For Monitor Monday, today, October 30, 2023, I dressed up as a RAC auditor. BOO!!! I get a spooky 13.5% commission for overzealous auditing tactics. RAC auditors come in every shape and size, color or gender.
In my experience, RACs are garishly incorrect in their assessments. I will reveal three, real life examples where these audit contractors accused healthcare providers of owing money but were found to be dead wrong:
Example 1 – Medical Necessity quibbles:
In a haunting case involving a hospital, the RAC alleged that certain cardiac procedures were billed inappropriately, citing concerns about the medical necessity of these services. They claimed the hospital should refund a repugnant amount for these procedures. However, upon closer examination and an appeal process, it was revealed that the services were indeed medically necessary and aligned with the standard protocols. The ghastly RAC’s accusation was disproven, and the hospital was not required to return any funds. Spine-tingling!
Example 2 – Improper Coding of Diagnosis:
A healthcare provider, particularly a large physician group, was accused by the RAC of using suspicious, improper diagnostic codes, leading to overbilling for certain services provided to Medicare and Medicaid beneficiaries. After a thorough internal audit, it was determined that the codes used were accurate and supported by the patient’s medical records. The RAC’s allegations were unfounded, and no repayment was required. Suspicious. A haunting reminder to spook audits.
Example 3 – Alleged Duplicate Billing:
In a murderous case involving a nursing facility, the RAC identified what they believed were instances of duplicate billing for certain procedures and services. Upon further review, it was revealed that the billing discrepancies were due to the RAC’s misunderstanding of the facility’s billing processes. Mysterious. The facility provided evidence showcasing that the billed services were distinct and not duplicates. Consequently, the RAC’s claim was refuted, and no repayment was deemed necessary. Suspicious.
These examples underscore the critical need for providers to have robust internal compliance measures in place. While RACs serve a vital purpose in identifying billing errors, they are not infallible. Providers need to be equipped to challenge these audit findings, ensuring they are based on accurate and comprehensive information.
It’s crucial for healthcare providers to engage in a proactive approach by conducting their internal audits, maintaining accurate documentation, and being prepared to challenge RAC determinations when necessary. These efforts not only protect providers from unwarranted financial obligations but also ensure that Medicare and Medicaid funds are appropriately allocated.
In conclusion, the relationship between RACs, healthcare providers, and government healthcare programs is complex. The examples provided demonstrate that while RACs play a critical role in safeguarding the integrity of Medicare and Medicaid, their findings are not always accurate. Providers must be diligent in ensuring their billing practices align with regulations and be prepared to contest any erroneous audit findings to maintain fiscal stability and fair reimbursement for services rendered.
Lack of medical necessity is one of the leading reasons for denials during RAC, MAC, TPE, and UPIC audits. However, case law dictates that the treating physician should be allowed deference with the decision that medical necessity exists because the Medicare and/or Medicaid auditor never had the privilege to see the recipient.
However, recent ALJ decisions have gone against case law. How is that possible? CMS creates “Rules” – I say that in air quotes – these Rules are not promulgated, but are binding on anyone under CMS’ umbrella. Guess what? That includes the ALJs for Medicare appeals. As an example, the “treating physician” Rule is law based on case law. Juxtapose, CMS’ Ruling 93-l. It states that no presumptive weight should be assigned to a treating physician’s medical opinion in determining the medical necessity of inpatient hospital and skilled nursing facility services. The Ruling adds parenthetically that the Ruling does not “by omission or implication” endorse the application of the treating physician rule to services not addressed in the Ruling. So, we get a decision from an ALJ that dismisses the treating physician rule.
The ALJ decision actually said: Accordingly, I find that the treating physician rule, standing alone, provides no basis for coverage.
This ALJ went against the law but followed CMS Rulings.
CMS Rulings, however, are not binding. CMS Rulings aren’t even law. Yet the CMS Rulings, according to CMS, are binding onto the entities that are under the CMS umbrella. This means that the Medicare appeals process, which include the redeterminations, the reconsiderations, the ALJ decisions, and the Medicare Appeals Councils’ decisions are all dictated by these non-law, CMS Rulings, which fly in the face of actual law. ALJs uphold extrapolations based on CMS Rulings because they have to. But once you get to a federal district court judge, who are not bound by CMS, non-law, rulings, you get a real Judge’s decision, and most extrapolations are thrown out if the error rate is under 50%.
