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EPSDT’s Impact on Medicaid Audits

Because the breadth of EPSDT is so large and covers so many Medicaid recipients under 21, many NC auditors conducting Medicaid audits are either overlooking the importance of EPSDT or lacking the comprehension of the ever-arching arms of EPSDT.

First, what in the heck is EPSDT?  It’s an acronym for Early and Periodic Screening, Diagnostic and Treatment.


The Early and Periodic Screening, Diagnostic and Treatment (EPSDT) benefit provides comprehensive and preventive health care services for children under age 21 who are enrolled in Medicaid. EPSDT is key to ensuring that children and adolescents receive appropriate preventive, dental, mental health, and developmental, and specialty services.

Early Assessing and identifying problems early
Periodic Checking children’s health at periodic, age-appropriate intervals
Screening Providing physical, mental, developmental, dental, hearing, vision, and other screening tests to detect potential problems
Diagnosis Performing diagnostic tests to follow up when a risk is identified, and
Treatment Control, correct or reduce health problems found.

How EPSDT works in real life:

The simplest way to think about EPSDT, is to throw out all entrance criteria for whichever Medicaid service is at issue (as long as the Medicaid recipient is under the age of 21). (Please understand that this is not the legal standard for EPSDT).

The way North Carolina explains EPSDT in the DMA Clinical Policies is as follows:

Early and Periodic Screening, Diagnostic, and Treatment (EPSDT) is a federal Medicaid requirement that requires the state Medicaid agency to cover services, products, or procedures for Medicaid beneficiaries under 21 years of age if the service is medically necessary health care to correct or ameliorate a defect, physical or mental illness, or a condition [health problem] identified through a screening examination** (includes any evaluation by a physician or other licensed clinician). This means EPSDT covers most of the medical or remedial care a child needs to improve or maintain his/her health in the best condition possible, compensate for a health problem, prevent it from worsening, or prevent the development of additional health problems.

For example, if, in order to receive Medicaid services for X the Medicaid recipient must meet criteria A, B, and C, but only meets A and B, the Medicaid recipient can still receive the services if the recipient is under 21 and:

  • The Medicaid recipient can show that the services are medically necessary to correct or ameliorate a medical condition.

Ok, you understand the definition of EPSDT. But how does EPSDT come into play during a Medicaid audit?

Many audited services have undergone prior authorization by the contracted company for DMA.  For example, for mental health services, prior authorization comes from ValueOptions (VO).  Then years later, the Carolinas Center for Medical Excellence (CCME) or other recoupment auditing contractor (RAC) audits the same services that were previously authorized, and, in many cases, decides that medical necessity was not met because the entrance criteria had not been met.

The difference in opinion between VO and CCME, in many cases, is a lack of understanding the strength of EPSDT.

Time and time again, I have gone to reconsideration reviews when the Medicaid recipients were all under 21 and argued that medical necessity was met through EPSDT.  Yet, time and time again, the RAC (whether CCME or Public Consulting Group (PCG)) representative vehemently disagrees that EPSDT is applicable. He or she argues that the entrance criteria must be met regardless.

Because, in my past life, I actually worked for the Attorney General’s office in the Medicaid department, I saw hundreds of hundreds of decisions from the Office of Administrative Hearings (OAH) stating that medical necessity was met via EPSDT. In some cases, the Medicaid recipient had not even met one entrance criteria for the Medicaid services.  But EPSDT has been interpreted to be extremely broad and encompassing.

Despite the importance of EPSDT, it appears that no one explained this to the contracting companies conducting the NC Medicaid audits. Perhaps someone should tell them….

Medicaid Story: WRAL 6:00 News Tonight

Today I was interviewed by WRAL.  The interview will be aired during the 6:00 news.  Please watch.

I am so thankful that WRAL saw a story in my client‘s injustice.  My client received a Medicaid termination letter recently, which means that she must discharge all Medicaid recipients and no longer provide Medicaid recipients with the mental health care they need.  She engaged in no fraud.  No, my client provided the mental health services to Medicaid recipients and billed for the services rendered.  The reason she was terminated from Medicaid was because a contracted company for the State decided that her documentation was inadequate (paperwork nit-picking).

