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Class Action Lawsuit Alleges Right to Inpatient Hospital Stays: Hospitals Are Damned If They Do…and Don’t!

Hospitals – “Lend me your ears; I come to warn you, not to praise RACs. The evil that RACs do lives after them; The good is oft interred with their appeals; So let it be with lawsuits.” – Julius Caesar, with modifications by me.

A class action lawsuit is pending against U.S. Health and Human Services (HHS) alleging that the Center for Medicare and Medicaid Services (CMS) encourages (or bullies) hospitals to place patients in observation status (covered by Medicare Part B), rather than admitting them as patients (covered by Medicare Part A). The Complaint alleges that the treatments while in observation status are consistent with the treatments if the patients were admitted as inpatients; however, Medicare Part B reimbursements are lower, forcing the patient to pay more out-of-pocket expenses without recourse.

The United States District Court for the District of Connecticut refused to dismiss the class action case on February 8, 2017, giving the legal arguments within the Complaint some legal standing, at least, holding that the material facts alleged warrant investigation.

The issue of admitting patients versus keeping them in observation has been a hot topic for hospitals for years. If you recall, Recovery Audit Contractors (RACs) specifically target patient admissions. See blog and blog. RAC audits of hospital short-stays is now one of the most RAC-reviewed issues. In fiscal year 2014, RACs “recouped” from hospitals $1.2 billion in allegedly improper inpatient claims. RACs do not, however, review outpatient claims to determine whether they should have been paid as inpatient.

On May 4, 2016, CMS paused its reviews of inpatient stays to determine the appropriateness of Medicare Part A payment. On September 12, 2016, CMS resumed them, but with more stringent rules on the auditors’ part. For example, auditors cannot audit claims more than the six-month look-back period from the date of admission.

Prior to September 2016,  hospitals would often have no recourse when a claim is denied because the timely filing limits will have passed. The exception was if the hospital joined the Medicare Part A/Part B rebilling demonstration project. But to join the program, hospitals would forfeit their right to appeal – leaving them with no option but to re-file the claim as an outpatient claim.

With increased scrutiny, including RAC audits, on hospital inpatient stays, the class action lawsuit, Alexander et al. v. Cochran, alleges that HHS pressures hospitals to place patients in observation rather than admitting them. The decision states that “Identical services provided to patients on observation status are covered under Medicare Part B, instead of Part A, and are therefore reimbursed at a lower rate. Allegedly, the plaintiffs lost thousands of dollars in coverage—of both hospital services and subsequent skilled nursing care—as a result of being placed on observation status during their hospital stays.” In other words, the decision to place on observation status rather than admit as an inpatient has significant financial consequences for the patient. But that decision does not affect what treatment or medical services the hospital can provide.

While official Medicare policy allows the physicians to determine the inpatient v. observation status, RAC audits come behind and question that discretion. The Medicare Policy states that “the decision to admit a patient is a complex medical judgment.” Ch. 1  § 10. By contrast, CMS considers the determination as to whether services are properly billed and paid as inpatient or outpatient to be a regulatory matter. In an effort to avoid claim denials and recoupments, plaintiffs allege that hospitals automatically place the patients in observation and rely on computer algorithms or “commercial screening tools.”

In a deposition, a RAC official admitted that if the claim being reviewed meets the “commercial screening tool” requirements, then the RAC would find the inpatient status is appropriate, as long as there is a technically valid order. No wonder hospitals are relying on these commercial screening tools more and more! It is only logical and self-preserving!

This case was originally filed in 2011, and the Court of Appeals overturned the district court’s dismissal and remanded it back to the district court for consideration of the due process claims. In this case, the Court of Appeals held that the plaintiffs could establish a protected property interest if they proved their allegation “that the Secretary—acting through CMS—has effectively established fixed and objective criteria for when to admit Medicare beneficiaries as ‘inpatients,’ and that, notwithstanding the Medicare Policy Manual’s guidance, hospitals apply these criteria when making admissions decisions, rather than relying on the judgment of their treating physicians.”

HHS argues that that the undisputed fact that a physician makes the initial patient status determination on the basis of clinical judgment is enough to demonstrate that there is no due process property interest at stake.

The court disagreed and found too many material facts in dispute to dismiss the case.

Going forward:

Significant discovery will be explored as to the extent to which hospitals rely on commercial screening tools. Also whether the commercial screening tools are applied equally to private insureds versus Medicare patients.

Significant discovery will be explored on whether the hospital’s physicians challenge changing a patient from inpatient to observation.

Significant discovery will be explored as to the extent that CMS policy influences hospital decision-making.

Hospitals need to follow this case closely. If, in fact, RAC audits and CMS policy is influencing hospitals to issue patients as observation status instead of inpatient, expect changes to come – regardless the outcome of the case.

As for inpatient hospital stays, could this lawsuit give Medicare patients the right to appeal a hospital’s decision to place the patient in observation status? A possible, future scenario is a physician places a patient in observation. The patient appeals and gets admitted. Then hospital’s claim is denied because the RAC determines that the patient should have been in observation, not inpatient. Will the hospitals be damned if they do, damned if they don’t?

damned

In the meantime:

Hospitals and physicians at hospitals: Review your policy regarding determining inpatient versus observation status. Review specific patient files that were admitted as inpatient. Was a commercial screening tool used? Is there adequate documentation that the physician made an independent decision to admit the patient? Hold educational seminars for your physicians. Educate! And have an attorney on retainer – this issue will be litigated.

Look into My Crystal Ball: Who Is Going to Be Audited by the Government in 2017?

Happy New Year, readers!!! A whole new year means a whole new investigation plan for the government…

The Department of Health and Human Services (HHS) Office of Inspector General (OIG) publishes what is called a “Work Plan” every year, usually around November of each year. 2017 was no different. These Work Plans offer rare insight into the upcoming plans of Medicare investigations, which is important to all health care providers who accept Medicare and Medicaid.

For those of you who do not know, OIG is an agency of the federal government that is charged with protecting the integrity of HHS, basically, investigating Medicare and Medicaid fraud, waste, and abuse.

