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Accused of a Medicare or Medicaid Overpayment? Remember That You May Fall Into an Exception That Makes You NOT Liable to Pay!!

In today’s health care world, post-payment review audits on health care providers who accept Medicare and/or Medicaid have skyrocketed. Part of the reason is the enhanced fraud, waste, and abuse detections that were implanted under ObamaCare. Then the snowball effect occurred. The Centers for Medicare and Medicaid Systems (CMS), which is the single federal agency designated by the Secretary of Health and Human Services (HHS), via authority from Congress, to manage Medicare and Medicaid nationwide, started having positive statistics to show Congress.

Without question, the recovery audit contractors (RACs) have recouped millions upon millions of money since 2011, when implemented. Every financial report presented to Congress shows that the program more than pays for itself, because the RACs are paid on contingency.

Which pushed the snowball down the hill to get bigger and bigger and bigger…

However, I was reading recent, nationwide case law on Medicare and Medicaid provider overpayments reviews (I know, I am such a dork), and I realized that many attorneys that providers hire to defend their alleged overpayments have no idea about the exceptions found in Sections 1870 and 1879 of the Social Security Act (SSA). Why is this important? Good question. Glad you asked. Because of this legal jargon called stare decisis (let the decision stand). Like it or not, in American law, stare decisis is the legal doctrine that dictates once a Court has answered a question,the same question in other cases must elicit the same response from the same court or lower courts in that jurisdiction. In other words, if “Attorney Uneducated” argues on behalf of a health care provider and does a crappy job, that decision, if it is against the provider, must be applied similarly to other providers. In complete, unabashed, English – if a not-so-smart attorney is hired to defend a health care provider in the Medicare and/or Medicaid world, and yields a bad result, that bad result will be applied to all health care providers subsequently. That is scary! Bad laws are easily created through poor litigation.

A recent decision in the Central District of California (shocker), remanded the Medicare overpayment lawsuit back to the Administrative Law Judge (ALJ) level because the ALJ (or the provider’s attorney) failed to adequately assess whether the exceptions found in Sections 1870 and 1879 of the SSA applied to this individual provider. Prime Healthcare Servs.-Huntington Beach, LLC v. Hargan, 2017 U.S. Dist. LEXIS 205159 (Dec., 13, 2017).

The provider, in this case, was a California hospital. The overpayment was a whopping total of $5,380.30. I know, a small amount to fight in the court of law and expend hundreds of thousands of attorneys’ fees. But the hospital (I believe) wanted to make legal precedent. The issue is extremely important to hospitals across the county – if a patient is admitted as inpatient and a contractor of CMS determines in a post payment review that the patient should have been admitted as an outpatient – is the hospital liable for the difference between the outpatient reimbursement rate and the inpatient reimbursement rate? To those who do not know, the inpatient hospital rates are higher than outpatient. Because the issue was so important and would have affected the hospital’s reimbursement rates (and bottom line) in the future, the hospital appealed the alleged overpayment of $5,380.30. The hospital went through the five levels of Medicare appeals. See blog. It disagreed with the ALJ’s decision that upheld the alleged overpayment and requested judicial review.

Judicial review (in the health care context): When a health care providers presents evidence before an ALJ and the ALJ ruled against the provider.The provider appeals the ALJ decision to Superior Court, which stands in as if it is the Court of Appeals. What that means is – that at the judicial review level, providers cannot present new evidence or new testimony. The provider’s attorney must rely on the   official record or transcript from the ALJ level. This is why it is imperative that, at the ALJ level, you put forth your best evidence and testimony and have the best attorney, because the evidence and transcript created from the ALJ level is the only evidence allowed from judicial review.

The exceptions found in Sections 1870 and 1879 of the SSA allow for a provider to NOT pay back an alleged overpayment, even if medical necessity does not exist. It is considered a waiver of the provider’s overpayment. If a Court determines that services were not medically necessary, it must consider whether the overpayment should be waived under Sections 1870 and 1879.

Section 1879 limits a provider’s liability for services that are not medically necessary when it has been determined that the provider “did not know, and could not reasonably have been expected to know, that payment would not be made for such services.” 42 U.S.C. 1395pp(a). A provider is deemed to have actual or constructive knowledge of non-coverage based on its receipt of CMS notices, the Medicare manual, bulletins, and other written directives from CMS. In other words, if CMS published guidance on the issue, then you are out of luck with Section 1879. The Courts always hold that providers are responsible for keeping up-to-date on rules, regulations, and guidance from CMS. “Ignorance of the law is no defense.”

