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NC Medicaid OVERHAULED!
NC Medicaid is getting a complete overhaul. Politically, everyone is lost and has no idea how this will work. Back in 2010-ish, when NC went to the MCO model, which we have now, hundreds of providers were not paid or had trouble getting paid until the “dust” settled, and the MCOs were familiar with their jobs. Providers continue to suffer nonpayment from MCOs.
The new model consists of two, separate models: (1) the Standard Plan; and (2) the Tailored Plan models.
What’s the difference?
The Tailored Plan
Applies to:
- People who get Innovations Waiver services
- People who get Traumatic Brain Injury (TBI) Waiver services
- People who may have a mental health disorder,substance use disorder, intellectual /developmental disability (I/DD) or traumatic brain injury (TBI).
The Standard Plan
Applies to everyone else. It is normal, physical Medicaid.
December 1, 2022, is the “go-live” date for the Tailored Plans.
Unlike the MCO model, the Tailored Plan offers physical health, pharmacy, care management and behavioral health services. It is for members who may have significant mental health needs, severe substance use disorders, intellectual/developmental disabilities (I/DDs) or traumatic brain injuries (TBIs). Tailored Plans offer added services for members who qualify. DHHS is trying to distance itself from any Medicaid administration by hiring all these private companies to manage Medicaid for DHHS. DHHS has to get federal Waivers to do this.
The MCOs are taking on a new function. Starting December 1, 2022, the MCOs will be managing physical care, as well as mental health and substance abuse.
I see this HUGE change as good and bad (isn’t everything?). The good side effect of this transition is that Medicaid recipients who suffer mental health and/or substance abuse will have their physical health taken care of by the same MCO that manage their mental health and/or substance abuse services. Despite, this positive side effect, we all know that whenever NC Medicaid is OVERHAULED, consumers fall between cracks on a large scale. Let’s just hope that this transition will be easier than past transitions.
Dave Richard, Deputy Secretary NC Medicaid, NCDHHS, gave a presentation today for the NCSHCA. He said that the transition to MCOs was rocky. What does he think will happen when we transfer to the Tailored Plan?
I think I may ask him whether he thinks whether the MCOs are doing a good job, presently.
He’s a great presenter.
He said that the hospitals have come together in the last 4 weeks. He said that we will see something in the media on Monday.
He wants to expand Medicaid because his agency DHHS would be awarded $1.5 Billion over the course of 2 years. Of course, he wants to expand. He has no idea that the MCOs are “terminating at will” providers within the catchment areas in a disproportionate and discriminatory way.
We are close to expansion, he said. 80%, he guessed. “Expansion is really important.”
Not if there are not enough providers.
I did not ask him my question.
Today Mr. Richard had to get a bunch of data from the “new plans.” We are 2 1/2 months away, and he said they are not prepared yet, but hopes to be prepared by December 1, 2022. They still have the discretion to “pull the plug.” He’s worried about a lot of providers who have invested a lot of money to get compliant and ready for the transformation – that they won’t get paid.
“We have 5 really, strong Standard Plans,” he said. Most Medicaid recipients will choose the 5 Standard Plans,
Attorney from the audience: “We have to raise reimbursement rates.” There is a staffing crisis, the attorney, emphasized.
Mr. Richard stated that there will be a raise, but no indication of how much.
Finally, I did ask him his opinion as to whether he thinks the MCOs are doing better now than when the transformation happened (back in 2010-ish).
He said, that nothing is perfect. And that other Medicaid Deputy Secretaries think very highly of NC’s program. I wonder if he’ll run for office. He would win.
The guy next to me asked, “What is the future of the Tailored Plans when they go out of business in 4 years?”
Mr. Richards said that there needed to be competition for being the “big dogs.”
NC Medicaid: Are MCOs Biased?
Since the inception of the Medicaid MCOs in North Carolina, we have discussed that the MCO terminations of providers’ Medicaid contracts have consistently and disproportionately been African American-owned, behavioral health care providers. Normally the MCOs terminate for “purported various reasons,” which was usually in error. However, these provider companies had one thing in common; they were all African American-owned. On this blog, I have generally reported that MCO terminations were just based on inaccurate allegations against the providers. The truth may be more bias. – Knicole Emanuel
- Written by Ryan Hargrave, associate at Practus.
George Floyd; Breyonna Taylor; Eric Garner; Tamir Rice; Jordan Davis, these are all names that we know, all-too-well, for such horrendous reasons. Not for the brilliance, that these young African-American men and women possessed; nor for the accolades they had accumulated throughout their short-lived experiences on this earth. We recognize these names through a disastrous realization that brought communities and our nation together for a singular purpose; to fight racism.
A global non-profit organization, United Way, recognizes four types of racism.
- Internalized Racism—a set of privately held beliefs, prejudices, and ideas about the superiority of whites and the inferiority of people of color.
- Interpersonal Racism—the expression of racism between individuals. Occurring when individuals interact and their private beliefs affecting their interactions.
- Institutional Racism—the discriminatory treatment, unfair policies and practices, and inequitable opportunities and impacts within organizations and institutions, all based on race, that routinely produce racially inequitable outcomes for people of color and advantages for white people.
- Structural Racism—a system in which public policies, institutional practices, cultural representations and other norms work in various, often reinforcing, ways to perpetuate racial group inequality.
These various types of racism can be witnessed in every state, city, county, suburb, and community, although it isn’t always facially obvious. Racism can even be witnessed in the health care community. Recently in 2020, NC Governor Roy Cooper signed executive order 143 to address the social, environmental, economic, and health disparities in communities of color that have been exacerbated by the COVID-19 Pandemic. Machelle Sanders, NC Department of Administration Secretary, was quoted stating that “Health inequities are the result of more than one individual choice or random occurrence—they are the result of the historic and ongoing interplay of inequitable structures, policies, and norms that shape lives.” Governor Cooper went on to include that there is a scarcity of African-American healthcare providers, namely behavioral healthcare providers, available to the public.
Noting this statement from the Governor of our great state, its troublesome to know that entities that provide federal funding to these healthcare providers have been doing their absolute best to rid the remaining African-American behavioral healthcare providers. For years, Managed Care Organizations (“MCOs”) have contracted with these providers to fund the expenses pursuant Medicaid billing. MCOs have repeatedly attempted to terminate these contracts with African-American providers without cause, unsuccessfully; until recently. In the past few years, Federal Administrative Law Judges (“ALJ’s”) have been upholding “termination without cause” contracts between MCOs and providers. This is nothing less of an escape route for MCOs, allowing them to keep the federal funds, that they receive each year based upon the number of contracts they have with providers, as profit. This is an obvious incentive to terminate contracts after receiving these funds. Some may refer to this as a business loophole, while most Americans would label this an unconstitutional form of structural racism. It has been estimated that 99% of behavioral healthcare providers in NC that have been terminated have ONE thing in common. You guessed it. They are African-American owned. Once terminated, most healthcare providers cannot operate without these Federal Medicaid Funds and, ultimately, are forced to close their respective practices.
