Friday evening WRAL covered my Preliminary Injunction hearing at the Office of Administrative Hearings (OAH).
What in the world is administrative law???? If you are a Medicare or Medicaid provider, you better know!
Most of my blogs are about Medicare and Medicaid providers and the tangled web of regulatory rules and regulations that they must abide by in order to continue providing medically necessary services to our most-needy and elderly populations. This time, however, I am going to blog about (1) administrative law 101 (which I am coming to the realization that few providers understand); and (2) out-of-state attorneys – and why you may need to seek out an attorney from another state from which you live (and why it is possible). Attorneys are licensed state-by-state and, lately, I’ve gotten a lot of questions about “how can you represent me in Nevada when you are in NC?” and when I Googled this topic – I found that there is very little information out there. I am here to teach and teach I will. Read on if you want to learn; close this browser if you do not. The other goal of this blog is to educate you on administrative law. Because administrative law is vastly different than normal law, yet it pertains to Medicare and Medicaid providers, such as you. My last goal with this blog is to educate you on the expense of hiring an attorney and why, in some instances, it may be more costly than others. Whew! We have a lot to go through!
Let’s get started…
A lot of potential clients often ask me how are you able to represent me in Nebraska when you live in North Carolina? Or Alaska? (yes, I have a client in Alaska). I figured I should clear up the confusion. (The “administrative law class” portion of this blog is interwoven throughout the blog – not my best blog, organizational-wise; but we cannot all be perfect).
There are three ways in which an attorney can represent an out-of-state client if that attorney does not have the State’s Bar license for the State in which you reside. Just in case you didn’t know, attorneys get licensed on a state-by-state basis. For example, I have my Bar licenses in North Carolina and Georgia. It is similar to how physicians have to get State licenses. However, I represent healthcare providers in approximately 30 states. I don’t have a client in Iowa yet, so any healthcare providers in Iowa – Hello!! Now we need to understand – how is this possible?
Let’s take a step back, in case there are those who are wondering what a Bar license is; it is a license to practice law and, literally, means that you can go past the bar in a courtroom.
The first way in which in attorney can represent an out-of-state client is because most Medicaid and Medicare provider appeals must be brought before Administrative Court. In North Carolina, our Administrative Court is called the Office of Administrative Hearings (OAH). OAH is the administrative agency for the Judicial Branch. An Administrative Court is the type of court specializing in administrative law, particularly in disputes concerning the exercise of public power. Their role is to ascertain that official/governmental acts are consistent with the law. Such courts are considered separate from general courts. For most state’s Administrative Courts, attorneys do not have to be licensed in that state. Most people don’t know the difference between Administrative Courts versus normal civil courts, like Superior and District courts. Or Magistrate Courts, for example, where Judge Judy would be. I certainly didn’t know what administrative law was even after I graduated law school. Quite frankly, I didn’t take the administrative law class in law school because I had no idea that I would be doing 89.125% administrative law in my real, adult life (I still file federal and state injunctions and sue the government in civil court, but the majority of my practice is administrative).
Administrative laws, which are applicable to Medicare and Medicaid providers, are laws pertaining to administrative agencies (seems self-defining). Administrative court is defined as a court that specializes in dealing with cases relating to the way in which government bodies exercise their powers.
There are literally hundreds of federal administrative agencies, including the Environmental Protection Agency, known as the EPA. If I have a pollution complaint, I contact the EPA. Another example is the Equal Employment Opportunity Commission, known as the EEOC. This agency is responsible for enforcing federal laws that make it illegal to discriminate a job applicant or employee. If I have a discrimination complaint, I contact the EEOC. Another example is the Consumer Product Safety Commission, known as CPSC, which is the independent agency that oversees the safety of products sold in the United States. If I have a problem with the safety of the product that I bought, I contact the CPSC. Complaints to government agencies, such as the EPA, do not go to normal, civil court. These complaints, otherwise known as petitions for contested case hearings, go to Administrative Court and are overseen by Administrative Law Judges (“ALJs”). Same is true for Medicare and Medicaid provider disputes. You cannot go to Superior Court until you have gone through Administrative Court otherwise your case will be kicked out because of an esoteric legal doctrine known as “exhaustion of administrative remedies.” See blog.
Here is a picture of North Carolina’s Raleigh OAH. You can see, from the picture below, that it does not look like a normal courthouse. It’s a beautiful building – don’t get me wrong. But it does not look like a courthouse.
Our OAH is located at 1711 New Hope Church Road, Raleigh NC, 27609. OAH used to be downtown Raleigh and one of the historic houses, but that got a little cramped.
Complaints about Medicare and Medicaid regulatory compliance issues go to Administrative Court because these complaints are against a government agency known as the Health Service Department or the Department of Health and Human Services, depending on which state within you live – the names may differ, but the responsibility does not.
