Our old friends from Public Consulting Group (PCG) were found to have accepted improper Medicaid payments in New Jersey.
Those of you who have followed my blog will remember that PCG has been the “watchdog” and auditor of Medicaid claims in many, many states, including North Carolina, New Mexico, and New York. The story of PCG’s motus operandi is like an old re-run of Friends – it never seems to end. PCG audits health care provider records, usually about 150 claims, and determines an error rate based on a desk review by an employee who may or may not have the requisite experience in health care or regulatory compliance issues. The error rates are normally high, and PCG extrapolates the number across a universe of three years (generally). The result is an alleged overpayment of millions of dollars. Of course, it varies state to state, but PCG is paid on a contingency basis, usually 12 – 15%. See blog.
In a November 2017 Office of Inspector General (OIG) Report, OIG found that, in New Jersey, PCG, which was the contractor for New Jersey doctored records.
Isn’t that called fraud?
OIG found that New Jersey did not follow Federal regulations and the Centers for Medicare and Medicaid Services’ (CMS) guidance when it developed its payment rates for Medicaid school-based services and, as a result, claimed $300.5 million in unallowable costs. Among OIG’s findings, OIG determined that PCG improperly altered school employees’ responses to time studies to timestudies to indicate that their activities were directly related to providing Medicaid services when the responses indicated the activities were unrelated.
OIG recommended that New Jersey repay $300.5 million in federal Medicaid reimbursements. If you are a taxpayer in New Jersey,
you know that you are hanging Sec. Carole Johnson in effigy…at least, in your mind.
According to the New Jersey Medicaid website, PCG receives and processes billing agreements from newly Medicaid-enrolled LEAs, which is the acronym for “Local Education Agency.”
Here are PCG’s duties:
The New Jersey State Agency claims Federal Medicaid reimbursement for health services provided by schools under Individuals With Disabilities Education Act (IDEA) through its Special Education Medicaid Initiative (SEMI). The State Department of Treasury (Treasury), the administrative manager for SEMI, hired PCG, on a contingency fee basis (shocker) to develop SEMI payment rates and submit claims on behalf of schools, which are overseen by the State Department of Education (DOE). Figure 1 (below) illustrates how New Jersey processes and claims Medicaid school-based services.
But notice the last bullet point in the list of PCG’s duties above. “provides ongoing Medicaid legal and regulatory compliance monitoring.” Of itself?
Only costs related to providing Medicaid-covered services may be included in payment rates for Medicaid services. But, remember, PCG is paid on contingency. See below.
So is it surprising that PCG raised the reimbursement rates? Why wouldn’t they? If you were paid on contingency, wouldn’t you determine the rates to be higher?
OIG’s report states that New Jersey, through a contractor (PCG), increased the payment rates retroactively to July 2003 from $552 to $1,451 for evaluation services and from $21 to $50 for rehabilitation services. This significant increase raised the question of whether the State was again using unallowable costs.
According to OIG, out of 1,575 responses from school employees, PCG recoded 235 employee responses in order to receive payment from Medicaid. Of those 235 recoded responses, OIG determined that 203 claims were incorrectly recoded by PCG. My math isn’t the best, but I am pretty sure that is approximately a 85% error rate. Shall we extrapolate?
Examples of improper activity code alterations included a social worker indicated that they were “scheduling students to see the [social worker].” Social worker coded this activity as “general administration” – correctly by the way. PCG altered the code to indicate that the employee was providing health care services in order to get paid for that time.
PCG incorporated learning disabilities teacher-consultant salaries in the evaluation rate. These salaries are unallowable because teacher-consultants provide special education services, not health-related services.
In a description of its rate-setting methodology, PCG stated that it excluded costs associated with learning disabilities teacher-consultants because they do not perform any medical services and are not medical providers as customarily recognized in the State’s Medicaid program. However, OIG found that PCG did not remove all learning disabilities teacher-consultant salaries when calculating payment rates
OIG calculated the amount of just that one issue – learning disabilities teacher-consultant salaries incorrectly incorporated – as more than $61 million. What’s 13% of $61 million (assuming that PCG’s contingency rate is 13%)? $7,930,000.
