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Medicaid Forecast: Cloudy with 100% Chance of Trump

Regardless how you voted, regardless whether you “accept” Trump as your president, and regardless with which party you are affiliated, we have a new President. And with a new President comes a new administration. Republicans have been vocal about repealing Obamacare, and, now, with a Republican majority in Congress and President, changes appear inevitable. But what changes?

What are Trump’s and our legislature’s stance on Medicaid? What could our future health care be? (BTW: if you do not believe that Medicaid funding and costs impact all healthcare, then please read blog – and understand that your hard-working tax dollars are the source of our Medicaid funding).

WHAT IS OUR HEALTHCARE’S FORECAST?

The following are my forecasted amendments for Medicaid:

  1. Medicaid block grants to states

Trump has indicated multiple times that he wants to put a cap on Medicaid expenses flowing from the federal government to the states. I foresee either a block grant (a fixed annual amount per state) or a per capita cap (fixed dollar per beneficiary) being implemented.

What would this mean to Medicaid?

First, remember that Medicaid is an entitlement program, which means that anyone who qualifies for Medicaid has a right to Medicaid. Currently, the federal government pays a percentage of a state’s cost of Medicaid, usually between 60-70%. North Carolina, for example, receives 66.2% of its Medicaid spending from Uncle Sam, which equals $8,922,363,531.

While California receives only 62.5% of its Medicaid spending from the federal government, the amount that it receives far surpasses NC’s share – $53,436,580,402.

The federal funding is open-ended (not a fixed a mount) and can inflate throughout the year, but, in return, the states are required to cover certain health care services for certain demographics; e.g., pregnant women who meet income criteria, children, etc. With a block grant or per capita cap, the states would have authority to decide who qualifies and for what services. In other words, the money would not be entwined with a duty that the state cover certain individuals or services.

Opponents to block grants claim that states may opt to cap Medicaid enrollment, which would cause some eligible Medicaid recipients to not get coverage.

On the other hand, proponents of per capita caps, opine that this could result in more money for a state, depending on the number of Medicaid eligible residents.

2. Medicaid Waivers

The past administration was relatively conservative when it came to Medicaid Waivers through CMS. States that want to contract with private entities to manage Medicaid, such as managed care organizations (MCOs), are required to obtain a Waiver from CMS, which waives the “single state entity” requirement. 42 CFR 431.10. See blog.

This administration has indicated that it is more open to granting Waivers to allow private entities to participate in Medicaid.

There has also been foreshadowing of possible beneficiary work requirements and premiums.Montana has already implemented job training components for Medicaid beneficiaries. However, federal officials from the past administration instructed Montana that the work component could not  be mandatory, so it is voluntary. Montana also expanded its Medicaid in 2015, under a Republican governor. At least for one Medicaid recipient, Ruth McCafferty, 53, the voluntary job training was Godsend. She was unemployed with three children at home. The Medicaid job program paid for her to participate in “a free online training to become a mortgage broker. The State even paid for her 400-mile roundtrip to Helena to take the certification exam. And now they’re paying part of her salary at a local business as part of an apprenticeship to make her easier to hire.” See article.

The current administration may be more apt to allow mandatory work requirements or job training for Medicaid recipients.

3. Disproportionate Share Hospital

When the ACA was implemented, hospitals were at the negotiating table. With promises from the past administration, hospitals agreed to take a cut on DSH payments, which are paid to hospitals to help offset the care of uninsured and Medicaid patients. The ACA’s DSH cut is scheduled to go into effect FY 2018 with a $2 billion reduction. It is scheduled to continue to reduce until FY 2025 with a $8 billion reduction. The reason for this deduction was that the ACA would create health coverage for more people and with Medicaid expansion there would be less uninsured.

If the ACA is repealed, our lawmakers need to remember that DSH payments are scheduled to decrease next year. This could have a dramatic impact on our hospitals. Last year, approximately 1/2 of our hospitals received DSH. In 2014, Medicaid paid approximately $18 billion for DSH payments, so the proposed reductions make up a high percentage of DSH payments.

4. Physician payment predictability

Unlike the hospitals, physicians got the metaphoric shaft when the ACA was implemented. Many doctors were forced to provide services to patients, even when those patients were not covered by a health plan. Many physicians had to  increase the types of insurance they would accept, which increased their administrative costs and the burden.

This go-around, physicians may have the ear of the HHS Secretary-nominee, Tom Price, who is an orthopedic surgeon. Dr. Price has argued for higher reimbursement rates for doctors and more autonomy. Regardless, reimburse rate predictability may stabilize.

Have an Inkling of a Possible Overpayment, You Must Repay Within 60 Days, Says U.S. District Court!

You are a health care provider.  You own an agency.  An employee has a “hunch” that…

maybe…

perhaps….

your agency was overpaid for Medicare/caid reimbursements over the past two years to the tune of $1 million!