Bringing a lawsuit in Administrative Court with an out-of-state attorney is the cheapest method. There is no need to pay local counsel to file pleadings. There is no need to pay to be pro hac-ed in (see below). Sure, you have to pay for travel expenses, but as we all know, you get what you pay for. If you don’t have an expert in Medicare or Medicaid in your state you need to look elsewhere. [Disclaimer – I am not saying you have to hire me. Just hire an expert].
Very few states require administrative attorneys to have the State Bar license in which they are practicing. For those few States that do require a State Bar license, even for administrative actions, the second alternative to hire an attorney out-of-state is for the attorney to pro hac into that State. Pro hace vice is a fancy Latin phrase which means, literally, “for on this occasion only.” It allows out-of-state attorneys a way to ask the court to allow them to represent a client in a state in which they do not have a license. Again, the reason why this is important is that in a extremely, niche practices, there may not be an attorney with the expertise you need in your state. I know there are not that many attorneys that do the kind of law that I do, [possibly because it is emotionally-draining (because all your clients are financial and emotional distress), extremely esoteric, yet highly-rewarding (when you keep someone in business to continue to provide medically necessary services), but, at times, overwhelming and, without question, time-consuming]. Did someone say, “Vacation?” “Pro hac-ing in” (defined as the attorney asking the court to allow them to represent a client in a state for which they do not have a license for one-time only) is also helpful when I appear in state or federal courts.
Most states have a limit of how many times an attorney can pro hac. For example, in New Mexico, out-of-state attorneys can only pro hac into New Mexico State courts four times a year. The fee for an attorney to pro hac into a state court varies state-by-state, but the amount is nominal when you compare the fee against how much it would cost to hire local counsel.
Thirdly, is by hiring local counsel. Some cases need to be escalated to federal or state court, and, in these instances, a Bar license in the state in which the case is being pursued is necessary. An example of why you would want to bring a lawsuit in federal or state court instead of an Administrative Court would be if you are asking for monetary damages. An Administrative Court does not have the jurisdiction to award such damages.
This is the scenario that I dislike the most because the client has to pay for another attorney only because their warm body possesses a State Bar license. Generally, local counsel does not do much heavy lifting. As in, they don’t normally contribute to the merits of the case. Because they have the State Bar license, they are used to file and sign-off on pleadings.
The first scenario – in which I represent a out-of-state client in Administrative Court, and do not need to hire local counsel or to get my pro hac, is the cheapest method for clients. As an aside, I spoke with an attorney from a bigger city yesterday and was amazed at his or her billable rates. Apparently, I’m steal.
The second most inexpensive way to hire an attorney from out-of-state is to have them get pro hac-ed in. There is a filing fee of, usually, a few hundred dollars in order to get pro hac-ed in. But, in some states, you don’t have to hire local counsel when you are pro hac-ed in.
The most expensive way to hire an out-of-state attorney is needing to hire local counsel as well. Let’s be honest – attorneys are expensive. Adding another into the pot just ups the ante, regardless how little they do. When attorneys charge $300, $400, or $500 an hour, very few hours add up to a lot of money (or $860/hour….what…zombies?).
If you do not agree with the decision that the Administrative Law Judge renders, then you can appeal to, depending in which state you reside, Superior Court or District Court. If you do not agree with the decision you receive in District Court or Superior Court, you then appeal to the Court of Appeals. On the appellate level, out-of-state attorneys would need to either be pro hac-ed on or hire local counsel.
My mom taught me a song when I was young called, “A Hole in the Bucket.” It is a maddening song about a lazy husband named Henry who begins the song telling his wife Liza that “There’s a hole in the bucket, dear Liza, dear Liza….” To which Liza sings, “Then fix it, dear Henry, dear Henry…”
The song continues with Henry singing excuses and impediments to his ability to fix the hole in the bucket and Liza explaining to Henry how to overcome these excuses. The song goes around and around until, in order to fix the bucket, Henry would have to sharpen an ax on a stone that “is too dry,” and the only way to wet the stone is with the bucket that has a hole. “There’s a hole in the bucket…” And the songs starts anew and can be sung continuously, never-ending.
My husband and daughter audibly groan when I begin such song.
And you can’t blame them! It is discouraging and frustrating when something is caught in a never-ending circle with no end and no conclusion. It is human nature to try to resolve issues; it is also ingrained in Americans’ minds that hard work yields results. When hard work yields nothing but a big, fat goose-egg, it is exacerbating.
Kind of like claims in NCTracks…
When NCTracks went live on July 1, 2013, providers immediately began to complain the claims were being erroneously denied and they were receiving no reimbursements. Folks with whom I spoke with were at their wits-ends, spending hours upon hours trying to discern why claims were being denied and what process they could undertake to fix “the hole in the bucket.”
The problem persisted so long and I was contacted by so many providers that I instigated the NCTracks class action lawsuit, which is still pending on appeal, to the best of my knowledge, at my former firm. Although it was dismissed at the Business Court level, I believe it is on appeal. See blog.