Basically, if you are a Medicare provider, you have to jump through the hoops of 4 levels of appeals that is not dictated by law, but by an administration that is rewarded for taking money from providers on the pretense of FWA. Most providers do not have the financial means to make it to the 5th level of appeal. So, CMS wins by default.
Folks, create a legal fund for your provider entity. You have got to appeal and be able to afford it. That is the only way that we can change the disproportionately unfair Medicare appeal process that providers must endure now.
The RACs are on attack! The “COVID Pause Button” on RAC audits has been lifted. The COVID Pause Button has been lifted since August 2020. But never have I ever seen CMS spew out so many new RAC topics in one month of a new year. Happy 2021.
Recovery audit contractors (“RACs”) will soon be auditing positron emission tomography (PET) scans for initial treatment strategy in oncologic conditions for compliance with medical necessity and documentation requirements.
Positron emission tomography (“PET”) scans detect early signs of cancer, heart disease and brain disorders. An injectable radioactive tracer detects diseased cells. A combination PET-CT scan produces 3D images for a more accurate diagnosis.
According to CMS’ RAC audit topics, “(PET) for Initial Treatment Strategy in Oncologic Conditions: Medical Necessity and Documentation Requirements,” will be reviewed as of January 5, 2021. The PET scan audits will be for outpatient hospital and professional service reviews. CMS added additional 2021 audit targets to the approved list:
- Air Ambulance: Medical Necessity and Documentation Requirements,. This complex review will be examining rotatory wing (helicopter) aircraft claims to determine if air ambulance transport was reasonable and medically necessary as well as whether or not documentation requirements have been met.
- Hospice Continuous Home Care: Medical Necessity and Documentation Requirements, and
- Ambulance Transport Subject to SNF Consolidated Billing.
Upcoming HHS secretary Xavier Becerra plans to get his new tenure underway quickly.
In False Claims Act (“FCA”) news, Medicare audits of P-Stim have ramped up across the country. A Spinal Clinic in Texas agreed to pay $330,898 to settle FCA allegations for allegedly billing Medicare improperly for electro-acupuncture device neurostimulators. CMS claims that “Medicare does not reimburse for acupuncture or for acupuncture devices such as P-Stim, nor does Medicare reimburse for P-Stim as a neurostimulator or as implantation of neurostimulator electrodes.”
Finally, is your staff getting medical records to consumers requesting their records quickly enough? Right to access to health records is yet another potential risk for all providers, especially hospitals due to their size. A hospital system agreed to pay $200,000 to settle potential violations of the HIPAA Privacy Rule’s right of access standard. This is HHS Office for Civil Rights’ 14th settlement under its Right of Access Initiative. The first person alleged that she requested medical records in December 2017 and did not receive them until May 2018. In the second complaint, the person asked for an electronic copy of his records in September 2019, and they were not sent until February 2020.
Beware of slow document production as slow document production can lead to penalties. And be on the lookout for the next RAC Report.
Remember, never accept the results of a Medicare or Medicaid audit. It is always too high. Believe me, after 21 years of my legal practice, I have yet to agree with the findings if a Tentative notice of Overpayment by any governmental contracted auditor, whether it is PCG, NGS, the MACs, MCOs, or Program Integrity – in any of our 50 States. That is quite a statement about the general, quality of work of auditors. Remember Teambuilders? How did $12 million become $896.35? See blog.
1 CMS, “0200-Air Ambulance: Medical Necessity and Documentation Requirements,” proposed RAC topic, January 5, 2021, http://go.cms.gov/35Jx1co.
2 CMS, “0201-Hospice Continuous Home Care: Medical Necessity and Documentation Requirements,” proposed RAC topic, January 5, 2021, http://go.cms.gov/3oRUyiY.
3 CMS, “0202- Ambulance Transport Subject to SNF Consolidated Billing,” proposed RAC topic, January 5, 2021, http://go.cms.gov/2LOMEbw.