Why is this not talked about? The answer is simple. Most Americans who are on Medicaid don’t even understand the processes and intricate considerations that go into Medicaid, let alone the general public. And what’s the craziest thing? The craziest thing is the fact that these Americans on Medicaid don’t know that the acts of racism instituted against their providers, trickle down and limit their ability to obtain healthcare services. Think about it. If I live in a rural town and have a healthcare provider that I know and love is terminated and forced to close, I lose access to said healthcare provider and must potentially go to an out-of-town provider. The unfortunate fact is that most healthcare providers who operate with a “specific” specialty, such as autistic therapy, can have waitlists up to 12 months! The ramifications of these financially-greedy, racist acts of the MCOs ultimately affect the general population.
Your Medicare Reimbursements Are Your Property Rights
As a Medicare/caid health care provider, you have a property right to your reimbursements for services rendered that were medically necessary.
Why does it matter if your Medicare/caid reimbursements constitute property rights? If you have a property right to something it cannot be taken from you without due process of law. Due process equals a fair hearing and notice. If you have a property right in something then it cannot be usurped from you. For example, since I own my house, you cannot come to my house and claim ownership, even as a squatter. I am afforded due process for my right to my property. Similarly, when you provide Medicare services that are medically necessary and properly completed, your reimbursements for such services cannot be withheld without due process. This means that many rules and regulations across the nation may be unconstitutional.
One of the questionable laws comes into light under many managed care catchment area’s (MCOs) closed network system, which comprises the majority of managed care in America, as well as Medicare Administrative Companies (MACs). MCOs and MACs act as if it are the judge, jury, and executioner when it comes to payments. But, according to the constitution and property rights, Medicare/caid reimbursements are not based on a subjective review by a government contractor.
The ultimate victims in unfair, premature, or erroneous terminations from Medicare or Medicaid programs are the recipients. Often there are too few providers who accept Medicare and Medicaid in certain areas. The other victims in a wrongful termination is the provider and its staff. While the adverse consequences of an unjust termination has minimal to no unfavorable results to the government.
Under numerous Supreme Court holdings, most notably the Court’s holding in Board of Regents v. Roth the right to due process under the law only arises when a person has a property or liberty interest at stake. See also Bowens v. N.C. Dept. of Human Res.
In determining whether a property interest exists a Court must first determine that there is an entitlement to that property. Cleveland Bd. of Educ. v. Loudermill. Unlike liberty interests, property interests and entitlements are not created by the Constitution. Instead, property interests are created by federal or state law and can arise from statute, administrative regulations, or contract. Bowens.
Specifically, the Fourth Circuit Court of Appeals has determined that North Carolina Medicaid providers have a property interest in continued provider status. Bowens, 710 F.2d 1018. In Bowens, the Fourth Circuit recognized that North Carolina provider appeals process created a due process property interest in a Medicaid provider’s continued provision of services and could not be terminated “at the will of the state.” The Court determined that these due process safeguards, which included a hearing and standards for review, indicated that the provider’s participation was not “terminable at will.” The Court held that these safeguards created an entitlement for the provider, because it limits the grounds for his/her termination such that the contract was not terminable “at will” but only for cause, and that such cause was reviewable. The Fourth Circuit reached the same result in Ram v. Heckler, two years later. I foresee the same results in other Court of Appeals’ jurisdiction.
Since Ram, North Carolina Medicaid provider’s right to continued participation has been strengthened through the passage of Chapter 108C. Chapter 108C expressly creates a right for existing Medicaid providers to challenge a decision to terminate participation in the Medicaid program in the Office of Administrative Hearings (OAH). It also makes such reviews subject to the standards of Article 3 of the APA. Therefore, North Carolina law now contains a statutory process that confers an entitlement to Medicaid providers. Chapter 108C sets forth the procedure and substantive standards for which OAH is to operate and gives rise to the property right recognized in Bowens and Ram.
In another particular case, a MAC terminated a provider’s ability to deliver four CPT codes, which comprised of over 80% of the provider’s bailiwick and severely decreased the provider’s financial income, not to mention Medicare recipients lost their access to care and choice of provider.
The MAC’s contention was that the provider was not really terminated since they could still participate in the network in ways. But the company was being terminated from providing certain services.
The Court found that the MAC’s contention that providers have no right to challenge a termination was without merit. And, rightfully so, the Court stated that if the MAC’s position were correct, the appeals process provided by law would be meaningless. This was certainly not the case.
The MAC’s contention that it operates a “closed network” and thus can terminate a provider at its sole discretion was also not supported by the law. No MAC or MCO can cite to any statute, regulation or contract provision that gives it such authority. The statutory definition of “closed network” simply delineates those providers that have contracted with the LME-MCOs to furnish services to Medicaid enrollees. The MAC was relying on its own definition of “closed network” to exercise complete and sole control and discretion which is without foundation and/or any merit. Nothing in the definition of “closed network” indicates that MACs or MCOs have absolute discretion to determine which existing providers can remain in the closed network.
It is well settled law that there is a single state agency responsible for Medicare and Medicaid, which equals the Center for Medicare and Medicaid Services (CMS). Case law dictates that the responsibility cannot be delegated away. A supervisory role, at the very least, must be maintained.
On the Medicaid level, 42 CFR § 438.214 entitled “Provider Selection” requires the State to ensure, through a contract, that each MCO/PIHP “implements written policies and procedures for selection and retention of providers.”). A plain reading of the law makes clear that MCOs that operate a PIHP are required to have written policies and procedures for retention of providers. Requiring policies and procedures would be pointless if they are not followed.
To the extent that a MAC or MCO’s policy states that it can decide not to retain a provider for any reason at its sole discretion, such a policy does not conform with Federal law and the State requirements.
On the Medicare level, 42 U.S.C. § 405(h) spells out the judicial review available to providers, which is made applicable to Medicare by 42 U.S.C. § 1395ii. Section 405(h) aims to lay out the sole means by which a court may review decisions to terminate a provider agreement in compliance with the process available in § 405(g). Section 405(g) lays out the sole process of judicial review available in this type of dispute. The Supreme Court has endorsed the process, for nearly two decades, since its decision in Shalala v. Illinois Council on Long Term Care, Inc., holding that providers are required to abide by the provisions of § 405(g) providing for judicial review only after the administrative appeal process is complete.
The MACs and the MCOs cannot circumvent federal law and State requirements regarding provider retention by creating a policy that allows it to make the determination for any reason in its sole discretion. Such a provision is tantamount to having no policies and procedures at all.
Hostile Takeover: Cardinal Usurped by DHHS! Any Possible Relief to Providers for Misconduct?
DHHS has ousted and taken over Cardinal Innovations!
And may I just say – Finally! Thank you, Sec. Cohen.