Providers complained that, when they contacted CSC’s Help Desk regarding denied claims, the customer service representatives would have little to no understanding of the claims process and instruct them to re-file the denied claims, which created a perpetual cycle of unadjudicated claims.
“It was infuriating!” One provider explained. “It was as if we were caught in the spin cycle with no hope of stopping. I wanted to yell, ‘I’m dry all ready!!'”
“I was spending 20+ a week on NCTracks billing problems,” another said.
To which, I said, “There’s a hole in the bucket, dear Liza, dear Liza.”
Over two years after the “go live” date, the Department has now (finally) informed providers that there is an informal reconsideration review process for denials from CSC.
The September 2015 Medicaid Bulletin states that:
“This article provides a detailed explanation of the N.C. Division of Medical Assistance (DMA) procedures for Informal Reconsideration Review of adverse claim actions (denials, disallowances and adjustments) made by its fiscal agent, CSC.”
The Bulletin provides a 30 day time period during which a provider can appeal a denied claim:
“Time Limit for Submission of Request
(emphasis in original).
You must request reconsideration review within 30 calendar days of the final notification. BUT what exactly is “final notification?” The initial denial? The second denial after re-submitting? The third? Or, what if, your claim is pending…for months…is that a denial? When CSC tells you to re-submit, does the time frame in which to file a reconsideration review start over? Or do you have to appeal every single denial for every single claim, even if the claim is re-submitted and re-denied 10 times?
This new informal appeal process is as clear as mud.
Notice the penalty for NOT appealing within 30 days…”DMA’s action will become final.”
This means that, if you fail to appeal a denial within 30 days, then the claim is denied and you cannot request a reconsideration review. Theoretically, there is a legal argument that, once the “final decision” is rendered, even if it were rendered due to you failing to request a reconsideration review, you would have 60 days to appeal such final decision to the Office of Administrative Hearings (OAH). Although, acting as the Devil’s advocate, there is an argument that your failure to request a reconsideration review and taking the appeal straight to OAH is “failing to exhaust your administrative remedies.” See blog. Which could result in your appeal being dismissed for lack of jurisdiction. This goes to show you the importance of having your attorney involved at the earliest juncture, otherwise you could risk losing appeal rights.
Let’s think about the “time limit for submission of request” in a real-life hypothetical.
You keep receiving denials for dialysis claims for no apparent reason. You received 20 denials on September 4, 2015. You contact a CSC customer service representative on September 8, 2015, four days later, due to Labor Day weekend. The customer service representative instructs you to re-file the claims because you must include the initial date of treatment in order to have the claims processed and paid (which was not required with HP Enterprises’ system). Is this the “final notification?” It does not seem so, since you are allowed to re-submit…
You revise all 20 claims to include the first treatment date on the claim and re-submit them on September 9, 2015. Since you re-submitted prior to the September 10th cutoff, you expect payment by September 16, 2015, 12 days after the initial denial.
You receive your explanation of benefits (EOBs) and 5 claims were adjudicated and paid, while 15 were denied again.
You contact CSC customer service and the representative instructs you to re-submit the 15 claims. The rep does not know why the claims were denied, but she/he suggests that you review the claims and re-submit. After hours of investigative work, you believe that the claims were denied because the NPI number was wrong…or the incorrect address was processed…or…
You miss the September 17th cut-off because you were trying to figure out why these claims were denied. you submit them for payment for the September 29th checkwrite date (25 days after the initial denial).
At this point, if any claims are denied, you wouldn’t know until October 6th, 32 days after the initial denial.
In my scenario, when is the final adjudication?
If the answer is that the final adjudication is at the point that the provider tries all possible revisions to the claims and continues to re-submit the claims until he/she cannot come up with another way to re-submit, then there is never final adjudication. As in, the provider could continue various changes to the billing ad nauseam and re-submit…and re-submit…and re-submit…”There’s a hole in the bucket!”
If the answer is that the final adjudication is the initial denial, then, in my scenario, the provider would be required to appeal every single denial, even for the same claim and every time it is denied.
You can imagine the burden to the provider if my second scenario is correct. You may as well hire a full-time person whose only task is to appeal denied claims.
Regardless, this new “Informal Reconsideration Review” purports to create many more questions than answers.
So may rules are enacted with good intentions, but without the “real life” analysis. How will this actually affect providers?
“There’s a hole in the bucket, dear Liza, dear Liza.”
“Then fix it.”
When you, as a health care provider, undergo a regulatory Medicare or Medicaid audit, your liability insurance could be your best friend or your worst enemy. It is imperative that you understand your liability coverage prior to ever undergoing an audit.
There are two very important issues that you need to know about your liability insurance:
1. Whether your liability insurance covers your choice of attorney; and
2. Whether your liability insurance covers settlements and/or judgments.
I cannot express the importance of these two issues when it comes to regulatory audits, paybacks and recoupments. Let me explain why…
I have blogged numerous times over the past years about the importance of knowing whether your liability insurance covers your attorneys’ fees. I have come to realize that whether your liability insurance covers your attorneys’ fees is less important than knowing whether your liability insurance covers your choice of attorney. Believe it or not, when it comes to litigating regulatory issues in the Medicare/Medicaid, attorneys are not fungible.