This employee has been your billing manager for years and you trust her…but…she’s not an attorney and doesn’t have knowledge of pertinent legal defenses. You are concerned about the possibility of overpayments, BUT….$1 million? What if she is wrong?  That’s a lot of money!

According to a recent U.S. District Court in New York, you have 60 days to notify and refund the government of this alleged $1 million overpayment, despite not having a concrete number or understanding whether, in fact, you actually owe the money.

Seem a bit harsh? It is.

With the passage of the Affordable Care Act (ACA) on March 23, 2010, many new regulations were implemented with burdensome requirements to which health care providers are required to adhere.  At first, the true magnitude of the ACA was unknown, as very few people actually read the voluminous Act and, even fewer, sat to contemplate the unintentional consequences the Act would present to providers. For example, I daresay that few, if any, legislators foresaw the Draconian effect from changing the word “may” in 42 CFR 455.23 to “must.” See blog and blog and blog.

Another boiling frog in the muck of the ACA is the 60-Day Refund Rule (informally the 60-day rule).

What is the 60-Day Refund Rule?

In 2012, CMS proposed the “60-day Refund Rule,” requiring Medicare providers and suppliers to repay Medicare overpayments within 60 days of the provider or supplier identifying the overpayment.  Meaning, if you perform a self audit and determine that you think that you were overpaid, then you must repay the amount within 60 days or face penalties.

If I had a nickel for each time a clients calls me and says, “Well, I THINK I may have been overpaid, but I’m not really sure,” and, subsequently, I explained how they did not owe the money, I’d be Kardashian rich.

It is easy to get confused. Some overpayment issues are esoteric, involving complex eligibility issues, questionable duplicity issues, and issues involving “grey areas” of “non”-covered services.  Sometimes a provider may think he/she owes an overpayment until he/she speaks to me and realizes that, by another interpretation of the same Clinical Coverage Policy that, in fact, no overpayment is owed. To know you owe an overpayment, generally, means that you hired someone like me to perform the self audit.  From my experience, billing folks are all too quick to believe an overpayment is owed without thinking of the legal defenses that could prevent repayment, and this “quick to find an overpayment without thinking of legal defenses” is represented in Kane ex rel. United States et al. v. Healthfirst et al., the lawsuit that I will be discussing in this blog.  And to the billings folks’ credit, you cannot blame them.  They don’t want to be accused of fraud. They would rather “do the right thing” and repay an overpayment, rather than try to argue that it is not due.  This “quick to find an overpayment without thinking of legal defenses” is merely the billing folks trying to conduct all work “above-board,” but can hurt the provider agency financially.

Nonetheless, the 60-day Refund Rule is apathetic as to whether you know what you owe or whether you hire someone like me.  The 60-Day Refund Rule demands repayment to the federal government upon 60-days after your “identification” of said alleged overpayment.

Section 1128(d)(2) of the Social Security Act states that:

“An overpayment must be reported and returned under paragraph (1) by the later of— (A) the date which is 60 days after the date on which the overpayment was identified; or (B) the date any corresponding cost report is due, if applicable.”

A recent case in the U.S. District Court of New York has forged new ground by denying a health care providers’ Motion to Dismiss the U.S. government’s and New York State’s complaints in intervention under the False Claims Act (FCA).  The providers argued that the 60-day rule cannot start without a precise understanding as to the actual amount of the overpayment. Surely, the 60-day rule does not begin to run on the day someone accuses the provider of a possible overpayment!

My colleague, Jennifer Forsyth, recently blogged about this very issue.  See Jennifer’s blog.

Basically, in Kane ex rel. United States et al. v. Healthfirst et al., three hospitals provided care to Medicaid patients. Due to a software glitch [cough, cough, NCTracks] and due to no fault of the hospitals, the hospitals received possible overpayments.  The single state entity for Medicaid in New York questioned the hospitals in 2010, and the hospitals took the proactive step of tasking an employee, Kane, who eventually became the whistleblower, to determine whether, if, in fact, the hospital did receive overpayments.

At this point, arguably, the hospitals were on notice of the possibility of overpayments, but had not “identified” such overpayments per the 60-day rule.  It was not until Kane made preliminary conclusions that the hospitals were held to have “identified” the alleged overpayments.  But very important is the fact that the Court held the hospitals liable for having “identified” the alleged overpayments prior to actually knowing the veracity of the preliminary findings.

Five months after being tasked with the job of determining any overpayment, Kane emails the hospital staff her findings that, in her opinion, the hospitals had received overpayments totaling over $1 million for over 900 claims.  In reality, Kane’s findings were largely inaccurate, as approximately one-half of her alleged findings of overpayments were actually paid accurately.  Despite the inaccurate findings, the Complaint that Kane filed as the whistleblower (she had been previously fired, which may or may not have contributed to her willingness to bring a whistleblower suit), alleged that the hospitals had a duty under the 60-day rule to report and refund the overpayments, even though there was no certainty as to whether the findings were accurate. And the Court agreed with Kane!

