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Is Health Care Fraud on the Rise? Or Just the Accusations??
Recent stories in the news seem to suggest that health care fraud is running rampant. We’ve got stories about Eric Leak‘s Medicaid agency, Nature’s Reflections, funneling money to pay athletes, a seizure of property in Greensboro for alleged Medicaid fraud, and, in Charlotte, a man was charged with Medicaid fraud and sentenced to three years under court supervision and ordered to pay $3,153,074. And these examples are local.
Health care fraud with even larger amounts of money at stake has been prosecuted in other states. A nonprofit up in NY is accused of defrauding the Medicaid system for over $27 million. Overall, the federal government opened 924 criminal health care fraud investigations last year.
What is going on? Are more people getting into the health care fraud business? Has the government become better at detecting possible health care fraud?
I believe that the answer is that the federal and state governments have determined that it “pays” high dividends to invest in health care fraud investigations. More and more money is being allocated to the fraud investigative divisions. More money, in turn, yields more health care fraud allegations…which yields more convictions….and more money to the government.
Believe me, I understand the importance of detecting fraud. It sickens me that those who actually defraud our Medicaid and Medicare systems are taking medically necessary services away from those who need the services. However, sometimes the net is cast so wide…so far…that innocent providers get caught in the net. And being accused of health care fraud when you innocent is a gruesome, harrowing experience that (1) you hope never happens; and (2) you have to be prepared in case it does. I have seen it happen.
As previously stated, in fiscal year (FY) 2014, the federal government opened 924 new criminal health care fraud investigations. That’s 77 new fraud investigations a month!! This number does not include civil investigations.
In FY 2012, the Department of Justice (DOJ) opened 2,016 new health care fraud investigations (1,131 criminal, 885 civil).
The Justice Department launched 903 new health-care fraud prosecutions in the first eight months of FY 2011, more than all of FY 2010.
These numbers show:
- an 85% increase over FY 2010,
- a 157% increase over FY 2006
- and 822% over FY 1991.
And the 924 investigations opened in fiscal 2014 only represent federal investigations. Concurrently, all 50 states are conducting similar investigations.
What is being recovered? Are the increased efforts to detect health care fraud worth the effort and expenditures?
Heck, yes, it is worth it to both the state and federal governments!
Government teams recovered $4.3 billion in FY 2013 and $19.2 billion over the last five years. While still astronomically high, the numbers dropped slightly for FY 2014. In FY 2014, according to the Annual Report of the Departments of Health and Human Services and Justice, the federal government won or negotiated over $2.3 billion in health care fraud judgments and settlements. Due to these efforts, as well as efforts from preceding years, the federal government retrieved $3.3 billion from health care fraud investigations.
So the federal and state governments are putting more money into investigating health care fraud. Why?
The Affordable Care Act.
Obviously, the federal and state governments conducted health care fraud investigations prior to the ACA. But the implementation of the ACA set new mandates to increase fraud investigations. (Mandates, which were suggestions prior to the ACA).
In 2009, Barack Obama signed Executive Order 13520, which was targeted to reduce improper payments and to eliminate waste in federal programs.
On March 23, 2010, President Obama signed the ACA into law. A major part of the ACA is focused on cost containment methods. Theoretically, the ACA is supposed to be self-funding. Detecting fraud, waste and abuse in the Medicare/Medicaid system helps to fund the ACA.
Unlike many of the other ACA provisions, most of the fraud and abuse provisions went into effect in 2010 or 2011. The ACA increases funding to the Healthcare Fraud and Abuse Control Program by $350 million over the next decade. These funds can be used for fraud and abuse control and for the Medicare Integrity Program.
The ACA mandates states to conduct post payment and prepayment reviews, screen and audit providers, terminate certain providers, and create provider categories of risk.
While recent articles and media seem to indicate that health care fraud is running rampant, the substantial increase in accusations of health care fraud really may be caused by factors other than more fraud is occurring.
The ACA mandates have an impact.
And, quite frankly, the investigation units may be a bit overzealous to recover funds.
What will happen if you are a target of a criminal health care fraud investigation?
It depends whether the federal or state government is conducting the investigation.
If the federal government is investigating you, most likely, you will be unaware of the investigation. Then, one day, agents of the federal government will come to your office and seize all property deemed related to the alleged fraud. Your accounts will be frozen. Whether you are guilty or not will not matter. What will matter is you will need an experienced, knowledgeable health fraud attorney and the funds with which to compensate said attorney with frozen accounts.
If the state government is conducting the investigation, it is a little less hostile and CSI-ish. Your reimbursements will be suspended with or without your notice (obviously, you would notice the suspension once the suspension occurred). But the whole “raid on your office thing” is less likely.