A client of mine summed it up for me today. She said, “I wouldn’t go to my dentist for a PAP smear.”
Case in point, here are some examples of misconceptions that attorneys NOT familiar with the Office of Administrative Hearings (OAH) might think:
• Myth: Getting the case continued is a breeze, especially if all the parties consent to it.
• Reality: Generally, OAH is reluctant to continue cases, except for good cause, especially when a case has pended for a certain amount of time. (This has been a more recent trend and could change in the future).
• Myth: When my case is scheduled for trial on X date, it will be a cattle call and we will only determine when the case will be actually heard, so I don’t need to prepare for trial. (This is true in superior court).
• Reality: Incorrect. Most likely, you will be heard. OAH has a number of administrative law judges (ALJs) who are assigned cases. Generally, they only schedule one case per day, although there are exceptions.
• Myth: Since we are going to trial next week, the other side must not intend to file a motion to dismiss or motion for summary judgment. I don’t need to prepare any counter arguments.
• Reality: The administrative rules allow attorneys to orally file motion the day of trial.
You can imagine how devastating attorney misconceptions can be to your case. An attorney with these misconceptions could very well appear unprepared at a trial, which could have catastrophic consequences on you and your company.
Review your liability insurance. Determine whether your liability insurance covers attorneys’ fees. Then determine whether it covers your choice of attorney.
Recently, a client was informed that the agency allegedly owes over $400,000 to the auditing agency. We will call him Jim. Jim came to me, and I instructed him to determine whether his liability insurance covers attorneys’ fees. It turned out that his insurance did cover attorneys’ fees, but only a certain attorney. Jim had overlooked our first issue.
Despite the fact that his insurance would not cover my fees, he opted to stick with me. (Thanks, Jim).
Regardless, once settlement discussions arose between us and the auditing entity, which in this particular case was Palmetto, I asked Jim for a copy of his liability insurance. If his liability insurance covers settlements, then we have all the incentive in the world to settle and skip an expensive hearing.
I was shocked at the language of the liability insurance.
According to the contract, insurance company would pay for attorneys’ fees (just not mine). Ok, fine. But the insurance company would contribute nothing to settlements or judgments.
What does that mean?
Insurance company could provide Jim with bargain basement attorneys, the cheapest it could find, with no regard as to whether the attorney were a corporate, litigation, real estate, tax, bankruptcy, or health care lawyer BECAUSE…
The insurance company has no skin in the game. In other words, the insurance company could not care less whether the case settles, goes to trial, or disappears. Its only duty is to pay for some lawyer.
Whereas if the insurance company were liable for, say, 20% of a settlement or judgment, wouldn’t the insurance company care whether the hired lawyer were any good?
Print off your liability insurance. Read it. Does your liability insurance cover attorneys’ fees for your choice of provider?
Does your liability insurance cover settlements and/or judgments?
The way it works with our three, separate branches of government is that if the court system determines that a statute should be interpreted as ‘A,’ and the legislative branch does not appreciate the way in which the statute was interpreted, then, during the next session, the legislative branch can pass a bill into law that specifically states that the statute is ‘B’ (provided the statutes are consistent with the constitution).
Take the leaning Tower of Pisa. It was built on unsteady ground and within 10 years of its construction, the builders knew it would lean…much like many of our Medicaid and Medicare laws. A beautiful tower, on paper, may not work in real life and on unsteady ground. But once the tower is erected, renovations can occur that will stop the tower from falling over (supposedly, the leaning Tower of Pisa is now stable).
Similarly, when a new law is enacted, no one can predict whether the law will work in real life or be effective in the manner for which it was intended.
N.C. Gen. Stat. 108C-5 was enacted in 2011 and allows the Department of Health and Human Services (DHHS) to audit a small sample of a health care provider’s medical records and extrapolate the error rate against the universe of all of the provider’s records. For example, HMS, one of NC’s hired auditors, asks a Hospital X for all 99222, 99219 and 99235 codes, that is, initial hospital encounter codes, for the period of time of January 1, 2010 – January 1, 2011. After HMS reviews a sample of those medical records, it determines that Hospital X is miscoding at an error rate of 45% (a conclusion which is ALWAYS likely to be wrong, from my experience) for an actual overpayment amount (from just that particular record sample) of $100,000.00. N.C. Gen. Stat. 108C-5 allows HMS to extrapolate the actual overpayment over a universe all of the Hospital’s records for ‘x’ number of years, to reach an alleged overpayment amount of $4,000,000.00 for the audited time period
It really is ridiculous. For example, one of my clients, a behavioral health care provider, who works very hard for his clients, received from the auditor an alleged notice of overpayment of $640,441.00. My associate, Robert Shaw, reviewed the exact same documents that the auditors reviewed and determined that the audit was erroneous. Robert didn’t even have to take it to court. After he drafted correspondence to the auditing company with explanations of why the audit was incorrect, the auditing company admitted that almost every single one of its conclusions was in error, and agreed to accept $258.20 for one claim.