Section 1870 of the SSA permits providers to essentially be forgiven for overpayments discovered after a certain period of time so long as the provider is “without fault” in causing the overpayment. Basically, no intent is a valid defense.

Sections 1879 and 1870 are extraordinary, strong, legal defenses. Imagine, if your attorney is unfamiliar with these legal defenses.

In Prime Healthcare, the Court in the Central District of California held that the ALJ’s decision did not clearly apply the facts to the exceptions of Sections 1870 and 1879. I find this case extremely uplifting. The Judge, who was Judge Percy Anderson, wanted the provider to have a fair shake. Hey, even if the services were not medically necessary, the Judge wanted the ALJ to, at the least, determine whether an exception applied. I feel like these exceptions found in Sections 1870 and 1879 are wholly underutilized.

If you are accused of an overpayment…remember these exceptions!!!

Appeal! Appeal! Appeal!

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

I love being right – just ask my husband.

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

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

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

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

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

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

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

A note as to the precedential value of this ruling:

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

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

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

There Is Only One Head Chef in the Medicaid Kitchen, Part Deux!

In a groundbreaking decision published today by the Court of Appeals (COA), the Court smacked down Public Consulting Group’s (PCG), as well as any other  contracted entity’s, authority to wield an “adverse decision” against a health care provider. This solidifies my legal argument that I have been arguing on this blog and in court for years!

The Department of Health and Human Services (DHHS) is the “single state agency” charged with managing Medicaid. Federal law requires that that one agency manage Medicaid with no ability to delegate discretionary decisions. Case law in K.C. v. Shipman upheld the federal law. See blog.

Yet, despite K.C. v. Shipman, decided in 2013, in Court, DHHS continued to argue that it should be dismissed from cases in which a contracted vendor rendered the adverse decision to recoup, terminate, or suspend a health care provider. DHHS would argue that it had no part of the decision to recoup, terminate, or suspend, that K.C. Shipman is irrelevant to health care provider cases, and that K.C. v. Shipman is only pertinent to Medicaid recipient cases, to which I countered until I was “blue in the face” is a pile of horse manure.

DHHS would argue that my interpretation would break down the Medicaid system because DHHS cannot possibly review and discern whether every recoupment, termination, and/or suspension made by a contracted vendor was valid (my words, not theirs). DHHS argued that it simply does not have the manpower, plus if it has the authority to contract with a company, surely that company can determine the amount of an alleged overpayment…WRONG!!

In fact, in DHHS v. Parker Home Care, LLC, the COA delineates the exact process for the State determining an overpayment with its contracted agent PCG.

  1. DHHS may enter into a contract with a company, such as PCG.
  2. A private company, like PCG, may perform preliminary and full investigations to collect facts and data.
  3. PCG must submit its findings to DHHS, and DHHS must exercise its own discretion to reach a tentative decision from six options (enumerated in the NC Administrative Code).
  4. DHHS, after its decision, will notify the provider of its tentative decision.
  5. The health care provider may request a reconsideration of the tentative decision within 15 days.
  6. Failure to do so will transform the tentative decision into a final determination.
  7. Time to appeal to OAH begins upon notification of the final determination by DHHS (60 days).

Another interesting part of this decision is that the provider, Parker Home Care, received the Tentative Notice of Overpayment (TNO) in 2012 and did nothing. The provider did not appeal the TNO.

However, because PCG’s TNO did not constitute a final adverse decision by DHHS (because PCG does not have the authority to render a final adverse decision), the provider did not miss any appeal deadline. The final adverse decision was determined to be DHHS’ action of suspending funds to collect the recoupment, which did not occur until 2014…and THAT action was timely appealed.

The COA’s message to private vendors contracted with DHHS is crystal clear: “There is only one head chef in the Medicaid kitchen.”

Federal Audit Spurs NC to Recoup from Dentists Who Accept MPW!!

When providers receive Tentative Notices of Overpayment (TNOs), we appeal the findings. And, for the most part, we are successful. Does our State of NC simply roll over when the federal government audits it??

A recent audit by Health and Human Services (HHS) Office of Inspector General (OIG) finds that:

“We recommend that the State agency:

  • refund $1,038,735 to the Federal Government for unallowable dental services provided to MPW beneficiaries after the day of delivery; and
  • increase postpayment reviews of dental claims, including claims for MPW beneficiaries, to help ensure the proper and efficient payment of claims and ensure compliance with
    Federal and State laws, regulations, and program guidance.”

MPW is Medicaid for Pregnant Women.  Recently, I had noticed that a high number of dentists were receiving TNOs.  See blog.  I hear through the grapevine that a very high number of dentists recently received TNOs claiming that the dentists had rendered dental services to women who had delivered their babies.