So let me look into my crystal ball and let you know which health care professionals may be audited by the federal government…

crystal-ball

The 2017 Work Plan contains a multitude of new and revised topics related to durable medical equipment (DME), hospitals, nursing homes, hospice, laboratories.

For providers who accept Medicare Parts A and B, the following are areas of interest for 2017:

  • Hyperbaric oxygen therapy services: provider reimbursement
  • Inpatient psychiatric facilities: outlier payments
  • Skilled nursing facilities: reimbursements
  • Inpatient rehabilitation hospital patients not suited for intensive therapy
  • Skilled nursing facilities: adverse event planning
  • Skilled nursing facilities: unreported incidents of abuse and neglect
  • Hospice: Medicare compliance
  • DME at nursing facilities
  • Hospice home care: frequency of on-site nurse visits to assess quality of care and services
  • Clinical Diagnostic Laboratories: Medicare payments
  • Chronic pain management: Medicare payments
  • Ambulance services: Compliance with Medicare

For providers who accept Medicare Parts C and D, the following are areas of interest for 2017:

  • Medicare Part C payments for individuals after the date of death
  • Denied care in Medicare Advantage
  • Compounded topical drugs: questionable billing
  • Rebates related to drugs dispensed by 340B pharmacies

For providers who accept Medicaid, the following are areas of interest for 2017:

  • States’ MCO Medicaid drug claims
  • Personal Care Services: compliance with Medicaid
  • Medicaid managed care organizations (MCO): compliance with hold harmless requirement
  • Hospice: compliance with Medicaid
  • Medicaid overpayment reporting and collections: all providers
  • Medicaid-only provider types: states’ risk assignments
  • Accountable care

Caveat: The above-referenced areas of interest represent the published list. Do not think that if your service type is not included on the list that you are safe from government audits. If we have learned nothing else over the past years, we do know that the government can audit anyone anytime.

If you are audited, contact an attorney as soon as you receive notice of the audit. Because regardless the outcome of an audit – you have appeal rights!!! And remember, government auditors are more wrong than right (in my experience).

Medicare Audits: DRG Downcoding in Hospitals: Algorithms Substituting for Medical Judgment, Part 1

This article is written by our good friend, Ed Roche. He is the founder of Barraclough NY, LLC, which is a litigation support firm that helps us fight against extrapolations.

e-roche

The number of Medicare audits is increasing. In the last five years, audits have grown by 936 percent. As reported previously in RACmonitor, this increase is overwhelming the appeals system. Less than 3 percent of appeal decisions are being rendered on time, within the statutory framework.

It is peculiar that the number of audits has grown rapidly, but without a corresponding growth in the number of employees for Recovery Audit Contractors (RACs). How can this be? Have the RAC workers become more than 900 percent more efficient? Well, in a way, they have. They have learned to harness the power of big data.

Since 1986, the ability to store digital data has grown from 0.02 exabytes to 500 exabytes. An exabyte is one quintillion bytes. Every day, the equivalent 30,000 Library of Congresses is put into storage. That’s lots of data.

Auditing by RACs has morphed into using computerized techniques to pick targets for audits. An entire industry has emerged that specializes in processing Medicare claims data and finding “sweet spots” on which the RACs can focus their attention. In a recent audit, the provider was told that a “focused provider analysis report” had been obtained from a subcontractor. Based on that report, the auditor was able to target the provider.

A number of hospitals have been hit with a slew of diagnosis-related group (DRG) downgrades from internal hospital RAC teams camping out in their offices, continually combing through their claims data. The DRG system constitutes a framework that classifies any inpatient stay into groups for purposes of payment.

The question then becomes: how is this work done? How is so much data analyzed? Obviously, these audits are not being performed manually. They are cyber audits. But again, how?

An examination of patent data sheds light on the answer. For example, Optum, Inc. of Minnesota (associated with UnitedHealthcare) has applied for a patent on “computer-implemented systems and methods of healthcare claim analysis.” These are complex processes, but what they do is analyze claims based on DRGs.

The information system envisaged in this patent appears to be specifically designed to downgrade codes. It works by running a simulation that switches out billed codes with cheaper codes, then measures if the resulting code configuration is within the statistical range averaged from other claims.

If it is, then the DRG can be downcoded so that the revenue for the hospital is reduced correspondingly. This same algorithm can be applied to hundreds of thousands of claims in only minutes. And the same algorithm can be adjusted to work with different DRGs. This is only one of many patents in this area.

When this happens, the hospital may face many thousands of downgraded claims. If it doesn’t like it, then it must appeal.

Here there is a severe danger for any hospital. The problem is that the cost the RAC incurs running the audit is thousands of time less expensive that what the hospital must spend to refute the DRG coding downgrade.

This is the nature of asymmetric warfare. In military terms, the cost of your enemy’s offense is always much smaller than the cost of your defense. That is why guerrilla warfare is successful against nation states. That is why the Soviet Union and United States decided to stop building anti-ballistic missile (ABM) systems — the cost of defense was disproportionately greater than the cost of offense.

Hospitals face the same problem. Their claims data files are a giant forest in which these big data algorithms can wander around downcoding and picking up substantial revenue streams.

By using artificial intelligence (advanced statistical) methods of reviewing Medicare claims, the RACs can bombard hospitals with so many DRG downgrades (or other claim rejections) that it quickly will overwhelm their defenses.

We should note that the use of these algorithms is not really an “audit.” It is a statistical analysis, but not done by any doctor or healthcare professional. The algorithm could just as well be counting how many bags of potato chips are sold with cans of beer.

If the patient is not an average patient, and the disease is not an average disease, and the treatment is not an average treatment, and if everything else is not “average,” then the algorithm will try to throw out the claim for the hospital to defend. This has everything to do with statistics and correlation of variables and very little to do with understanding whether the patient was treated properly.

And that is the essence of the problem with big data audits. They are not what they say they are, because they substitute mathematical algorithms for medical judgment.

EDITOR’ NOTE: In Part II of this series, Edward Roche will examine the changing appeals landscape and what big data will mean for defense against these audits. In Part III, he will look at future scenarios for the auditing industry and the corresponding public policy agenda that will involve lawmakers.