Cardinal is/was the largest of seven managed care organizations (MCOs) that was given the task to manage Medicaid funds for behavioral health care recipients. These are Medicaid recipients suffering from developmental disabilities, mental health issues, and substance abuse; these are our population’s most needy. These MCOs are given a firehose of Medicaid money; i.e., tax dollars, and were entrusted by the State of North Carolina, each individual taxpayer, Medicaid recipients, and the recipients’ families to maintain an adequate network of health care providers and authorize medically necessary behavioral health care services. Cardinal’s budget was just over $682 million in 2016. Instead, I have witnessed, as a Medicaid and Medicare regulatory compliance litigator, and have legally defended hundreds of health care providers who were unlawfully terminated from the MCOs’ catchment areas, refused a contract with the MCOs, accused of owing overpayments to the MCOs for services that were appropriately rendered. To the point that the provider catchment areas are woefully underrepresented (especially in Minority-owned companies), recipients are not receiving medically necessary services, and the MCOs are denying medically necessary services. The MCOs do so under the guise of their police power. For years, I have been blogging that this police power is overzealous, unsupervised, unchecked, and in violation of legal authority. I have blogged that the MCOs act as the judge, jury, and executioner. I have also stated that the actions of the MCOs are financially driven. Because when providers are terminated and services are not rendered, money is not spent, at least, on the Medicaid recipients’ services.
But, apparently, the money is spent on executives. This past May, State Auditor Beth Wood wrote a scathing performance audit regarding Cardinal’s lavish spending on CEO pay as well as on expensive Christmas parties and board retreats, charter flights for executives and “questionable” credit card purchases, including alcohol. All of that, her report said, threatened to “erode public trust.” Cardinal’s former CEO Richard Topping made more than $635,000 in salary this year. On Monday (November 21, 2017), DHHS escorted Topping and three other executives out the door. But they did not walk away empty handed. Topping walked away with a $1.7 million severance while three associates left with packages as high as $740,000 – of taxpayer money!
This overspending on salaries and administration is not new. Cardinal has been excessively spending on itself since inception. This has been a long term concern, and I congratulate Sec. Cohen for having the “cojones” to do something about it. (I know. Bad joke. I apologize for the French/Spanish).
In 2011, Cardinal spent millions of dollars constructing its administrative facility.
Break Room
Conference Room
According to Edifice, the company that built Cardinal Innovations’ grand headquarters, starting in 2011, Cardinal’s building is described as:
“[T[his new three-story, 79,000-square-foot facility is divided into two separate structures joined by a connecting bridge. The 69,000-square-foot building houses the regional headquarters and includes Class A office space with conference rooms on each floor and a fully equipped corporate board room. This building also houses a consumer gallery and a staff cafe offering an outdoor dining area on a cantilevered balcony overlooking a landscaped ravine. The 10,000-square-foot connecting building houses a corporate training center. Computer access flooring is installed throughout the facility and is supported by a large server room to maintain redundancy of information flow.” How much did that cost the Medicaid recipients in Cardinal’s catchment area? Seem appropriate for an agent of the government spending tax money for luxurious office space? Shoot, my legal office is not even that nice. And I don’t get funded by tax dollars!
In 2015, I wrote:
On July 1, 2014, Cardinal Innovations, one of NC’s managed care organizations (MCOs) granted its former CEO, Ms. Pam Shipman, a 53% salary increase, raising her salary to $400,000/year. In addition to the raise, Cardinal issued Ms. Shipman a $65,000 bonus based on 2013-2014 performance.
Then in July 2015, according to the article in the Charlotte Observer, Cardinals paid Ms. Shipman an additional $424,975, as severance. Within one year, Ms. Shipman was paid by Cardinal a whopping $889,975. Almost one million dollars!!!!
I have been blogging about MCO misconduct for YEARS. Seeblog, blog, blog, blog, and blog.
Now, finally, DHHS says Cardinal Innovations “acted unlawfully” in giving its ousted CEO $1.7 million in severance, and DHHS took over the Charlotte-based agency. It was a complete oust. One journalist quoted Cardinal as saying, “DHHS officials arrived at Cardinal “unexpectedly and informed the executive leadership team that the department is assuming control of Cardinal’s governance.”” Unexpected they say? Cardinal conducted unexpected audits all the time on their providers. But, the shoe hurts when it’s on the other foot.
The MCOs are charged with the HUGE fiscal and moral responsibility, on behalf of the taxpayers, to manage North Carolina and federal tax dollars and authorize medically necessary behavioral health care services for Medicaid recipients, our population’s most needy. The MCOs in NC are as follows:
- Vaya Health
- Partners Behavioral Health Management
- Cardinal Innovations (formerly)
- Trillium Health Resources
- Eastpointe
- Alliance Behavioral Health Care
- Sandhills Center
The 1915 (b)(c) Waiver Program was initially implemented at one pilot site in 2005 and evaluated for several years. Two expansion sites were then added in 2012. The State declared it an immediate success and requested and received the authority from CMS to implement the MCO project statewide. Full statewide implementation is expected by July 1, 2013. The MCO project was intended to save money in the Medicaid program. The thought was that if these MCO entities were prepaid on a capitated basis that the MCOs would have the incentive to be fiscally responsible, provide the medically necessary services to those in need, and reduce the dollars spent on prisons and hospitals for mentally ill.
Sadly, as we have seen, fire hoses of tax dollars catalyze greed.
Presumably, in the goal of financial wealth, Cardinal Innovations, and, maybe, expectantly the other MCOs, have sacrificed quality providers being in network and medically necessary services for Medicaid recipients, Cardinal has terminated provider contracts. And for what? Luxurious office space, high salaries, private jets, and a fat savings account.
I remember a former client from over 5 years ago, who owned and ran multiple residential facilities for at-risk, teen-age boys with violent tendencies and who suffered severe mental illness. Without cause, Alliance terminated the client’s Medicaid contract. There were no alternatives for the residents except for the street. We were able to secure a preliminary injunction preventing the termination. But for every one of those stories, there are providers who did not have the money to fight the terminations
Are there legal recourses for health care providers who suffered from Cardinal’s actions?
The million dollar question.
In light of the State Auditor’s report and DHHS’ actions and public comments that it was usurping Cardinal’s leadership based on “recent unlawful actions, including serious financial mismanagement by the leadership and Board of Directors at Cardinal Innovations,” I believe that the arrows point to yes, with a glaring caveat. It would be a massive and costly undertaking. David and Goliath does not even begin to express the undertaking. At one point, someone told me that Cardinal had $271 million in its bank account. I have no way to corroborate this, but I would not be surprised. In the past, Cardinal has hired private, steeply-priced attorney regardless that its funds are tax dollars. Granted, now DHHS may run things differently, but without question, any legal course of action against any MCO would be epically expensive.
Putting aside the money issue, potential claims could include (Disclaimer: this list is nonexhaustive and based on a cursory investigation for the purpose of my blog. Furthermore, research has not been conducted on possible bars to claims, such as immunity and/or exhaustion of administrative remedies.):
- Breach of fiduciary duty. Provider would need to demonstrate that a duty existed between providers and MCO (contractual or otherwise), that said MCO breached such duty, and that damages exist. Damages can include actual loss and if intent is proven, punitive damages may be sought.