While the Coronavirus pandemic is horrible and seems to be getting worse. COVID has forced slight, positive changes in the telehealth arena and, perhaps, in the widening of the ambiguous definition of “medical necessity” or, as I call it – the undefined, definition of “medical necessity.” Medical necessity is the backbone of rendering health care services. Without it, services should not be provided. Yet, medical necessity is the most litigated topic in all of audits.
On September 1, 2020, the Centers for Medicare & Medicaid Services (“CMS”) published a proposed rule that will codify a definition of “medical necessity” for Medicare purposes. So far, the definition of medical necessity varies, depending on the source. The MACs have been given long rein in defining the term on an individual and separate basis, creating disparity in definitions and criteria. The proposed rule’s comment period ended November 2, 2020.
All this to say medical necessity is in the eye of the beholder. Much like beauty. Why then, can RAC and MAC auditors who are not doctors, not firsthand, treating providers, not nurses or LCASs, decide that medical necessity does or does not exist for a patient that they have never seen?
Black’s Law Dictionary (the most prominent legal dictionary) has a super, unhelpful definition of medical necessity: “If not carried out the patient’s situation could worsen. For a patient’s treatment found to be necessary is this specific type of procedure or treatment.”
The American Medical Association (“AMA”), on the other hand, has a more detailed definition, probably unintended to make it all the more confusing:
“Our AMA defines medical necessity as: Health care services or products that a prudent physician would provide to a patient for the purpose of preventing, diagnosing or treating an illness, injury, disease or its symptoms in a manner that is: (a) in accordance with generally accepted standards of medical practice; (b) clinically appropriate in terms of type, frequency, extent, site, and duration; and (c) not primarily for the economic benefit of the health plans and purchasers or for the convenience of the patient, treating physician, or other health care provider.”
CMS’ proposed rule codifies a definition of what makes an item or service medically “reasonable and necessary” under the Social Security Act 1861(a)(1)(A). The rule, if finalized, would codify in regulations a definition of “reasonable and necessary” items and services based on a definition currently used by Medicare Administrative Contractors (MACs), with an additional element that potentially would include coverage determinations by commercial insurers as a factor in making Medicare coverage determinations.
The Proposed Definition (To be Codified in 42 CFR 405.201)
“We are proposing to codify the longstanding Program Integrity Manual definition of “reasonable and necessary” into our regulations at 42 CFR 405.201(b), with modification. Under the current definition, an item or service is considered “reasonable and necessary” if it is (1) safe and effective; (2) not experimental or investigational; and (3) appropriate, including the duration and frequency that is considered appropriate for the item or service, in terms of whether it is—
- Furnished in accordance with accepted standards of medical practice for the diagnosis or treatment of the patient’s condition or to improve the function of a malformed body member;
- Furnished in a setting appropriate to the patient’s medical needs and condition;
- Ordered and furnished by qualified personnel;
- One that meets, but does not exceed, the patient’s medical need; and
- At least as beneficial as an existing and available medically appropriate alternative.” See Proposed Rule.
In addition, CMS adds that it will also utilize commercial payor standards or have an objective panel determine medical necessity if criteria #1 and #2 were met, but not #3. This additional commentary is another example of how subjective and fact-specific determining medical necessity can be. The LCDs will also be consulted.
If adopted, these proposals would arguably lead to the most wide-ranging changes in Medicare’s coverage standards and procedures in decades. The proposal to codify the definition of “reasonable and necessary” applies to all items and services. The inclusion of commercial payor standards may be a wild card.
The definition of medical necessity has not been officially revised – yet. One could imagine that, in the midst of a RAC or MAC audit, auditors and providers will disagree as to the true definition of medical necessity.
Going forward, when you get audited, immediately look and see whether your claim denials were denied due to “lack of medical necessity.” Ask yourself, “Really? Is there no medical necessity in this case…even in the era of COVID?” Because the auditors may be wrong.
Secondly, ensure that the RAC and MAC entity is CMS-certified to review those certain CPT codes for medical necessity. CMS limits audits on medical necessity because of the vagueness of the definition. When auditors find no medical necessity, then providers must push back. And you should push back, legally, of course!
