The Feds Criminally Investigating DHHS! Is Its Scope Too Narrow and What Are Possible Consequences?

DHHS is under criminal investigation by the federal government for allegedly overpaying employees without a bid process, and, simply, mismanaging and overspending our Medicaid tax dollars. See blog.

When I first started writing this blog, I opined that the federal investigation should be broadened. While I still believe so, the results of broadening the scope of a federal investigation could be catastrophic for our Medicaid providers and recipients. So I am metaphorically torn between wanting to shine light on tax payer waste and wanting to shield NC Medicaid providers and recipients from the consequences of penalties and sanctions on NC DHHS. Because, think about it, who would be harmed if NC lost federal funding for Medicaid?

[BTW, of note: These subpoenas were received July 28, 2015. Aldona Wos announced her resignation on August 5, 2015, after receipt of subpoenas. The Subpoenas demand an appearance on August 18, 2015, which, obviously, has already passed, yet we have no intel as to the occurrences on August 18, 2015. If anyone has information, let me know.]

Let’s explore:

Does this criminal investigation go far enough? Should the feds investigate more Medicaid mismanagement over and above the salaries of DHHS employees? What are the potential consequences if NC is sanctioned for violating Medicaid regulations? How could a sanction affect providers and recipients?

DHHS’ employees are not the only highly compensated parties when it comes to our Medicaid dollars! It is without question that the contracts with vendors with whom DHHS contracts contain astronomically high figures. For example, DHHS hired Computer Sciences Corporation (CSC) to implement the NCTracks software for $265 million. Furthermore, there is no mention of the lack of supervision of the managed care organizations (MCOs) and the compensation for executives of MCOs being equal to that of the President of the United States in the Subpoenas.

The subpoenas are limited in scope as to documents related to hiring and the employment terms surrounding DHHS employees. As I just said, there is no mention of violations of bid processes for vendors or contractors, except as to Alvarez & Marsal, and nothing as to the MCOs.

Specifically, the subpoena is requesting documents germane to the following:

  • Les Merritt, a former state auditor who stepped down from the North Carolina State Ethics Commission after WRAL News raised questions about potential conflicts of interest created by his service contract with DHHS;
  • Thomas Adams, a former chief of staff who received more than $37,000 as “severance” after he served just one month on the job;
  • Angie Sligh, the former director of the state’s upgraded Medicaid payment system who faced allegations of nepotism and the waste of $1.6 million in payments to under-qualified workers for wages, unjustified overtime and holiday pay in a 2015 state audit;
  • Joe Hauck, an employee of Wos’ husband who landed a lucrative contract that put him among the highest-paid workers at DHHS;
  • Alvarez & Marsal, a consulting firm overseeing agency budget forecasting under a no-bid contract that has nearly tripled in value, to at least $8 million;


Possible penalties:

Most likely, the penalties imposed would be more civil in nature and encompass suspensions, recoupments, and/or reductions to the federal matching. Possibly a complete termination of all federal matching funds, at the worst.

42 CFR Part 430, Subpart C – of the Code of Federal Regulations (CFR) covers “Grants; Reviews and Audits; Withholding for Failure To Comply; Deferral and Disallowance of Claims; Reduction of Federal Medicaid Payments”

The Center for Medicare and Medicaid Services (CMS) is charged with the oversight of all 50 states’ management of Medicaid, which makes CMS very busy and with solid job security.

“The Department’s Office of Inspector General (OIG) periodically audits State operations in order to determine whether—(1) The program is being operated in a cost-efficient manner; and
(2) Funds are being properly expended for the purposes for which they were appropriated under Federal and State law and regulations.” 42 CFR 430.33.

CMS may withhold federal funding, although reasonable notice and opportunity for a hearing is required (unlike the reimbursement suspensions from providers upon “credible” (or not) allegations of fraud).

If the Administrator of a hearing finds North Carolina non compliant with federal regulations, CMS may withhold, in whole or in part, our reimbursements until we remedy such deficiency. Similar to health care providers’ appeals, if the State of North Carolina is dissatisfied with the result of the hearing, NC may file for Judicial Review. Theoretically, NC could go all the way to the U.S. Supreme Court.

Other penalties could include reductions of (1) the Federal Medical Assistance Percentage; (2) the amount of State expenditures subject to FFP; (3) the rates of FFP; and/or (4) the amount otherwise payable to the state.

As a reminder, the penalties listed above are civil penalties, and NC is under criminal investigation; however, I could not fathom that the criminal penalties would differ far from the civil allowable penalties. What are the feds going to do? Throw Wos in jail? Highly unlikely.

The subpoena was addressed to:


NC DHHS, attention the Custodian of Records. In NC, public records requests go to Kevin V. Howell, Legal Communications Coordinator, DHHS.