There are legal remedies available, and the “defense” should begin immediately.
Most importantly, if you are a health care provider and you are not committing fraud, you are not safe from accusations of fraud.
Your insurance, most likely, will not cover attorneys’ fees for alleged intention fraud.
The attorney of your choice will not be able to accept funds that are “tainted” by alleged fraud, even if no fraud occurred.
Be aware that if, for whatever reason, you are accused, you will need to be prepared…for what you hope never happens.
Judge Orders State’s Termination of Provider’s Medicaid Contract To Be REVERSED, Despite the Unilateral Termination!!
THE CASES LISTED BELOW ARE ILLUSTRATIVE OF THE MATTERS HANDLED BY THE FIRM. CASE RESULTS DEPEND UPON A VARIETY OF FACTORS UNIQUE TO EACH CASE. NOT ALL CASE RESULTS ARE PROVIDED. CASE RESULTS DO NOT GUARANTEE OR PREDICT A SIMILAR RESULT IN ANY FUTURE CASE UNDERTAKEN BY THE LAWYER.
[The names and services involved have been changed to protect the innocent. Lawyers have so many rules to follow…probably due to litigation].
Imagine that the State of North Carolina knocks on your office door and informs you that you are no longer allowed to accept Medicaid and/or Medicare reimbursement rates. That for whatever reason, you are no longer allowed to bill for Medicaid and/or Medicare services. You would expect a reason, right? You would expect the reason to be correct, right?
But what if the reason is invalid?
A North Carolina administrative judge recently held that the State’s reason for terminating a Medicaid provider’s contract must be accurate, and REVERSED the State’s decision to terminate its Medicaid contract with my client. Here’s the story:
The State terminated my client’s contract to provide chiropractic services.
In this case it was a bit of a duress contract (as are most Medicaid contracts) – a “take or leave it” offer to the local service provider. If you are a provider and want to continue to serve Medicaid recipients, you have no choice but to sign whatever contract the State gives you. You cannot negotiate. You’d be told to sign the contract “as is,” or you do not provide services. I know of a provider who, before he signed a contract with the State, crossed out a number of clauses. The State just sent him a clean, un-altered contract, same as the original, and told him sign it, no changes allowed.
Going back to my case…
My client is a provider that provides chiropractic services. In this case, the State inaccurately claimed that my client provided services without a proper license.
Upon the State’s termination of my client’s contract for chiropractic services, we filed a petition to the Office of Administrative Hearings in 2013 and asked the administrative law judge for a temporary restraining order, a motion to stay the termination, and a Preliminary Injunction to enjoin the State from terminating my client’s Medicaid provider contract.
The administrative law judge (ALJ) issued the temporary restraining order in May 2013. According to judge, we demonstrated a likelihood of success on the merits and that any failure to award the injunction would cause irreparable harm.
Obtaining an injunction, however, was not a complete victory. We had won an opening battle, but not the war.
A temporary injunction is exactly that…temporary. We had two additional hurdles to overcome: (1) a hearing at which we would have to prove to the judge that we were likely to succeed and the irreparable harm would be so irreparable that the judge should award us a longer injunction, at least until we could have a full hearing on the merits; and (2) a final hearing on the merits.
We received the Final Decision from the ALJ last week. The judge found that my client performed its contractual and legal obligations and that the State acted erroneously in determining that my client had breached its contract. The judge found the weight of the evidence sufficient to prove that my client provided services with a proper license.
If you think a 2 year injunction is pretty long, from May 2013 to now, you are right.
But think about this…from May 2013, through today and into the foreseeable future, as long as the contract is in effect, my client has been and will be able to provide medically necessary chiropractic services to those in need and receive reimbursements for those medically necessary services. This case shows why it is important for providers to assert their rights when those are violated.
And it shows also that the State is not allowed to arbitrarily violate those provider rights.
Source: [New Mexico] Human Services Secretary Squier Resigns!
“Gov. Susana Martinez’s controversial Human Services Department Secretary Sidonie Squier resigned on Thursday, sources inside the department confirmed,” according to the Santa Fe New Mexican.
Patsy Romero, COO of Easter Seals El Mirador wrote to me, “post on your blog and say thank God that this woman is out after she falsely accused innocent people of being criminal and specifically targeted individuals without any evidence to support her allegations.”
According to a member of legislature, Squier had stated to the member that she was “after Patsy and Roque.” (Roque is the CEO of the Rio Grande Behavioral Health).
See the documentary about the events in New Mexico leading up to the accusations of fraud against 15 behavioral healthcare providers here.