OIG recommended that New Jersey Medicaid:
- refund $300,452,930 in Federal Medicaid reimbursement claimed based on payment rates that incorporated unallowable costs,
- work with CMS to determine the allowable amount of the remaining $306,233,377 that we have set aside because the rates included unallowable costs that we cannot quantify, and
- revise its payment rates so they comply with Federal requirements.
PCG disagreed with OIG’s findings.
Another recommendation that OIG SHOULD have found – Get rid of PCG.
Don’t we have due process in America? Isn’t due process something that our founding fathers thought important, essential even? Due process is in our Constitution.
The Fourteenth (governing state governments) and the Fifth Amendment (governing federal government) state that no person shall be “deprived of life, liberty, or property without due process of law.”
Yet, apparently, if you accept Medicaid or Medicare, due process is thrown out the window. Bye, Felicia!
How is it possible that criminals (burglars, murderers, rapists) are afforded due process but a health care provider who accepts Medicaid/care does not?
Surely, that is not true! Let’s look at some examples.
In Tulsa, a 61-year-old man was arrested for killing his Lebanese neighbor. He pled not guilty. In news articles, the word “allegedly” is rampant. He allegedly killed his neighbor. Authorities believe that he may have killed his neighbor.
And prior to getting his liberty usurped and getting thrown in jail, a trial ensues. Because before we take a person’s liberty away, we want a fair trial. Doesn’t the same go for life and property?
Example A: I recently received a phone call from a health care provider in New Jersey. She ran a pediatric medical daycare. In 2012, it closed its doors when the State of New Jersey accused it of an overpayment of over $12 million and suspended its funds. With its funds suspended, it could no longer pay staff or render services to its clients.
Now, in 2016, MORE THAN FOUR YEARS LATER, she calls to ask advice on a closing statement for an administrative hearing. This tells me (from my amazing Murdoch Mysteries (my daughter’s favorite show) sense of intuition): (1) she was not provided a trial for FOUR YEARS; (2) the state has withheld her money, kept it, and gained interest on it for over FOUR YEARS; (3) in the beginning, she did have an attorney to file an injunction and a declaratory judgment; and (4) in the end, she could not afford such representation (she was filing her closing argument pro se).
Examples B-P: 15 New Mexico behavioral health care agencies. On June 23, 2013, the State of New Mexico accuses 15 behavioral health care agencies of Medicaid fraud, which comprised 87.5% of the behavioral health care in New Mexico. The state immediately suspends all reimbursements and puts most of the companies out of business. Now, MORE THAN THREE YEARS LATER, 11 of the agencies still have not undergone a “Fair Hearing.” Could you imagine the outrage if an alleged criminal were held in jail for THREE YEARS before a trial?
Example Q: Child psychiatrist in rural area is accused of Medicaid fraud. In reality, he is not guilty. The person he hired as his biller is guilty. But the state immediately suspends all reimbursements. This Example has a happy ending. Child psychiatrist hired us and we obtained an injunction, which lifted the suspension. He did not go out of business.
Example R: A man runs a company that provides non-emergency medical transportation (NEMT). One day, the government comes and seizes all his property and freezes all his bank accounts with no notice. They even seize his fiance’s wedding ring. More than TWO YEARS LATER – He has not stood trial. He has not been able to defend himself. He still has no assets. He cannot pay for a legal defense, much less groceries.
Apparently the right to speedy trial and due process only applies to alleged burglars, rapists, and murderers, not physicians and health care providers who render medically necessary services to our most fragile and vulnerable population. Due process??? Bye, Felicia!
What can you, as a health care provider, do if you are accused of fraud and your reimbursements are immediately suspended?
- Prepare. If you accept Medicare/caid, open an account and contribute to it generously. This is your CYA account. It is for your legal defense. And do not be stupid. If you accept Medicaid/care, it is not a matter of if; it is a matter of when.