- Unfair and Deceptive Trade Practices. Providers would have to prove three elements: (1) an unfair or deceptive act or practice; (2) in or affecting commerce; (3) which proximately caused the injury to the claimant. A court will first determine if the act or practice was “in or affecting commerce” before determining if the act or practice was unfair or deceptive. Damages allowed are actual damages, plus treble damages (three times the actual damages).
- Negligence. Providers would have to show (1) duty; (2) breach; (3) cause in fact; (4) proximate cause; and (5) damages. Actual damages are allowed for a negligence claim.
- Breach of Contract. The providers would have to demonstrate that there was a valid contract; that the providers performed as specified by the contract; that the said MCO failed to perform as specified by the contract; and that the providers suffered an economic loss as a result of the defendant’s breach of contract. Actual damages are recoverable in a breach of action claim.
- Declaratory Judgment. This would be a request to the Court to make a legal finding that the MCO failed to follow certain Medicaid procedures and regulations.
- Violation of Article I, NC Constitution (legal and contractual right to receive payments for reimbursement claims due and payable under the Medicaid regulations.
To name a few…
House Bill 403: A Potential Upheaval of Medicaid!
Is this the end of the managed care organizations (MCOs)?
If the Senate’s proposed committee substitute (PCS) to House Bill 403 (HB 403) passes the answer is yes. The Senate’s PCS to House Bill 403 was just favorably reported out of the Senate Health Care Committee on June 15, 2017. The next step for the bill to advance will be approval by the Senate Rules Committee. Click here to watch its progress.
As my readers are well aware, I am not a proponent for the MCOs. I think the MCOs are run by overpaid executives, who pay themselves too high of bonuses, hire charter flights, throw fancy holiday parties, and send themselves and their families on expensive retreats – to the detriment of Medicaid recipients’ services and Medicaid providers’ reimbursement rates. See blog. And blog.
Over the last couple days, my email has been inundated by people abhorred with HB 403 – urging the Senators to retain the original HB 403, instead of the PCS version. As with all legislation, there are good and bad components. I went back and re-read these emails, and I realized multiple authors sat on an MCO Board. Of course MCO Board members will be against HB 403! Instead of hopping up and down “for” or “against” HB 403, I propose a (somewhat) objective review of the proposed legislation in this blog.
While I do not agree with everything found in HB 403, I certainly believe it is a step in the right direction. The MCOs have not been successful. Medically necessary behavioral health care services have been reduced or terminated, quality health care providers have been terminated from catchment areas, and our tax dollars have been misused.
However, I do have concern about how quickly the MCOs would be dissolved and the new PHPs would be put into effect. There is no real transition period, which could provide safety nets to ensure continuity of services. We all remember when NCTracks was implemented in 2013 and MMIS was removed on the same day. There was no overlap – and the results were catastrophic.
The following bullet points are the main issues found in HB 403, as currently written.
- Effective date – MCOs dissolve immediately (This could be dangerous if not done properly)
Past legislation enacted a transition time to dissolve the MCOs. Session Law 2015-245, as amended by Session Law 2016-121, provided that the MCOs would be dissolved in four years, allowing the State to implement a new system slowly instead of yanking the tablecloth from the table with hopes of the plates, glasses, and silverware not tumbling to the ground.
According to HB 403, “on the date when Medicaid capitated contracts with Prepaid Health Plans (PHPs) begin, as required by S.L. 2015-245, all of the following shall occur:…(2) The LME/MCOs shall be dissolved.”
Session Law 2015-245 states the following timeline: “LME/MCOs shall continue to manage the behavioral health services currently covered for their enrollees under all existing waivers, including the 1915(b) and (c) waivers, for four years after the date capitated PHP contracts begin. During this four-year period, the Division of Health Benefits shall continue to negotiate actuarially sound capitation rates directly
with the LME/MCOs in the same manner as currently utilized.”
HB 403 revises Session Law 2015-245’s timeline by the following: “LME/MCOs shall continue to manage the behavioral health services currently covered for their enrollees under all existing waivers, including the 1915(b) and (c) waivers, for four years after the date capitated PHP contracts begin. During this four-year period, the Division of Health Benefits shall continue to negotiate actuarially sound capitation rates directly with the LME/MCOs in the same manner as currently utilized.”
Instead of a 4-year transition period, the day the PHP contracts are effective, the MCOs no longer exist. Poof!! Maybe Edward Bulwer-Lytton was right when he stated, “The pen is mightier than the sword.”
Again, I am not opposed to dissolving the MCOs for behavioral health care; I just want whatever transition to be reasonable and safe for Medicaid recipients and providers.
With the MCOs erased from existence, what system will be put in place? According to HB 403, PHPs shall manage all behavioral health care now managed by MCOs and all the remaining assets (i.e., all those millions sitting in the savings accounts of the MCOs) will be transferred to DHHS in order to fund the contracts with the PHPs and any liabilities of the MCOs. (And what prevents or does not prevent an MCO simply saying, “Well, now we will act as a PHP?”).
What is a PHP? HB 403 defines PHPs as an entity, which may be a commercial plan or provider-led entity with a PHP license from the Department of Insurance and will operate a capitated contract for the delivery of services. “Services covered by PHP:
- Physical health services
- Prescription drugs
- Long-term care services
- Behavioral health services
The capitated contracts shall not cover:
Behavioral healthDentist services- The fabrication of eyeglasses…”
It would appear that dentists will also be managed by PHPs. As currently written, HB 403 also sets no less than three and no more than five contracts between DHHS and the PHPs should be implemented.
Don’t we need a Waiver from the Center for Medicare and Medicaid Services (CMS)?
Yes. We need a Waiver. 42 CFR 410.10(e) states that “[t]he Medicaid agency may not delegate, to other than its own officials, the authority to supervise the plan or to develop or issue policies, rules, and regulations on program matters.” In order to “Waive” this clause, we must get permission from CMS. We had to get permission from CMS when we created the MCO model. The same is true for a new PHP model.
Technically, HB 403 is mandating DHHS to implement a PHP model before we have permission from the federal government. HB 403 does instruct DHHS to submit a demonstration waiver application. Still, there is always concern and hesitancy surrounding implementation of a Medicaid program without the blessing of CMS.
- The provider network (This is awesome)
HB 403 requires that all contracts between PHPs and DHHS have a clause that requires PHPs to not exclude providers from their networks except for failure to meet objective quality standards or refusal to accept network rates.
- PHPs use of money (Also good)
Clearly, the General Assembly drafted HB 403 out of anger toward the MCOs. HB 403 implements more supervision over the new entities. It also disallows use of money on alcohol, first-class airfare, charter flights, holiday parties or similar social gatherings, and retreats, which, we all know these are precisely the activities that State Auditor Beth Wood found occurring, at least, at Cardinal. See Audit Report.
HB 403 also mandates that the Office of State Human Resources revise and update the job descriptions for the area directors and set limitations on salaries. No more “$1.2 million in CEO salaries paid without proper authorization.”