 

AZ Supreme Court Holds AZ Legislators Have Standing to Challenge AZ Law, But Media Mischaracterizing the Lawsuit

You know the old adage, “Believe none of what you hear, and only half of what you see?” –Benjamin Franklin.

Well the old adage still holds true, especially when it comes to journalists and the media interpreting and reporting on lawsuits that deal with Medicaid laws, and which, perhaps, only an infinitesimal, ancillary aspect may touch the issue of Medicaid expansion.

Even if the lawsuit will not impact Medicaid expansion, journalists and the media hype the lawsuits as “conservatives challenging Obamacare yet again,” which mischaracterizes the actual lawsuit.

It seems that the media have become so accustomed to polarizing the topic of Medicaid expansion that reporters seem incapable of truly assessing the issues objectively and reporting accordingly.  This has happened recently when the AZ Supreme Court rendered a decision December 31, 2014, regarding legal standing, not the constitutionality of Medicaid expansion as many journalists report.  Biggs, et al. v. Hon. Cooper, et al.

The Arizona Supreme Court only decided that 36 legislators have the legal standing to challenge the passage of House Bill 2010, which was signed into law as A.R.S. § 36-2901.08.

What is A.R.S. § 36-2901.08?

For starters, A.R.S. stands for Arizona Revised Statutes (ARS). For those of you who missed “Schoolhouse Rock” as a child, a statute is a law that is enacted by the legislative body and which governs the state. Statutes are considered “black letter law” and should be interpreted on their face value and plain meaning.

The content of 36-2901.08 allows the State of Arizona to expand Medicaid.  In addition to expanding Medicaid, 35-2901.08 assesses a levy on hospitals to aid in funding the expansion of Medicaid.

36 Arizona legislators voted against 36-2901.08. It passed by a simple majority and was signed into law. The 36 legislators, who voted against the bill, brought a lawsuit to enjoin the statute from being applied or enacted. The State of Arizona’s position is that the 36 legislators lack the legal standing to bring the lawsuit.

Here are the issues in the legislators’ case, BIGGS ET AL. v. HON. COOPER ET AL.:

1. Do the 36 legislators have the standing to bring an injunctive action enjoining Arizona from carrying out 36-2901.08?

2. If the answer to #1 is yes, then have the 36 legislators proven that 36-2901.08 was passed in violation of the AZ Constitution?

I’ve read a number of articles from journalists covering this matter who mischaracterize the Biggs lawsuit as a lawsuit brought by the Arizona legislators, predominantly Republicans, asking the Arizona Supreme Court to strike statute 36-2901.08 because the expansion of Medicaid is unconstitutional, or “challenging Governor Jan Brewer’s Medicaid expansion plan,” or “challenging the legality of the state’s Medicaid expansion…”

These journalists are mischaracterizing the Arizona Supreme Court’s opinion.  And I am not talking about journalists for small, local papers are making these mistakes…the above quotations are from “The New York Times” and “The Associated Press.”

So, let’s discuss the true, correct ramifications of the Arizona Supreme Court opinion in Biggs

First, the Biggs opinion does not hold that Medicaid expansion in Arizona or elsewhere is unconstitutional…nor does it decide whether Medicaid expansion in Arizona is invalid on its face.

The opinion, rendered December 31, 2014, only holds that the 36 legislators have the legal standing to bring the lawsuit…there is no holding as to constitutionality of Medicaid expansion, despite so many journalists across America stating it so.

What is standing?

Standing, or locus standi, is the capacity of a party to bring suit in court.  This is not a question of whether a person is physically capable of bringing a lawsuit, but whether the person prove that he or she has sustained or will sustain a direct injury or harm and that the harm is redressable (or can be fixed or set right by the lawsuit).

The issue on the Supreme Court level in Arizona is only the narrow issue of whether the 36 legislators have standing. Period.

The Arizona Supreme Court held that the 36 legislators do possess the requisite legal standing in order to bring the lawsuit.

Now, the case will be remanded (sent to a lower court), in this instance, to the Superior Court, for a new fact-finding trial now that the issue of standing has been resolved.  In other words, at the lower superior court level, the ref (judge) made a call that the football players on the team (36 legislators) were ineligible to play NCAA football (poor grades, were red-shirted last year), and the alleged ineligible players appealed the decision all the way up.  Now the NCAA (AZ Supreme Court) has determined that the players are eligible and the game will resume.

Again, despite the rhetoric put forth by numerous widespread journalists, the 36 legislators are not merely challenging Arizona Medicaid expansion on its face.

Instead, the Arizona Constitution requires that certain Acts that increase state revenues must pass the legislature by a supermajority vote. See Ariz. Const. art. 9, § 22(A).

Remember from the beginning of this blog that 36-2901.08 was passed by a simple majority.

The 36 legislators argue that the assessment of a levy on Arizona hospitals constitute an Act that requires a supermajority vote, which, obviously would require more than a straight 50% approval.

So the 36 legislators’ lawsuit in AZ is about whether 36-2901.08 needs a supermajority or simple majority to vote it into law.

Not whether Medicaid expansion is constitutional.

Believe none of what you hear, and only half of what you see…especially when it comes to journalists and media reporting on lawsuits regarding Medicaid rules and regulations.

Obama’s Executive Order, Its Impact on Health Care Costs, and the Constitutionality of Executive Orders

Pres. Barack Obama will address the nation tonight at 8 pm (Thursday, November, 20, 2014). He is expected to discuss his executive order that will delay deportations of up to 5 million migrants.

What does an executive order on immigration have to do with Medicaid? Well, you can bank on the fact that almost none of the 5 million people has private health care coverage….which means, there is a high likelihood that most, if not all, the people would qualify for Medicaid.

With the expansion of Medicaid in many states, adding another 5 million people to the Medicaid program would be drastic.  Think about it…in NC, approximately 1.8 million people rely on Medicaid as their insurance.  5 million additional Medicaid recipients would be like adding 3 more North Carolinas to the country.