Going back to N.C. Gen. Stat. 108C-5, subsection (i) used to state, “Prior to extrapolating the results of any audits, the Department shall demonstrate and inform the provider that (i) the provider failed to substantially comply with the requirements of State or federal law or regulation or (ii) the Department has credible allegation of fraud concerning the provider.”
Using the plain language of the statute, in court, I would often argue in defense of a health care provider that the extrapolation should be thrown out because DHHS would send a Tentative Notice of Overpayment (TNO) that included the extrapolated amount in the same correspondence in which DHHS was “demonstrating and informing” the health care provider that either: (i) the provider failed to substantially comply with the requirements of State or federal law or regulation or (ii) the Department has a credible allegation of fraud concerning the provider. N.C. Gen. Stat. 108C-5 clearly states that the demonstration and informing should be given to the health care provider prior to extrapolating.
The DHHS attorney would argue that my argument would create absurd results in that DHHS could demonstrate and inform the provider in one correspondence, then one minute later send the extrapolation. The judges at the Office of Administrative Hearings (OAH) agreed with me to a point. They agreed that the first extrapolation should be thrown out because DHHS did not demonstrate and inform prior to extrapolating.
However, when a provider receives an extrapolation, the first level of appeal is an informal reconsideration review within DHHS, Division of Medical Assistance (DMA). The hearing officers are hired by DHHS and do not, generally, have legal backgrounds; although I can think of one exception. After the reconsideration review, DHHS, through its hired vendor, conducts another extrapolation, which usually does not usually result in a severe decrease in alleged overpayment.
So the Administrative Law Judges (ALJs) held that the subsequent extrapolations…the extrapolations after receiving the TNO which provides the provider notice, are legit…that the TNOs satisfy the requirement of DHHS to demonstrate and inform the provider prior to extrapolating
Well, long story short, DHHS did not like having to defend itself for not providing sufficient notice prior to extrapolating.
Enter Session Law 2014-100, otherwise known as the sneaky Appropriations Bill that appropriates more than our budget.
Session Law 2014-100 revises N.C. Gen. Stat 108C-5(i) to state “(i) Prior to extrapolating the results of any audits, the Department shall demonstrate and inform the provider that (i) the provider failed to substantially comply with the requirements of State or federal law or regulation or (ii) the Department has a credible allegation of fraud concerning the provider. Nothing in the subsection shall be construed to prohibit the Department from identifying the extrapolated overpayment amount in the same notice that meets the requirements of this subsection.”
See the difference? Poof! The leaning Tower of Pisa is renovated!
Session Law 2014-100 retroactively became effective July 31, 2014. So, going forward, I can no longer argue that the TNO is not sufficient notice in order to throw out the first extrapolation.
However, I do have more arguments as to how DHHS is not complying with N.C. Gen. Stat. 108C-5 in an effort to throw out the extrapolation. There is more than one way to skin a cat! In fact, I am waiting for a decision from an ALJ on an innovative argument I made the last week.
Perhaps the leaning Tower of Pisa will lean a little more in the future despite the renovations…
I believe that everyone would agree with me that The Affordable Care Act (ACA) has done more to impact health care legally…probably since 1966 when Medicare was established. Whether you think the impact is beneficial or negative, it does not matter. The impact exists nonetheless.
One of the changes the ACA has yielded is the threshold for suspending Medicare and Medicaid payments to providers based on credible allegations of fraud is lower.
While CMS regulations authorized the suspension of Medicare and Medicaid payments prior to the enactment of the ACA, § 6402(h) lowers the standard the government must meet in order to suspend payments based upon suspected fraud.
The lower standard for a state to suspend Medicaid and Medicare payments nip…nay, I say…bite at the fabric of due process.
First, what is a “credible allegation of fraud?”
Credible allegation of fraud means an allegation from any source, such as data mining, whistleblowers, and/or fraud hotline complaints. Quite literally, you could be accused of having credible allegations of fraud because an ex, disgruntled employee calls the fraud hotline.
The definition of “credible” is equally as scary. If there is “indicia of reliability,” it is credible. I have no idea what “indicia” means, but it does not sound like much. So if there is indicia of reliability when your ex, disgruntled employee calls the fraud hotline, there may be credible allegations of fraud against you.
When you have credible allegations of fraud against you, your Medicaid/Medicare payments are suspended. Without an opportunity to rebut the allegations. Without you even knowing from where the allegation came.
I make the analogy (albeit, admittedly, a poor one) of my law license. Or an M.D.’s license. Or a teacher’s license. We do not have a right to a law license. But, I argue, once you go through the process and pass the necessary tests and are awarded a law license (or M.D. license or teacher’s license), you have a protected property right in continuing in the profession.