Obviously, I cannot comment or have an opinion, so here is the rest of the article from the Santa Fe New Mexican:
“In a state that ranks at or near the bottom of the nation in childhood hunger, poverty and unemployment, Squier has been a target of criticisms from groups that advocate for the poor, beginning with a statement in an email last year from her office that no evidence of hunger in the state exists in New Mexico.
Squier later backed off the statement, but came under fire again last year over the sudden removal of 15 behavioral health providers accused of fraud and their replacement with Arizona companies. The Human Services Department’s suspicions have yet to be proven. See my blog: “Because of PCG Audit, New Mexico Freezes Mental Health Services!”
Democrats in the New Mexico Senate this year targeted Squier with a “no confidence” resolution over her remarks about hunger in the state and the behavioral health shakeup.
Since then, a federal judge chided the Human Services Department when he ordered it to immediately eliminate a backlog of thousands of applications for food and health benefits from poor New Mexicans that were months overdue for processing. The department has since satisfied the court that the backlog for those most desperately in need of food assistance has been eliminated, but advocates for impoverished residents of the state say problems in other areas continue to deny eligible applicants much needed benefits.
While working to satisfy the court order over the benefit delays, Squier announced plans to restore a requirement that some food benefit recipients work, receive job training or perform community service in order to keep receiving assistance. A state district judge in Santa Fe delayed the launch of the regulatory change last week in a lawsuit that challenged whether the Human Services Department fully disclosed all the relevant details of the requirement before adopting it.
On Wednesday, the department announced it will start the hearing process for the work requirement anew, further delaying its implementation.
As election results came in Tuesday night and Martinez was swept into office for a second term by a large margin, U.S. Rep. Michelle Lujan Grisham, D-New Mexico, said she planned to apply pressure on the governor to dump Squier based on the volume of complaints Lujan Grisham’s office has received about human services in the state.
“I don’t think that Sidonie Squier is the right leadership for the Human Services Department,” Lujan Grisham told The New Mexican.”
Williams Mullen Hosts Its First Annual Healthcare Panel Discussion: Summary Below
I am currently sitting in a hotel in New Mexico. I testified this morning before the New Mexico Behavioral Health Care Subcommittee regarding due process for health care providers upon “credible allegations of fraud.”
This past Sunday I ran and finished my very first half marathon. And, yes, I am sore. I signed up for the Bull City 1/2 marathon in Durham because it was being held in October and I thought the temperature would be cool. But I failed to contemplate Durham’s hills…ouch!
Despite my jet lag and sore muscles, I wanted to blog about the health care panel discussion this past Thursday night hosted by Williams Mullen. Representative Nelson Dollar, Barbara Morales Burke, Blue Cross Blue Shield of NC, Stephen Keene, General Counsel for the NC Medical Society, and I presented as the healthcare panel. As you can see below, we sat in the above-referenced order.
Below, I have outlined the questions presented and my personal recollection of each answer. These answers were not recorded, so, if, by chance, I misquote someone, it is my own personal recollection’s fault, and I apologize.
Our Williams Mullen associate Robert Shaw, acted as the moderator and asked the following questions:
To Rep. Dollar:
Most of us have heard about the discussion in the General Assembly about moving North Carolina’s Medicaid program towards a more fully implemented managed care model or to one using accountable care organizations. Where do the House and Senate currently stand with respect to these models, and what are the prospects for passing Medicaid reform in next year’s long session of the General Assembly?
Summary: The House and the Senate are not in agreement. The House put forth a Bill 1181 last session that encompasses the House’s ideas for Medicaid reform. It was a bipartisan bill. It was passed unanimously. Medicaid reform should not be a bipartisan matter. Our Bill did not fare well in the Senate, but the House believes Bill 1181 is the best we have so far.
To which Keene interjected: It is important that Bill 1181 was unanimous. The Medical Society endorses the bill.
To Barbara Morales Burke:
As we head into open enrollment season under the Affordable Care Act, what are the biggest challenges you see from the insurer’s perspective in complying with Affordable Care Act requirements and meeting the needs of the marketplace?
Summary: BCBS, as all other insurance companies, faced unique times last year during the open enrollment and this year will be even more important because we will find out who will re-new the policies. While BCBS was not perfect during last year’s open enrollment, we have learned from the mistakes and are ready for the upcoming enrollment.
To Steve Keene:
What concerns are you seeing from members of the North Carolina Medical Society regarding patients’ access to providers of their choice and your members’ participation in the major health insurance networks?