Ok, I’m sure that a number of you is sitting there reading this thinking, “Well, her documentation was poor. She should have done a better job.”  No.  Let me explain.

The State has contracted with a couple of companies to audit Medicaid, Recovery Audit Contractors (RACs).  These companies are compensated on a contingent fee, meaning the more errors the companies find, the more money the companies receive.  A RAC audited my client’s documents.  My client provides mental health services (which receive prior authorization).  The RAC is auditing claims from 2009-2010.  So all the claims have been approved back in 2009-2010 by ValueOptions, the State’s contracted company to approve mental health services.  Now, in 2013, the RAC is claiming that the very documentation that was approved in 2009-2010, is now inadequate.

The problem? (And the problem I have seen over and over with many health care providers):

The contracted companies are not being overseen by the State. They have full reign. Unfortunately, many times, the RACs are applying the Medicaid policy requirements from 2013 to Medicaid claims from 2009-2010.  Meaning, the contracted companies are reviewing the current policies and applying them retroactively.

My favorite example of this (not necessarily applicable to my client in this instance) is Implementation Update #68. In Implementation Update #68, the State changed the practice of using an Introductory Person-Centered Plan (Intro PCP).  Before Implementation Update #68, an Intro PCP was written prior to any assessment.  Yet, I have had instances with clients in which the State (via its contracted companies) has stated that a health care provider owed the Medicaid reimbursement back to the State because the Intro PCP was dated prior to the assessment. Yes, NOW, the PCP will be dated after the assessment. But not back in 2009. Therefore, the contracted companies are using the criteria from current policies to audit Medicaid claims from the past.

Why is this important? Today, health care providers who accept Medicaid are getting audits, causing those health care providers to expend time, money and man-power on defending the claims. Who loses? The Medicaid recipients who need the services.  Already, a small percentage of health care providers accept Medicaid.  Medicaid recipients need health care providers willing to see them.

We are appealing my client’s termination of her Medicaid contract.  But the potential consequences (should our appeal not work) are dire. The Medicaid recipients receiving mental health services from my client will need to be discharged.  These people in need of mental health care, will have to find another psychologist, when over 60% of health care providers refuse to accept Medicaid.

Shouldn’t we, as a population, be grateful to health care providers who decide to accept Medicaid recipients? We are not paying high enough reimbursements already, most providers refuse Medicaid recipients. So when a health care provider does accept Medicaid, we should say, “Thank you.” Not scrutinize the documentation (when the services were provided) and say, “Hey, those documents are not compliant with 2013 standards. Yeah, I know the services were provided in 2009, but you should have had a crystal ball and known the policies would become more stringent. Your fault.”

Medicaid EXPANSION Put on Hold; Medicaid REFORM Imminent

North Carolina spends $36 million dollars a day on Medicaid!!!! Therefore, last year the General Assembly requested the State Auditor’s department conduct an audit on Medicaid spending.

The Office of the State Auditor (OSA) published a 75-page, January 2013 Performance Audit (Audit) for the Division of Medical Assistance (DMA). Apparently the OSA is less than pleased with DMA’s budgeting ability, use of Medicaid funds, and general bookkeeping practices.

With phrases, such as “DMA’s inability,” “insufficient monitoring of contracted administrative services,” and “indicative of its inadequate oversight,” it is clear that DMA flunked the Audit.

The purpose of the Audit was four-fold:

1. to determine if the DMA administrative functions complied withe the Medicaid State Plan and federal requirements;

2. to evaluate DMA’s process for preparing annual budgets and monitoring expenditures to determine whether DMA is accurately predicting costs;

3. to review the process by which DMA made State Amendments from beginning until approval by Centers of Medicare and Medicaid Services (CMS) for compliance with federal requirements;

4. to assess the timeliness, completeness and flow of budget and expenditure information from DMA to stakeholders (Secretary, Governor, etc.)

