When action happens in the Medicare/caid world, it happens quickly. Sometimes you do not receive adequate notice to coordinate continuity of care for your consumers or patients. For example, on August 3, 2018, the Center for Medicare and Medicaid Services announced that at midnight on August 18, 2018, it would be terminating the contract between CMS and ESEC, LLC, an Oklahoma-based surgery center.
CMS provided ESEC 15 days notice of complete termination of Medicare and Medicaid reimbursements. Now I do not know the details of ESEC’s financial reliance on Medicare or Medicaid, but, these days, few providers are solely third-party pay or cash-only. I can only assume that ESEC is scrambling to initiate a lawsuit to remain afloat and open for business. Or ESEC is praying for a “rescind” by correcting whatever issues it purportedly had. Personally, I would not count on a possible rescind. I would be proactively seeking legal intervention.
Here are some examples of recent terminations and the notice received by the providers:
- Baylor St. Luke’s Medical Center’s heart transplant program lost federal funding August 17, 2018. The hospital will no longer be able to bill Medicare and Medicaid for heart transplants.
- Effective August 9, 2018, Brookwood Baptist Medical Center’s Medicare contract was terminated. The notice was published July 25, 2018.
- As of August 12, 2018, The Grandview Nursing & Rehabilitation Facility’s Medicare contract was terminated. Notice of the termination was published August 1, 2018.
- As of September 1, 2018, Compassus-Kansas City, a hospice company, will lose its Medicare contract. Notice was provided August 17, 2018.
- On August 3, 2018, CMS announced that it was terminating Deligent Health Services Inc.’s Medicare and Medicaid contact, effective December 5, 2017. (That is quite a retroactive timeframe).
Can Careless Judy put a healthcare provider out of business?
This happens all the time. Sure, ESEC probably had knowledge that CMS was investigating it. However, CMS has the authority to issue these public notices of termination without holding a hearing to determine whether CMS’ actions are accurate. What if Careless Judy in Program Integrity made a human error and ESEC actually does meet the standards of care. But you see, Careless Judy accidentally used the minimum standards of care from 2008 instead of 2018. It’s an honest mistake. She had no malice against ESEC. But, my point is – where is the mechanism that prevents a surgical ambulatory center from going out of business – just because Careless Judy made a mistake?
To look into whether any legal mechanism exists to prevent Careless Judy from putting the ambulatory center out of business, I turn to the legal rules.
42 CFR 488.456 governs terminations of provider agreements. Subsection (a) state that termination “ends – (1) Payment to the facility; and (2) Any alternative remedy.”
Subsection (b) states that CMS or the State may terminate the contract with the provider if the provider “Is not in substantial compliance with the requirements of participation, regardless whether immediate jeopardy is present.” On the bright side, if no immediate jeopardy exists then CMS or the State must give 15 days notice. If there is found to be immediate jeopardy, the provider get 2 days. But who determines what is “substantial compliance?” Careless Judy?
42 CFR 489.53 lists the reasons on which CMS may rely to terminate a provider. Although, please note, that the regulations use the word “may” and not “must.” So we have some additional guidance as to when a provider’s contract may be terminated, but it still seems subjective. Here are the reasons:
- The provider is not complying with the provisions of title XVIII and the applicable regulations of this chapter or with the provisions of the agreement.
- The provider or supplier places restrictions on the persons it will accept for treatment and it fails either to exempt Medicare beneficiaries from those restrictions or to apply them to Medicare beneficiaries the same as to all other persons seeking care.
- It no longer meets the appropriate conditions of participation or requirements (for SNFs and NFs) set forth elsewhere in this chapter. In the case of an RNHCI no longer meets the conditions for coverage, conditions of participation and requirements set forth elsewhere in this chapter.
- It fails to furnish information that CMS finds necessary for a determination as to whether payments are or were due under Medicare and the amounts due.
- It refuses to permit examination of its fiscal or other records by, or on behalf of CMS, as necessary for verification of information furnished as a basis for payment under Medicare.
- It failed to furnish information on business transactions as required in § 420.205 of this chapter.
- It failed at the time the agreement was entered into or renewed to disclose information on convicted individuals as required in § 420.204 of this chapter.
- It failed to furnish ownership information as required in § 420.206 of this chapter.
- It failed to comply with civil rights requirements set forth in 45 CFR parts 80, 84, and 90.
- In the case of a hospital or a critical access hospital as defined in section 1861(mm)(1) of the Act that has reason to believe it may have received an individual transferred by another hospital in violation of § 489.24(d), the hospital failed to report the incident to CMS or the State survey agency.