But is the federal government’s criminal investigation of DHHS too narrow in scope?

If we are investigating DHHS employees’ salaries and bid processes, should we not also look into the salaries of DHHS’ agents, such as the salaries for employees of MCOs? And the contracts’ price tags for DHHS vendors?

Turning to the MCOs, who are the managers of a fire hose of Medicaid funds with little to no supervision, I liken the MCOs’ current stance on the tax dollars provided to the MCOs as the Lion, who hunted with the Fox and the Jackal from Aesop’s Fables.

The Lion went once a-hunting along with the Fox, the Jackal, and the Wolf. They hunted and they hunted till at last they surprised a Stag, and soon took its life. Then came the question how the spoil should be divided. “Quarter me this Stag,” roared the Lion; so the other animals skinned it and cut it into four parts. Then the Lion took his stand in front of the carcass and pronounced judgment: The first quarter is for me in my capacity as King of Beasts; the second is mine as arbiter; another share comes to me for my part in the chase; and as for the fourth quarter, well, as for that, I should like to see which of you will dare to lay a paw upon it.”

“Humph,” grumbled the Fox as he walked away with his tail between his legs; but he spoke in a low growl:

Moral of Aesop’s Fable: “You may share the labours of the great, but you will not share the spoil.”

At least as to DHHS employees’ salaries, the federal government is investigating any potential mismanagement of Medicaid funds due to exorbitant salaries, which were compensated with tax dollars.

Maybe this investigation is only the beginning of more forced accountability as to mismanaging tax dollars with Medicaid administrative costs.

One can hope…(but you do not always want what you wish for…because the consequences to our state could be dire if the investigation were broadened and non compliance found).

Possible Ramifications:

Let us quickly contemplate the possible consequences of any of the above-mentioned penalties, whether civil or criminal in nature, on Medicaid recipients.

To the extent that you believe that the reimbursement rates are already too low, that medically necessary services are not being authorized, that limitations to the amount services are being unduly enforced…Imagine that NC lost our federal funding completely. We would lose approximately 60% of our Medicaid budget.

All our “voluntary” Medicaid-covered services would, most likely, be terminated. Personal care services (PCS) is an optional Medicaid-covered service.

With only 40% of our Medicaid budget, I could not imagine that we would have much money left to pay providers for services rendered to Medicaid recipients after paying our hefty administrative costs, including overhead,payroll, vendor contracts, MCO disbursements, etc. We may even be forced to breach our contracts with our vendors for lack of funds, which would cause us to incur additional expenses.

All Medicaid providers could not be paid. Without payments to providers, Medicaid recipients would not receive medically necessary services.

Basically, it would be the next episode of “Fear the Walking Dead.”

Hopefully, because the ramifications of such penalties would be so drastic, the federal government will not impose such sanctions lightly. Sanctions of such magnitude would be a last resort if we simply refused to remedy whatever deficiencies are found.

Otherwise, it could be the zombie apocalypse, but the Lion’s would be forced to share.

Feds launch investigation into DHHS contracts, hiring!!!


By Tyler Dukes, Mark Binker & Laura Leslie

RALEIGH, N.C. — The U.S. Attorney’s Office has launched an investigation into high-dollar consulting contracts and salary payments at the North Carolina Department of Health and Human Services.

According to documents provided by DHHS on Friday afternoon, U.S. Attorney Thomas Walker subpoenaed the department for information on more than 30 employees, as well as bidding and payment information for administrative contracts, as part of a criminal investigation. The subpoenas came in late July, about a week before the resignation of former DHHS Secretary Aldona Wos in early August.

The investigation was first reported by The News & Observer.

DHHS spokeswoman Kendra Gerlach said Wos decided to resign before the subpoenas.

“The current secretary had been selected prior to any knowledge of this government inquiry,” Gerlach said.

Walker’s office did not return phone calls seeking comment.

Gerlach said the department is cooperating with the federal government, but she declined to comment further about the investigation.

“We will continue to respect the confidentiality of the process by the federal government to protect the integrity and fairness of this review,” she said in an emailed statement.

The Governor’s Office has not responded to requests for comment.

Among the targets of the subpoena are the records of state employees and contractors who have come under fire in the past, both by North Carolina legislators and the State Auditor’s Office.