Interestingly, the Audit determined that, in 2011, of the $10.3 billion medical assistance spending (MAP) (basically, how much money Medicaid spent), $648.8 million went to administrative costs.

In other words, in 2011, Medicaid recipients, physicians providing Medicaid services, and other health care providers did not receive $648.8 million of Medicaid funds because the State of North Carolina (or…DMA) spent the money on itself.

Compared to 9 states with similar Medicaid budgets, North Carolina spent 38% MORE than the average of those 9 states.  Or, in other words, $180 million more.

Just think…if we lowered admin costs, and raised Medicaid reimbursement for physicians accepting Medicaid…..hmmmm…one can dream….

According to the Audit, 46.7% of the admin costs ($648.8 million) went to pay private contractor payments.  Like ValueOptions, Public Consulting Group, Carolinas Center for Medical Excellence, etc. Those contracts with the State make up almost 50% of admin costs.  Yet, when the conductors of the Audit requested copies of all private contractor contracts to review the contracts, DMA was unable to produce the copies. DMA is spending almost 50% of the Medicaid money on contractors, yet DMA can’t find the contracts??

As the Audit put it:

“DMA’s inability to provide this information is indicative of its inadequate oversight of contractual expenditures.”

Here are some other goodies:

“DMA does not appropriately manage Medicaid costs that are subject to agency control.”

“Finding #1: The Division has consistently exceeded budgeted amounts for contracted administrative costs and interagency transfers due to an apparent lack of oversight.”

A few hours ago, Governor McCrory, DHHS Sec. Wos, and State Auditor Beth Wood spoke on NC Medicaid funding.

Wos stated that DHHS has a duty to the taxpayers and has not been upholding its duty.  Wood stated that DMA and its sub departments have “no cost accountability.”

In response to  the Audit, McCrory (or the State) hired Medicaid expert Carol Steckel to revamp the Medicaid program.

McCrory said that NC cannot expand Medicaid without fixing the Medicaid system!

Finally! Let’s fix the Medicaid system. Let’s stop the useless spending and make sure that Medicaid dollars go to the recipients in need, not government fat!!

How Medicaid Handles Mental Illness

Mental health in this country is not handled well. That is an understatement!!! Look at the atrocity in Connecticut last week. An young man, supposedly suffering from Asberger’s, a mild type of autism, shot his way into an elementary school and proceeded to slaughter young children and women. Our country does not handle mental health. However, mental health issues exist, are common, and are not treated appropriately. We cannot act like an ostrich and poke our heads in the sand.

The horrifying events of last week’s elementary school slaughter should make us realize that something must be done with how this country handles mental illness.  Folks, it’s not the guns that need control. Gun cannot act on their own. The people holding the guns need to be reasonable and sane. People who suffer mental illness in this country need real services. Real help.

How North Carolina handles mental illness is about to change drastically. The entire Medicaid mental health system is changing. This may be the biggest re-vamping of mental health we have undergone. If it doesn’t work, it will cost billions to change the system back. How will it change? See below.

The sad truth is mental illness is a very under-treated health condition. The stigma that attaches to it is one reason.  But poverty is also a factor.

The N.C. Interagency Council for Coordinating Homeless Programs (ICCHP) conducts an annual survey of homeless people.  In 2008, the statistics were as follows:

  • 12,371 people identified as homeless, including
  • 3,643 people in families, 2,216 of whom were children.
  • 1,054 identified themselves as veterans of military service.
  • 1,961 identified themselves as having a serious mental illness.
  • 4,206 identified themselves as having a substance use disorder.
  • 1,108 identified themselves as being a victim of domestic violence.
  • 6.5 percent of people identified themselves as having been released from the criminal justice system.
  • 6 percent of people identified themselves as having been released from a mental health hospital or drug treatment program.