Even more astounding, Kane’s email to the hospitals’ management that contained the inaccurate findings contained phrases that would lead one to believe that the findings were only preliminary:

  • “further analysis would be needed to confirm his findings;” and
  • the spreadsheet provided “some insight to the magnitude of the problem” (emphasis added).

The above-mentioned comments would further the argument that the hospitals were not required to notify the Department and return the money 60 days from Kanes’ email because Kane’s own language within the email was so wishy-washy. Her language in her email certainly does not instill confidence that her findings are accurate and conclusive.

But…

The 60-day rule requires notification and return of the overpayments within 60 days of identification.  The definition of “identification” is the crux of Kane ex rel. United States et al. v. Healthfirst et al. [it depends on what the definition of “is” is].

The Complaint reads, that the hospitals “fraudulently delay[ed] its repayments for up to two years after the Health System knew” the extent of the overpayments” (emphasis added). According to the Complaint, the date that the hospitals “knew” of the overpayment was the date Kane emailed the inaccurate findings.

The hospitals filed a Motion to Dismiss based on the fact that Kane’s email and findings did not conclusively identify overpayments, instead, only provided a preliminary finding to which the hospitals would have needed to verify.

The issue in Kane ex rel. United States et al. v. Healthfirst et al. is the definition of “identify” under the 60-day rule. Does “identify” mean “possibly, maybe?” Or “I know I owe it?” Or somewhere in between?

The hospitals filed a Motion to Dismiss, claiming that the 60-day rule did not begin to run on the date that Kane sent his “preliminary findings.”  The U.S. District Court in New York denied the hospitals’ Motion to Dismiss and stated in the Order, “there is an established duty to pay money to the government, even if the precise amount due is yet to be determined.” (emphasis added).

Yet another heavy burden tossed upon health care providers in the ever-deepening, regulatory muck involved in the ACA.  As health care providers carry heavier burdens, they begin to sink into the muck.

Important take aways:

  • Caveat: Take precautions to avoid creating disgruntled, former employees.
  • Have an experienced attorney on speed dial.
  • Self audit, but self audit with someone highly experienced and knowledgeable.
  • Understand the ACA. If you do not, read it. Or hire someone to teach you.

Supreme Court Upholds Obamacare! Three Judges Dissent, Calling the Decision Absurd!

Mark this day, June 25,2015 (also my daughter’s 10th birthday) as also the birth of a new state.  Our country, according to the Supreme Court’s decision in King v. Burwell, now consists of 51 states.  The Health and Human Services (HHS) is now our 51st state.

Today the Supreme Court decided the King v. Burwell case.

If you recall, this case was to determine whether the plain language of the Affordable Care Act (ACA) should be upheld.  According to the ACA, people were to receive tax subsidies or “premium tax credits” to subsidize certain purchases of health insurance made on Exchanges, but only those enrolled in through an Exchange established by the State under [§18031]. §36B(c)(2)(A).

See blog.

“Specifically, the question presented is whether the Act’s tax credits are available in States that have a Federal Exchange.”

“At this point, 16 States and the District of Columbia have established their own Exchanges; the other 34 States have elected to have HHS do so.”

In Justice Scalia’s words, “This case requires us to decide whether someone who buys insurance on an Exchange established by the Secretary gets tax credits. You would think the answer would be obvious—so obvious there would hardly be a need for the Supreme Court to hear a case about it. In order to receive any money under §36B, an individual must enroll in an insurance plan through an “Exchange established by the State.” The Secretary of Health and Human Services is not a State. So an Exchange established by the Secretary is not an Exchange established by the State—which means people who buy health insurance through such an Exchange get no money under §36B.”

However, the majority disagrees.

Apparently, HHS is now our 51st state.

The upshot of the Decision is that the majority found that, despite our country’s deep-rooted, case law precedent that when a statute is unambiguous that the plain meaning of the statute prevails.  Despite hundreds of years of the Supreme Court upholding statutes’ clear meanings, the Supreme Court, in this case, decided that “[i]n extraordinary cases, however, there may be reason to hesitate before concluding that Congress has intended such an implicit delegation.”

Therefore, when the ACA became law, and the word “state” was used, surely, Congress meant “state and/or federal government.”  Or, on the other hand, let’s just call HHS a state for the purpose of the ACA.

In Justices Scalia, Thomas, and Alito’s opinions, the decision is absurd.  In the dissent they write, “The Court holds that when the Patient Protection and Affordable Care Act says “Exchange established by the State” it means “Exchange established by the State or the Federal Government.” That is of course quite absurd, and the Court’s 21 pages of explanation make it no less so.”