So I looked into it…

The Kaiser Family Foundation website states that even immigrants who have been in America over 5 years are sometimes still barred from getting Medicaid and those people would remain uninsured.  The Kaiser website states that under current law “some lawfully present immigrants who are authorized to work in the United States cannot enroll in Medicaid, even if they have been in the country for five or more years.”

By law, only immigrants who have green cards are entitled to enroll in Medicaid or purchase subsidized health care coverage through the ACA. Usually those immigrants with green cards are on the course to become citizens.

Regardless of whether Obama’s executive order tonight will or will not allow the 5 million people Medicaid coverage (which it will not), the executive order absolutely will greatly increase health care costs

The truth is that, with or without Obama’s executive order, the government already funds some health care for undocumented immigrants. We have an “emergency Medicaid” program and it pays hospitals to provide emergency and maternity care to immigrants if: 1) he or she otherwise would be Medicaid eligible if they weren’t in the country illegally or 2) he or she are legally present in this country for less than 5 years.  (Which is the reason that ER wait times are so long…if you have no health insurance and you get sick, the ER is precisely where you go).

However, with the additional 5 million people living within the borders of USA, it is without question that the “emergency Medicaid” funds will sharply escalate as hospitals provide more emergency care. ER waits times will, inevitably, increase. Health care costs, in general, surge as the population increases.  And the addition of 5 million folks in America is not a “natural” increase in population.  It will be like we added additional states.  Overnight and with the stroke of a pen, our population will grow immensely.  I guess we will see whether we get “growing pains.”

An act of Congress will still be required before the undocumented immigrants impacted by the executive order would be allowed to participate in the Medicaid programs and the Children’s Health Insurance Program (CHIP) coverage.

As to the Constitutionality of executive orders…

Executive orders are not specifically mentioned in the Constitution.  Many people interpret the nonexistence of executive orders in the Constitution as barring executive orders.

Article I Section I of the Constitution clearly states that all legislative powers reside in Congress. However, an executive order is not legislation. Technically, an executive order is a policy or procedure issued by the President that is a regulation that applies only to employees of the executive branch of government.

Nonetheless, our country has a vast history of president’s issuing executive orders. Abraham Lincoln issued an executive order to engage military in the Civil War, Woodrow Wilson issued an executive order arming the military before we entered World War I, and Franklin Roosevelt approved Japanese internment camps during World War II with an executive order.

Regardless of your political affiliation, in my opinion, it is very interesting that Obama would initiate an executive order regarding immigration given his past statements over the years complaining about past presidents’ executive orders being unconstitutional.

In 2008 campaign speeches, Obama regularly emphasized the importance of civil liberties and the sanctity of the Constitution.

In fact, in speeches, Obama stated, “most of the problems that we have had in civil liberties were not done through the Patriot Act, they were done through executive order by George W. Bush. And that’s why the first thing I will do when I am president is to call in my attorney general and have he or she review every executive order to determine which of those have undermined civil liberties, which are unconstitutional, and I will reverse them with the stroke of a pen.”

Whether or not people believe that executive orders are constitutional, it is indisputable that presidents on both sides of the aisle have issued executive orders.

Reagan and Bush issued executive orders. Although there is an argument that those executive orders came on the heels of congressional bills, as adjustments. Neither Reagan nor Bush simply circumvented Congress.

Going back to tonight’s anticipated executive order allowing 5 million migrants to remain in America…

While the executive order will not allow the 5 million people immediate access to Medicaid and other subsidized health care, it will allow 5 million more uninsured people to exist in America, which will, undoubtedly, increase health care costs and ER visits. And, eventually, the additional 5 million people will be eligible for Medicaid, subsidized health care, and all other benefits of living in America.

Dealer Has an Ace: Do You Take the “Insurance?” CMS Incentivizes Hospitals to Drop Appeals

Medicare appeals are at an all-time high. Back in January 2014, the Office of Medicare Hearings and Appeals (OMHA) stated that a health care provider with a Medicare appeal, may not have the case assigned to a judge for at least two years, and may wait even longer for the appeal to be heard.

Since the beginning of 2014, the Medicare appeal backlog has only grown. With the passing of the Affordable Care Act (ACA), which increased the amount of regulatory audits on providers in an attempt to partially fund the Act, more and more providers are finding themselves audited and in disagreement with the overzealous results. More and more providers are fighting the audit results and filing Medicare appeals at OMHA.

Now, because in large part of the massive backlog, the Center for Medicare and Medicaid Services (CMS) is offering hospitals an “administrative agreement mechanism.” In other words, if the hospitals agree to dismiss the appeal, CMS will agree to partial repayment for the claims at issue. Specifically, the hospital will be reimbursed for 68% of the disputed claims.
Notice the offer from CMS only pertains to hospitals. CMS has made no such offer to long-term care facilities (LTCF), which have been vocal when it comes to aggravation resulting from the Medicare appeal backlog.

For CMS’s offer, if a hospital is owed $1 million, then CMS will agree to reimburse the hospital $680,000 if the hospital dismisses the appeal.

What if the hospital has multiple appeals? CMS will only offer this meagre, olive branch if no other appeals are pending. As in, you must dismiss all lawsuits in order to receive the partial payout.

Personally, I call this a raw deal.

Think of blackjack. The purpose of blackjack is to have two cards’ sums equal 21. Only with 2 cards equaling 21 does the player receive more than the bet. You bet $100 and hit 21 with an ace and a king? You get paid $150.

“Insurance” is a side bet which you can take when the dealer’s face up card shows an ace and only pays 2:1. You bet half your bet for insurance; so if you placed a $100 blackjack bet, your insurance bet should be $50. If the dealer hits blackjack, you lose your $100 bet but get paid on the insurance. On a $50-insurance bet, you’d win $100, and lose your $100 bet. If the dealer doesn’t have a blackjack, your insurance bet is forfeited. Either way, by making an insurance bet, you lose money.. You do not have the chance to win 100% of a blackjack payout.

This is essentially what CMS is offering. You are holding an ace and CMS is holding an ace. Will you take the partial payout?

Many of these pending appeals by hospitals are a result of auditors’ determinations that a Medicare recipient was received as an inpatient instead of (as the auditor believes proper) an outpatient.

