Blog Archives

Hospital May Lose Its Medicare Contract, Threatens CMS

Hospital is shocked to learn that its Medicare contract with Health and Human Services may be terminated by April 16, 2017. Medicaid services may also be adversely affected. The hospital was notified of the possible Medicare contract termination on March 27, 2017, and is faced with conceivably losing its Medicare contract within a month of notification. Legal action cannot act fast enough – unless the hospital requests an emergency temporary restraining order, motion to stay, and preliminary injunction and files it immediately upon learning that its Medicare contract is terminated.

The Center for Medicare and Medicaid Services (CMS) threatened Greenville Memorial Hospital, part of Greenville Health System, in South Carolina, that Medicare reimbursements will cease starting April 16, 2017. According to CMS, Memorial’s emergency department is not compliant with Medicare regulations.

A public notice in the Greenville News says: “Notice is hereby given that effective April 15, 2017, the agreement between GHS Greenville Memorial Hospital, 701 Grove Road, Greenville, S.C. 29605 and the Secretary of Health and Human Service, as a provider of Hospital Services and Health Insurance for the Aged and Disabled Program (Medicare) is to be terminated. GHS Greenville Memorial Hospital does not meet the following conditions of participation. 42 CFR 482.12 Governing Body, 42 CFR 482.13 Patients’ Rights and 42 CFR 482.23 Nursing Services.”

“The Centers for Medicare and Medicaid Services has determined that GHS Greenville Memorial Hospital is not in compliance with the conditions of coverage. The Medicare program will not make payment for hospital services to patients who are admitted after April 16, 2017.”

The findings came after an onsite audit was conducted on March 13, 2017. Memorial was notified of the report on March 27, 2017.

Memorial must have submitted a corrective action plan by April 3, 2017, but it has not been released.

The emergency department at Memorial treats about 300 patients per day. An employee of Memorial estimates that the termination would lose net revenue from Medicare and Medicaid could potentially reach around $495 million. Greenville Memorial received $305 million in Medicare funding and $190 million from Medicaid in the most recent fiscal year, accounting for nearly six in 10 patients, officials said.

While CMS and Memorial refuse to discuss the details of the alleged noncompliance, CMS’ public notice cites three CFR cites: 42 CFR 482.12 Governing Body, 42 CFR 482.13 Patients’ Rights and 42 CFR 482.23 Nursing Services.

42 CFR 482.12 requires that hospitals have governing bodies and plans to follow Medicare regulations. Subsection (f) specifically requires that if a hospital has an emergency department that the hospital must follow 42 CFR 482.55 “Conditions of Participation,” which states that “The hospital must meet the emergency needs of patients in accordance with acceptable standards of practice.

(a) Standard: Organization and direction. If emergency services are provided at the hospital –

  1. The services must be organized under the direction of a qualified member of the medical staff;
  2. The services must be integrated with other departments of the hospital;
  3. The policies and procedures governing medical care provided in the emergency service or department are established by and are a continuing responsibility of the medical staff.

(b) Standard: Personnel.

  1. The emergency services must be supervised by a qualified member of the medical staff.
  2. There must be adequate medical and nursing personnel qualified in emergency care to meet the written emergency procedures and needs anticipated by the facility.”

The Memorial audit stemmed from a March 4, 2017, death of Donald Keith Smith, 48, who died as a result of traumatic asphyxiation. After an altercation, the patient was placed on a gurney, supposedly, face-down. South Carolina’s Department of Health and Environmental Controls Site Survey Agency investigated the hospital after the death and the audit found that hospital security officers improperly restrained Smith, strapping him face down to a gurney during an altercation, rendering him unable to breathe. The death was ruled a homicide.

Memorial terminated the security officers involved in the death.

Now the hospital is faced with its own potential death. The loss of Medicare and, perhaps, Medicaid reimbursements could financially kill the hospital. Let’s see what happens…

Work Requirements for Medicaid?