Summary: This has always an issue since he came to NC. He actually wrote a memo regarding the access to provider issue back in the 1990s. The insurance need to come up with a known a published standard. BCBS actually has better relationships with providers than, say, for example, a United Healthcare. If the insurance company decides to only use X number of ob/gyns, then it should be clear why the insurance company is only contracting with x number ob/gyns.
To Knicole Emanuel:
Under the Affordable Care Act, the standard for withholding payments in the event of a credible allegation of fraud has changed. What is the standard for a credible allegation of fraud and how does such an allegation affect Medicaid reimbursements?
Summary: The ACA was intended to be self-funding. In drafting the ACA, 42 CFR 455.23 was amended from allowing states to choose whether to suspend Medicaid reimbursements upon credible allegations of fraud to mandating the states to suspend payments. The basis for a suspension is credible allegations of fraud and only requires an indicia of reliability. This indicia of reliability is an extremely low standard and, thus, adversely impacts health care providers who are accused of fraud without a basis, such as a disgruntled employee or anonymous and unfounded complaint.
For more information on suspension of Medicaid payments, please see my blogs: “How the ACA Has Redefined the Threshold for “Credible Allegations of Fraud” and Does It Violate Due Process?” or “NC Medicaid Providers: “Credible Allegations of Fraud?” YOU ARE GUILTY UNTIL PROVEN INNOCENT!”
To Keene and Burke: (ACA topic)
One of the concerns, or perhaps benefits depending on one’s perspective, about the implementation of the Affordable Care Act is the possible transition from our country’s employer-based health insurance model. Are you seeing any trends away from the employer-based health insurance model, or do you expect such a trend in the future?
Summary: (From Keene) He sees the employer-based health insurance model as a tax issue. Employer-based health insurance is not going anywhere unless the related tax break is eliminated. Keene does not have an opinion as to whether the employer-based health insurance model is good or bad; he just believes that it is not going anywhere. On a side note, Keene mentioned that, with employer-based health insurance, the employee has a much smaller voice when it comes to negotiating any terms of the health insurance. The employee is basically at the whim of the employer and health insurance company.
Dollar and Emanuel: (Medicaid reform)
Who are the major contributors to the legislative discussion on Medicaid funding and reimbursement rates? What stakeholders do legislators want or need to hear from more to make sound policy decisions about funding decisions?
Summary: (From Dollar) It is without question that the legislators are surrounded by lobbyists regarding the discussion as to Medicaid funding and reimbursement rates. I stated that the reimbursement rates are too low and are a direct correlation as to quality of care. Rep. Dollar stated that he is open to hearing from all. Furthermore, Rep. Dollar believes that the Senate Bill on Medicaid reform is a good start for Medicaid reform. The Bill implements the Accountable Care Organizations (ACOs), and is supported by the NC Medical Society.
Summary: (From me) I support Medicaid reform that eliminates the MCOs in behavioral health care. These MCOs are prepaid and have all the financial incentive to deny services and terminate providers.
Burke: (ACO)
How is Blue Cross Blue Shield of North Carolina working with providers to take advantage of the new Medicare Shared Savings Program? (E.g., partnership signed with WakeMed Key Community Care (an accountable care organization) in July.)
Summary: BCBS works very hard to maintain solid relationships with providers. To which Keene agreed and stated that other private insurance does not.
The health care panel was great. We hope to host a State of the State on Health Care panel discussion annually.
The NC MCOs: Jurisdiction Issues and Possible Unenforceable Contract Clauses with Medicaid Providers
According to NC Superior Court, OAH (and I) has (have) been right all along…OAH does have jurisdiction over the MCOs. And you cannot contract away protections allowable by statute.
Before I went to law school, I do not recall ever thinking about the word “jurisdiction.” Maybe in an episode of Law and Order I would hear the word thrown around, but I certainly was not well-versed in its meaning. While I was in law school, the word “jurisdiction” cropped up incessantly.
“Jurisdiction” is extremely important to North Carolina Medicaid providers. Jurisdiction, in the most basic terms, means in which court to bring the lawsuit or appeal of an adverse determination.
In this blog, I am mostly referring to terminations/refusals to contract with providers by the managed care organizations (MCOs), which manage behavioral health, developmental disability, and substance abuse services for North Carolina. Recently, there have been a slew of providers terminated or told that they would not receive a renewed contract to provide Medicaid services. The MCOs tell the providers that, per contract, the providers have no rights to continued participation in the Medicaid system.
The MCOs also tell the providers that the providers cannot appeal at OAH… That the providers have no recourse… That the providers’ contracts are terminable at will (at the MCO’s will)…. I have been arguing all along that this is simply not true. And now a Superior Court decision sides with me.