One of the reasons that I believe the 68% payout from CMS is a raw deal is because the auditors are not always right. Why take 68% when you are owed 100%?

My question is: Are these auditors M.D.s?

When I present myself at a hospital emergency room, I hope that the decision for me to be admitted as inpatient or outpatient hospital admission is a complex medical decision contemplated by my doctor based on medical necessity, not an insurance auditor. After the physician determines that a patient needs to be admitted, an auditor is second guessing a physician’s decision that was made in “real time” with multiple variables at issue.

The Social Security Act (SSA) provides numerous defenses for a provider to assert against an auditor challenging the medical necessity of a service, in this case whether the patient is admitted into the hospital as inpatient. The rendering physician’s medical decision should be upheld absent clear and convincing evidence to the contrary.

Some people suggest that the auditors’ emphasis on inpatient stays versus outpatient stays will cause hospitals to err on the side of caution and just keep patients in observation status to avoid inpatient status.

We need to prevent the hospitals from fearing to admit patients as inpatient due to overzealous audits and mistaken determinations from non-M.D.s who believe the patient should have been outpatient. I say, go all in. Do not take the “insurance.” Do not take the 68%, if you deserve 100%.

Medicare Appeals to OMHA Reaches 15,000 Per Week, Yet Decisions Take Years; Hospital Association Sues Over Medicare Backlog

When you are a health care provider and make the business determination to accept Medicare or Medicaid, you are agreeing to deal with certain headaches.  Low reimbursement rates and more regulations than you can possibly count make accepting Medicare and Medicaid a daunting experience.  Throw in some pre- and post-payment review audits, some inept contractors, and dealing with the government, in general, and you have a trifecta of terrible to-dos.

But having to “pay back” (by reimbursement withholding) an alleged overpayment before an appeal decision is rendered is not a headache which hospitals have agreed to take, says the American Hospital Association.  And it said so very definitively, in the form of a Complaint in the U. S. District Court for the District of Columbia

In both Medicaid and Medicare audits, if you get audited and are told to pay back XX dollars, you have a right to appeal that determination.  Obviously, with Medicare, you appeal on the federal level and with Medicaid, you appeal to the state level.  But the two roads to appeal (the state and federal) are not identical.  Robert Frost once said, “Two roads diverged in a wood, and I, I took the one less traveled by, And that has made all the difference.”  However,the Medicare appeal route is NOT the route less traveled by.

As of February 12, 2014, over 480,000 Medicare appeals were pending for assignment to an Administrative Law Judge (ALJ), with 15,000 new appeals filed each week.  In December 2013, HHS Office of Medicare Hearings and Appeals (OMHA) announced a moratorium on assignment of provider appeals to ALJs for at least the next two years, and possibly longer.  The average wait-time for a hearing is approximately 24 months, but will undoubtedly increase quickly due to the moratorium.  A decision would not come until later.  And all the while the parties are waiting, the provider’s reimbursements will be withheld until the alleged overpayment amount is met.  Literally, a Medicare appeal could take 3-5 years.

The American Hospital Association is fed up. And who can blame them?  On May 22, 2014, the American Hospital Association (AHA) filed a Complaint in the United States District Court in the District of Columbia against Kathleen Selebius, in her official capacity as Secretary of Health and Human Services (HHS), complaining that HHS is noncompliant with federal statutory law because of the Medicare appeal backlog.  I am not surprised by AHA’s Complaint; I am only surprised that it took this long for a lawsuit.  I am also surprised that more providers, other than hospitals, are not taking action.

AHA is requesting relief under the Mandamus Act, 28 U.S.C. § 1361.  The Mandamus Act allows a court to compel an officer or employee of the United States or any agency thereof to perform a duty owed.  In this case, the AHA is saying that HHS has a statutory duty to resolve Medicare appeals within 90 days.  So, AHA is asking the district court to compel HHS to resolve Medicare appeals by not later than the end of the 90-day period beginning on the date a request for hearing has been timely filed.

And, here, I am obliged to insert a quick, two thumbs-up for our very own Office of Administrative Hearings (OAH)  in NC for its handling of Medicaid appeals.  If you file a contested case at OAH, it will not take 3-5 years.

AHA’s lawsuit is significant because AHA does not restrict the relief requested to only hospital Medicare appeals.  AHA requests that the District Court “enter a declaratory judgment that HHS’s delay in adjudication of Medicare appeals violates federal law.”  If granted, I would assume that this declaratory judgment would impact all Medicare providers.  The only way to ensure all providers are covered by this decision is for all providers to either (1) file a separate action (to include damages, which is not included in AHA’s action for some reason); or (2) to join AHA’s action (and forego damages), but its impact will be broad.  I am not sure why AHA did not seek damages; the time value of money is a real damage…the non-ability for the hospitals to invest in more beds because their money is stuck at HHS is a real damage…the loss of the interest on the withheld money, which is obviously benefiting the feds, is a real damage.

AHA’s request is not dissimilar to an arrested individual’s right to a speedy trial.  During a criminal trial, the defendant remains incarcerated.  Therefore, because we believe our liberty is so important, the defendant has a right to a speedy trial.  That way, if he or she is innocent, the defendant would have spent the least number of days imprisoned.

With a Medicare audit appeal, HHS begins immediately withholding reimbursements until the alleged overpayment amount is met, even though through the appeal, that overpayment will most likely be decreased quite substantially.  Apparently, across the nation, the percent of overturned Medicare audits through appeal is around 72%,  but I could not find out whether the 72% represents ANY amount overturned or the entire 100% of the audit being overturned.  Because, in my personal experience, 99.9% of Medicare appeals have SOME reduction in the alleged amount (I would have said 100%, but we are taught not to use definitive remarks as attorneys).

Because the provider’s Medicare money is withheld based on an allegation of an overpayment, the fact that the cases are backlogged at the ALJ level is financially distressing for any provider.Even without the backlog, Medicare appeals take longer than Medicaid appeals.  In Medicare, there is four-step appeal process.  Going before the ALJ is the 3rd level.