Under the Trump Administration, some Republican governors may look to move their Medicaid programs in a more conservative direction. In his latest column for Axios, Drew Altman discusses the arguments about Medicaid “work requirements” and why few people are likely to be affected by them in practice.

via Don’t Expect Medicaid Work Requirements to Make a Big Difference — The Henry J. Kaiser Family Foundation

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:

  1. “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.
  2. To prevent the premature disclosure of an honorary degree, scholarship, prize, or similar award.
  3. 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.
  4. 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.
  5. 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.
  6. 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.
  7. To plan, conduct, or hear reports concerning investigations of alleged criminal misconduct.
  8. 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.
  9. 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.

Medicaid Law: What Are Policies Versus Law and Why Does It Matter?

“Always follow the Golden Rule. Always treat others how you want to be treated.”

What is so great about following rules? Do we have to follow all rules? What if other people do not follow the rules? What if the rules contradict? Are some rules more important than others?

The answer is – it depends.

When you sign your provider procurement agreement with NC to provide Medicaid services, there is a sentence in it that says, something to the effect, “The provider agrees to follow all applicable state and federal rules, laws, and regulations.” Yet, I am constantly shocked how many providers are completely oblivious to what are the “applicable state and federal rules, laws, and regulations” (although it does keep me in business).

The fact is, however, not all rules are created equal.

First, what is the difference between a policy, a regulation, and a law?

A law must be followed. If you break the law, you are punished. A regulation also must be followed; however, regulations are created by state agencies through a rule-making process. Usually, the public may comment on proposed regulations prior to being enacted.

On the other hand, a rule (that has not been formally adopted by the State) is policy or guidance. For example, the DMA Clinical Coverage Policies are rules or guidance. The Policies are not promulgated; i.e., they have not undergone the official rule-making process. Don’t get me wrong – you should follow the DMA Clinical Coverage Policies. My point is that a violation of a Clinical Coverage Policy will not/should not warrant the same punishment as violating a regulation or law.

Let’s think about this in a “real-life” hypothetical.

You receive a notice of overpayment in the amount of $450,000.00 because, allegedly, your service notes are signed electronically and you do not have an electronic signature policy.

There is no law or regulation that dictates that you must have an electronic signature policy. It is best practice to have an electronic signature policy. The Medicaid Billing Guide suggests that you maintain an electronic billing policy.

N.C. Gen. Stat. 150B sets forth the rule-making process. Any policy or rule that has not undergone the official rule-making process is considered nonbinding interpretative statements. N.C. Gen. Stat. 150B-18 states that “[a]n agency shall not seek to implement  or enforce  against any person a policy, guideline, or other nonbinding interpretative statement…if the statement has not been adopted as a rule in accordance with this Article.” (emphasis added).

Because there is no law or regulation requiring you to have an electronic signature policy, the State cannot punish you for not having one. In other words, the State cannot hold you to arbitrary criteria unless that criteria was formally adopted in the rule-making process.

How do you know if a policy or rule has been formally adopted?

Any policy or rule that is formally adopted will have a legal citation. For example, N.C. Gen. Stat 150B is a formal law. 10A NCAC 27G .0104 is a formal regulation – it is part of our administrative code. NC DMA Clinical Coverage Policies and the Medicaid Billing Guide are comprised of nonbinding, interpretative statements, as well as law and regulations. Usually, when a law or regulation is cited in the Policies or Billing Guide the formal, legal citation is also provided, but not always. I know, it’s confusing, yet extremely important.

You cannot and should not be punished for violating suggestions, policy, or nonbinding, interpretative statements. You should not be punished for not “treating others how you would like to be treated.” – That is not a law.

It is important to know the distinction because, apparently, those in charge of our Medicaid program, at times, do not.