There is a good cause exception and you should try to assert the exceptions, but this blog concentrates on the suspension and the due process (or lack thereof) involved.
CMS states that providers have “ample opportunity to submit information to us in the established rebuttal statement process to demonstrate their case for why a suspension is unjust.”
However, think of this…in Medicare, notice to the provider is not required prior to the suspension. So, I ask you, how can you plead the suspension is unjust when you have no notice? Obviously, only after the suspension has been put into place. Due process violation?
In Medicaid, the agency must notify the provider of the suspension within 5 days of taking the action. Although it can be extended to 90-days upon request of a law enforcement agency.
Even though the Medicare suspension statutes do not require notice, the Medicare statutes are a bit more provider-friendly when it comes to the length of time during which you may be suspended. For Medicare providers, the suspension can last a period of 180 days. However, the 180 days can be extended.
Conversely, for Medicaid providers, there is no scheduled period of suspension.
In my cursory review of case law, I found one case in which the Medicaid provider had suffered suspension of Medicaid reimbursements for over 4 years. Obviously, the company had closed and staff had been terminated. You cannot maintain a business without revenue.
So, is the suspension of Medicare and Medicaid payments upon a credible allegation of fraud a violation of due process?
Do not even get me started on the importance of due process. In fact, I have blogged about the importance of due process before in this blog. “NC Medicaid and Constitutional Due Process.”
Due process is generally described as notice and an opportunity to be heard. But due process does not apply to everything. For example, you do not have due process rights to your drivers’ license. Certain infractions will cause you to lose your drivers’ license without due process. That is because driving is a privilege, not a right. You do not have a right to drive. Instead due process attaches when a liberty or a property right is deprived.
The right to vote (for some…not felons)
Freedom of religion
Freedom of speech
Obviously, in certain circumstances, those rights can be restricted (shouting fire in a crowded movie theatre, for example). But, generally, you have due process to the deprivation of any of your rights.
For purposes of this blog, we are concentrating on whether due process attaches to the deprivation of Medicare and Medicaid reimbursements. If someone takes away your Medicaid and/or Medicare reimbursements, are you entitled to due process…or notice and an opportunity to be heard?
Some courts have held that “health care providers have a constitutionally protected property interest in continued participation in the Medicare and Medicaid programs.”
Obviously, in the jurisdictions in which this view is followed, without question, you have a right to due process upon suspension of Medicaid and/or Medicare reimbursements.
However, the view that Medicaid and Medicare participation is a constitutionally protected right is not the majority view. Or, I should say, this particular issue has not arisen in all jurisdictions. Some jurisdictions have not even considered whether the participation in Medicaid and Medicare is a protected property interest.
To be completely clear, there is no protected property interest in procuring a Medicaid or Medicare contract. Only once you receive the contract does your interest in the contract become protected (in those certain jurisdictions).
North Carolina, for example, has not contemplated this issue (at least, not since after 10 NCAC 22F.0605 was enacted).
Interestingly enough, 10A N.C. A. C. 22F.0605 states “[a]ll provider contracts with the North Carolina State Medicaid Agency are terminable at will. Nothing in these Regulations creates in the provider a property right or liberty right in continued participation in the Medicaid program.”
So, one would think that, in NC, there is no protected property interest in continued participation in the Medicaid program.
However, in the Office of Administrative Hearings (OAH), this very issue was contemplated in a few contested case hearings and the Administrative Law Judges (ALJ) have decided that there is a protected property interest in the continued participation of the Medicaid program, despite 10A N.C. A. C. 22F.0605. The decisions are based on federal and state law.
“North Carolina statutes and rules provide procedural due process. Federal Medicaid regulations are replete with provisions that require that notice be given to the provider of the suspension or termination of Medicaid payment for services.”
“The Supreme Court has ruled that property rights can be created by administrative regulations and that the “sufficiency of the claim of entitlement must be decided by reference to state law.”‘ (Internal cite omitted). Bowens v. N.C. Dept. of Human Res., 710 F.2d 1015, 1017 (4th Cir. 1983). Our state statutes and rules have the procedural and substantive safeguards, indicating that the provider’s participation is not terminable at will.” (This opinion was written after 10A N.C. A. C. 22F.0605 was enacted).
While these OAH decisions have not undergone judicial review, at least, in OAH, providers may have a protected property interest in the continuation of participation in the Medicaid program. And analogous argument would exist for Medicare providers.
Who knows? Maybe NC will follow the view that providers have a protected property interest in continuing participation in Medicaid…
Just imagine if the government could snatch away law licenses…or M.D.’s licenses…or teachers’ licenses…without any due process. We would live in fear of losing our livelihoods.
Jurisdiction…ugh…what a dry, boring topic. But wait!! Legal jurisdiction is imperative information for all my health care provider readers. Let me explain:
In what venue do you have to legally pursue the claim? Right now, some DMA-contracted companies are claiming that OAH does not have jurisdiction over them. In fact, I even have an Order signed by a Judge directing the contracted company to act, yet the company argues that OAH has no control over it. However, the State Plan states differently….