First, a Medicare appeal begins with the Medicare Administrative Contractor (MAC) for redetermination.  The MAC must render a redetermination decision within sixty days.

If unsuccessful, a provider can appeal the MAC’s decision to a Qualified Independent Contractor (“QIC”) for reconsideration. QICs must render a decision within sixty days.

Provided that the amount in controversy is greater than $140 (for calendar year 2014), the next level, and where the backlog begins, is at the level of appeal to an ALJ. The ALJ is required both to hold a hearing and to render a decision within ninety days, which is not happening.

Hence, AHA’s lawsuit.  Hopefully AHA will be successful, because a backlog of Medicare appeals at the ALJ level doesn’t help anyone.  And audits are not going away.

Could NC Hospitals Be the Surprising and Much Needed Advocate for Mentally Ill Medicaid Recipients?

North Carolina has created the perfect storm when it comes to mentally ill…the perfect scenario for disaster.  10…9….8…..7……6…….5……..4………3………..2…………..

From 2001 to 2012, the total population of North Carolina increased from 8,203,734 people to 9,781,022.  Over 1 and a half million more people live here now than twelve years ago.  Which is understandable when you think about all the people relocating here.

The number of NC residents in need of mental health services has increased from 517,447 in 2001 to 613,379 in 2012 (not sure how many are on Medicaid).  However, since 2001, the number of inpatient psychiatric beds has DECREASED by fifty percent (50%), from approximately 1,750 beds to approximately 850 beds.  850 beds!!  Not even enough beds to serve 1/10 of the population in need!!

In the past, it was understandable to decrease the number of psychiatric beds.  NC was doing a fairly decent, not perfect, by any means, but a decent job of providing community-based mental health services to those in need. 

Those days of decent care for mentally ill Medicaid recipients are over.  Instead, we have the perfect storm for utter disaster.

Enter main ingredient of the perfect storm…the managed care organizations (MCOs).  In NC, we moved only behavioral health care to the MCOs.  Basically, if you are on Medicaid and need any type of health care services, besides behavioral health services, you will never come into contact with an MCO.  However, if you suffer from a mental illness, a developmental disability, or a substance abuse problem and rely on Medicaid for insurance, you have encountered the MCOs.

Prior to 2013 (except for the experimental 1st MCO, which was called Piedmont Behavioral Health, but now called Cardinal Innovations), the MCOs did not exist.  Literally, the MCOs have gone “live” this year.  The MCOs are new to being the gatekeepers of mental health services for Medicaid recipients in NC.

Not only do we have these new, inexperienced companies deciding which Medicaid recipients may receive mental health services, but we, in our great wisdom, gave them the monetary incentive to DENY services to recipients and to DENY providers Medicaid contracts, which is the 2nd ingredient for the perfect storm.  Oh yes, we did all that!  The MCOs are prepaid.  So, in theory, the MCOs are taking the burden of risk (i.e., going over budget) off the State and onto themselves.  If the MCOs go over budget, it is on the MCOs to come up with the money.  However, in reality, the MCOs, to save on money and increase profit, are denying medically necessary services and terminating (or not enrolling) quality health care providers.  See my blog “The NC Medicaid Mental Health 10-Ring Circus: How 10 Mini Jurisdictions Will Be the Downfall of Mental Health.”

Enter the 3rd ingredient to the perfect storm…the Department of Health and Human Services (DHHS), Division of Medical Assistance (DMA)’s complete absence of supervision of the MCOs.

The MCOs have full reign and uninhibited authority to deny mental health care services, to terminate Medicaid provider contracts, or to refuse to contract with Medicaid providers with absolutely ZERO repercussions (unless you hire an attorney (not necessarily me) and obtain an injunction) from DMA, from the federal government, from anyone.  See my blog “The MCOs: Judge, Jury, and Executioner.”

[The equation for the perfect storm = the decreased number of psychiatric beds + increase in population + the increase of mentally ill residents + the MCOs + the monetary incentive for MCOs to deny services and not enroll providers + DMA’s complete lack of supervision]

As I am sure you are aware, a week or so ago, Virginia state Senator Creigh Deeds was stabbed multiple times by his son.  Deeds was hospitalized for three days, but his son took his own life after stabbing his father.  According to the media, Deeds’ son, Gus Deeds, suffered from severe mental problems and the day prior to the stabbing, an emergency custody order was sought.  However, a psychiatric bed, reportedly, could not be found.

Sadly, the tragic story of Gus Deeds is too common.  In Modern Healthcare this week, the feature story is called, “No Room for the Mentally Ill.”

The article discusses how the hospitals “are trying to collaborate with other hospitals  to place psychiatric patients in open beds, using separate psychiatric EDs, setting up crisis triage centers, and referring patients to residential treatment centers.” See Modern Healthcare, dated November 18, 2013.

The hospitals may be acting in a self-serving manner.  Most mentally ill patients, who are admitted to the ERs are not paying clients.  The hospitals cannot turn a profit if too many non-paying clients are admitted to the ER.  However, whatever the motivation, I say, thank goodness, and God bless the hospitals’ efforts!

Mentally ill, Medicaid recipients may be the demographic with the LEAST voice of all demographics in existence. 

Sadly, few care about poor people, and even fewer care about poor people suffering with MH/DD/SA. (When I say “care,” I mean will devote time, resources, and energy to them.  I mean hire lobbyists for them, hire attorneys.)

Here, in NC, we are staring into the face of a perfect storm.  If the hospitals can make headway with a bigger voice than those depending on Medicaid with behavioral health issues, God bless the hospitals, whatever the reason for their advocacy.

Because, perhaps, without the hospitals, we could be seeing:

3….2…..1……BOOM!

More Financial Pressure on Hospitals By 2013’s Legislative Medicaid Budget

Representative David Price spoke as the Keynote Speaker at the North Carolina Society of Health Care Attorneys annual meeting yesterday morning.  Since Representative Price was actually up in Washington D.C. during the shutdown, it was very interesting to hear him speak.  His opinion, as one would expect from his ideology, was that the shutdown was idiotic and unnecessary.