Medicaid Auditors, Nitpicky Nonsense, and Journalistic Mistakes

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

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

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

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

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

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

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

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

Let’s dissect.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Before (frumpy individual):

""before2
After (fashionable chichi):
photo (3)
""

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

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

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

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

e-roche

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

 

Another Win for the Good Guys! RAC Auditors Cannot Look Back Over 3 Years!!! (BTW: We Already Knew This -Shhhhh!)

I love being right – just ask my husband.

I have argued for years that government auditors cannot go back over three years when conducting a Medicaid/Care audit of a health care provider’s records, unless there are credible allegations of fraud. See blog.

42 CFR 455.508 states that “[a]n entity that wishes to perform the functions of a Medicaid RAC must enter into a contract with a State to carry out any of the activities described in § 455.506 under the following conditions:…(f) The entity must not review clams that are older than 3 years from the date of the claim, unless it receives approval from the State.”

Medicaid RAC is defined as “Medicaid RAC program means a recovery audit contractor program administered by a State to identify overpayments and underpayments and recoup overpayments.” 42 CFR 455. 504.

From the definition of a Medicaid RAC (Medicare RAC is similarly defined), albeit vague, entities hired by the state to identify over and underpayments are RACs. And RACs are prohibited from auditing claims that are older than 3 years from the date of the claim.

In one of our recent cases, our client, Edmond Dantes, received a Tentative Notice of Overpayment from Public Consulting Group (PCG) on May 13, 2015. In a Motion for Summary Judgment, we argued that PCG was disallowed to review claims prior to May 13, 2012. Of the 8 claims reviewed, 7 claims were older than May 13, 2012 – one even went back to 2009!

The Administrative Law Judge (ALJ) at the Office of Administrative Hearings (OAH) agreed. In the Order Granting Partial Summary Judgment, the ALJ opined that “[s]tatutes of limitation serve an important purpose: to afford security against stale demands.”

Accordingly, the ALJ threw out 7 of the 8 claims for violating the statute of limitation. With one claim left, the amount in controversy was nominal.

A note as to the precedential value of this ruling:

Generally, an ALJ decision is not binding on other ALJs. The decisions are persuasive. Had DHHS appealed the decision and the decision was upheld by Superior Court, then the case would have been precedent; it would have been law.

Regardless, this is a fantastic ruling , which only bolsters my argument that Medicaid/care auditors cannot review claims over 3 years old from the date of the claim.

So when you receive a Tentative Notice of Overpayment, after contacting an attorney, look at the reviewed claims. Are those reviewed claims over 3 years old? If so, you too may win on summary judgment.

All Medicare/Caid Health Care Professionals: Start Contracting with Qualified Translators to Comply with Section 1557 of the ACA!!

Being a health care professional who accepts Medicare and/ or Medicaid can sometimes feel like you are Sisyphus pushing the massive boulder up a hill, only to watch it roll down, over and over, with the same sequence continuing for eternity. Similarly, sometimes it can feel as though the government is the princess sleeping on 20 mattresses and you are the pea that is so small and insignificant, yet so annoying and disruptive to her sleep.

Well, effective immediately – that boulder has enlarged. And the princess has become even more sensitive.

boulder

On May 18, 2016, the Department of Health and Human Services (HHS) published a Final Rule to implement Section 1557 of the Affordable Care Act (ACA). Section 1557 of the ACA has been on the books since the ACA’s inception in 2010. However, not until 6 years later, did HSD finally implement regulations regarding Section 1557. 81 Fed. Reg. 31376.

The Final Rule became effective July 18, 2016. You are expected to be compliant with the rule’s notice requirements, specifically the posting of a nondiscrimination notice and statement and taglines within 90 days of the Final Rule – October 16, 2016. So you better giddy-up!!

First, what is Section 1557?

Section 1557 of the ACA provides that an individual shall not, on the basis of race, color, national origin, sex, age, or disability, be

  • excluded from participation in,
  • denied the benefits of, or
  • subjected to discrimination under

all health programs and activities that receive federal financial assistance through HHS, including Medicaid, most Medicare, student health plans, Basic Health Program, and CHIP funds; meaningful use payments (which sunset in 2018); the advance premium tax credits; and many other programs.