The Centers for Medicare & Medicaid Services (CMS) posted its December 2017 list of health care services that the Recovery Audit Contractors (RACs) will be auditing. As usual, home health is on the chopping block. So are durable medical equipment providers. For whatever reason, it seems that home health, DME, behavioral health care, and dentists are on the top of the lists for audits, at least in my experience.
Number one RAC audit issue:
Home Health: Medical Necessity and Documentation Review
To be eligible for Medicare home health services, a beneficiary must have Medicare Part A and/or Part B per Section 1814 (a)(2)(C) and Section 1835 (a)(2)(A) of the Social Security Act:
- Be confined to the home;
- Need skilled services;
- Be under the care of a physician;
- Receive services under a plan of care established and reviewed by a physician; and
- Have had a face-to-face encounter with a physician or allowed Non-Physician Practitioner (NPP).
Medical necessity is the top audited issue in home health. Auditors also love to compare the service notes to the independent assessment. Watch it if you fail to do one activity of daily living (ADL). Watch it if you do too many ADLs out of the kindness of your heart. Deviations from the independent assessment is a no-no to auditors, even if you are going above and beyond to be sweet. And never use purple ink!
Number two RAC audit issue:
Annual Wellness Visits (AWV) billed within 12 months of the Initial Preventative Physical Examination (IPPE) or Annual Wellness Examination (AWV)
This is a simple mathematical calculation. Has exactly 12 months passed? To the day….yes, they are that technical. 365 days from a visit on January 7, 2018 (my birthday, as an example) would be January 7, 2019. Schedule any AWV January 8, 2019, or beyond.
Number three RAC audit issue:
Ventilators Subject to DWO requirements on or after January 1, 2016
This will be an assessment of whether ventilators are medically necessary. Seriously? Who gets a ventilator who does not need one? I was thinking the other day, “Self? I want a ventilator.”
Number four RAC audit issue:
This will be an assessment of whether cardiac pacemakers are medically necessary. Seriously? Who gets a pacemaker who does not need one? I was thinking the other day, “Self? I want a pacemaker.” Hospitals are not the only providers targets for this audit. Ambulatory surgical centers (ASCs) also will be a target. As patient care continues its transition to the outpatient setting, ASCs have quickly grown in popularity as a high-quality, cost-effective alternative to hospital-based outpatient care. In turn, the number and types of services offered in the ASC setting have significantly expanded, including pacemakers.
Number five RAC audit issue:
Evaluation and Management (E/M) Same Day as Dialysis
Except when reported with modifier 25, payment for certain evaluation and management services is bundled into the payment for dialysis services 90935, 90937, 90945, and 90947
It is important to remember that if you receive a notice of overpayment, you need to appeal immediately. The first level of appeal is redetermination, usually with the Medicare Administrative Contractor (MAC). Medicare will not begin overpayment collection of debts (or will cease collections that have started) when it receives notice that you requested a Medicare contractor redetermination (first level of appeal).
See blog for full explanation of Medicare provider appeals.
Centers for Medicare & Medicaid Services (CMS) created a new page on its Recovery Audit Contractor (RAC) website entitled “Provider Resources.” CMS indicated that it will post on this page any new issues the RACs have proposed to audit and are being evaluated by CMS for approval. It is like a glimpse behind the curtain to see the Great Oz. This is a fantastic resource for providers. CMS posts a list of review topics that have been proposed, but not yet approved, for RACs to review. You can see the future!
Topics proposed for future audits:
- Inpatient Rehabilitation Facility (IRF) Stays: Meeting Requirements to be considered Reasonable and Necessary;
- Respiratory Assistive Devices: Meeting Requirements to be considered Reasonable and Necessary;
- Excessive or Insufficient Drugs and Biologicals Units Billed;
- E&M Codes billed within a Procedure Code with a “0” Day Global Period (Endoscopies or some minor surgical procedures);
- E&M Codes billed within a Procedure Code with a “10” Day Global Period (other minor procedures);
- E&M Codes billed within a Procedure Code with a “90” Day Global Period (major surgeries);
Over the next few weeks, intermittently (along with other blog posts), I will tackle these, and other, hot RAC audit topics.