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What I found interesting was how he described the relationships between congressmen and women today versus in the 90s.  Remember, he has represented NC in Washington for more than one decade.  He described the relationships, even across party lines, as more cordial in the 90s than today’s relationships.  I wonder why our legislative body has become more segregated.

In the afternoon session, Linwood Jones from the North Carolina Hospital Association spoke about recent legislative action.  This legislature was not good to hospitals.  As Linwood described the legislative session this year…”It was all about Medicaid.” (I know you were wondering how the NC Society of Health Care Attorneys annual meeting was going to be germane to Medicaid).  According to Mr. Jones, the Medicaid budget was the primary factor in almost all budget cuts.  And what entities get most of Medicaid funding?

Duh…Hospitals.  Hospitals are the biggest providers in the state, and, in some areas, the biggest employers.

Our Medicaid budget is approximately $13 billion.

Remember…36 million a day is what we spend on Medicaid in NC.

How much of that $13 billion Medicaid budget goes to hospitals?   According to Kaiser Family Foundation, 25.7% for inpatient care.  Or $3.341 billion annually.  Or $9.252 million a day!!

Including outpatient care?  38.7%  Or $5.031 billion annually.  Or $13.932 million a day!!

According to the handy-dandy Wikipedia website, North Carolina has 126 hospitals in 83 counties.  For those of you who never went to 6th grade in North Carolina, we have 100 counties in NC.  (In the 6th grade, if you grew up here, you learn all about North Carolina geography, which apparently didn’t stick, because I still get lost).

That is $13.932 million dollars a day going to 126 hospitals in NC.  That is a lot of money!!!

Does Medicaid matter to hospitals?

Heck, yes!! Remember, a hospital cannot turn anyone away, including Medicaid recipients and uninsured.  Add the fact that the mentally ill in NC are not getting medically necessary services because our managed care organizations (MCOs) have monetary incentives to NOT provide the expensive mental health services; PLUS the fact that Medicaid reimbursements are painfully low, which leads to many physicians not accepting Medicaid, and you get the sad sum of Medicaid recipients ending up in emergency rooms of hospitals.

Don Dalton, a spokesman for the Hospital Association, said that statewide about 46 percent of hospitals’ revenue comes from Medicaid. (See Rose Hoban’s article).

But, hospitals don’t make a huge profit.  Especially on Medicaid recipients.

On average, Medicaid reimburses hospitals 80% of the actual cost for hospital services.

But this year, the General Assembly created a budget in which the 80% will be reduced to 70%.

Medicaid reimbursements were already bad.  But now, the Medicaid reimbursements will be 10% worse.  Subtract 10% from the $13.932 million dollars a day…

This is not a good thing for hospitals nor Medicaid recipients.

When Representative Price was speaking, a woman raised her hand with a question/vignette.  She said that she and her friends had gotten on the health care exchange (Obamacare) (Healthcare.gov) website and “shopped” for health insurance.  She said that all the people who signed up for health care exchange (because it is mandated and there is a penalty for not having insurance) had their premiums increase anywhere from 300%-800%.  Although Rep. Price made a good point, that they all should have contacted Blue Cross Blue Shield (BCBS) and asked why BCBS dropped that particular insurance plan.  Nonetheless, the woman harped on the fact that Obama had promised, “You like your insurance? You can keep it! You like your doctor? You can keep him/her!” (I added the “her.”)

So, here we are…with low Medicaid reimbursements to begin with, high medical costs, and the General Assembly reducing the Medicaid rates for hospitals by 10%.

Incentive to accept Medicaid recipients?  I think not…but hospitals have no choice.

Physicians and other Medicaid providers have the choice as to whether to accept Medicaid patients, but hospitals?  No choice there.  Hospitals must accept Medicaid recipients.  Mandatory!!!

In my opinion, the very first step toward fixing the Medicaid system is RAISING Medicaid reimbursement rates.

Sound counterintuitive? Yes, I agree it sounds counterintuitive.  But think about Medicaid like this:

If you agree with me that Medicaid is an entitlement and that the Medicaid budget is way too high, but that all Medicaid recipients deserve quality health care…if you agree with all that…

And you also agree with me that it is drastically more expensive for Medicaid recipients to go to the emergency room (ER) for health issues that could be solved in a family physicians’ office…if you agree with all that…

Then we would save Medicaid dollars by increasing (drastically) the Medicaid reimbursements.  If doctors had a monetary incentive to accept Medicaid, then more doctors would accept Medicaid (Logic 101).  If more doctors accept Medicaid, then more Medicaid recipients have the ability to go see a doctor.  If more recipients have more office visits then ER visits drop.  If more unnecessary ER visits drop, then the State pays less money to the hospitals, which is an extremely higher rate (even with the 10% reduction) than a higher Medicaid reimbursement to physicians.  Cut the $13.932 million a day to hospitals, not by decreasing the reimbursement rate, but by fewer Medicaid recipient going to the ER…instead have the recipients receive quality care outside the hospital, thus saving money…

Get it?

By reducing the Medicaid reimbursements to hospitals, the legislature did decrease the Medicaid budget, but not in a way that intelligently attempts to fix the system.  The same amount of Medicaid recipients will be going to hospitals.  Since the hospitals cannot turn anyone away, reducing reimbursements to hospitals merely hurts the hospitals.

Want to decrease the Medicaid budget? Increase Medicaid reimbursements (drastically) to Medicaid providers.  More providers accepting Medicaid means more recipients receiving quality care and NOT checking into the ER….

Money saved intelligently.  Too bad the legislature didn’t ask my opinion prior to slashing Medicaid reimbursement rates.

Number of Mental Health Patients Rise in ERs as Willing/Able Medicaid Behavioral Health Providers Dwindle

This is EXACTLY the issue that I have been blogging about for months.  The State of North Carolina, for whatever reason, has determined (whether intentional or not) to decrease the number of behavioral health care providers who accept Medicaid.  With the aggressive tools in the Division of Medical Assistance’s (DMA) work shed, such as outrageous Tentative Notices of Overpayments, capricious prepayment review audits, and arbitrary terminations of Medicaid contracts without affording due process, DMA has, in the last year or so, successfully bankrupt hundreds of Medicaid behavioral health providers. Or the providers simply washes their hands of Medicaid all together.