- Provider contracts with the PHPs (No choice is never good)
It appears that HB 403 will not allow providers to choose which PHP to join. DHHS is to create the regions for the PHPs and every county must be assigned to a PHP. Depending on how these PHPs are created, we could be looking at a similar situation that we have now with the MCOs. If the State is going to force you to contract with a PHP to provide Medicaid services, I would want the ability to choose the PHP.
In conclusion, HB 403 will re-shape our entire Medicaid program, if passed. It will abolish the MCO system, apply to almost all Medicaid services (both physical and mental), open the provider network, limit spending on inappropriate items, and assign counties to a PHP.
Boy, what I would give to be a fly on the wall in all the MCO’s boardrooms (during the closed sessions).
Eastpointe Sues DHHS, Former Sec. Brajer, Nash County, and Trillium Claiming Conspiracy! (What It Means for Providers)
In HBO’s Game of Thrones, nine, noble, family houses of Westeros fight for the Iron Throne – either vying to claim the throne or fighting for independence from the throne.
Similarly, when NC moved to the managed care organizations for Medicaid behavioral health care services, we began with 12 MCOs (We actually started with 23 (39 if you count area authorities) LME/MCOs, but they quickly whittled down to 11). “The General Assembly enacted House Bill 916 (S.L. 2011-264) (“H.B. 916) to be effective June 23, 2011, which required the statewide expansion of the 1915(b)/(c) Medicaid Waiver Program to be completed within the State by July 1, 2013.” Compl. at 25. Now the General Assembly is pushing for more consolidation.
Now we have seven (7) MCOs remaining, and the future is uncertain. With a firehose of money at issue and the General Assembly’s push for consolidation, it has become a bloody battle to remain standing in the end, because, after all, only one may claim the Iron Throne. And we all know that “Winter is coming.”
Seemingly, as an attempt to remain financially viable, last week, on Thursday, June 8, 2017, Eastpointe, one of our current MCOs, sued the Department of Health and Human Services (DHHS), Nash County, Trillium Health Resources, another MCO, and former secretary Richard Brajer in his individual and former official capacity. Since the Complaint is a public record, you can find the Complaint filed in the Eastern District of NC, Western Division, Civil Action 5:17-CV-275. My citations within this blog correspond with the paragraphs in the Complaint, not page numbers.
Eastpointe’s Complaint wields a complex web of conspiracy, government interference, and questionable relationships that would even intrigue George R. R. Martin.
The core grievance in the lawsuit is Eastpointe alleges that DHHS, Trillium, Nash County, and Brajer unlawfully conspired and interfered with Eastpointe’s contract to manage behavioral health care services for its twelve (12) county catchment area, including Nash County. In 2012, Nash County, as part of the The Beacon Center, signed a contract and became part of a merger with Eastpointe being the sole survivor (Beacon Center and Southeastern Regional Mental Health were swallowed by Eastpointe). At the heart of Eastpointe’s Complaint, Eastpointe is alleging that Nash County, Trillium, DHHS, and Brajer conspired to breach the contract between Eastpointe and Nash County and unlawfully allowed Nash County to join Trillium’s catchment area.
In June 2013, the General Assembly, pursuant to Senate Bill 208 (S.L. 2013-85 s. 4.(b)), appended N.C.G.S. § 122C-115 to include subparagraph (a3), permitting a county to disengage from one LME/MCO and align with another with the approval of the Secretary of the NCDHHS, who was required by law to promulgate “rules to establish a process for county disengagement.” N.C.G.S. § 122C-115(a3) (“Rules”) (10A N.C.A.C. 26C .0701-03).
Why does it matter whether Medicaid recipients receive behavioral health care services from providers within Trillium or Eastpointe’s catchment area?? As long as the medically necessary services are rendered – that should be what is important – right?
Wrong. First, I give my reason as a cynic (realist), then as a philanthropist (wishful thinker).
Cynical answer – The MCOs are prepaid. In general and giving a purposely abbreviated explanation, the way in which the amount is determined to pre-pay an MCO is based on how many Medicaid recipients reside within the catchment area who need behavioral health care services. The more people in need of Medicaid behavioral health care services in a catchment area, the more money the MCO receives to manage such services. With the removal of Nash County from Eastpointe’s catchment area, Eastpointe will lose approximately $4 million annually and Trillium will gain approximately $4 million annually, according to the Complaint. This lawsuit is a brawl over the capitated amount of money that Nash County represents, but it also is about the Iron Throne. If Eastpointe becomes less financially secure and Trillium becomes more financially secure, then it is more likely that Eastpointe would be chewed up and swallowed in any merger.
Philanthropic answer – Allowing Nash County to disengage from Eastpointe’s catchment area would inevitably disrupt behavioral health care services to our most fragile and needy population. Medicaid recipients would be denied access to their chosen providers…providers that may have been treating them for years and created established trust. Allowing Nash County to disembark from Eastpointe would cause chaos for those least fortunate and in need of behavioral health care services.
Eastpointe also alleges that DHHS refused to approve a merger between Eastpointe and Cardinal purposefully and with the intent to sabotage Eastpointe’s financial viability.
Also in its Complaint, Eastpointe alleges a statewide, power-hungry, money-grubbing conspiracy in which Brajer and DHHS and Trillium are conspiring to pose Trillium as the final winner in the “MCO Scramble to Consolidate,” “Get Big or Die” MCO mentality arising out of the legislative push for MCO consolidation. Because, as with any consolidation, duplicate executives are cut.
Over the last couple years, Eastpointe has discussed merging with Cardinal, Trillium, and Sandhills – none of which occurred. Comparably, Joffrey Lannister and Sansa Stark discussed merging. As did Viserys and Illyrio wed Daenerys to Khal Drogo to form an alliance between the Targaryens.
Some of the most noteworthy and scandalous accusations:
Against Trillium:
Leza Wainwright, CEO of Trillium and director of the NC Council of Community MH/DD/SA Programs (“NCCCP”) (now I know why I’ve never been invited to speak at NCCCP). Wainwright “brazenly took actions adverse to the interest of Eastpointe in violation of the NCCCP mission, conflicts of interest policy of the organization, and her fiduciary duty to the NCCCP and its members.” Compl. at 44.
Robinson, Governing Board Chair of Trillium, “further informed Brajer that he intended for Trillium to be the surviving entity in any merger with Eastpointe and that “any plan predicated on Trillium and Eastpointe being coequal is fundamentally flawed.”” Compl. at 61.
“On or about May 11, 2016, Denauvo Robinson (“Robinson”), Governing Board Chair of Trillium wrote Brajer, without copying Eastpointe, defaming Eastpointe’s reputation in such a way that undermined the potential merger of Eastpointe and Trillium.” Compl. at 59.
“Robinson, among other false statements, alleged the failure to consummate a merger between Eastpointe, CoastalCare, and East Carolina Behavioral Health LMEs was the result of Eastpointe’s steadfast desire to maintain control, and Eastpointe’s actions led those entities to break discussions with Eastpointe and instead merge to form Trillium.” Compl. at 60.
“Trillium, not Nash County, wrote Brajer on November 28, 2016 requesting approval to disengage from Eastpointe and to align with Trillium.” Compl. at 69.