Half of the homeless identified themselves as suffering from a mental illness or suffering substance abuse! Half! How many homeless suffer a mental illness without a diagnosis?

These are people who should be receiving Medicaid. In order to receive mental health services covered by Medicaid, the mental health services must be determined to be medically necessary to treat the mental illness.

So what is “medical necessity?”

Medicaid covers procedures, products, and services when they are medically necessary. With all the Medicaid rules and regulations, somewhere, medical necessity must be defined. It is not. In North Carolina Clinical Policy 8A, medical necessity is described as: “All Medicaid services are based upon a finding of medical necessity, which is determined by generally accepted North Carolina community practice standards as verified by independent Medicaid consultants. There must be a current diagnosis reflecting the need for treatment.”  What?  Basically, an independent consultant, as of now, VO, must decide whether a health care service is medically necessary. Despite the amorphous definition, medical necessity has been somewhat uniform because all the prior authorizations went through VO. It did not matter in which county you lived. VO was state-wide.

Not for long. In upcoming changes to NC Medicaid, VO will no longer be the independent consultant for North Carolina’s mental health.  The State is creating Managed Care Organizations (“MCOs”).  Suffice it to say, if you are a health care provider in North Carolina, you have heard the term “MCO.” What is an MCO? I guess the correct question is what will be an MCO?

The best way to describe the new Medicaid system in North Carolina, I think, is to explain the process for getting prior approval now and explain how it will change in the upcoming 6-7 months.

To obtain prior authorization now for mental health services, the provider sends documents, usually a Person-Centered Plan (“PCP”) with a Service Order, among other papers, to ValueOptions.  Since 2006, VO has provided North Carolina with utilization management. Meaning health care professionals at VO would review the documents and determine whether the Medicaid recipient met “medical necessity” in order to receive the services requested.

When the MCOs take over, there will be no state-wide definition for medical necessity.  There will be no state contract with VO. Basically, the State will disperse all the Medicaid funds to the MCOs.  No one really knows how many MCOs there will be in North Carolina.  As of now, it appears there will be 12 or so. Alliance Behavioral Health will be one. Wake County could not get qualified on its own, so Wake County partnered up with Durham County.

The thought process was this: The State is too big to understand the needs of local regions. So let the localities decide what services are needed in Medicaid’s mental health. On paper, I think it sounds good. Trying to focus locally is a good thing. The problem I foresee is the lack of a uniform, well-defined criteria for medical necessity in mental health.

It is foreseeable that each different MCO will have different opinions as to what services are medically necessary or not. In Charlotte, Medicaid may cover hyperbolic oxygen treatment for autism. But Raleigh may not. In Raleigh, Medicaid may limit psychiatrist visits for people with violent tendencies, and, in Wilmington, the psych visits may be unlimited. A Medicaid recipient may be denied in Roxsboro for mental health services that would be covered if that Medicaid recipient lived in a different MCOs region.

Mental health is such an important topic. In the wake of the killings in Connecticut, we, as a country, need to learn to better provide services to those with mental illnesses. Medicaid recipients need solid mental health services. With the MCOs provide better mental health services? Maybe. But I think a good start would be to provide a state-wide definition for medical necessity.

Are Medicaid’s “Tentative Notices of Overpayment” Violating State Law?

Today I represented a health care provider who provided Community Support and Community Support Team Services to many Medicaid recipients back in 2010 (it still provides services to Medicaid recipients, but what is important here in this blog is back in 2010).  We sat in a small conference room at DMA for an “informal” reconsideration review opposite a PCG nurse, a DHHS administrative representative, and adjacent an “objective” DHHS-employed, Hearing Officer. Back in 2010, this health care provider (HCP) went through the correct hoops before providing these Medicaid services, which are now in question. Per Medicaid regulations and state law, it had a clinical assessment for each Medicaid recipient (MR), it submitted a Person-Centered-Plan (PCP) for each MR, it provided service orders, signed by the appropriately, licensed-personnel.  Every one of these Medicaid recipients’ services from 2010 (after authorization by a different agency), determined that those prior authorized services did not meet the requirements of the Medicaid rules (for various reasons). Now (after proper authorization in 2010) the State is turning around, pointing its finger at the HCP (which already properly received State authorization), and saying, “Give me back the money!” Is this right? Can the State say, in essence, in the past, “You are good to go,” and then, in the present, say, “Our mess-up is now your mess-up. You (we) messed-up, so you (NOT we) must pay us (NOT you) back?”