Obama’s Executive Order, Its Impact on Health Care Costs, and the Constitutionality of Executive Orders

Pres. Barack Obama will address the nation tonight at 8 pm (Thursday, November, 20, 2014). He is expected to discuss his executive order that will delay deportations of up to 5 million migrants.

What does an executive order on immigration have to do with Medicaid? Well, you can bank on the fact that almost none of the 5 million people has private health care coverage….which means, there is a high likelihood that most, if not all, the people would qualify for Medicaid.

With the expansion of Medicaid in many states, adding another 5 million people to the Medicaid program would be drastic.  Think about it…in NC, approximately 1.8 million people rely on Medicaid as their insurance.  5 million additional Medicaid recipients would be like adding 3 more North Carolinas to the country.

So I looked into it…

The Kaiser Family Foundation website states that even immigrants who have been in America over 5 years are sometimes still barred from getting Medicaid and those people would remain uninsured.  The Kaiser website states that under current law “some lawfully present immigrants who are authorized to work in the United States cannot enroll in Medicaid, even if they have been in the country for five or more years.”

By law, only immigrants who have green cards are entitled to enroll in Medicaid or purchase subsidized health care coverage through the ACA. Usually those immigrants with green cards are on the course to become citizens.

Regardless of whether Obama’s executive order tonight will or will not allow the 5 million people Medicaid coverage (which it will not), the executive order absolutely will greatly increase health care costs

The truth is that, with or without Obama’s executive order, the government already funds some health care for undocumented immigrants. We have an “emergency Medicaid” program and it pays hospitals to provide emergency and maternity care to immigrants if: 1) he or she otherwise would be Medicaid eligible if they weren’t in the country illegally or 2) he or she are legally present in this country for less than 5 years.  (Which is the reason that ER wait times are so long…if you have no health insurance and you get sick, the ER is precisely where you go).

However, with the additional 5 million people living within the borders of USA, it is without question that the “emergency Medicaid” funds will sharply escalate as hospitals provide more emergency care. ER waits times will, inevitably, increase. Health care costs, in general, surge as the population increases.  And the addition of 5 million folks in America is not a “natural” increase in population.  It will be like we added additional states.  Overnight and with the stroke of a pen, our population will grow immensely.  I guess we will see whether we get “growing pains.”

An act of Congress will still be required before the undocumented immigrants impacted by the executive order would be allowed to participate in the Medicaid programs and the Children’s Health Insurance Program (CHIP) coverage.

As to the Constitutionality of executive orders…

Executive orders are not specifically mentioned in the Constitution.  Many people interpret the nonexistence of executive orders in the Constitution as barring executive orders.

Article I Section I of the Constitution clearly states that all legislative powers reside in Congress. However, an executive order is not legislation. Technically, an executive order is a policy or procedure issued by the President that is a regulation that applies only to employees of the executive branch of government.

Nonetheless, our country has a vast history of president’s issuing executive orders. Abraham Lincoln issued an executive order to engage military in the Civil War, Woodrow Wilson issued an executive order arming the military before we entered World War I, and Franklin Roosevelt approved Japanese internment camps during World War II with an executive order.

Regardless of your political affiliation, in my opinion, it is very interesting that Obama would initiate an executive order regarding immigration given his past statements over the years complaining about past presidents’ executive orders being unconstitutional.

In 2008 campaign speeches, Obama regularly emphasized the importance of civil liberties and the sanctity of the Constitution.

In fact, in speeches, Obama stated, “most of the problems that we have had in civil liberties were not done through the Patriot Act, they were done through executive order by George W. Bush. And that’s why the first thing I will do when I am president is to call in my attorney general and have he or she review every executive order to determine which of those have undermined civil liberties, which are unconstitutional, and I will reverse them with the stroke of a pen.”

Whether or not people believe that executive orders are constitutional, it is indisputable that presidents on both sides of the aisle have issued executive orders.

Reagan and Bush issued executive orders. Although there is an argument that those executive orders came on the heels of congressional bills, as adjustments. Neither Reagan nor Bush simply circumvented Congress.

Going back to tonight’s anticipated executive order allowing 5 million migrants to remain in America…

While the executive order will not allow the 5 million people immediate access to Medicaid and other subsidized health care, it will allow 5 million more uninsured people to exist in America, which will, undoubtedly, increase health care costs and ER visits. And, eventually, the additional 5 million people will be eligible for Medicaid, subsidized health care, and all other benefits of living in America.

Halbig: Court Holds Clear Language of the ACA Prohibits Health Care Subsidies in Federally-Run Exchanges

Remember my post, “The Great and Powerful ACA: Are High, Inflated Premiums Hiding Behind the Curtain?” I warned of the possible consequences of Halbig v. Burwell…and it happened.

Halbig v. Burwell was decided earlier today.