Against DHHS:
Dave Richards, Deputy Secretary for Medical Assistance, maintains a “strong relationship with Wainwright” and “displayed unusual personal animus toward Kenneth Jones, Eastpointe’s former CEO.” Compl. at 47.
Brajer made numerous statements to Eastpointe staff regarding his animus toward Jones and Eastpointe. “Brajer continued to push for a merger between Eastpointe and Trillium.” Compl. at 53.
“On December 5, 2016, the same day that former Governor McCrory conceded the election to Governor Cooper, Brajer wrote a letter to Trillium indicating that he approved the disengagement and realignment of Nash County.” Compl. at 72.
“On March 17, 2016, however, Brajer released a memorandum containing a plan for consolidation of the LME/MCOs, in which NCDHHS proposed Eastpointe being merged with Trillium.” Compl. at 55.
Brajer’s actions were “deliberately premature, arbitrary, and capricious and not in compliance with statute and Rule, and with the intent to destabilize Eastpointe as an LME/MCO).” Compl. at 73.
“Brajer conspired with Nash County to cause Nash County to breach the Merger Agreement.” Compl. at 86.
Brajer “deliberately sought to block any merger between Eastpointe and other LME/MCOs except Trillium.” Compl. at 96.
“Brajer and NCDHHS’s ultra vires and unilateral approval of the Nash County disengagement request effective April 1, 2017 materially breached the contract between Eastpointe and NCDHHS. Equally brazen was Brajer’s calculated failure to give Eastpointe proper notice of the agency action taken or provide Eastpointe with any rights of appeal.” Compl. at 101.
Against Nash County
“To date, Nash County is Six Hundred Fifty Three Thousand Nine Hundred Fifty Nine Thousand and 16/100 ($653,959.16) in arrears on its Maintenance of Efforts to Eastpointe.” Compl. at 84.
“While serving on Eastpointe’s area board, Nash County Commissioner Lisa Barnes, in her capacity as a member of the Nash County Board of Commissioners, voted to adopt a resolution requesting permission for Nash County to disengage from Eastpointe and realign with Trillium. In so doing, Barnes violated her sworn oath to the determent of Eastpointe.” Compl. at 85.
What Eastpointe’s lawsuit could potentially mean to providers:
Eastpointe is asking the Judge in the federal court of our eastern district for a Temporary Restraining Order and Preliminary Injunction prohibiting Nash County from withdrawing from Eastpointe’s catchment area and joining Trillium’s catchment area. It is important to note that the behavioral health care providers in Eastpointe’s catchment area may not be the same behavioral health care providers in Trillium’s catchment area. There may be some overlap, but without question there are behavioral health care providers in Trillium’s catchment area that are not in Eastpointe’s catchment area and vice versa.
If Eastpointe is not successful in stopping Nash County from switching to Trillium’s catchment area, those providers who provide services in Nash County need to inquire – if you do not currently have a contract with Trillium, will Trillium accept you into its catchment area, because Trillium runs a closed network?!?! If Trillium refuses to include Nash County’s behavioral health care providers in its catchment area, those Nash County providers risk no longer being able to provide services to their consumers. If this is the case, these Nash County, non-Trillium providers may want to consider joining Eastpointe’s lawsuit as a third-party intervenor, as an interested, aggrieved person. Obviously, you would, legally, be on Eastpointe’s side, hoping to stay Nash County’s jump from Eastpointe to Trillium.
Even if Eastpointe is successful in stopping Nash County’s Benedict Arnold, then, as a provider in Eastpointe’s catchment area, you need to think ahead. How viable is Eastpointe? Eastpointe’s lawsuit is a powerful indication that Eastpointe itself is concerned about the future, although this lawsuit could be its saving grace. How fair (yet realistic) is it that whichever providers happen to have a contract with the biggest, most powerful MCO in the end get to continue to provide services and those providers with contracts with smaller, less viable MCOs are put out of business based on closed networks?
If Nash County is allowed to defect from Eastpointe and unite with Trillium, all providers need to stress. Allowing a county to abscond from its MCO on the whim of county leadership could create absolute havoc. Switching MCOs effects health care providers and Medicaid recipients. Each time a county decides to choose a new MCO the provider network is upended. Recipients are wrenched from the provider of their choice and forced to re-invent the psychological wheel to their detriment. Imagine Cherokee County being managed by Eastpointe…Brunswick County being managed by Vaya Health…or Randolph County being managed by Partners. Location-wise, it would be an administrative mess. Every election of a county leadership could determine the fate of a county’s Medicaid recipients.
Here is a map of the current 7 MCOs:
All behavioral health care providers should be keeping a close watch on the MCO consolidations and this lawsuit. There is nothing that requires the merged entity to maintain or retain the swallowed up entities provider network. Make your alliances because…
“Winter is coming.”
Darkness Surrounds MCO Mergers: Are Closed Meetings for MCOs Legal?
Recently, Eastpointe Human Services’ board voted unanimously to consolidate with Cardinal Innovations Healthcare, which would make the merged entity the managed care organization (MCO) overseeing 1/3 of NC’s Medicaid, behavioral health services – 32 counties, in all.
The Board’s decision is subject to the approval of the Secretary, but Eastpointe hopes to consolidate by July 1st.
Whether a consolidation between Eastpointe and Cardinal is good for Medicaid recipients and/or our community, I have no opinion.
But the reason that I have no opinion is because the negotiations, which all deal with public funds, have occurred behind closed doors.
Generally, it is our public policy that public bodies’ actions are to be conducted openly. This is why you can stroll on over to our courthouse and watch, virtually, any case be conducted. There are rare cases in which the court will “seal” or close the record, such as to protect privileged health information or the identity of children. Our public policy that strongly encourages open sessions for public entities exists for good reason. As tax payers, we expect full disclosure and transparency as to how our tax dollars are being used. In a way, all tax paying NC residents are shareholders of NC. Those who spend our tax dollars owe us a fiduciary duty to manage our tax dollars in a reasonable and responsible manner, and we should be able to attend all board meetings and review all meeting minutes. The MCOs are the agents of the single state entity, Department of Health and Human Services (DHHS), charged with managing behavioral health care for the Medicaid and state-funded population suffering with mental health/developmentally disabled /substance abuse (MR/DD/SA) issues. As an agent of the state, MCOs are public entities.
But, as I am researching the internet in search of Eastpointe and Cardinal board meeting minutes, I realize that the MCOs are initiating closed meetings and quoting N.C. Gen. Stat. § 143-318.11, ” Closed sessions” as the basis for being able to conduct closed sessions. And the number of closed sessions that I notice is not a small number.
The deliberations of a merger between two MCOs are highly important to the public. The public needs to know whether the board members are concerned about improving quality and quantity of care. Whether the deliberations surround a more inclusive provider network and providing more services to those in need. Whether the deliberations consider using public funds to create playgrounds or to fund more services for the developmentally disabled. Or are the board members more concerned with which executives will remain employed and what salaried are to be compensated?