IRFs are under fire in North Carolina, South Carolina, Virginia, and West Virginia!
Many patients with conditions like stroke or brain injury, who need an intensive medical rehabilitation program, are transferred to an inpatient rehabilitation facility.
Palmetto, one of Medicare’s MACs, conducted a prepayment review of IRFs in these four states. The results were bleak, indeed, and will, most likely, spur more audits of IRFs in the future. If you are a Medicare provider within Palmetto’s catchment area, then you know that Palmetto conducts a lot of targeted prepayment review. Here is a map of the MAC jurisdictions:
You can see that Palmetto manages Medicare for North Carolina, South Carolina, West Virginia, and Virginia. So Palmetto’s prepayment review covered its entire catchment area.
North Carolina Results A total of 28 claims were reviewed with 19 of the claims either completely or partially denied. The total dollars reviewed was $593,174.60 of which $416,483.42 was denied, resulting in a charge denial rate of 70.2 percent.
South Carolina Results A total of 24 claims were reviewed with 16 of the claims either completely or partially denied. The total dollars reviewed was $484,742.68 of which $325,266.43 was denied, resulting in a charge denial rate of 67.1 percent.
West Virginia Results
A total of two claims were reviewed with two of the claims either completely or partially denied. The total dollars reviewed was $32,506.21 of which $32,506.21 was denied, resulting in a charge denial rate of 100 percent.
A total of 39 claims were reviewed with 31 of the claims either completely or partially denied. The total dollars reviewed was $810,913.83 of which $629,118.08 was denied, resulting in a charge denial rate of 77.6 percent.
In all 4 states, the most cited denial code was “5J504,” which means that “need for service/item not medically and reasonably necessary.” Subjective, right? I mean, who is better at determining medical necessity: (1) the treating physician who actually performs services and conducts the physical; or (2) a utilization auditor without an MD and who as never rendered medical services on the particular consumer? I see it all the time…former dental hygienists review the medical records of dentists and determine that no medial necessity exists…
When it comes to IRF Stays, what is reasonable and necessary?
According to Medicare policy and CMS guidance, the documentation in the patient’s IRF
medical record must demonstrate a reasonable expectation that the following criteria were met at the time of admission to the IRF. The patient must:
- Require active and ongoing intervention of multiple therapy disciplines (Physical
Therapy [PT], Occupational Therapy [OT], Speech-Language Pathology [SLP], or
prosthetics/orthotics), at least one of which must be PT or OT;
- Require an intensive rehabilitation therapy program, generally consisting of:
◦ 3 hours of therapy per day at least 5 days per week; or
◦ In certain well-documented cases, at least 15 hours of intensive rehabilitation
therapy within a 7-consecutive day period, beginning with the date of admission;
- Reasonably be expected to actively participate in, and benefit significantly
from, the intensive rehabilitation therapy program (the patient’s condition and
functional status are such that the patient can reasonably be expected to make
measurable improvement, expected to be made within a prescribed period of time
and as a result of the intensive rehabilitation therapy program, that will be of practical value to improve the patient’s functional capacity or adaptation to impairments);
- Require physician supervision by a rehabilitation physician, with face-to-face
visits at least 3 days per week to assess the patient both medically and functionally
and to modify the course of treatment as needed; and
- Require an intensive and coordinated interdisciplinary team approach to the
delivery of rehabilitative care.
Did you notice how often the word “generally” or “reasonably” was used? Because the standard for an IRF stay is subjective. In fact, I would wager a bet that if I reviewed the same documentation as the Palmetto auditors did, that I could make a legal argument that the opposite conclusion should have been drawn. I do it all the time. This is the reason that so many audits are easily overturned…they are subjective!
Therefore, when you get an audit result, such as the ones referenced above:
APPEAL! APPEAL! APPEAL!
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 health Dentist 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).
You could hear the outrage in the voices of some of the NC legislators (finally, for the love of God – our General Assembly has taken the blinders off their eyes regarding the MCOs) at the Joint Legislative Oversight Committee on Medicaid and NC Health Choice on Tuesday, December 6, 2016, when Cardinal Innovations‘, a NC managed care organization (MCO) that manages our Medicaid behavioral health care in its catchment area, CEO, Richard Topping, stated that his salary was raised this year from $400,000 to $635,000 – with our tax dollars. (Whoa – totally understand if you have to read that sentence multiple times; it was extraordinarily complex).
