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Medicaid Closed Networks: Can Waivers Waive Your Legal Rights?

Sorry for the lapse in blogging. I took off for Thanksgiving and then got sick. I hope you all had a wonderful Thanksgiving!!

While I was sick, I thought about all the health care providers that have been put out of business because the managed care organization (MCO) in their area terminated their Medicaid contract or refused to contract with them. I thought about how upset I would be if I could not see my doctor, whom I have seen for years. See blog for “You Do Have Rights!

Then I thought about…Can a Waiver waive a legal right?

Federal law mandates that Medicaid recipients be able to choose their providers of choice. Court have also held that this “freedom of choice” of provider is a right, not a privilege.

42 U.S.C. § 1396a states that Medicaid recipients may obtain medical services from “any institution, agency, community pharmacy, or person, qualified to perform the service or services required… who undertakes to provide him such services….” Id. at (a)(23).

So how can these MCOs restrict access?

First, we need to discuss the difference between a right and a privilege.

For example, driving is a privilege, not a right. You have no right to a driver’s license, which is why you can lose your license for things, such as multiple DUIs. Plus, you cannot receive a driver’s license unless you pass a test, because a license is not a right.

Conversely, you have the right to free speech and the right to vote. Meaning, the government cannot infringe on your rights to speak and vote unless there are extraordinary circumstances. For example, the First Amendment does not protect obscenity, child pornography, true threats, fighting words, incitement to imminent lawless action (yelling “fire” in a crowded theater), criminal solicitation or defamation. Your right to vote will be rescinded if you are convicted of a felony. Furthermore, you do not need to take a test or qualify for the rights of free speech and voting.

Likewise, your choice of health care provider is a right. It can only be usurped in extraordinary circumstances. You do not need to take a test or qualify for the right. (Ok, I am going to stop underlining “right” and “privilege” now. You get the point).

Then how are MCOs operating closed networks? For that matter, how can Blue Cross Blue Shield (BCBS) terminate a provider’s contract? Wouldn’t both those actions limit your right to choose your provider?

The answer is yes.

And the answer is simple for BCBS. As for BCBS, it is a private company and does not have to follow all the intricate regulations for Medicare/caid. 42 U.S.C.  § 1396a is inapplicable to it.

But Medicaid recipients have the right to choose their provider.  This “freedom of choice” provision has been interpreted by both the Supreme Court and the Seventh Circuit as giving Medicaid recipients the right to choose among a range of qualified providers, without government interference (or its agents thereof).

What does this mean? How can a managed care organization (MCO) here in NC maintain a closed network of providers without violating the freedom of choice of provider rule?

The “Stepford” answer is that we have our Waivers in NC, which have waived the freedom of choice. In our 1915 b/c Waiver, there are a couple pages that enumerates certain statutes. We “x” out the statutes that we were requesting to waive.

It looks like this:

waiver1

Furthermore, federal law carves out an exception to freedom to choose right when it comes to managed care. But to what extent? It the federal carve unconstitutional?

But…the question is twofold:

  • Would our Waiver stand up to federal court scrutiny?
  • Can our state government waive your rights? (I couldn’t help it).

Let’s think of this in the context of the freedom of speech. Could NC request from the federal government a waiver of our right to free speech? It sounds ludicrous, doesn’t it? What is the difference between your right to free speech and your right to choose a provider? Is one right more important than the other?

The answer is that no one has legally challenged our Waiver’s waiver of the right to freedom of provider with a federal lawsuit claiming a violation of a constitutionally protected right. It could be successful. If so, in my opinion, two legal theories should be used.

  1. A § 1983 action; and/or
  2. A challenge under 42 CFR 431.55(f)

Section 1983 creates a federal remedy against anyone who deprives “any citizen of the United States… of any rights, privileges, or immunities secured by the Constitution and laws” under the color of state law. 42 U.S.C. § 1983. The Supreme Court has explained that § 1983 should be read to generally “authorize[] suits to enforce individual rights under federal statutes as well as the Constitution.” City of Rancho Palos Verdes, Cal. v. Abrams, 544 U.S. 113, 119 (2005).

Section 1983 does not authorize a federal remedy against state interference with all government entitlements, however; “it is rights, not the broader or vaguer ‘benefits’ or ‘interests,’ that may be enforced under the authority of that section.” Gonzaga Univ. v. Doe, 536 U.S. 273, 283 (2002). But the courts have already held that the freedom to choose your provider is a right.

In 2012, the Seventh Circuit confirmed that § 1983 authorizes Medicaid recipients to sue to enforce the right to freely choose among qualified health providers.

In Planned Parenthood, the court was confronted with an Indiana state law prohibiting state agencies from providing state or federal funds to any entity that performs abortions or maintains or operates a facility in which abortions are performed – regardless of whether there is any nexus between those funds and the abortion services. See Planned Parenthood, 699 F.3d at 967 (7th Cir. 2012). In other words, the law effectively prohibited entities that perform abortions from receiving any state or federal funds for any (non-abortion) purpose.

The Court found that the restrictions violated the Medicaid recipients’ right to freedom of choice of provider.

There are, as always, more than one way to skin a cat. You could also attack the Waiver’s waiver of the freedom to choose your health care provider by saying the NC is violating 42 CFR 431.55.

Notice the last sentence in subsection (d) in the picture above. In our Waiver, NC promises to abide by 42 CFR 431.55(f), which states:

(f) Restriction of freedom of choice—
(1) Waiver of appropriate requirements of section 1902 of the Act may be authorized for States to restrict beneficiaries to obtaining services from (or through) qualified providers or practitioners that meet, accept, and comply with the State reimbursement, quality and utilization standards specified in the State’s waiver request.
(2) An agency may qualify for a waiver under this paragraph (f) only if its applicable State standards are consistent with access, quality and efficient and economic provision of covered care and services and the restrictions it imposes—
(i) Do not apply to beneficiaries residing at a long-term care facility when a restriction is imposed unless the State arranges for reasonable and adequate beneficiary transfer.
(ii) Do not discriminate among classes of providers on grounds unrelated to their demonstrated effectiveness and efficiency in providing those services; and
(iii) Do not apply in emergency circumstances.
(3) Demonstrated effectiveness and efficiency refers to reducing costs or slowing the rate of cost increase and maximizing outputs or outcomes per unit of cost.
(4) The agency must make payments to providers furnishing services under a freedom of choice waiver under this paragraph (f) in accordance with the timely claims payment standards specified in § 447.45 of this chapter for health care practitioners participating in the Medicaid program.

Basically, to argue a violation of 42 CFR 431.55, you would have to demonstrate that NC violated or is violating the above regulation by not providing services “consistent with access, quality and efficient and economic provision of covered care and services.”

So, while it is true that NC has requested and received permission from the Center of Medicare and Medicaid Services (CMS) to restrict access to providers, that fact may not be constitutional.

Someone just needs to challenge the Waiver’s waiver.

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!!