The Office of Administrative Hearings (OAH) has jurisdiction (meaning OAH can hear lawsuits against) state agencies. “Agency” is statutory defined as an agency or an officer in the executive branch of the government of this State and includes the Council of State, the Governor’s Office, a board, a commission, a department, a division, a council, and any other unit of government in the executive branch. A local unit of government is not an agency.
The state court system, instead is for civil actions. The district court division is the proper division for the trial of all civil actions in which the amount in controversy is ten thousand dollars ($10,000) or less; and the superior court division is the proper division for the trial of all civil actions in which the amount in controversy exceeds ten thousand dollars ($10,000).
Whether you are required to proceed legally at OAH or state court will impact your claim A TON!
The OAH Mission Statement is:
To serve the citizens of North Carolina, with quality and efficiency, by providing an independent forum for prompt and impartial resolution of administrative law contested cases involving citizens and state agencies; investigating alleged acts of unlawful employment practices in state government; functioning as the State’s codifier and publisher of all administrative rules; and reviewing rules before the Rules Review Commission.
Daily, OAH decides cases against the state government. Therefore, the judges at OAH are intimately involved in state legislation and the state governments limits. Also, OAH is a much faster process. A Contested Case Hearing filed in OAH will be heard in months (a preliminary injunction, even quicker); whereas a complaint filed in Wake County Superior Court may not be heard for years (it may be faster or slower in rural areas. I just don’t know).
From my cursory explanation of OAH, it would appear that any Medicaid issue against the state government would automatically be heard at OAH, right? Well, recently, I have encountered a number of Division of Medical Assistance’s agents arguing that (1) these agents are not agents, they are independent contractors; and (2) that OAH does not have jurisdiction over the agents.
Specifically, DMA contracts with companies to manage Medicaid, conduct audits, conduct investigations, etc. The Managed Care Organizations have been contracted with DMA to manage Medicaid behavioral health. Remember, since Western Highlands was consumed by Smokey Mountain, North Carolina now has 10 MCOs. They are, in no particular order:
So what if you have a legal disagreement with an MCO? State court or OAH? So far, all MCOs have declared themselves to be out of OAH jurisdiction.
However, remember my blog, “Final Agency Decision No Longer Needed in Appeals” from March 5, 2013? If not, feel free to go back and read it.
The point is, unless North Carolina receives a specific Waiver from the federal government, NC must follow federal law which requires a single state agency to administer Medicaid. If OAH is allowed a final decision, then, in essence, another entity is deciding a Medicaid issue.
So, is NC in violation of federal law? Well, yes, as to other federal laws, but not in this case. NC submitted a State Plan Waiver, which was granted on December 27, 2012.
The Waiver states, in pertinent part, OAH acknowledges and also agrees that the issue to be determined at final hearings conducted in accordance with this waiver is whether a single state Medicaid agency or one of its contractors or agents exceeded its authority or jurisdiction, acted erroneously, failed to use proper procedure, acted arbitrarily or capriciously, and/or failed to act as required by law or rule…”
According to the Waiver, it does not matter if the MCO is a contractor or agent. Either way, OAH has jurisdiction.
In my profession, I come across so many health care providers…of all sorts….dentists, psychiatrists, speech therapists, general practitioners, etc. Many of these providers and most of my clients, despite the audits, despite the immense paperwork, despite the low reimbursements, despite the lack of communication with the Division of Medical Assistance (DMA) and all agents, most providers still want to serve Medicaid recipients, even after the horrible events the providers are dragged through.
But, today, I had two potential clients receive a consultation. When I asked, “Is your goal to get your Medicaid contract back?” Potential clients answered (paraphrasing), “Heck no!!!!”
These potential clients were quality health care providers. Like so many other providers, these potential clients committed no fraud. All they did was provide quality health care services to Medicaid recipients and fell victim to paperwork nitpicking by DMA and agents (Managed Care Organizations (MCOs) and Recovery Audits Contractors (RACs)).
But these potential clients were sick of it. They were continuing their practices, but without Medicaid recipients. So when they open their doors and Medicaid recipients come for help, there will be two more health care providers saying, “Sorry. We don’t accept Medicaid.”
Recently, I have watched Gov. McCrory and Director Wos in interviews. I seem to remember Director Wos saying, in an interview, that she wanted North Carolina to be the best place for providers to practice health care and accept Medicaid.
I think, if memory serves me right, that part of making providers want to accept Medicaid recipients in NC, would be to not harass providers by conducting audits in a an erroneous manner (by contracting out to minimum wage, non- knowledgeable “contractors”), would be to not terminate Medicaid contracts without due process and without real cause, would be to not cause quality health care providers to force Medicaid recipients to be discharged from care.