The Halbig court held that the Internal Revenue Service (IRS) went too far in extending subsidies to those who buy insurance through the federally run, Healthcare.gov website.

The Halbig court ruled that the subsection of the ACA that allows high insurance premium tax credits, according to the plain language of the statute, only applies to those individuals enrolled “through an exchange established by the state.” (emphasis added). Therefore, if Halbig is upheld on en banc review by the D. C. Circuit (see below) or on appeal to the U. S. Supreme Court, residents who reside in two-thirds (or 36) of the states that did not establish state-run health care exchanges (including NC), will not benefit from the health care subsidies.

Looking at the decision through a purely objective, legal lens, I believe the federal court of appeals is correct in its ruling. I also agree that the ruling will have drastic and devastating consequences for the ACA and the people who would have benefited from the health care subsidies.

However, the law governing statutory construction and interpretation is clear. Statutory interpretation is the process by which courts interpret legislation.

For years, the U.S. Supreme Court has been explicit on statutory interpretation. “We begin with the familiar canon of statutory construction that the starting point for interpreting a statute is the language of the statute itself. Absent a clearly expressed legislative intention to the contrary, that language must ordinarily be regarded as conclusive.” Consumer Product Safety Commission et al. v. GTE Sylvania, Inc. et al., 447 U.S. 102 (1980).

In other words, if the words of a statute are unambiguous, then the statutory interpretation ends. The clear words of the statute must be followed.

Let me give an example of ambiguous language:

A magazine printed the following: “Rachel Ray enjoys cooking her family and her dogs.” If that were true, Rachel Ray’s family and dogs would be very upset. I am sure what the editor meant to write was “Rachel Ray enjoys cooking, her family, and her dogs.”

It is amazing how important a comma is.

The Halbig court held that the section of the ACA allowing health care subsidies only apply to those enrolled in an exchange established by the state is not ambivalent. Thus, according to statutory interpretation rules, the judicial inquiry ends.

So what happens now?

A request for an en banc ruling by the D. C. Circuit is the next step for Department of Justice. An en banc ruling is a decision made by all the justices, or the entire bench, of an appeals court, instead of a panel selected by the bench. In this case, three federal judges sat on the panel and the case was decided 2-1. An appeals court can only overrule a decision made by one of its panels if the court is sitting en banc.

Looking beyond any en banc ruling, the case could, potentially, be heard by the U.S. Supreme Court, especially in light of the importance of the decision and the fact that a 4th Circuit Court of Appeals ruled the opposite way literally hours after Halbig was announced. See David King, et al. v. Burwell, et al.

The Fourth Circuit found the ACA ambiguous, and it states, “For reasons explained below, we find that the applicable statutory language is ambiguous and subject to multiple interpretations. Applying deference to the IRS’s determination, however, we uphold the rule as a permissible exercise of the agency’s discretion. We thus affirm the judgment of the district court.”

Bizarre that two courts hold opposing positions on the same issue and publish both decisions on the same day.  It reminds of the old Sam the Sheepdog cartoon, “Duh! Which way did he go? Which way did he go, George?”

Finally, in closing, and on a personal note, I would like to dedicate this blog to my lab-doberman mix, Booker T, who, sadly, passed Sunday.  He was my best friend for over 14 years.  You will be greatly missed, Booker T.  Rest in peace.

Booker T

The Future of Medicaid, a POPPED Balloon, and Proposals

There are more people on Medicaid than Medicare.

Think about that.  There are more people in America who qualify for Medicaid than Medicare.  Yet, as a nation, we spend more on Medicare than Medicaid.  (I assume because the older population requires more expensive services).  58 million people relied on Medicaid in 2012 as their insurance.

And Medicaid is growing.  There is no question that Medicaid is growing.  When I say Medicaid is growing, I mean the population dependent on Medicaid is growing, the demand for services covered is growing, and the amount of money required to satisfy the demand is growing.  This means that every year we will spend more and more on Medicaid.  Logically, at some point, at its current growth pattern, there will come a point at which we can no longer afford to sustain the Medicaid budget.

If you think of the Medicaid budget as a super, large balloon, imagine trying to inflate the balloon more and more.  At some point, the balloon cannot withstand the amount of air being put into it and it…POPS.

Will Medicaid eventually POP if we keep cramming more people into it, demanding more services, and demanding more money to pay for the increased services?

First, let’s look at the amount of money spent on Medicaid last year.

The Center for Medicare and Medicaid Services (CMS) just released the 2013 Actuarial Report on the Financial Outlook on Medicaid and its report considers the effect of Obamacare.

The CMS report found that total Medicaid outlays in 2012 were $431.9 billion.

The feds put in $250.5 billion or 58%.  States paid $181.4 billion or 42%.  In 2011, the federal government’s percentage of the whole Medicaid expenditure was 64%.

The CMS report also made future projections.