Wait, let me back up…for those who do not know how a provider gets authorization for a Medicaid recipient to receive a certain Medicaid service…let me explain…it is not like private insurance:

When a Medicaid-eligible person comes to an HCP, a licensed professional conducts an assessment. In Medicaid-lingo, the assessment is called a CCA or Comprehension Clinical Assessment. Concurrently (or close to it), the team meets to draft an individualized PCP. Folks, this is a lot of work. It takes numerous people and the cooperation of the Medicaid recipient. The HCP also drafts an Inpatient Treatment Report (ITR). There are other documents, but these are the main ones. Next, the HCP sends the documentation to ValueOptions, North Carolina’s contracted agent to review all Medicaid authorization requests. A review by ValueOptions is two-fold. First, a non-licensed (usually) clinician reviews the submitted documents.  He or she determines (a) whether the documentation is complete; and, if so, (b) whether it appears, to an unlicensed-eye (although in reality, these people have been around the block), that the recipient should receive the requested Medicaid services. If documentation is missing, the recipient is rejected.  If the documentation is complete and the information shows authorization may be necessary, the documents go to a second-tier at ValueOptions. Here, a licensed professional get involved. A licensed professional reviews the documentation for substance. Do the documents indicate medical necessity for the requested services. The key phrase is “medical necessity” (although, FYI: this phrase is never defined in regulations).  At this time, the licensed professional at ValueOptions takes the appropriate DMA Clinical Policy (for mental health, usually, #8A is used) and compares the entrance criteria in the policy against the substance of the documentation submitted by the HCP.  [Quick sidebar: What does this tell HCPs???? It should tell all HCPs that MORE documentation is better. More is better.] Then, using the best objectivity humans can use, the licensed professional at ValueOptions attempts to determine whether the Medicaid-eligible person is authorized for the requested services. [Very important: UNLIKE private insurance, prior authorization means a licensed professional reviewed the request and authorized it.] So after all that……

The State, via ValueOptions, has told the HCP, “Yes. You may provide services to this Medicaid recipient. The State has reviewed the documentation and put her stamp of approval. Proceed.” So should an HCP proceed? Or still be worried?? Apparently, still be worried.

The HCP I represented in this reconsideration review today, received that stamp of approval by the state. However, two years later, it received what is called a “Tentative Notice of Overpayment.”  In essence, the notice stated that the HCP owed (for the sake of anonymity I have changed all names and dollar amounts) DHHS (or the State) $200,000.00 for overpayments of Medicaid services (all of which previously authorized by the State-contracted-agency before providing these services). Some of the reasons that PCG gave for the overpayment included:

  • Lack of documentation
  • Incorrect PCP dates
  • Ineligibility of Medicaid recipient for service rendered
  • Failure of documentation to demonstrate the professional working had the necessary credentials
  • Lack of service note

I ask…Should the above-enumerated list not have been determined BEFORE the HCP was told by the State to,” Go Forward????” Why after 2 years, can the State, in retrospect, with a different agency that does NOT have access to all the documents to which ValueOptions does, say, “I know I said it was ok, but now it is not ok, so give me back my money.” ?? Is this fair? Is this legal?

I know a statute exists that allows the State to retroactively-police, already-paid-Medicaid-funds. However, should this statute not be challenged? Does the retroactive law seem fair to the laymen? Everyone understands the State’s ability (without speaking for everyone, I guess I should say, I understand) to police the Medicaid services. But when the State said, “Go forward.” ??? I question… Should we????

Anyone else?