The MCO have been arguing in every case that OAH does not have jurisdiction over the actions of the MCOs. The MCOs have pointed to NC Gen. Stat. 108D and Session Law 2013-397, which amends NC Gen. Stat. 150B-23 to read:
“Solely and only for the purposes of contested cases commenced as Medicaid managed care enrollee appeals under Chapter 108D of the General Statutes, a LME/MCO is considered an agency as defined in G.S. 150B-2(1a). The LME/MCO shall not be considered an agency for any other purpose.”
A termination or denial to participate in the Medicaid program is an adverse determination. Adverse determination is defined in NC Gen. Stat. 108C-2 as, “A final decision by the Department to deny, terminate, suspend, reduce, or recoup a Medicaid payment or to deny, terminate, or suspend a provider’s or applicant’s participation in the Medical Assistance Program.”
The Department is defined as, “The North Carolina Department of Health and Human Services, its legally authorized agents, contractors, or vendors who acting within the scope of their authorized activities, assess, authorize, manage, review, audit, monitor, or provide services pursuant to Title XIX or XXI of the Social Security Act, the North Carolina State Plan of Medical Assistance, the North Carolina State Plan of the Health Insurance Program for Children, or any waivers of the federal Medicaid Act granted by the United States Department of Health and Human Services.”
Obviously, per statute, any entity that is acting on behalf of DHHS would be considered the “Department.” Any adverse act by any entity acting on behalf of DHHS, including terminating a provider’s participation in the Medical Assistance Program is considered an adverse determination.
The MCOs have been arguing that the above-referenced amendment to 150B means that the MCOs are not agents of the state; therefore, OAH has no jurisdiction over them.
Until March 7, 2014, these issues have been argued within OAH and no Superior Court judge had ruled on the issue. Most of the Administrative Law Judges (ALJ), even without Superior Court’s guidance, has, in my opinion, correctly concluded that OAH does have jurisdiction over the MCOs. A couple of the ALJs vacillate, but without clear guidance, it is to be expected.
On or about March 7, 2014, the Honorable Donald W. Stephens, Senior Resident Superior Court Judge ruled that OAH does have jurisdiction over the MCOs. Yelverton’s Enrichment Services, Inc. v. PBH, as legally authorized contractor of and agent for NC Department of Health and Human Services (DHHS).
If these MCOs are acting on DHHS’ behalf in managing the behavioral health Medicaid services, it would be illogical for OAH to NOT have jurisdiction over the MCOs.
In the Yelverton Order, Judge Stephens writes, “OAH did not err or exceed its statutory authority in determining that it had jurisdiction over Yelverton’s contested case.”
The Order also states that the MCO, in this case, PBH (now Cardinal Innovations), agreed that only DHHS had the authority to terminate provider enrollment. The MCO argued that, while only DHHS can terminate provider enrollment, the MCOs do have the authority “to terminate the participation of the provider in the Medical Assistance Program.”
Talk about splitting hairs! DHHS can terminate the enrollment, but the MCO can terminate the participation? If you cannot participate, what is the point of your enrollment?
Judge Stephens did not buy the MCO’s argument.
On March 7, 2014, Judge Stephens upheld ALJ Donald Overby’s Decision that OAH has jurisdiction over the MCOs for terminating provider contracts.
I anticipate that the MCOs will argue in future cases that the Yelverton case was filed prior to Session Law 2013-397, so Yelverton does not apply to post-Session Law 2013-397 fillings. However, I find this argument also without merit. The Yelverton Order expressly contemplates NC Gen. Stat. 108D and House Bill 320.
House Bill 320 was the bill contemplated by the General Assembly in the last legislative session that expressly stated that OAH does not have jurisdiction over the MCOs. It did not pass.
In Yelverton, the MCO argued that the MCO contracts with the providers allow the MCO to terminate without cause and without providing a reason.
Judge Stephens notes that the General Assembly did not pass House Bill 320. The Yelverton Order further states that no matter what the contracts between the providers and the MCOs states, “[c]ontract provisions cannot override or negate the protections provided under North Carolina law, specifically appeal rights set forth in NC Gen. Stat. 108C.”
Will the MCO appeal? That is the million dollar question…
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.
A Dose of Truth: If an MCO Decides Not to Contract With You, YOU DO HAVE RIGHTS!
It has come to my attention that the managed care organizations (MCOs) are spreading non-truths. As to appeal rights and rights, in general, of a Medicaid provider. You may not hear the truth elsewhere, but you will hear the truth here.
Supposedly, the truth shall set you free. If this is true, then why do so many people lie? I believe that people’s desire for money, power, status, greed and/or others to look at them with respect are the some of the catalysts of many lies.