With the dramatic decrease in Medicaid mental health providers, where are all the Medicaid recipients going? One answer? The ERs.

People in the industry are also noticing.

My best friend is an ER nurse.  She told me recently that she noticed more and more patients coming in to the ER with mental illness the primary diagnosis.  I asked her whether she knew whether these patients with primary mental health diagnoses were Medicaid patients.  She answered (which I love), “I don’t know. I never look to see if a patient is a Medicaid recipient.  I treat them all the same.”  She is a good nurse. 

Anyway, I asked her to start paying attention (without ever providing me with specific information).  She returned a week or so later saying that, yes, the patients with mental illness as the primary diagnosis generally seem to be Medicaid recipients. (In fact the night before a man came in the ER sticking his tongue in and out rapidly and screaming, “Get me my lily pad!”  This is not a man who should be in the ER.  This man should be receiving mental health services).

Others in the industry have noticed this growing issue of Medicaid recipients with mental illness as the primary diagnosis going to the ER as well.  Dr. Judy Tintinalli, an ER physician noticed and researched the issue.  Here is her article:

NC Emergency Patients Twice as Likely to Have Mental Health Problems
June 17, 2013 by Rose Hoban

Research published by the Centers for Disease Control and Prevention compared rates of people reporting to North Carolina’s emergency departments complaining of mental health issues to EDs in the rest of the country.

By Rose Hoban

Many people think of emergency departments as mostly treating patients with traumas or heart attacks or an out-of-control infection.  But in 2010, Judy Tintinalli, an emergency department physician at UNC Hospitals, was getting the sense that she was seeing more and more patients coming into her emergency department with mental health problems.  She started asking around and found she wasn’t the only one with this impression.  “We’d all noticed that the number of mental health diagnoses in visits are just going up in EDs,” Tintinalli said. “And this has been going on for a while.” Source: Emergency Department Visits by Patients with Mental Health Disorders — North Carolina, 2008–2010, MMWR 62(23);469-472EmergencyDept_Box So she and her colleagues from several states started work on a study to look at rates of people coming in for care with mental health issues as one of their main complaints. Tintinalli’s intuition was on target. In a paper published last week, she writes that while rates of mental health issues in emergency departments are up all over the country, they’re especially high in North Carolina. Patients who came to emergency departments in the state between the beginning of 2008 and the end of 2010 were twice as likely to have a mental health complaint than in the rest of the country.

Good data

According to the Centers for Disease Control and Prevention, in 2009, about 5 percent of people coming into emergency rooms had a mental health disorder. But at that time, North Carolina’s rate was almost double, according to Tintinalli’s study. She used data that comes from almost every emergency department in the state, a system called the North Carolina Disease Event Tracking and Epidemiologic Collection Tool (NC DETECT). The system, begun as a way to catch bioterrorism or disease outbreaks before they get out of control, collects data about the diagnoses of every visitor to North Carolina’s emergency departments. NC DETECT captures more than four million emergency department visits per year. No personal data is collected, just geographic data and information about what happened during the visit. The system collects up to 10 possible diagnoses for each patient encounter. “And at the end of the patient encounter, you list the diagnoses the patient had,” Tintinalli said. “You prioritize based on how critical they are. “So, say you have someone come in with cancer, and they have pneumonia, and they’re also depressed; depression is the third diagnosis. If you come in saying you want to kill yourself, then the depression will be the first diagnosis.” By the end of 2010, 9.3 percent of all ED visits had a mental health problem as one of the top complaints.

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NC DETECT draws data from many sources and provides surveillance data to NC public health as well as to CDC. Diagram courtesy North Carolina Preparedness and Emergency Response Research Center

And Tintinalli found that not only were people coming in for mental health disorders, but those people with a main complaint of mental health problems were more than twice as likely to be admitted to the hospital. No surprise. Clinical social worker Bebe Smith, who teaches at the UNC School of Social Work, said she wasn’t surprised to hear that North Carolina has had higher rates of emergency department usage among people with mental health issues. “North Carolina’s mental health system has been in constant flux for over a decade,” Smith said. “Sometimes people end up going to the ER when they’re truly suicidal and despairing and overwhelmed by stress. You know, if there are psychosocial stressors like losing a job, you don’t want to go on, you start drinking, get suicidal,” Smith said. She said it’s called being “in crisis,” and it looks slightly different for each patient. Tintinalli’s data showed that close to two-thirds of people coming in with mental health problems were complaining of stress, anxiety or depression.
“We let people go into crisis,” said Vicki Smith, head of Disability Rights North Carolina, who pointed to the lack of community-based services for people with mental health problems. “We are not providing people with mental health needs the services they need to keep them out of crisis,” she said. “We allow them to go into crisis and they end up in the ED, sometimes via police cars.”
“If numbers are going up, we need to look and ask if we have adequate resources to really deal with these problems statewide,” Tintinalli said. Vicki Smith said that’s exactly the problem.  “We can keep people out of EDs, and there are a lot of evidence-based practices to do that,” she said. “But we haven’t provided the resources.”

Severe and persistent

A lot of providers of care for people with severe and persistent mental illness, like schizophrenia or bipolar disorder, have gone out of business, Bebe Smith said. And when that happens, patients lose their continuity of care. “That’s something important for them,” she said, “and it’s something we’ve lost.” She also said that the state has shifted away from continuous provision of care for these people – who often are disabled enough to have Medicaid –into episodic care, as a way to save dollars. “So people might have been in treatment for a while, they do better and then we discharge them,” Bebe Smith said. She said many outpatient clinics have pushed providers into seeing more patients for shorter visits as a way of getting productivity – and revenues – up. Then if patients start to do poorly, they get lost. “So if someone misses the appointment, they don’t have time to check in on that person. But the people who are doing more poorly are the ones who need outreach,” Smith said. “The way they’ve pushed productivity levels on therapeutic workers – that’s another place where you lose the continuity that’s key in keeping people from crisis.” So, she said, many end up in the facility of last resort – emergency departments.