“We estimate that the [Affordable Care] Act will increase the number of Medicaid enrollees by about 18 million in 2022 and that Medicaid costs will grow significantly as a result of these changes starting in 2014.”

The 10 year projection, according to the report, is an increase in expenditures at an annual rate of 7.1%.  By 2022, the expenditures on Medicaid will be $853.6 billion.

Just for some perspective…a billion is a thousand million.

If you sat down to count from one to one billion, you would be counting for 95 years (go ahead…try it!).

If I gave you $1000 per day (not counting interest), how long would it take you to receive one billion dollars?  Answer: 2,737.85 years (2,737 years, 10 months, 7 days).  Now multiply 2,737.85 years by 853.6.

That’s a lot of years!!

In the next ten years, average enrollment is projected to reach 80.9 million in 2022.  It is estimated that, currently, 316 million people live in America.

So the question becomes, how can we reform, change, alter (whatever verb you want to use) Medicaid so that we can ensure that the future of Medicaid is not a POPPED balloon?  While I do not have the answer to this, I do have some ideas.

According to the CMS report, per enrollee spending for health goods and services was estimated to be $6,641 in 2012.  I find this number interesting because, theoretically, each enrollee could use $6,641 to purchase private insurance.

Remember my blog: “A Modest Proposal?” For that blog, I used the number $7777.78 per enrollee to purchase private insurance, which would require an increase in Medicaid spending assuming we give $7,777.78 to each enrollee.  But think of this…the amount would be a known amount.  Not a variable.

My health care, along with health care for my husband, costs $9,000/year.  My cost includes two people.  If I wanted individual insurance it would only have cost $228/month or $2,736/year.

What are other options to decrease the future Medicaid budgets and to avoid the big POP:

  • Decrease Medicaid reimbursements (really? Let’s make LESS providers accept Medicaid);
  • Decrease covered services (I would hope this idea is obviously stupid);
  • Decrease the number of recipients (I believe the ACA shot this one out of the water);
  • Create a hard cap on Medicaid spending and refuse to allow services over the cap regardless of the medical necessity (Again, I would hope this idea is obviously stupid);
  • Decrease administrative costs (this is apparently an impossible feat);
  • Create more difficult standards for medical necessity (I believe the ADA would have something to say about that); or
  • Print more money (Hmmmm…can we say inflation?).

Please, if anyone else has a good idea, let me, or, better yet, your General Assembly, know.

Because without question the future of Medicaid is larger and more expensive than today.  We want to avoid that…

POP!!

Demand With Little Supply: Medicaid Enrollment Up, Physicians’ Acceptance of Medicaid…Not!

In microeconomics, you learn the theory of supply and demand, which is, basically, a model to determine the price of a product. The most basic explanation of supply and demand is if the demand for the product is high and the supply is low then the price of the product will be high. Take diamonds, for example. Whenever there is a finite amount of something the value goes up. I remember my dad telling me to invest in land abutting water. The reason? There is a finite amount of land abutting water. Once all the land is sold that touches water, it is gone unless someone decides to resell.

Similarly, there is a finite number of doctors or health care providers who accept Medicaid. Recently data show that Medicaid enrollment has jumped 3 million since October 2013. There are approximately 61 million Americans on Medicaid and approximately 319,510,848 Americans total. This increase in Medicaid enrollment is mainly due to 26 states expanding Medicaid due to the ACA, although Medicaid enrollment has increased in the states that opted to not expand as well.

That’s GREAT…..right?? 3 million more people are covered by health insurance than were covered back in October 2013. However, although theoretically the statistic should correlate to more people getting medical coverage, it may not.

We cannot assume that offering people Medicaid coverage will necessarily provide them with adequate access to health care services.

While the number of people on Medicaid is climbing, there is no evidence that the number of providers who accept Medicaid is climbing.

Health-care consulting firm, Merritt Hawkins, conducted a 2014 survey of Medicaid acceptance rates in the U.S.’s largest 15 cities. The 2014 survey researched five medical specialties: cardiology, dermatology, obstetrics-gynecology, orthopedic surgery, and family practice. It also calculated the average wait-time for Medicaid recipients to see a doctor in one of the five specialties.

The survey found that only 45.7% of physicians are now accepting Medicaid patients. This is a decrease from 55.4% in 2009 and 49.9% in 2004. Compare the percentage of physicians accepting Medicare, which is 76%.

The percentage of physicians accepting Medicaid varies immensely state by state. In Dallas, TX only 23% of physicians accept Medicaid; whereas in Boston 73% of the physicians accept Medicaid (but even though Boston seems to have more physicians accepting Medicaid, the wait time is not good; the average wait time to see a dermatologist in Boston is 72 days).

Much of the problem is high population and low percentage of doctors. See the table below.