- In the case of a hospital requested to furnish inpatient services to CHAMPUS or CHAMPVA beneficiaries or to veterans, it failed to comply with § 489.25 or § 489.26, respectively.
- It failed to furnish the notice of discharge rights as required by § 489.27.
- The provider or supplier refuses to permit copying of any records or other information by, or on behalf of, CMS, as necessary to determine or verify compliance with participation requirements.
- The hospital knowingly and willfully fails to accept, on a repeated basis, an amount that approximates the Medicare rate established under the inpatient hospital prospective payment system, minus any enrollee deductibles or copayments, as payment in full from a fee-for-service FEHB plan for inpatient hospital services provided to a retired Federal enrollee of a fee-for-service FEHB plan, age 65 or older, who does not have Medicare Part A benefits.
- It had its enrollment in the Medicare program revoked in accordance to § 424.535 of this chapter.
- It has failed to pay a revisit user fee when and if assessed.
- In the case of an HHA, it failed to correct any deficiencies within the required time frame.
- The provider or supplier fails to grant immediate access upon a reasonable request to a state survey agency or other authorized entity for the purpose of determining, in accordance with § 488.3, whether the provider or supplier meets the applicable requirements, conditions of participation, conditions for coverage, or conditions for certification.
As you can see from the above list of possible termination reasons, many of which are subjective, it could be easy for Careless Judy to terminate a Medicare contract erroneously, based on inaccurate facts, or without proper investigation.
The same is true for Medicaid; your contract can be terminated on the federal or state level. The difference is that at the state level, Careless Judy is a state employee, not a federal.
42 CFR 498.5 governs appeal rights for providers contract terminations. Subsection (b) states that “Any provider dissatisfied with an initial determination to terminate its provider agreement is entitled to a hearing before an ALJ.”
42 CFR 498.20 states that an initial determination by CMS (like a contract termination) is binding unless it is reconsidered per 42 CFR 498.24.
A Stay of the termination should suspend the termination until the provider can obtain a hearing by an impartial tribunal until the appeal has been completed. The appeal process and supposed automatic Stay of the termination is the only protection for the provider from Careless Judy. Or filing an expensive injunction.
“No person shall be held to answer for a capital or otherwise infamous crime unless on presentment or indictment of a grand jury, except in cases arising in the land or naval forces, or in the militia, when in actual service in time of war or public danger; nor shall any person be subject for the same offense to be twice put in jeopardy of life or limb; nor shall be compelled in any criminal case to be a witness against himself, nor be deprived of life, liberty, or property without due process of law; nor shall private property be taken for public use without just compensation.” U.S. Constitution, 5th Amendment (emphasis added).
The first ten amendments to the U.S. Constitution, or, the Bill of Rights, were written by James Madison (for whom my daughter Madison was named).
Our managed care organizations (MCOs) and the government take the irritating position that providers have no right to be a Medicaid provider. And, often they quote the NC Administrative Code, which states that “All provider contracts with the North Carolina State Medicaid Agency are terminable at will. Nothing in these Regulations creates in the provider a property right or liberty right in continued participation in the Medicaid program.” 10A NCAC 22F .0605. However, as every attorney knows, when there is a rule, there is an exception. And when there is a rule, case law overrides it.
Despite 10A NCAC 22F .0605, a intelligent judge found that “Alliance contends that [the provider] has no right to be a Medicaid provider and therefore this Court cannot find that [the provider]’s rights have been substantially violated by its decision. Alliance also argues that [the provider]’s rights are solely contractual in nature and once the contract expired, the [provider] had no rights.
This contested case is not merely a contract case as Alliance contends. This contested case is about Alliance’s almost total disregard for Federal and State laws and regulations and its own policies. Based on the evidence, the process for the RFP seems almost like it began on a whim—ostensibly to fix problems that had no basis in fact. The result was a flawed RFP in which providers which might otherwise be comparable were treated differently, based in significant part on a subjective review.” Carolina Comm. Support Serv., Inc. v. Alliance Behavioral Healthcare, 14 DHR 1500, April 2, 2015.
So how can you have a property right in a Medicaid contract when the NCAC states that the contracts are terminable at will?