You’ve heard of the saying, “Give him an inch and he’ll take a mile?” This is what is going through my mind as I review the statute allowing public bodies to hold closed sessions. Is the statute too open-ended? Is the closed session statute a legal mishandling that unintentionally, and against public policy, allows public meetings to act privately? Or are the MCOs misusing the closed session statute?
So I ask myself the following:
1. Is N.C. Gen. Stat. § 143-318.11 applicable to MCOs, or, in other words, can the MCOs conduct closed sessions? and, if the answer to #1 is yes, then
2. Are the MCOs overusing or misusing its ability to hold closed sessions? If the answer to #3 is yes, then
3. What can be done?
These are the three questions I will address in this blog.
Number one:
Is N.C. Gen. Stat. § 143-318.11 applicable to MCOs, or, in other words, can the MCOs conduct closed sessions?
According to the statute, “”public body” means any elected or appointed authority, board, commission, committee, council, or other body of the State, or of one or more counties, cities, school administrative units, constituent institutions of The University of North Carolina, or other political subdivisions or public corporations in the State that (i) is composed of two or more members and (ii) exercises or is authorized to exercise a legislative, policy-making, quasi-judicial, administrative, or advisory function.”
The MCOs are bodies or agents of the state that are composed of more than 2 members and exercises or is authorized to exercise administrative or advisory functions to the extent allowed by the Waivers.
I determine that, in my opinion, N.C. Gen. Stat. § 143-318.11 is applicable to the MCOs, so I move on to my next question…
Number two:
Are the MCOs overusing or misusing its ability to hold closed sessions?
As public policy dictates that public bodies act openly, there are enumerated, statutory reasons that a public body may hold a closed session.
A public body may hold a closed session only when a closed session is required:
- “To prevent the disclosure of information that is privileged or confidential pursuant to the law of this State or of the United States, or not considered a public record within the meaning of Chapter 132 of the General Statutes.
- To prevent the premature disclosure of an honorary degree, scholarship, prize, or similar award.
- To consult with an attorney employed or retained by the public body in order to preserve the attorney-client privilege between the attorney and the public body, which privilege is hereby acknowledged. General policy matters may not be discussed in a closed session and nothing herein shall be construed to permit a public body to close a meeting that otherwise would be open merely because an attorney employed or retained by the public body is a participant. The public body may consider and give instructions to an attorney concerning the handling or settlement of a claim, judicial action, mediation, arbitration, or administrative procedure. If the public body has approved or considered a settlement, other than a malpractice settlement by or on behalf of a hospital, in closed session, the terms of that settlement shall be reported to the public body and entered into its minutes as soon as possible within a reasonable time after the settlement is concluded.
- To discuss matters relating to the location or expansion of industries or other businesses in the area served by the public body, including agreement on a tentative list of economic development incentives that may be offered by the public body in negotiations, or to discuss matters relating to military installation closure or realignment. Any action approving the signing of an economic development contract or commitment, or the action authorizing the payment of economic development expenditures, shall be taken in an open session.
- To establish, or to instruct the public body’s staff or negotiating agents concerning the position to be taken by or on behalf of the public body in negotiating (i) the price and other material terms of a contract or proposed contract for the acquisition of real property by purchase, option, exchange, or lease; or (ii) the amount of compensation and other material terms of an employment contract or proposed employment contract.
- To consider the qualifications, competence, performance, character, fitness, conditions of appointment, or conditions of initial employment of an individual public officer or employee or prospective public officer or employee; or to hear or investigate a complaint, charge, or grievance by or against an individual public officer or employee. General personnel policy issues may not be considered in a closed session. A public body may not consider the qualifications, competence, performance, character, fitness, appointment, or removal of a member of the public body or another body and may not consider or fill a vacancy among its own membership except in an open meeting. Final action making an appointment or discharge or removal by a public body having final authority for the appointment or discharge or removal shall be taken in an open meeting.
- To plan, conduct, or hear reports concerning investigations of alleged criminal misconduct.
- To formulate plans by a local board of education relating to emergency response to incidents of school violence or to formulate and adopt the school safety components of school improvement plans by a local board of education or a school improvement team.
- To discuss and take action regarding plans to protect public safety as it relates to existing or potential terrorist activity and to receive briefings by staff members, legal counsel, or law enforcement or emergency service officials concerning actions taken or to be taken to respond to such activity.”
Option 1 clearly applies, in part, to privileged health information (PHI) and such. So I would not expect that little Jimmy’s Medicaid ID would be part of the board meeting issues, and, thus, not included in the minutes, unless his Medicaid ID was discussed in a closed session.
I cannot fathom that Option 2 would ever be applicable, but who knows? Maybe Alliance will start giving out prizes…
I would assume that Option 3 is used most frequently. But notice:
“General policy matters may not be discussed in a closed session and nothing herein shall be construed to permit a public body to close a meeting that otherwise would be open merely because an attorney employed or retained by the public body is a participant.”
Which means that: (1) the closed session may only be used to talk about specific legal strategies and not general policies. For example, arguably, an MCO could hold a closed session to consult with its attorney whether to appeal a specific case, but not to discuss whether, generally, the MCO intends to appeal all unsuccessful cases.
and
(2) the MCO cannot call for a closed session “on the fly” and only because its attorney happens to be participating in the board meeting.
As I am rifling through random board meeting minutes, I notice the MCO’s attorney is always present. Now, I say “always,” but did not review all MCO meeting minutes. There may very well be board meetings at which the attorneys don’t attend. However, the attorney is present for the minutes that I reviewed.
Which begs the question…Are the MCOs properly using the closed sessions?
Then I look at Options 4, and 5, and 6, and 7, and 8, and 9…and I realize, Geez, according to one’s interpretation, the statute may or may not allow almost everything behind closed doors. (Well, maybe not 9). But, seriously, depending on the way in which each Option is interpreted, there is an argument that almost anything can be a closed session.
Want to hold a closed session to discuss why the CEO should receive a salary of $400,000? N.C. Gen. Stat. § 143-318.11(5)(ii).
Want hold a closed session to discuss the anonymous tip claim that provider X is committing Medicaid fraud? N.C. Gen. Stat. § 143-318.11(7).
Want to hold a closed session to discuss how an MCO can position itself to take over the world? N.C. Gen. Stat. § 143-318.11(4).
In an atmosphere in which there is little to no supervision of the actions of the MCOs, who is monitoring whether the MCOs are overusing or misusing closed sessions?
Number three:
What can you do if you think that an MCO is holding closed sessions over and above what is allowed by N.C. Gen. Stat. § 143-318.11?
According to N.C. Gen. Stat. § 143-318.16A, “[a]ny person may institute a suit in the superior court requesting the entry of a judgment declaring that any action of a public body was taken, considered, discussed, or deliberated in violation of this Article. Upon such a finding, the court may declare any such action null and void. Any person may seek such a declaratory judgment, and the plaintiff need not allege or prove special damage different from that suffered by the public at large.”