Physician ratio

Even more of the problem is that physicians refuse to accept Medicaid. So, looking at the above chart, and based on an estimated current U. S. population of about 319,510,848, there are two physicians for every 845 persons. Yet, only 23% of physicians accept Medicaid in Dallas. Less than half the physicians nationally accept Medicaid. So, of the 845 physicians, roughly 422 of the physicians will refuse to accept Medicaid. More and more Medicaid insured people will have fewer physicians. This is a scary thought.

Remember the horrible tragedy of Deamonte Driver? Even though Deamonte Driver died due to not seeing a dentist, not a physician, the analogy still applies. A 12-year-old Maryland boy, Deamonte Driver, died when a tooth infection spread to his brain. His mother, Alyce Driver, had been unable to find a dentist to treat him on Medicaid. Deamonte Driver died not because he was uninsured; he died because he was insured by the government.

Now imagine that it is not a dentist a parent is trying to find, but a cardiologist, where, in D.C., if you are on Medicaid, the average wait-time to see a cardiologist is 32 days. If only your heart problems would pause for 32 days.

The average cumulative wait times to see a cardiologist in all 15 markets was 16.8 days. Whereas if I were to call up a cardiologist, I would be able to make an appointment within a day or so.

I found a blog online that charted why doctors will not take Medicaid. See below.

doctors no medicaid

See blog.

To physicians, Medicaid is a pain in the arse that reimburses them too little to warrant the pain.

Medicaid recipients suffer.

Going back to the 3 million increase in Medicaid enrollment…that’s great, right? Maybe. It depends whether the recipients can find a doctor.

Knock, Knock. Who’s There? Burwell. Burwell Who?

As I am sure most of you have heard, April 10, 2014, Kathleen Sebelius, former Secretary to Health and Human Services (HHS), resigned. Some journalists wrote that her resignation came 6 months after “the disastrous rollout of Obamacare,” obviously alluding that she was fleeing from her position as Secretary. But is that why Sebelius left? And who is Sylvia Mathews Burwell?

It is no secret that when Healthcare.gov went live on October 1, 2013, Sebelius called the roll-out a “debacle.” But recent figures show enrollment in Obamacare exchanges has surpassed 7.5 million.

Sunday Sebelius stated that “Clearly, the estimate that it was ready to go Oct. 1 was just flat-out wrong.”

According to Politico Pro, “a White House official said Sebelius told Obama in March that she planned to resign. She felt that the Affordable Care Act trajectory was back on track, and believed “that once open enrollment ended it would be the right time to transition the Department to new leadership.””

It seems that Sebelius did not want to resign during the height of the debacle. She waited until things smoothed out a bit before walking away.

Obama has chosen Sylvia Mathews Burwell, his budget Director, to replace Sebelius.

Who is Burwell?

Burwell

Burwell served as deputy White House chief of staff during the Clinton administration. She also served at the Office of Management and Budget (OMB) twice, once as director. She has also worked at the Bill and Melinda Gates Foundation. (Speaking of Bill and Melinda Gates Foundation and people with obscene amounts of money, why don’t people ever set up charities to pay for Medicaid recipients to receive private insurance with the co-pays all covered? If I ever get an obscene amount of money I would set up a Medicaid Foundation. The Emanuel Medicaid Foundation. Look for that in the VERY FAR future, folks.).

Going back to Burwell…she received her bachelor’s degree in government from Harvard University. She also received her bachelor’s degree in philosophy, politics and economics from Oxford University. Seriously? Is that a quadruple major from 2 colleges?

Her grandparents were Greek immigrants, and she grew up in West Virginia.

There isn’t much more information on Burwell. She is relatively young (48) and holds a relatively small resume considering the enormous undertaking she is about to assume.

Obama nominated Burwell one day after Sebelius resigned. There is no indication of whether Burwell was Obama’s first choice. It took him one day to replace Sebelius, which is pretty amazing.  Remember, we still haven’t replaced former Medicaid Director, Carol Steckel. Sandy Terrell is still the “Acting Director.” Whew, it has got to be difficult to fill these intimidating positions.

I can only imagine how many people would NOT want to be Secretary of HHS. Talk about a big job! Talk about high stress!

Burwell has not been confirmed yet. Despite Burwell not being a common household name when Obama nominated her, it is without question that Burwell has now stepped into the limelight. If confirmed, Burwell will be one of the most powerful people in health care…and one of the most scrutinized.

Good luck, Burwell!! Make Burwell a household name…for good reasons. And when someone says, “Burwell who?”

Someone else will respond, “That is the Secretary for HHS.”

How the ACA Has Redefined the Threshold for “Credible Allegation of Fraud” and Does It Violate Due Process?

I believe that everyone would agree with me that The Affordable Care Act (ACA) has done more to impact health care legally…probably since 1966 when Medicare was established.  Whether you think the impact is beneficial or negative, it does not matter.  The impact exists nonetheless.