If Gov. McCrory and Director Wos truly want to make health care providers want to accept Medicaid in NC, (which I actually believe) then what about what is happening right now?? I understand that, in the future, providers may be happy in NC, but, right now, providers are losing their businesses because of ridiculous audits with ridiculous outcomes. We are worried about providers NOW. I beg of all politicians with pull to save these Medicaid providers, please use that pull now. One week from now, 3-9 providers could be out of business. Two weeks from now, 6-18 providers could be bankrupt.
Worry about now. Fix now. Help these providers, before these quality providers go out-of-business.
This is huge!! Not often in Medicaid administrative law, does the appeal process actually change. But the appeal process has changed.
In the past, to appeal a decision from North Carolina Department of Health and Human Services (DHHS), you had to file a Petition for Contested Case. The Petition would be heard by an Administrative Law Judge (ALJ) at the Office of Administrative Hearings (OAH).
Once the ALJ rendered a Decision, DHHS would review the ALJ Decision and render a “Final Agency Decision.” Since DHHS is the entity rendering the Final Agency Decision, 9 times out of 10, the Final Agency Decision happened to decide in favor of the Department.
To appeal a Final Agency Decision, you had to request a Judicial Review in Superior Court. For the Judicial Review, the Superior Court sits as a Court of Appeals. Meaning no additional testimony or evidence may be introduced, but each side arguments the legal arguments with the evidence already introduced at OAH.
Not anymore. For dental, behavioral health, and medical authorizations, following an OAH Decision, no Final Agency Decision will be rendered.
This means that any decision made by OAH is the decision that the provider and beneficiary can act upon and that a final agency decision by DHHS is no longer required.
OAH will mail a copy of the decision via trackable mail (e.g., certified mail, registered mail, USPS trackable mail) to the parties identified on the appeal request form.
How the OAH decision is implemented depends on whether the Decision agreed with DHHS (or the contracting company) or overturned DHHS, in full or in part. The implementation language is no important, I copied and pasted the language from the http://www.ncdhhs.gov/dma/bulletin/0313bulletin.htmhttp://www.ncdhhs.gov/dma/bulletin/0313bulletin.htm.
An OAH decision that upholds the agency action will be implemented no later than three business days from the date the OAH hearing decision is mailed.
Decisions that Reverse the Agency Action (Utilization Review [UR] Contractor Decision) in Part or in Full
Remember, regardless of the OAH Decision, you still have the right to a judicial review at Superior Court.
Very rarely in the Medicaid arena will a health care provider be able to choose to advance to the Office of Administrative Hearings (OAH) without first visiting the Hearing Officers at the Department of Health and Human Services (DHHS). However, if ever given the choice, in the famous words of the Monopoly Man, “Go Directly to OAH! Do not pass DHHS! Do not collect your $200!”
When does a health care provider get this choice?
Never after receiving a Tentative Notice of Overpayment. But when a health care provider is placed on prepayment review and, subsequently, receives a Termination of Medicaid Contract notice, the provider may choose to (a) appeal to DHHS within 15 days; or (b) appeal to OAH within 60 days.
1. Going straight to OAH skips a tedious procedural step (the reconsideration review):
Since I have practiced Medicaid law, I have never seen a decision from a DHHS Hearing Officer with which I agreed. Of all the DHHS decisions I have received on behalf of my clients, I have appealed 100%. Now, I am not saying that health care providers should not appeal if the only choice is DHHS. In fact, I strongly encourage the exact opposite. Because appealing to DHHS, in most circumstances, is just the beginning. Once the appeal is heard by a DHHS Hearing Officer and a decision in rendered, then a provider can move on to appeal to OAH. But, when given a choice between DHHS and OAH, always pick OAH because, basically, going straight to OAH allows the health care provider to skip a step.
2. Going straight to OAH costs less in attorneys’ fees:
Again, because going straight to OAH allows the health care provider to skip the reconsideration review at the DHHS level, attorneys’ fees are less.
3. Going straight to OAH appoints an Administrative Law Judge (ALJ):
If given the option between a DHHS Hearing Officer and an ALJ (not employed by DHHS), which would you chose to be the objective truth-seeker? I am in no way insinuating that the DHHS Hearing Officer is biased. I, personally, would just choose the person to hear my case who was not employed by DHHS. Plus, for the most part, ALJs are more sympathetic to Medicaid recipients and providers.
4. Going straight to OAH appoints an Attorney General (AG):
What? This is a good thing??? We WANT an attorney against us? Yes. Until the Medicaid recoupment appeal gets to the OAH level, there is no attorney on the state’s side. Which means no settlement can be discussed. Once an AG is assigned, the likelihood of settling skyrockets. The AGs understand the Medicaid rules and the benefits to settle. Thus, having a knowledgable attorney on the state’s side is extremely beneficial.
Despite all these great reasons to “Go Directly to OAH! Do not pass DHHS!,” inevitably, health care providers will normally not be able to skip DHHS. My advice? Appeal, Appeal, Appeal. And once you get the Decision from DHHS? Appeal, Appeal, Appeal. The decisions only get better once you receive that first DHHS decision.