Now we know why…

However, my question is: Does NC simply accept the findings of HHS OIG without requesting a reconsideration review and/or appeal?

It seems that if NC appealed the findings, then NC would not be forced to seek recoupments from health care providers.  We already have a shortage of dentists for Medicaid recipients.  See blog and blog.

And if the federal auditors audit in similar fashion to our NC auditors, then the appeal would, most likely, be successful. Or, in the very least, reduce the recouped amount, which would benefit health care providers and taxpayers.

Whenever NC receives a federal audit with an alleged recoupment, NC should fight for NC Medicaid providers and taxpayers!!  Not simply roll over and pay itself back with recoupments!

This audit was published March 2015.  It is September.  I will look into whether there is an appeal on record.

The Grim Reaper – Prepayment Review!

Attorney/Client Privilege: Its Importance to Health Care Providers, and TIPS to Avoid Potential Pitfalls as to Former Employees

This blog is intended to provide TIPS to health care providers who have any amount of attrition with staff members and why these TIPS as to attorney/client privilege are so important.

First, I’d like to say, for the past few weeks, I have been moving homes and firms, concurrently.  Add in a trial or two into the mix and I haven’t been able to blog as often.  But I’m fairly moved in now (to both) and have one of the trials mostly wrapped up.

The idea for this blog, in particular, actually came to me while Robert Shaw, Senior Counsel, and I were Santa Fe, New Mexico for a trial.

While preparing the witnesses for trial, I re-realized an important aspect of attorney/client privilege that is vital to health care providers if there is any attrition in their staff.

I say “re-realized” because I already knew the importance of attorney/client privilege, but I realized the importance for health care providers to understand its importance, as well…hence, this blog.

If, for whatever reason, your company is forced to lay off staff or, even, if you have staff voluntarily leave your office, you need to read the entirety of this blog and pay special attention to the TIPS at the bottom.

Why?

What if you need to rely on that former employee for testimony in a hearing?

For example, you are CEO of a small or large health care provider company and your Medical Director or Compliance Director leaves your employment and you need the former employee to testify in the future.  Your former employee and your attorney will not be protected by attorney/client privilege.

You may be thinking…so what?

But attorney/client privilege is key in trial.

Let me give you an illustrative example:

You own a dental practice and accept Medicaid.  Lucy is your office manager.  She oversees the Medicaid billing, ensures regulatory compliance, and deals with denials that come from NCTracks.  She also enters the data into NCTracks.  You, as the dentist, provide dental services, but you have little to do with what Lucy does.  You trust her and she does her job well.

DHHS via Program Integrity conducts an audit and determines that you owe $750,000 in alleged overpayments. Maybe the auditor didn’t know that the notation “cavies” means cavities and dinged you for billing for filling a cavity because the auditor could not discern from the service note that a cavity was actually filled.  Or, maybe you coded the service for scraping the wall of a gingival pocket, and the auditor did not understand what “curettage” is in the service note.

Regardless, you receive a Notice of Overpayment on May 4, 2015.  On May 7, 2015, Lucy tells you that she is having her first baby and wants to be stay at home mother.  You congratulate her and begin your search for another office manager.  You end up hiring Bill.

By the time that you need to get ready to defend your $750,000 overpayment with your attorney, Lucy has given birth to Annie and hasn’t worked for you for over a year.

But your attorney, in order to defend the overpayment, will need Lucy to testify at court.  Before a witness testifies in court, your attorney must meet with him or her to prepare the witness for direct examination and cross examination by opposing counsel. (If your attorney does not, instruct him or her to do so).

When I am in a situation such as the one I have outlined above.  I am extremely careful.  Because there is no attorney/client privilege between “Lucy” and me because she is a former employee, I am very precise in my prep.  For example, I would never discuss legal strategy with Lucy.  I would never show privileged information; I would never try to “lead” Lucy’s opinion. Leading a witness’s opinion could come across like, “Lucy, If I ask you on the stand whether your opinion is that curettage means scraping a gingival pocket, you would agree, correct?” Instead, I would ask, “Lucy, what do you understand curettage to mean and how would you normally code the procedure?”

Why?

Any attorney worth his or her salt knows that attorney/client privilege does not attach to a former employee.

Why does that matter?

Any opposing attorney worth his or her salt will cross exam Lucy as to every detail possible involving the meeting between Lucy and me. And I mean every detail.

For example:

Q: “You met with Ms. Emanuel in preparation for this meeting, correct?”

A: “Yes.”

Q: “When exactly was that?”