Senator Tommy Tucker (R-Waxhaw) was especially incensed. He said, “I received minutes from your board, Sept. 16 of 2016, they made that motion, that your 2017 comp package, they raised your salary from $400,000 to $635,000, they gave you a 0 to 30 percent bonus potential which could be roughly another $250,000 and also you have some sort of annuity or long-term package of $412,000,” said Sen. Tommy Tucker.
Sen. Tucker was not alone.
Representative Dollar was also concerned. But even more surprising than our legislators stepping up to the plate and holding an MCO accountable (MCOs have expensive lobbyists – with our tax dollars), the State’s Department of Health and Human Services (DHHS) Secretary Rick Brajer was visibly infuriated. He spoke sharply and interrogated Topping as to his acute income increase, as well as the benefits attached.
As a health care blogger, I receive so many emails from blog readers, including parents of disabled children, who are not receiving the medically necessary Medicaid behavioral health care services for their developmentally disabled children. MCOs are denying medically necessary services. MCOs are terminating qualified health care providers. MCOs are putting access to care at issue. BTW – even if the MCOs only terminated 1 provider and stopped 1 Medicaid recipient from receiving behavioral health care services from their provider of choice, that MCO would be in violation of federal law access to care regulations. But, MCOs are terminating multiple – maybe hundreds – of health care providers. MCOs are nickeling and diming health care providers. Yet, CEO Topping will reap $635,000+ as a salary.
The MCOs, including Cardinal, do not have assets except for our tax dollars. They are not incorporated. They are not private entities. They are extensions of our “single state agency” DHHS. The MCOs step into the shoes of DHHS. The MCOs are state agencies. The MCOs are paid with our tax dollars. Our tax dollars should be used (and are budgeted) to provide Medicaid behavioral health care services for our most needy and to be paid to those health care providers, who still accept Medicaid and provide services to our most vulnerable population. News alert – These providers who render behavioral health care services to Medicaid recipients do not make $635,000/year, or anywhere even close. The reimbursement rates for Medicaid is paltry, at best. Toppings should be embarrassed for even accepting a $635,000 salary. The money, instead, should go to increasing the reimbursements rates – or maintaining a provider network without terminating providers ad nauseum. Or providing medically necessary services to Medicaid recipients.
Rest assured, Cardinal is not the only MCO lining the pockets of its executives. While both Trillium and Alliance, other MCOs, pay their CEOs under $200,000 (still nothing to sneeze at). Alliance, however, throws its tax dollars at private, legal counsel. No in-house counsel for Alliance! Oh, no! Alliance hires expensive, private counsel to defend its actions. Another way our tax dollars are at work. And – my question – why in the world does Alliance, or any other MCO, need to hire legal counsel? Our State has perfectly competent attorneys at our Attorney General’s office, who are on salary to defend the state, and its agencies, for any issue. The MCOs stand in the shoes of the State when it comes to Medicaid for behavioral health. The MCOs should utilize the attorneys the State already employs – not a high-dollar, private law firm. These are our tax dollars!
There have been few times that I have praised DHHS in my blogs. I will readily admit that I am harsh on DHHS’ actions/nonactions with our tax dollars. And I am now not recanting any of my prior opinions. But, last Tuesday, Sec. Brajer held Toppings feet to the fire. Thank you, Brajer, for realizing the horror of an MCO CEO earning $635,000/year while our most needy population goes under-served, and, sometimes not served at all, with medically necessary behavioral health care services.
What is deeply concerning is that if Sec. Brajer is this troubled by actions by the MCOs, or, at least, Cardinal, why can he not DO SOMETHING?? Where is the supervision of the MCOs by DHHS? I’ve read the contracts between the MCOs and DHHS. DHHS is the supervising entity over the MCOs. Our Waiver to the federal government promises that DHHS will supervise the MCOs.
If the Secretary of DHHS cannot control the MCOs, who can?