Of course, our old friend Aesop told many tales of the virtue of honesty. My favorite is the “Mercury and the Woodman.”
A Woodman was felling a tree on the bank of a river, when his axe,
glancing off the trunk, flew out of his hands and fell into the water.
As he stood by the water’s edge lamenting his loss, Mercury appeared
and asked him the reason for his grief. On learning what had happened,
out of pity for his distress, Mercury dived into the river and,
bringing up a golden axe, asked him if that was the one he had lost.
The Woodman replied that it was not, and Mercury then dived a second
time, and, bringing up a silver axe, asked if that was his. “No,
that is not mine either,” said the Woodman. Once more Mercury dived
into the river, and brought up the missing axe. The Woodman was
overjoyed at recovering his property, and thanked his benefactor
warmly; and the latter was so pleased with his honesty that he made
him a present of the other two axes. When the Woodman told the story
to his companions, one of these was filled with envy of his good
fortune and determined to try his luck for himself. So he went and
began to fell a tree at the edge of the river, and presently contrived
to let his axe drop into the water. Mercury appeared as before, and,
on learning that his axe had fallen in, he dived and brought up a
golden axe, as he had done on the previous occasion. Without waiting
to be asked whether it was his or not, the fellow cried, “That’s mine,
that’s mine,” and stretched out his hand eagerly for the prize: but
Mercury was so disgusted at his dishonesty that he not only declined
to give him the golden axe, but also refused to recover for him the
one he had let fall into the stream.
The moral of the story is “Honesty is the best policy.”
But is it? In our world, we do not have fairies, Roman gods, good witches, fairy godmothers, wood sprites, or wizards to hold us accountable for our lies. If George Washington never admitted that he chopped down the cherry tree, no wood nymph would have appeared, angered by his lie, only to throw his ax into the Potomac.
So who holds us accountable for lies?
As a Christian, I believe that I will be held accountable in my afterlife. But, without getting too profound and soapbox-ish, I mean who…NOW…presently…in our lives…holds us accountable for lies?
Obviously, when we were children, our parents held us accountable. Oh boy…the worst thing for me to hear growing up was for my father to say, “I am so disappointed in you.”
What about the MCOs? Who or what holds the MCOs accountable? And what is this non-truth that the MCOs may or may not be telling providers that has spurred me to write this blog?
Recently, many MCOs have (1) terminated contracts with providers; (2) refused to renew contracts with providers; and (3) conducted desk reviews and interviews of providers only to decide to not contract with many providers; thus leaving many small businesses to bankruptcy and closure…not to mention severing the relationships between the Medicaid recipients and their providers.
It has come to my attention that, when the MCO is asked by a provider whether the provider can have a reconsideration review or whether the provider has any appeal rights as to the MCO’s adverse decision, that the MCOs are telling providers, “No.” As in, you have no appeal rights as to the MCOs decision to not contract with you.
This is simply not true.
There are so few providers in NC willing to accept Medicaid because of the administrative burden of Medicaid regulations and the already low reimbursement rates. To then have the audacity to “willy nilly” or at its own whim subjectively decide that it [the MCO] does not want to contract with you and then tell you that its “willy nilly” or subjective whim cannot be challenged legally eats at the heart of this country’s core values. Do we not applaud small business owners? Do we not applaud those small business owners dedicated to serving the population’s most needy? Do we not promote due process? Do we not promote truth, justice and the American way?
Or are those promotions clouded when it comes to money, power, status, greed, and desire for respect?
So, I say to you [providers who have been denied a Medicaid contract with an MCO despite having a contract with the Department of Health and Human Services (DHHS) to provide Medicaid services throughout the state of North Carolina], YOU HAVE RIGHTS.
You do not need to merely accept the decision of the MCO. You do not need to simply close up shop…fire your staff…and try a new career. You have a choice to fight…legally.
But you DO need to know a few things.
First, lawyers are expensive. Period and without question. So whatever law firm you hire, understand that the cost will more than you ever expected. (Please understand that I am not advocating you to hire my firm. Parker Poe and Poyner Spruill both have fantastic attorneys in this area. Just hire someone knowledgable.) It’s even a good idea to have consultations with more than one firm. Find an attorney you trust.
Second, call your liability insurance. There is a chance that your liability insurance will cover all, or a portion of, your attorneys’ fees. But do not allow your insurance company tell you whom to hire. Because this area is specialized there are few attorneys well-versed. Again, go to the firms I mentioned above.