“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, 470 U.S. 532 (1985). 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 v. N.C. Dept. of Human Res., 710 F.2d 1015, 1018 (4th Cir. 1983). Under North Carolina case law, 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 safeguards, which included a hearing and standards for review, indicated that the provider’s participation was not “terminable at will.” Id. The court held that these safeguards created an entitlement for the provider, because it limits the grounds for his 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, 792 F.2d 444 (4th Cir. 1986) two years later. Since the Court’s decision in Bowen, a 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. 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. Under Chapter 108C, providers have a statutory expectation that a decision to terminate participation will not violate the standards of Article 3 of the APA. The enactment of Chapter 108C gives a providers a right to not be terminated in a manner that (1) violates the law; (2) is in excess of the Department’s authority; (3) is erroneous; (4) is made without using proper procedures; or (5) is arbitrary and capricious. To conclude otherwise would nullify the General Assembly’s will by disregarding the rights conferred on providers by Chapter 108C. This expectation cannot be diminished by a regulation promulgated by the DMA which states that provider’s do not have a right to continued participation in the Medicaid program because under the analysis in Bowen the General Assembly created the property right through statutory enactment.” Carolina Comm. Support Serv, Inc., at 22.
Again – how can you have a property right in a Medicaid contract when the NCAC states that the contracts are terminable at will? The answer is – You have a property right in your Medicaid contract. The state or MCOs cannot arbitrarily terminate your contract – regardless what they say. Know your rights!!
Judge Orders State’s Termination of Provider’s Medicaid Contract To Be REVERSED, Despite the Unilateral Termination!!
THE CASES LISTED BELOW ARE ILLUSTRATIVE OF THE MATTERS HANDLED BY THE FIRM. CASE RESULTS DEPEND UPON A VARIETY OF FACTORS UNIQUE TO EACH CASE. NOT ALL CASE RESULTS ARE PROVIDED. CASE RESULTS DO NOT GUARANTEE OR PREDICT A SIMILAR RESULT IN ANY FUTURE CASE UNDERTAKEN BY THE LAWYER.
[The names and services involved have been changed to protect the innocent. Lawyers have so many rules to follow…probably due to litigation].
Imagine that the State of North Carolina knocks on your office door and informs you that you are no longer allowed to accept Medicaid and/or Medicare reimbursement rates. That for whatever reason, you are no longer allowed to bill for Medicaid and/or Medicare services. You would expect a reason, right? You would expect the reason to be correct, right?
But what if the reason is invalid?
A North Carolina administrative judge recently held that the State’s reason for terminating a Medicaid provider’s contract must be accurate, and REVERSED the State’s decision to terminate its Medicaid contract with my client. Here’s the story:
The State terminated my client’s contract to provide chiropractic services.
In this case it was a bit of a duress contract (as are most Medicaid contracts) – a “take or leave it” offer to the local service provider. If you are a provider and want to continue to serve Medicaid recipients, you have no choice but to sign whatever contract the State gives you. You cannot negotiate. You’d be told to sign the contract “as is,” or you do not provide services. I know of a provider who, before he signed a contract with the State, crossed out a number of clauses. The State just sent him a clean, un-altered contract, same as the original, and told him sign it, no changes allowed.
Going back to my case…
My client is a provider that provides chiropractic services. In this case, the State inaccurately claimed that my client provided services without a proper license.
Upon the State’s termination of my client’s contract for chiropractic services, we filed a petition to the Office of Administrative Hearings in 2013 and asked the administrative law judge for a temporary restraining order, a motion to stay the termination, and a Preliminary Injunction to enjoin the State from terminating my client’s Medicaid provider contract.
The administrative law judge (ALJ) issued the temporary restraining order in May 2013. According to judge, we demonstrated a likelihood of success on the merits and that any failure to award the injunction would cause irreparable harm.
Obtaining an injunction, however, was not a complete victory. We had won an opening battle, but not the war.
A temporary injunction is exactly that…temporary. We had two additional hurdles to overcome: (1) a hearing at which we would have to prove to the judge that we were likely to succeed and the irreparable harm would be so irreparable that the judge should award us a longer injunction, at least until we could have a full hearing on the merits; and (2) a final hearing on the merits.
We received the Final Decision from the ALJ last week. The judge found that my client performed its contractual and legal obligations and that the State acted erroneously in determining that my client had breached its contract. The judge found the weight of the evidence sufficient to prove that my client provided services with a proper license.
If you think a 2 year injunction is pretty long, from May 2013 to now, you are right.
But think about this…from May 2013, through today and into the foreseeable future, as long as the contract is in effect, my client has been and will be able to provide medically necessary chiropractic services to those in need and receive reimbursements for those medically necessary services. This case shows why it is important for providers to assert their rights when those are violated.
And it shows also that the State is not allowed to arbitrarily violate those provider rights.
How the ACA Has Redefined the Threshold for “Credible Allegation of Fraud” and Does It Violate Due Process?