One of the changes the ACA has yielded is the threshold for suspending Medicare and Medicaid payments to providers based on credible allegations of fraud is lower. 

While CMS regulations authorized the suspension of Medicare and Medicaid payments prior to the enactment of the ACA, § 6402(h) lowers the standard the government must meet in order to suspend payments based upon suspected fraud.

The lower standard for a state to suspend Medicaid and Medicare payments nip…nay, I say…bite at the fabric of due process.

First, what is a “credible allegation of fraud?”

Credible allegation of fraud means an allegation from any source, such as data mining, whistleblowers, and/or fraud hotline complaints.  Quite literally, you could be accused of having credible allegations of fraud because an ex, disgruntled employee calls the fraud hotline.

The definition of “credible” is equally as scary.  If there is “indicia of reliability,” it is credible.  I have no idea what “indicia” means, but it does not sound like much.    So if there is indicia of reliability when your ex, disgruntled employee calls the fraud hotline, there may be credible allegations of fraud against you.

When you have credible allegations of fraud against you, your Medicaid/Medicare payments are suspended.  Without an opportunity to rebut the allegations.  Without you even knowing from where the allegation came.

I make the analogy (albeit, admittedly, a poor one) of my law license.  Or an M.D.’s license.  Or a teacher’s license.  We do not have a right to a law license.  But, I argue, once you go through the process and pass the necessary tests and are awarded a law license (or M.D. license or teacher’s license), you have a protected property right in continuing in the profession. 

There is a good cause exception and you should try to assert the exceptions, but this blog concentrates on the suspension and the due process (or lack thereof) involved.

CMS states that providers have “ample opportunity to submit information to us in the established rebuttal statement process to demonstrate their case for why a suspension is unjust.”

However, think of this…in Medicare, notice to the provider is not required prior to the suspension.  So, I ask you, how can you plead the suspension is unjust when you have no notice? Obviously, only after the suspension has been put into place. Due process violation?

In Medicaid, the agency must notify the provider of the suspension within 5 days of taking the action.  Although it can be extended to 90-days upon request of a law enforcement agency.

Even though the Medicare suspension statutes do not require notice, the Medicare statutes are a bit more provider-friendly when it comes to the length of time during which you may be suspended.  For Medicare providers, the suspension can last a period of 180 days.  However, the 180 days can be extended.

Conversely, for Medicaid providers, there is no scheduled period of suspension.

In my cursory review of case law, I found one case in which the Medicaid provider had suffered suspension of Medicaid reimbursements for over 4 years.  Obviously, the company had closed and staff had been terminated.  You cannot maintain a business without revenue.

So, is the suspension of Medicare and Medicaid payments upon a credible allegation of fraud a violation of due process?

 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.

Rights include:

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.

HHS Announces More Time for Noncompliant Plans, Other ACA Policies

BNA’s Health Care Policy Report:

Posted March 5, 2014

The Obama administration March 5 said consumers can keep their health plans that don’t comply with the Affordable Care Act for two more years, as part of a release of new ACA rules and policies.

The Department of Health and Human Services noted that in fall 2013, the administration extended through 2014 noncompliant health plans in the small group and individual health insurance markets, for insurers that received permission from their state to do so. Now, the department is extending its “transitional policy for two years,” to policy years beginning on or before Oct. 1, 2016.

“This gives consumers in the individual and small group markets the choice of staying in their plan or joining a new Marketplace plan as the new system is fully implemented,” the HHS said.

The HHS also issued a comprehensive ACA insurance markets rule (CMS-9954-F) called the Notice of Benefit and Payment Parameters for 2015. The regulation includes provisions on premium stabilization; open enrollment for 2015; annual limitations on cost sharing; consumer protections; financial oversight; and the Small Business Health Options Program, or SHOP.

For the temporary “risk corridors program,” which helps stabilize premiums when enrollees are much sicker or much healthier than expected, the HHS said it intends to operate the program in a budget-neutral manner, with payments coming in equaling the amount of money going out, “while helping to ensure that prices remain affordable in 2015 and beyond.”

The Treasury Department and the Internal Revenue Service also released final rules (TD 9661) March 5 to implement the information reporting provisions for insurers and certain employers under the ACA that take effect in 2015. Treasury said the final rules on information reporting by employers “will substantially streamline reporting requirements for employers, particularly those that offer highly affordable coverage to full-time employees.” Treasury also released final rules (TD 9660) to provide guidance for reporting by insurers and other parties that provide health coverage under the ACA.

An HHS bulletin on the plan extension is at http://www.cms.gov/CCIIO/Resources/Regulations-and-Guidance/Downloads/transition-to-compliant-policies-03-06-2015.pdf. The HHS and Treasury rules are posted at the public inspection website: http://www.federalregister.gov/public-inspection.