Plus, according to N.C. Gen. Stat. § 143-318.16A, “[w]hen an action is brought pursuant to G.S. 143-318.16 or G.S. 143-318.16A, the court may make written findings specifying the prevailing party or parties, and may award the prevailing party or parties a reasonable attorney’s fee, to be taxed against the losing party or parties as part of the costs. The court may order that all or any portion of any fee as assessed be paid personally by any individual member or members of the public body found by the court to have knowingly or intentionally committed the violation; provided, that no order against any individual member shall issue in any case where the public body or that individual member seeks the advice of an attorney, and such advice is followed.”
In sum, if you believe that an MCO is conducting a closed session for a reason not enumerated above, then you can institute a lawsuit and request attorneys’ fees if you are successful in showing that the MCO knowingly or intentionally committed the violation.
We should also appeal to the General Assembly to revise, statutorily, more narrowly drafted closed session exceptions.
Managed Care – Eight Reasons Why MCOs Smell Like Pre-Minced Garlic
When it comes to the managed care organizations (MCOs) in NC, something smells rancid, like pre-minced garlic. When I first met my husband, Scott, I cooked with pre-minced garlic that comes in a jar. I figured it was easier than buying fresh garlic and dicing it myself. Scott bought fresh garlic and diced it. Then he asked me to smell the fresh garlic versus the pre-minced garlic. There was no contest. Next to the fresh garlic, the pre-minced garlic smelled rancid. That is the same odor I smell when I read information about the MCOs – pre-minced garlic in a jar.
In NC, MCOs are charged with managing Medicaid funds for behavioral health care, developmentally disabled, and substance abuse services. When the MCOs were initially created, we had 13. These are geographically situated, so providers and recipients have no choice with which MCO to interact. If you live in Sandhills’ catchment area, then you must go through Sandhills. If you provide services in Cardinal’s catchment area, then you must contract with Cardinal – even though you already have a provider participation agreement with the State of NC to provide Medicaid services in the State of NC.
Over the years, there has been consolidation, and now we have 7 MCOs.
From left to right: Smoky Mountain (Duke blue); Partners Behavioral Health (Wake Forest gold); Cardinal Innovations Healthcare (ECU purple); Sandhills (UNCC green); Alliance Behavioral Healthcare (mint green); Eastpointe (Gap Khaki); and Trillium (highlighter yellow/green).
Recently, Cardinal (ECU purple) and Eastpointe (Gap khaki) announced they will consolidate, pending authorization from the Secretary of DHHS. The 20-county Cardinal will morph into a 32-county, MCO giant.
Here is the source of the rancid, pre-minced, garlic smell (in my opinion):
One – MCOs are not private entities. MCOs are prepaid with our tax dollars. Therefore, unlike Blue Cross Blue Shield, the MCOs must answer to NC taxpayers. The MCOs owe a duty of financial responsibility to taxpayers, just like the state government, cities, and towns.
Two – Cardinal CEO, Richard Topping, is paid $635,000, plus he has a 0 to 30 percent bonus potential which could be roughly another $250,000, plus he has some sort of annuity or long-term package of $412,000 (with our tax dollars).
Three – Cardinal is selling or has sold the 26 properties it owns or owned (with our tax dollars) to lease office space in the NASCAR Plaza office tower in uptown Charlotte for $300 to $400 per square foot plus employee parking (with our tax dollars).
Four – Cardinal charges 8% of public funds for its administrative costs. (Does that include Topping’s salary and bonuses?) How many employees are salaried by Cardinal? (with our tax dollars).
Five – The MCOs are prepaid. Once the MCOs receive the funds, the funds are public funds and subject to fiscal scrutiny. However, the MCOs keep whatever funds that it has at the end of the fiscal year. In other words, the MCOs pocket any money that was NOT used to reimburse a provider for a service rendered to a Medicaid recipient. Cardinal – alone – handles around $2.8 billion in Medicaid funding per year for behavioral health services. The financial incentive for MCOs? Terminate providers and reduce/deny services.
Six – MCOs are terminating providers and limiting access to care. In my law practice, I am constantly defending behavioral health care providers that are terminated from an MCO catchment area without cause or with erroneous cause. For example, an agency was terminated from their MCO because the agency had switched administrative offices without telling the MCO. The agency continued to provide quality services to those in need. But, because of a technicality, not informing the MCO that the agency moved administrative offices, the MCO terminated the contract. Which,in turn, puts more money in the MCO’s pocket; one less provider to pay. Is a change of address really a material breach of a contract? Regardless – it is an excuse.
Seven – Medicaid recipients are not receiving medically necessary services. Either the catchment areas do not have enough providers, the MCOs are denying and reducing medically necessary services, or both. Cardinal cut 11 of its state-funded services. Parents of disabled, adult children write to me, complaining that their services from their MCO have been slashed for no reason….But the MCOs are saving NC money!
Eight – The MCOs ended 2015 with a collective $842 million in the bank. Wonder how much money the MCOs have now…(with our tax dollars).
Rancid, I say. Rancid!
Pac-Man Is Gobbling Up the Health Care World: Know Who To Call!
As many of you know, the health care provider world in North Carolina, and throughout the USA, is changing rapidly. Smaller providers are getting absorbed by bigger providers at an increasingly rapid pace. Some of those small providers cannot survive alone without the financial backing of a larger provider.
It reminds me of the Atari game of my childhood, “Pac-Man.” I am sure that all my readers remember playing Pac-Man as a youth or their children playing Pac-Man. If not, you are surely too young to understand this blog.
Pac-Man (or Ms. Pac-Man, in 1982, two years after Pac-Man was released) would gobble, gobble, gobble, gobble up pellets and try to avoid the super scary ghosts, which tried to eat Ms./Mr. Pac-Man. Once Pac-Man consumed all the pellets, you advanced to the next level.
While this analogy is wildly simplistic as an analogy for the current situation in health care in North Carolina and throughout the USA, I find the analogy fitting. Think of the super scary ghosts (Inky, Blinky, Pinky, and Clyde) as…well…certain providers that you should avoid absorbing…or, hence, get eaten alive.
The point of the health care market today is to eat as many pellets as possible without being eaten by Inky, Pinky, Blinky, or Clyde.
I have blogged about this “Brave New World” of health care providers merging, selling, and consolidating previously (you have to love Aldous Huxley). See blog. And blog.
However, I have never provided you with an actual contact with whom you may correspond to explore merger, acquisition, and partnership ventures.
But guess what…for those of you who have continued to read, despite my simplistic analogy, here comes the contact information.
First, the required law disclosure: This is a personal endorsement. There is no guarantee of outcome. My recommendation is not being made on behalf of my law firm, Gordon & Rees, although Mr. Rodgers’ company, see below, is a client of the firm.
So when you are contemplating who to call, my recommendation is Gene Rodgers! ‘Cause he ain’t afraid of no ghosts!!
Meet Gene Rodgers. His company, Community Based Care, is interested in acquiring health care providers in North Carolina, as well as the rest of country. See below:
Gene Rodgers, Community Based Care
grodgers@cbcarellc.com