A: “Two weeks ago.”

Q: “What documents did Ms. Emanuel show you?”

A: “She showed me my direct examination.”

Q: “What do you mean? A hard copy of the questions that you would be asked?”

A: “Yes.”

Q: “Ms. Emanuel, I expect that you have no problem providing me with a copy of what you showed Lucy?”

Me: “Not at all.”

Boom! By Lucy testifying that I showed her my hard copy of my direct examination questions, opposing counsel is entitled to review my draft questions along with any notes I may have notated on that hard copy of Lucy’s direct testimony.  What happens if I have privileged notes contained within my questions? My attorney notes contained within the questions are now discoverable by the other side.

[BTW: I would never show Lucy my actual list of questions, unless I fully anticipated giving my list to opposing counsel.]

But you can see the potential pitfalls. Anything discussed or shown to Lucy by your counsel will be discoverable by opposing counsel.  What if your counsel, without thinking, tells Lucy that he or she thinks this is a weak case? Or tells Lucy that he or she hopes the other side doesn’t pick up on…..X?

Even if the attorney prepping Lucy states something disparaging about opposing counsel, or God forbid, the judge, those remarks are discoverable and Lucy must testify to those comments on the stand.

On one occasion, I actually had opposing counsel question my witness about our conversation during a 10 minute break, during which I was smart enough not to speak about the case.  My witness answered, “We discussed that I think you are b$#@!”  But counsel’s question was valid and allowable.  Because just as easily, during the break, I could have said, if I were not worth my salt, “Lucy, I did not like how you answered that question.  You need to say…..X.”

Judges do not look favorable on coached testimony.

TIPS:

As a health care provider, what measures can you take that if you are forced to call former employees as witnesses, you are poised for the best result?

1. Try to maintain a cordial relationship with former employees.

I know this can be difficult as every provider needs to terminate staff or has disgruntled employees.  But, even if you are firing staff, try to do so in a professional, amicable manner. Explain that it is a business decision, not personal (regardless the reason).  Give the soon-to-be-fired employee notice, such as 30 days, if possible.  If you would recommend the employee to a colleague, let the employee know and to whom.  These small steps can help your future in case of trial.

2. Re-hire the employee.

In my opinion, this avenue has an aura of attempted deceit, and I do not recommend this route unless you are re-hiring the employee in good faith.  For example, if you truly did not want to fire the staff member and you genuinely could use that person back in your office, or, if, in the case of Lucy, she decides that she wants to come back to work of her own volition and you still have the need.

An employee is protected by attorney/client privilege, generally.

3. Be knowledgeable or hire a knowledgeable attorney.

If you are concerned that your attorney may disclose something otherwise confidential in witness prep of a former employee, have a lengthy discussion with your attorney prior to the preparation session.  Sit in with your attorney during the prep of the former attorney.

Along the same lines as above, come to an understanding with your attorney which documents may be considered “hot docs” and essential to the case, and, which should not be discussed with a former employee at all.

4. Test the waters.

Prior to your attorney contacting Lucy, call Lucy yourself. Have a chat.  Catch up. Ask Lucy whether she is willing to testify on your behalf.  If Lucy starts cussing you out, you may want to think of alternative witnesses.  If there are no alternative witnesses, you may want to discuss with your attorney whether an affidavit or deposition could substitute for Lucy’s testimony at trial.

5. Pay for Lucy’s time

There is nothing wrong or unethical about compensating Lucy for her trial preparation and appearance at trial.  Obviously, this compensation is discoverable by opposing counsel and questions can be asked about the compensation situation.  But I believe it is better to have a happy Lucy, who feels that her time is valuable, rather than an increasingly frustrated Lucy, as each second ticks along.

6. Think ahead

If you know you will be terminating an employee or if you receive notice that an employee  is leaving, think about the most important aspects of his or her job and memorialize the procedures.  For example, in the case of Lucy, ask Lucy to draft a memo to the file as to her procedures in billing Medicaid.  Have her write which service notes are billed for which codes and the reasons in support and how she manually enters data into NCTracks.  It may seem tedious, but these notes will be invaluable during any future litigation.

Along the same vein as above, if possible, have Lucy train Bill prior to her leaving.  That way, if Lucy is an undesirable witness, Bill can testify that he follows the same protocol as Lucy because Lucy trained him and he follows her protocol.

Hopefully, these TIPS will be helpful to you in the future in the case of employees leaving your practice.  Print off the blog and review it whenever an employee is leaving.