Thirdly, you may not win. While the success rate is extremely high, there are some clients who are simply not going to win. For example, if your documentation is so poor. Or, for example, you really are not a great provider. Remember, the MCOs do have a point to try to only contract with great providers. I only disagree with the way in which the MCOs are deciding to not contract with providers. It seems “willy nilly” and subjectively arbitrary. But, depending on your exact circumstances, you do have a chance of success.
Fourth, you will have to testify. I know it is scary, but I can think of very few circumstances during which the provider would not testify. The judge needs to hear your story….why you should be allowed to continue to provide Medicaid services.
Fifth, the lawsuit will not shield you from future issues with the MCO. Until DHHS decides to actually supervise the MCOs properly (or maybe even after that), the MCOs seem to wield the power.
So why even fight legally? You certainly aren’t guaranteed success. It will certainly cost you a pretty penny.
Maybe the answer for you is to not fight. Only you can make that decision. But I hope someone holds the MCOs accountable for telling providers that the providers have no recourse…no appeal rights…for the MCOs simply not contracting with the provider.
Because if honesty is the best policy, the MCOs’ policies leave much to be desired. Someone needs to throw their axes into the Potomac!
NC Medicaid: Freedom of Choice of Providers? Why Bother? Providers Are Fungible!…Right?
I found some interesting language in the 1915(b) Waiver last week (well, interesting to me).
What is the 1915(b) Waiver? In the simplest of terms, with the 1915(b) Waiver, NC has asked the federal government for an exception to certain mandatory statutes. In order to request the exception or “waiver” of certain federal statutes, NC had to draft our 1915(b) Waiver and promise the federal government that, despite the fact that NC is not following certain federal statutes, that certain things about Medicaid will not change. Even though we may have waived the federal statute requiring it.
For example, in our 1915(b) Waiver, NC asks to waive Medicaid recipients’ “freedom of choice of provider” provision. As in, federal statute requires the states to allow a Medicaid recipient to have the freedom to choose whatever or whomever provider that recipient desires. (Kind of like…”You like your doctor? You can keep your doctor!”)
Well, NC had to waive the freedom of choice of provider because the MCOs in NC are jurisdictional. For example, if Dr. Norwood provides Medicaid services in Durham, there is no reason that she should have to contract with Smokey Mountain Center (SMC). And because Dr. Norwood does not contract with SMC, a Medicaid recipient cannot choose to receive services from Dr. Norwood, which, obviously, limits Medicaid recipients’ freedom of choice of provider.
The thinking behind the waiver of Medicaid recipients’ freedom of choice of provider is that (in my opinion), realistically, even if we did not waive the provision mandating the freedom of choice of provider, how likely is it that a Medicaid recipient residing in Asheville would choose to receive services from a Medicaid provider in Durham, NC? Most likely, the Medicaid recipients in Asheville have never heard of the Medicaid providers in Durham. So…waive the freedom of choice….it’s harmless.
However, in order for the feds to allow this waiver of the freedom of choice of provider, NC had to promise something.
Our promise is found in the 1915(b) Waiver. The language of our promise reads, ”
Why is this important?
Because it is not true. Our promise that we made to the federal government in order for the federal government to allow us to implement our managed care system for our mental health, substance abuse, and developmentally disabled population is not true.
“These providers support this initiative and consumers have at least as much choice in individual providers as they had in the pre-reform non-managed care environment.”
If the Waiver were Pinocchio, its nose would be circling the earth.
It reminds me of my grandma. Grandma is the sweetest, most wonderful grandma in the world. She and my grandpa lived in a home in Cary, NC for over five decades. When grandpa passed and grandma’s health began to decline, grandma decided to sell her home and move into an assisted living facility. Well, grandma’s home was near and dear to all 5 children’s hearts, as well as all 15+ grandchildren’s hearts (I know…I have a huge family). I, personally, had so many wonderful memories there (fishing in the lake behind the house, playing pool and ping-pong in the basement, climbing up and down the laundry chute acting as if it were a secret passage way, and grandpa’s amazing tomato sandwiches, gumbo and cornbread).
Anyway, the point is that when grandma sold the house, there was a stipulation in the contract. The buyer promised to not bulldoze the house and build a new home. You see, this neighborhood was old…one of the oldest in Cary. So the homes were built in the 70s. It had become “posh” to buy an older home in this neighborhood because the lots were so large and the location was so great and to simply flatten the old house for a new one.
Well, grandma wouldn’t have it. There was too much nostalgia in the home for some buyer to bulldoze the home. So the contract to sell the house stipulated that the buyer would not bulldoze the house. So grandma sold the home.
And the buyer bulldozed the home.