- Have your attorney on speed dial. And I am not talking about your brother’s best friend from college who practices general trial law and defends DUIs. I am talking about a Medicaid/care litigation expert.
- File an injunction. Suspension of your reimbursements is a death sentence. The two prongs for an injunction are (a) likelihood of success on the merits; and (b) irreparable harm. Losing your company is irreparable harm. Likelihood of success on the merits is on you. If your documents are good – you are good.
NC is #1 in USA!! (For Highest Percentage Increase in Total Medicaid Spending)…and What About the Rest of the USA?
On October 21, 2013, the magazine Modern Healthcare published an article, “Medicaid budgets By State,” which showed each state’s total Medicaid spent in 2012, total number of Medicaid enrollees in 2012, and average spending per enrollee in 2012.
Where does North Carolina rank in terms of our Medicaid budget versus other states? We hear constantly that we spend all this needless money on administrative costs of Medicaid. But, in terms of our Medicaid budget, where do we rank? And my next question…do we simply have more Medicaid recipients in NC in relation to other states? Is NC’s average spending per Medicaid enrollee grossly higher or lower than the national average?
Inquiring minds want to know!
Surprisingly, at least to me, Alaska has the highest average spending per Medicaid enrollee: $13,073, on average, per enrollee. But then I thought about, much of Alaska is rural…not only rural , but almost impossible to navigate due to the snow and ice. I don’t know for sure, but I would imagine that getting to and from Medicaid recipients or getting recipients to services (while not always reimbursed by Medicaid) must impact some of the costs.
[Important to note: The average spending per enrollee, to my knowledge, does not mean actual money spent per enrollee. I believe the authors took the total budget and divided it by the number of enrollees. So the average spent per enrollee includes built-in, administrative costs.]
Or…Maybe Alaska has a low number of Medicaid recipients and that is why Alaska spends the most per enrollee…maybe Alaska has a huge Medicaid budget without many recipients on which to spend it…few people, big pie…
Alaska had, in 2012, 109,000 Medicaid recipients.
The fewer people you have at Thanksgiving, the bigger the pie pieces. However, interestingly enough, Alaska spent $1.425 million total in Medicaid in 2012. Delaware spent $1.421 in Medicaid in 2012. (Close enough, right?). Yet, Delaware spent $6831, on average, per enrollee. Maybe the pie analogy doesn’t work. Maybe sometimes, even with a big pie and few people, too many rats and ants nibble at the pie.
Out of 50 states, where do you think NC falls? Top 10 highest spender? Bottom 10? Right in the middle?
The only 8 states that spend more than NC per Medicaid recipient are:
2. New Jersey (somehow that did not surprise me) ($11,433/recipient)
3. Rhode Island (that did surprise me…I mean, look how little RI is…how big a Medicaid budget can it have?) ($11,080/recipient)
4. North Dakota (a less populous state (less tax dollars), I believe) ($10,969/recipient)
5. Pennsylvania ($10,835/recipient)
6. Minnesota (there are big cities there (more tax dollars), no surprise) ($10,080/recipient)
7. Missouri (I went to law school in Missouri. This number surprised me a bit). ($10,022/recipient)
8. Connecticut ($9883/recipient)
9. NC ($9,430/recipient)
Crazy! What about Illinois? With the hugely populous, Windy City and it being Obama’s home state, surely, Medicaid spending per recipient is, at least, in the middle, right?
Wrong. Illinois is dead last with only $5229, on average, per recipient being spent.
Probably because too many people were invited to Thanksgiving…in 2012, Illinois had 2.626 million Medicaid recipients enrolled….or too many rats and ants.
Compare to NC in 2012 – 1.471 million Medicaid recipients.
What was Alaska’s Medicaid budget/spending in 2012 that the average spending per enrollee was $13,073?
$1.425 million spent. Up 10.3% from 2011. And 109,000 Medicaid enrollees.