NC Medicaid Providers: Do Not Be a Cockey Lockey! Know Your Due Process Rights to Defend Against Administrative Penalties

An acorn falls on Chicken Little’s head. His first immediate thought is, “The sky is falling. The sky is falling.” So Chicken Little begins his travels to tell the king that the sky is falling. Along the way he meets Cockey Lockey, Ducky Lucky, Drakey Lakey and Goosey Loosey, to name a few of his well-feathered friends. Each new waterfowl asks Chicken Little where he is going. To which Chicken Little replies, “The sky is falling. The sky is falling. We have to tell the king.” And the fowl join Chicken Little in his travel to the king.

None of the characters question Chicken Little’s assertion that the sky is falling. They simply accept the fact that the sky is falling.

All too often, people, like Cockey Lockey and Goosey Loosey, accept what they are told without questioning the source.

Over and over I talk to health care providers who are told:

• by the Department of Health and Human Services (DHHS), Division of Medical Assistance (DMA) that they owe DMA hundreds of thousands of dollars for Medicaid overpayments;
• by the managed care organization (MCO) that the provider’s Medicaid contract is terminated;
• by a contracted entity that the provider is out of compliance with rules and regulations;
• by Program Integrity (PI) that there is a complaint filed against the provider; or
• by an MCO that its network is closed.

And some providers just accept the overpayment, the contract termination, the penalty, or the refusal to contract.

Don’t be a Cockey Lockey!

You do have rights! You deserve due process!

Let’s talk about the possible penalties allowed by Medicaid regulations and your right to defend against such penalties and the procedural safeguards enacted to protect you.

10A NCAC 22F .0602 governs “Administrative Sanctions and Remedial Measures,” and it enumerates the following possible sanctions for provider abuse:

• Warning letters for those instances of abuse that can be satisfactorily settled by issuing a warning to cease the specific abuse. The letter will state that any further violations will result in administrative or legal action initiated by the Medicaid Agency.
• Suspension of a provider from further participation in the Medicaid Program for a specified period of time, provided the appropriate findings have been made and provided that this action does not deprive recipients of access to reasonable service of adequate quality.
• Termination of a provider from further participation in the Medicaid Program, provided the appropriate findings have been made and provided that this action does not deprive recipients of access to reasonable services of adequate quality.
• Probation whereby a provider’s participation is closely monitored for a specified period of time not to exceed one year. At the termination of the probation period, the Medicaid Agency will conduct a follow-up review of the provider’s Medicaid practice to ensure compliance with the Medicaid rules.

Remedial Measures are to include:

• placing the provider on “flag” status whereby his claims are remanded for manual review;
• establishing a monitoring program not to exceed one year whereby the provider must comply with pre-established conditions of participation to allow review and evaluation of his Medicaid practice, i.e., quality of care.

Furthermore, certain factors must be considered prior to the levy of a sanction, including:

• seriousness of the offense;
• extent of violations found;
• history or prior violations;
• prior imposition of sanctions;
• period of time provider practiced violations;
• provider willingness to obey program rules;
• recommendations by the investigative staff or Peer Review Committees; and
• effect on health care delivery in the area

All of this information is found in 10A NCAC 22F, et al, which is an administrative code. The code also defines provider fraud and abuse. The penalties enumerated above are penalties allowed for instances of provider abuse, but, only after proper investigation, proper notice to the provider, and proper consideration of lesser penalties. In other words, due process.

For example, 10A NCAC 22F.0302 states that “[a]busive practices shall be investigated according to the provisions of Rule .0202 of this Subchapter.”

Rule .0202 requires a preliminary investigation prior to a full investigation. Additionally, Rule .0302 requires the investigative unit to prepare a “Provider Summary Report,” furnishing the full investigative findings of fact, conclusions, and recommendations. Then the Department is to review the Provider Summary Report and make a “tentative” recommendation as to the penalty, and that tentative recommendation is reviewable under Rule .0400, which allows a reconsideration review. The provider will receive the results of the reconsideration review within 5 business days following the date of the review.

If a provider is unhappy with the results of a reconsideration review, then the provider can appeal to the Office of Administrative Hearings (OAH) within 60 days.

All of the above-mentioned administrative procedures exist in order to protect a provider from unfair, arbitrary, capricious, erroneous actions by DMA and any of its contracted entities. That means Public Consulting Group (PCG), Carolinas Center for Medical Excellence (CCME), all the MCOs, HMS, and any other state contractor must also follow these administrative procedures.

So next time you are told that you owe hundreds of thousands of dollars to the state, that your Medicaid contract has been terminated, or your Medicaid reimbursements are being withheld, do not take these penalties at face value! Know you rights!

Do not be a Cockey Lockey!!