Of all the low-down, dirty tricks!!! To lie in a contract to my grandma! Needless to say, grandma was very upset. She felt that a piece of her life vanished, which, obviously, it did.
Well, grandma has a number of attorneys in the family (including me). So grandma’s kids began to talk about a lawsuit. But grandma said that even if she sued the buyer that it would not bring back the house. Money could not replace the memories at grandma’s house.
If I am remembering correctly, this new house was built 5-6 years ago. Maybe more. I pass the neighborhood all the time. To date, I still have not driven to see the house that replaced grandma’s house. I don’t think I could take it.
What is worse than lying to a grandmother about her home?
In my opinion? Lying to the feds about the freedom of choice of Medicaid provider that our Medicaid recipients have here in NC. Talk about a vulnerable population…our most needy citizens, but add to the vulnerability mental health issues, substance abuse issues, and/or developmentally disablement. And, now, let’s lie about their freedom of choice.
So where am I getting my allegation that Medicaid recipients do not have “at least enough choice in individual providers as they had in pre-reform non-managed care?”
Normally I only blog as to facts that I can corroborate with some research. However, this blog may not be corroborated by any independent research. My allegation is based on my own experience as a Medicaid attorney, conversations with my clients, emails that I have received from providers across the state, memos I have read from the MCOs, and the very real fact that the MCOs are terminating (or not renewing) hundreds of provider contracts across the state.
For the sake of argument, let’s say I am right. That Medicaid recipients do not have at least the same freedom of choice of provider as pre-MCOs. What then?
If I am right, this is the situation in which we find ourselves today. So what is happening today?
As the MCOs determine that fewer providers are needed within a catchment area, the MCOs are refusing to contract with “redundant and unnecessary” providers. But are these providers really unnecessary? Really redundant? Are we to believe that mental health providers are fungible? Meaning that one provider is just as good as the next…that nothing makes some provider “stick out?” Are providers fungible like beach balls are fungible?
Let’s test that theory.
Abby is a suicidal teenager. She has suffered from schizophrenia with auditory hallucinations since she was a child. For the last six years, Abby has seen Dr. Norwood. It took some time, but, eventually, Abby began to trust Dr. Norwood. Dr. Norwood has developed a close relationship with Abby, even telling Abby to call her 24 hours a day, 7 days a week if she is in crisis. Dr. Norwood resides in Durham, so Alliance Behavioral Healthcare (Alliance) is her MCO, and Dr. Norwood provides Abby with outpatient behavioral therapy (OBT). But, in addition to the weekly therapy, Dr. Norwood also provides Abby with a sense of security. Abby knows that, if needed, Dr. Norwood would be there for here under any circumstances. In addition, Abby trusts Dr. Norwood because she is a female. Abby has an intense distrust of males. When Abby was 9, her step-father raped her over and over until child protective services stepped in, but not before Abby suffered 8 broken bones and has lost the ability to reproduce forever.
Then, Alliance held its RFPs a couple of months ago. It’s “tryout.”
And Dr. Norwood was not awarded a contract with Alliance. Dr. Norwood has no idea why Alliance did not award her a contract. Only that, according to Alliance, Alliance has sufficient number of providers providing OBT within its catchment area and Dr. Norwood’s services are no longer needed.
Because mental health care providers are fungible, right?
Who cares whether Abby receives services from Dr. Norwood? She can get the same exact services from a large corporation…we will call it “Triangle Counseling.” (BTW: If a Triangle Counseling really exists, I apologize. This is a fictitious company made up for my example). Triangle Counseling employs 25+ psychiatrists and 30+ counselors. When a Medicaid recipient is referred to Triangle, Triangle assigns a psychiatrist and a counselor to the recipient. Oh, and if, for some reason, the Medicaid recipients needs crisis help outside business hours, Triangle provides “tele-care” so the Medicaid recipient can speak to a computer screen on which a person can be seen by a counselor.
Abby is now hospitalized. Dr. Norwood filed bankruptcy, lost her 30 year+ career, and is receiving monetary support from the state.
I ask you, if Alliance (or any other MCO) has terminated even one provider, hasn’t that MCO restricted Medicaid recipients’ freedom of choice of provider beyond what was contemplated by the Waiver? Is the clause in our Waiver that “freedom of choice of provider will be the same as before the implementation of MCOs?,” truthful? What if the MCO has terminated 10 provider contracts? 50? 100?
Yet, in order to implement the MCO system, we promised the federal government in our 1915(b) Waiver that “consumers have at least as much choice in individual providers as they had in the pre-reform non-managed care environment.”
Fact or fiction?
Are providers fungible? Because my grandma knows from experience, houses sure are not.