Here is NC:
Spending: $13.872 million. Up 22.8% from 2011. And 1.471 million recipients.
Here is a crazy one..Nevada:
In 2012, Nevada had 301,000 Medicaid enrollees. A little under 3x Alaska. Nevada spent $1.692 million on Medicaid (only 200,000-ish over Alaska), but Nevada’s average spending per enrollee was $5,621 (less than half of Alaska and the third lowest amount spent per enrollee). Where did all Nevada’s Medicaid money go?? Rats and ants eating away the pie?
North Dakota has the very least number of Medicaid enrollees in 2012…66,000. Wyoming is a close second with only 67,000 Medicaid enrollees in 2012.
North Dakota was the 4th highest state as to spending per enrollee with an average of $10,969/enrollee.
Wyoming was the 16th highest state as to spending per enrollee with an average of $8537/enrollee.
Guess which state had the highest total spending on Medicaid in 2012?
California. (Shocker!). California spent $47.726 million on Medicaid, up 4.2% from 2011. California also had the highest number of enrollees on 2012 with 2.624 million enrollees (over a million more than NC). California also spent the 5th lowest on average per enrollee, $6,065.
Having a high number of enrollees did not always have a direct correlation with spending the least, on average, per enrollee. Oregon only had 569,000 Medicaid enrollees in 2012 and spent the 4th lowest amount, on average, per enrollee, $6,007.
New York is the closest state to spending and number of recipients to California, but New York succeeded in a much higher average spending per enrollee than California.
New York spent $39.257 million total on Medicaid (less than $8 million difference from California) in 2012. New York had 5.004 million enrollees (2.8 million Medicaid enrollees less than California) and spent, on average, $7845/enrollee (absolute, dead-on-middle as compared to all states).
Georgia is, perhaps, the most comparable to North Carolina in terms of number of Medicaid enrollees in 2012. NC = 1.471 million enrollees in 2012. GA = 1.529 enrollees in 2012.
NC spent $13.872 million, while Georgia spent $8.497 million in 2012. So, Georgia had MORE Medicaid enrollees and spent over $5 million less……
Is that good or bad? Is Georgia more efficient? Did Georgia spend less in administration costs?
Actually (albeit there may be other factors), Georgia spent significantly less, on average, on each Medicaid enrollee.
Georgia spent 2nd lowest, on average, per Medicaid enrollee. Only Illinois surpassed Georgia in lowest spending, on average, per enrollee. Georgia spent, on average, $5,229 per enrollee.
NC spent $9430, on average, per enrollee. (Which, BTW, is more than enough for my “A Modest Proposal”).
That is a huge difference!
One other number jumped out at me when I reviewed Modern Healthcare‘s article, “Medicaid Budgets By State.” Remember I told you that NC spent $13.872 million on Medicaid in 2012…and that the amount spent was a 22.8% increase from 2011?
22.8% is a high percentage to increase in only one year!
I looked at the increases/decreases of the states. North Carolina gets the award for the highest percentage growth in spending on Medicaid in the entire nation. NC was the only state whose percentage “increase of Medicaid spending” percentage from 2011 to 2012 was in the 20s.
NC is #1 in the nation for percentage increase as to total Medicaid spending!!!! (Proud?)
The next state with the highest increase in spending on Medicaid is Mississippi with a 17.4% increase in spending from 2011. Next in line is Alabama with a 14.7% increase in Medicaid spending.
Guess which states decreased its Medicaid spending the most from 2011 to 2012?
Oregon (decrease of 23.2% spending) and Illinois (decrease of 15% spending). Is it coincidental that Illinois spent the absolute least, on average, per Medicaid recipient and that Oregon spent the 4th lowest, on average, per Medicaid recipient?
Regardless the size of the pie, the number of guests, and the number of rats and ants, we need to make sure that the guests (Medicaid recipients) are benefitting most from the pie.
Sometimes a decrease in spending equals a decrease in services to Medicaid recipients…sometimes not…I guess it depends on the number of rats and ants.