Section 1557 is extremely broad in scope. Because it is a federal regulation, it applies to all states and health care providers in all specialties, regardless the size of the practice and regardless the percentage of Medicare/caid the agency accepts.

HHS estimates that Section 1557 applies to approximately 900,000 physicians. HHS also estimates that the rule will cover 133,343 facilities, such as hospitals, home health agencies and nursing homes; 445,657 clinical laboratories; 1300 community health centers; 40 health professional training programs; Medicaid agencies in each state; and, at least, 180 insurers that offer qualified health plans.

So now that we understand Section 1557 is already effective and that it applies to almost all health care providers who accept Medicare/caid, what exactly is the burden placed on the providers? Not discriminating does not seem so hard a burden.

Section 1557 requires much more than simply not discriminating against your clients.

Section 1557 mandates that you will provide appropriate aids and services without charge and in a timely manner, including qualified interpreters, for people with disabilities and that you will provide language assistance including translated documents and oral interpretation free of charge and in a timely manner.

In other words, you have to provide written materials to your clients in their spoken language. To ease the burden of translating materials, you can find a sample notice and taglines for 64 languages on HHS’ website. See here. The other requirement is that you provide, for no cost to the client, a translator in a timely manner for your client’s spoken language.

In other words, you must have qualified translators “on call” for the most common 15, non-English languages in your state. You cannot rely on friends, family, or staff. You also cannot allow the child of your client to act as the interpreter. The clients in need of the interpreters are not expected to provide their own translators – the burden is on the provider. The language assistance must be provided in a “timely  manner. “Further, these “on call” translators must be “qualified,” as defined by the ACA.

I remember an English teacher in high school telling the class that there were two languages in North Carolina: English and bad English. Even if that were true back in 19XX, it is not true now.

Here is a chart depicting the number of non-English speakers in North Carolina in 1980 versus 2009-2011:

languages

As you can see, North Carolina has become infinitely more diverse in the last three decades.

And translators aren’t free. According to Costhelper Small Business,

Typical costs:
  • Interpreting may take place in person, over the phone or via video phone.
  • In-person interpreters typically cost $50-$145 per hour. For example, American Language Services offers interpreters starting at $100 per hour (or $125 for sign language) and a two-hour minimum is required.
  • Phone interpreters typically cost $1.25-$3 per minute. Language Translation, Inc. offers a flat fee of $1.88 per minute for phone interpreting, for example.
  • Video interpreters typically range from $1.75 to $7 per minute. For instance, LifeLinks offers video interpreting from $2.25 per minute for any language and $2.95 for sign language. A 15-minute minimum is common for phone or video interpreting.

It seems likely that telehealth may be the best option for health care providers considering the cost of in-person translations. Of course, you need to calculate the cost of the telehealth equipment and the savings you project over time to determine whether the investment in telehealth equipment is financially smart.

In addition to agencies having access to qualified translators, agencies with over 15 employees must designate a single employee who will be responsible for Section 1557 compliance and to adopt a grievance procedure for clients. Sometimes this may mean hiring a new employee to comply.

The Office of Civil Rights (“OCR”) at HHS is the enforcer of Section 1557. OCR has been enforcing Section 1557 since its inception in 2010 – to an extent.

However, expect a whole new policing of Section 1557 now that we have the Final Rule from HHS.

Medicaid Reimbursement Rates: What Goes Down Never Goes Up!

It is a timeless joke. What goes down, but never goes up? Medicaid rates!

Having a Medicaid card is as useful as holding a lottery ticket. Sure, maybe you’ll hit the jackpot and find a quality health care provider with whom you share some common connection, but, most likely, you will receive nothing but false hope. 10% of nothing is nothing.

For health care providers that do accept Medicaid – how many of you are accepting new patients? Or maybe the better question is – how many of you are profitable from your Medicaid patients?