I believe that everyone would agree with me that The Affordable Care Act (ACA) has done more to impact health care legally…probably since 1966 when Medicare was established. Whether you think the impact is beneficial or negative, it does not matter. The impact exists nonetheless.
One of the changes the ACA has yielded is the threshold for suspending Medicare and Medicaid payments to providers based on credible allegations of fraud is lower.
While CMS regulations authorized the suspension of Medicare and Medicaid payments prior to the enactment of the ACA, § 6402(h) lowers the standard the government must meet in order to suspend payments based upon suspected fraud.
The lower standard for a state to suspend Medicaid and Medicare payments nip…nay, I say…bite at the fabric of due process.
First, what is a “credible allegation of fraud?”
Credible allegation of fraud means an allegation from any source, such as data mining, whistleblowers, and/or fraud hotline complaints. Quite literally, you could be accused of having credible allegations of fraud because an ex, disgruntled employee calls the fraud hotline.
The definition of “credible” is equally as scary. If there is “indicia of reliability,” it is credible. I have no idea what “indicia” means, but it does not sound like much. So if there is indicia of reliability when your ex, disgruntled employee calls the fraud hotline, there may be credible allegations of fraud against you.
When you have credible allegations of fraud against you, your Medicaid/Medicare payments are suspended. Without an opportunity to rebut the allegations. Without you even knowing from where the allegation came.
I make the analogy (albeit, admittedly, a poor one) of my law license. Or an M.D.’s license. Or a teacher’s license. We do not have a right to a law license. But, I argue, once you go through the process and pass the necessary tests and are awarded a law license (or M.D. license or teacher’s license), you have a protected property right in continuing in the profession.
There is a good cause exception and you should try to assert the exceptions, but this blog concentrates on the suspension and the due process (or lack thereof) involved.
CMS states that providers have “ample opportunity to submit information to us in the established rebuttal statement process to demonstrate their case for why a suspension is unjust.”
However, think of this…in Medicare, notice to the provider is not required prior to the suspension. So, I ask you, how can you plead the suspension is unjust when you have no notice? Obviously, only after the suspension has been put into place. Due process violation?
In Medicaid, the agency must notify the provider of the suspension within 5 days of taking the action. Although it can be extended to 90-days upon request of a law enforcement agency.
Even though the Medicare suspension statutes do not require notice, the Medicare statutes are a bit more provider-friendly when it comes to the length of time during which you may be suspended. For Medicare providers, the suspension can last a period of 180 days. However, the 180 days can be extended.
Conversely, for Medicaid providers, there is no scheduled period of suspension.
In my cursory review of case law, I found one case in which the Medicaid provider had suffered suspension of Medicaid reimbursements for over 4 years. Obviously, the company had closed and staff had been terminated. You cannot maintain a business without revenue.
So, is the suspension of Medicare and Medicaid payments upon a credible allegation of fraud a violation of due process?
Do not even get me started on the importance of due process. In fact, I have blogged about the importance of due process before in this blog. “NC Medicaid and Constitutional Due Process.”
Due process is generally described as notice and an opportunity to be heard. But due process does not apply to everything. For example, you do not have due process rights to your drivers’ license. Certain infractions will cause you to lose your drivers’ license without due process. That is because driving is a privilege, not a right. You do not have a right to drive. Instead due process attaches when a liberty or a property right is deprived.
The right to vote (for some…not felons)
Freedom of religion
Freedom of speech
Obviously, in certain circumstances, those rights can be restricted (shouting fire in a crowded movie theatre, for example). But, generally, you have due process to the deprivation of any of your rights.
For purposes of this blog, we are concentrating on whether due process attaches to the deprivation of Medicare and Medicaid reimbursements. If someone takes away your Medicaid and/or Medicare reimbursements, are you entitled to due process…or notice and an opportunity to be heard?
Some courts have held that “health care providers have a constitutionally protected property interest in continued participation in the Medicare and Medicaid programs.”
Obviously, in the jurisdictions in which this view is followed, without question, you have a right to due process upon suspension of Medicaid and/or Medicare reimbursements.
However, the view that Medicaid and Medicare participation is a constitutionally protected right is not the majority view. Or, I should say, this particular issue has not arisen in all jurisdictions. Some jurisdictions have not even considered whether the participation in Medicaid and Medicare is a protected property interest.
To be completely clear, there is no protected property interest in procuring a Medicaid or Medicare contract. Only once you receive the contract does your interest in the contract become protected (in those certain jurisdictions).
North Carolina, for example, has not contemplated this issue (at least, not since after 10 NCAC 22F.0605 was enacted).
