recipients. See blog. And blog.

However, Section 30A of the Social Security Act, while important, delineates no repercussions for violating such access requirements. You could say that the section “has no teeth,” meaning there is no defined penalty for a violation. Even more “toothless” is Section 30A’s lack of definition of what IS an adequate network? There is no publication that states what ratio of provider to recipient is acceptable.

Enter stage right: Final Rule.

The Final Rule requires states to consider certain criteria when determining adequacy of networks in managed care. Notice – I did not write the MCOs are to consider certain criteria in determining network adequacy. I have high hopes that the Final Rule will instill accountability and responsibility on our single state entity to maintain constant supervision on the MCOs [insert sarcastic laughter].

The regulation lists factors states are to consider in setting standards, including the ability of providers to communicate with limited English proficient enrollees, accommodation of disabilities, and “the availability of triage lines or screening systems, as well as the use of telemedicine, e-visits, and/or other evolving and innovative technological solutions.” If states create exceptions from network adequacy standards, they must monitor enrollee access on an ongoing basis.

The Final Rule marks the first major overhaul of the Medicaid and CHIP programs in more than a decade. It requires states to establish network adequacy standards in Medicaid and CHIP managed care for providers. § 457.1230(a) states that “[t]he State must ensure that the services are available and accessible to enrollees as provided in § 438.206 of this chapter.” (emphasis added).

Perhaps now the MCOs will be audited! Amen!