The fact of the matter is that Medicaid pays crap. See blog. And blog.

Because we live in a society in which we need money to live, if Medicaid pays less than the cost, health care providers will not accept Medicaid. And you cannot blame them. It’s happening all over the country. In Utah, dentists are un-enrolling in Medicaid, i.e., refusing their Medicaid patients. See article. Pennsylvania has a shortage of psychiatrists..even more so who accept Medicaid. See article. “Some 55% of doctors in major metropolitan areas refuse to take new Medicaid patients, according to a 2014 report by Merritt Hawkins. The Department of Health and Human Services reported that same year that 56% of Medicaid primary-care doctors and 43% of specialists weren’t available to new patients.” See article.

Medicaid is failing our most vulnerable and many more. Medicaid, as it exists now, fails every taxpayer, every health care provider who accepts it, and every family member of a developmentally disabled person who is dependent on Medicaid.

The cost of the Medicaid program is expected to rise from $500 billion to $890 billion by 2024, according to the Center for Medicare and Medicaid Services (CMS). Yet – throwing more money at a dysfunctional program does not equate to Medicaid recipients gaining access to quality care. The increased money is not going to the services for Medicaid recipients. The ballooned Medicaid budget is not earmarked to elevate the current, inadequate Medicaid reimbursements, which would induce more health care providers to accept Medicaid. The higher the cost of Medicaid, the more the government slashes the reimbursement rates. Yet our government is willing to throw Medicaid dollars at managed care organizations (MCOs) to release the burden of managing such shortfalls and turn a blind eye when our taxpayers’ money is not used to provide Medicaid medically necessary services to recipients, but to compensate CEOs $400,000 or allow alleged extortion.

For example, in obstetrics, if the national Medicaid reimbursement rate for ob/gyn visits is $1.00, here, in NC, Medicaid reimburses ob/gyns 88¢. Which is why only 34% of North Carolina ob/gyns accept Medicaid.

If it is imperative for the Medicaid reimbursements to increase (to, at the very least, cost, if not a slight profit), then how do we accomplish such an insurmountable task?

There are two options: (1) lobbying (which, obviously, has not been successful thus far); and (2) litigation.

Section 30(A) of the Medicaid Act requires that a state provide Medicaid reimbursement rates at a level to “assure that payments are consistent with efficiency, economy, and quality of care and are sufficient to enlist enough providers so that care and services are available under the plan at least to the extent that such care and services are available to the general population…”

In an article entitled “Nurse Staffing Levels and Medicaid Reimbursement Rates in Nursing Facilities,” written by Charlene Harrington, James H. Swan, and Helen Carrillo, the authors found that the Medicaid nursing home reimbursement rates were linked to quality of care, as to both RN hours and total nursing hours.

“Resident case mix was a positive predictor of RN hours and a negative predictor of total nursing hours. Higher state minimum RN staffing standards was a positive predictor of RN and total nursing hours while for-profit facilities and the percent of Medicaid residents were negative predictors.” Id.

Numerous other articles have been published in the last few years that cite the direct correlation between reimbursement rates and quality of care.

How do we stop Medicaid reimbursement rates from dropping and the executives of those companies charged with managing Medicaid funds from lining their own pockets?

According to the Supreme Court, suing under the Supremacy Clause is not the answer.

In Armstrong v. Exceptional Child Services, providers of habilitative Medicaid services sued the State of Idaho for Medicaid reimbursements rates being too low as to violate Section 30(A) of the Medicaid Act.

In the Armstrong decision from last year, the Supreme Court, Scalia found that, in enacting §1902(a)(30)(A) Congress had empowered the HHS Secretary to withhold all Federal funds from states that violate federal law. According to Armstrong, this “express provision of an administrative remedy” shows that Congress intended that the Secretary be the enforcer – not the courts. In other words, the Supreme Court held that

“The sole remedy Congress provided for a State’s failure to comply with Medicaid’s requirements—for the State’s “breach” of the Spending Clause contract—is the withholding of Medicaid funds by the Secretary of Health and Human Services.” Armstrong.