Interestingly enough, 10A N.C. A. C. 22F.0605 states “[a]ll provider contracts with the North Carolina State Medicaid Agency are terminable at will. Nothing in these Regulations creates in the provider a property right or liberty right in continued participation in the Medicaid program.”
So, one would think that, in NC, there is no protected property interest in continued participation in the Medicaid program.
However, in the Office of Administrative Hearings (OAH), this very issue was contemplated in a few contested case hearings and the Administrative Law Judges (ALJ) have decided that there is a protected property interest in the continued participation of the Medicaid program, despite 10A N.C. A. C. 22F.0605. The decisions are based on federal and state law.
“North Carolina statutes and rules provide procedural due process. Federal Medicaid regulations are replete with provisions that require that notice be given to the provider of the suspension or termination of Medicaid payment for services.”
“The Supreme Court has ruled that property rights can be created by administrative regulations and that the “sufficiency of the claim of entitlement must be decided by reference to state law.”‘ (Internal cite omitted). Bowens v. N.C. Dept. of Human Res., 710 F.2d 1015, 1017 (4th Cir. 1983). Our state statutes and rules have the procedural and substantive safeguards, indicating that the provider’s participation is not terminable at will.” (This opinion was written after 10A N.C. A. C. 22F.0605 was enacted).
While these OAH decisions have not undergone judicial review, at least, in OAH, providers may have a protected property interest in the continuation of participation in the Medicaid program. And analogous argument would exist for Medicare providers.
Who knows? Maybe NC will follow the view that providers have a protected property interest in continuing participation in Medicaid…
Just imagine if the government could snatch away law licenses…or M.D.’s licenses…or teachers’ licenses…without any due process. We would live in fear of losing our livelihoods.
East Carolina Behavioral Health (ECBH), one of North Carolina’s 10 MCOs had to defend itself at a local Mental Health Town Hall Meeting in Greenville, NC.
Amy Brown, who works at Arc of North Carolina, which is a company-advocate for people suffering from mental illness and/or developmental disabilities, finally asked what so many providers and recipients have been asking for months:
WHY ARE SERVICES GETTING DENIED????
For the news video, click here.
“It appears that there is a growing trend of families being denied services,” Brown, who works at the Arc of North Carolina, told the panel.
Brown, like other families who have shared their story with 9 On Your Side, is frustrated with East Carolina Behavioral Health – the organization that manages local providers.
She says the processes ECBH requires to approve services for the mentally ill is long, tedious and ineffective.
“For those families that are willing to fight it out and go through the appeals process, it’s very frustrating, it’s very long,” Brown says.
ECBH, or any MCO, that denies medically necessary services, are denying Medicaid services for the most needy.
But, believe me, this is NOT isolated to ECBH. ECBH serves Beaufort, Bertie, Camden, Chowan, Craven, Currituck, Dare, Gates, Hertford, Hyde, Jones, Martin, Northampton, Pamlico, Pasquotank, Perquimans, Pitt, Tyrrell & Washington counties. But medically necessary services are being denied outside the above-mentioned counties.
Not only are medically necessary services being denied, but quality, competent health care providers are being DENIED Medicaid contracts or the Medicaid contracts are being rescinded.
People, listen, if a health care provider resides in Beaufort county, NC, that health care provider, in order to provide mental health services to the Medicaid population must contract with ECBH in order to provide services. There is no other option. The provider cannot, for example, just contract with a different MCO, to provide mental health services within Beaufort county. ECBH is the only option in Beaufort county for a Medicaid contract in behavioral health. So, if ECBH, arbitrarily decides that it does not want to contract with Provider X, for whatever reason, Provider X cannot provide mental health services to Medicaid recipients within Beaufort county and be reimbursed for services rendered. Period.
And this is happening. Providers, who have been providing mental health services to Medicaid recipients for, sometimes, years and years, and who have, some, hundreds of Medicaid recipients, are being denied a Medicaid contract with ECBH, and other MCOs, are not receiving the reimbursement for services rendered for themselves and their staff, and are being forced to close their doors or no longer accept Medicaid patients.
The MCOs, including ECBH, seem to be pushing mental health care providers away from Medicaid, resulting in Medicaid recipients not receiving desperately-needed mental health services.
And here I thought mental health is such an important topic…
It’s easy to proclaim that you care about providers and recipients and you want Medicaid recipients to receive quality health care, but it’s a whole other thing to actually determine if the WAY the system is IMPLEMENTED is broken. Maybe it’s not the Medicaid system that is broken; maybe it is the implementation of the system.
George Bernard Shaw said, “People who say it cannot be done should not interrupt those who are doing it.”