In other words, according to Armstrong, the sole remedy for health care providers who demand higher Medicaid reimbursement rates, will be for the Secretary of HHS to withhold Medicaid funds from the state. Such a drastic measure would undoubtedly cause the state such a budgetary shortfall that the state would soon be in a position in which it could not reimburse health care providers at all. Therefore, the providers go from receiving woefully low reimbursement rates to receiving none at all. That seems hardly the situation that the Supreme Court would want.

There are still litigation options for health care providers to sue in order to increase the Medicaid reimbursement rate. Just not through the Supremacy Clause.

I have a joke: What goes down, but never goes up?

NC DHHS Fails: No Bid Contracts – No Bueno!

A recent State Auditor report found that DHHS “had approximately 2,500 non-competitively bid contracts with a value of approximately $2.4 billion between state fiscal year 2012 through 2014. The value of the no-bid contracts accounts for more than 32% of all contracts during the same period.”

No bid contracts are exactly that – the company awarded the contract received the contract without competition, or a bid process. Think of a no bid contract as a try out for a professional football team, but only one person is trying out. Generally, competition breeds better results because people try harder when they compete, rather than a solo act.

In contract bidding, rivalry also breeds a lower contract price. It’s only logical. If you know that other companies are submitting bids, you are going to submit the lowest number possible.

So how is DHHS allowed to award no bid contracts?

NC Statute dictates that the AG or the AG’s attorney shall review “all proposed contracts for supplies, materials, printing, equipment, and contractual services that exceed one million dollars…” as of June 27, 2011. See NCGS 114-8.3 as amended by Session Law 2011-326 and Session Law 2013-234.

But – Per 09 NCAC 06B .0901, “…competition may be limited or waived where a factual basis demonstrates support of one or more of the conditions set forth in Paragraph (b) of this Rule. If the procurement is within a purchasing agency’s general delegation, then the purchasing agency may waive competition in conformance with this Rule. If the procurement is greater than the agency’s delegation, requests for limited or waived competition shall be submitted to the State CIO for approval.”

Here are the exceptions found in 09 NCAC 06B.0901(b):

(b) Competition may be limited or waived under the following conditions:

  1. Competition is not available;
  2. A needed product or service is available from only one source of supply;
  3. Emergency action is indicated;
  4. Competition has been solicited but no responsive offers have been received;
  5. Standardization or compatibility is the overriding consideration;
  6. A donation stipulates the source of supply;
  7. Personal or particular professional services are required;
  8. A product or service is needed for a person with disabilities and there are overriding considerations for its use;
  9. Additional products or services are needed to complete an ongoing job or task;
  10. A particular product or service is desired for educational, training, experimental, developmental or research work;
  11. Equipment is already installed, connected and in service, and it is determined advantageous to purchase it;
  12. Items are subject to rapid price fluctuation or immediate acceptance;
  13. There is evidence of resale price maintenance or other control of prices or collusion on the part of persons or entities that thwarts normal competitive procedures unless otherwise prohibited by law;
  14. A purchase is being made and a price is available from a previous contract;
  15. The requirement is for an authorized cooperative project with another governmental unit(s) or a charitable non-profit organization(s); or
  16. A used item is available on short notice and subject to prior sale.

Did all the no bid contracts that DHHS procured between state fiscal year 2012 through 2014 to equal approximately $2.4 billion fit within 1 or more of the above referenced exceptions?

At least, according to the State Auditor – No.

Here are the key findings of the State Auditor’s Report:

  • Many no-bid contracts lacked required review and approval to protect state interests
  • Many no-bid contracts lacked documentation of negotiations to improve pricing or terms
  • Many no-bid contracts lacked adequate written justification to waive competition, which increases the risk of favoritism, unfavorable terms, and poor performance

It appears that DHHS failed this audit. Should we extrapolate?