That includes:

  • Les Merritt, a former state auditor who stepped down from the North Carolina State Ethics Commission after WRAL News raised questions about potential conflicts of interest created by his service contract with DHHS
  • Thomas Adams, a former chief of staff who received more than $37,000 as “severance” after he served just one month on the job
  • Angie Sligh, the former director of the state’s upgraded Medicaid payment system who faced allegations of nepotism and the waste of $1.6 million in payments to under-qualified workers for wages, unjustified overtime and holiday pay in a 2015 state audit
  • Joe Hauck, an employee of Wos’ husband who landed a lucrative contract that put him among the highest-paid workers at DHHS
  • Alvarez & Marsal, a consulting firm overseeing agency budget forecasting under a no-bid contract that has nearly tripled in value, to at least $8 million

State lawmakers have grilled DHHS leadership in the past in response to the contracts and audits, often publicly in legislative oversight meetings.

Rep. Justin Burr, co-chairman of the Joint Legislative Oversight Committee on DHHS, said Friday that he was recently made aware of the federal investigation into DHHS.

“It’s a concern, but it covers several areas that our oversight committee has expressed concerns about,” Burr, R-Stanly, said.

Oversight hearings during Wos’ tenure questioned the qualifications of contractors hired by DHHS, as well as the size of those contracts.

“Depending on which one you’re talking about, there was no sort of bid or effort to find the most qualified person,” Burr said. “They were just hand-picking individuals.”

This is a copy of the WRAL article. MORE TO COME FROM ME!!!!

GO BIG OR GO HOME! The Extinction of Small Providers and Integration of Health Care

Six years ago, 68% of hospitals in NC were affiliated with a health system. Today, 85% of our member hospitals are in a health system.

The managed care organizations (MCOs) are squeezing out small behavioral health care providers, and, legally or not (I say not), contracting with only large comprehensive providers.

Home health providers are acquiring, merging, and/or consolidating with other home health providers to become a bigger fish in order to have more input in legislative issues and rate issues.

Providers of all types are reaching across service industries to form more comprehensive entities whether with intent to place a bid to be an accountable care organization (ACO) or provider led entity (PLE) or to corner the market on certain services.

Whether you like it or not, health care is transforming from small, mom and pop companies to large, comprehensive corporations that will encompass the whole treatment of an individual.


With the implementation of the Affordable Care Act (ACA), came a “never before seen,” tidal wave of regulations applicable to health care. Even health care providers who were prepared and aware of the incoming tsunami of regulatory force did not foresee the sheer magnitude of the new regulations coupled with the intended and unintended consequences of such regulatory horsepower.

Surfing on the top of the tsunami came the RACs, MACs, QICs, PERMs, MFCUs, CERTs. Also caught up in the overwhelming and over-expansive riptide, were more credible allegations of fraud, MCO closed networks, fraud waste and abuse (FWA) investigations, prepayment reviews, post payments reviews.

Small providers have a more difficult time defending themselves against regulatory audits or credible allegations of fraud, have fewer resources to devote to regulatory compliance issues, and have less pull with those in power at associations and in government. This is not to say that I think bigger is better. To the contrary, personally, I would much rather receive health care services from a smaller provider rather than some big conglomerate where I never see the same doctor twice. This is just reality.

In addition to the ACA, our NC General Assembly is pushing for Medicaid reform, which will also be a catalyst to an already busy market of merging, acquiring and/or consolidation.

What should providers do?

I have received more telephone calls in the last year asking about buying, selling and partnering up with health care agencies than 5 years previously, combined. The number of agencies seeking to team up with other agencies is at an all time high.

Reach out to those people with contacts, such as your attorneys, my firm, health care brokers, your associations, and inquire whether they know of any agencies seeking to merge, acquire, or consolidate. Start the conversation. If confidentiality is a concern, then be sure to express that concern from the onset of the conversation.

Tips for Consolidation

  1. Decide whether you want to be involved in the new entity’s future
  2. Make contacts
  3. Target health care providers and types of services
  4. Choose the right type of transaction
  5. Do your due diligence
  6. Use the right people to conduct your due diligence
  7. Use the right attorney
  8. Draft a contract that will protect you regardless of your future involvement
  9. Ensure regulatory compliance

Most importantly, whatever you decide to do, be proactive and be informed!

CMS’ Feeble Attempt to Decrease Medicare Appeal Backlog Will, At Least, Benefit Providers

On August 1, 2015, the Center for Medicare and Medicaid Services (CMS) clarified (limited) the scope of Medicare auditors in a published article entitled, “Limiting the Scope of Review on Redeterminations and Reconsiderations of Certain Claims.” (MLN Matters® Number: SE1521).

The limitations apply to Medicare Audit Contractors (MACs) and Qualified Independent Contractors (QICs). This new instruction will apply to audits conducted on or after August 1, 2015, and will not be applied retroactively. Important to note: this instruction does not apply to prepayment review, only post payment reviews.

MLN Matters® Number: SE1521 was published in response to the overwhelming, increasingly, mushroomed backlog of Medicare appeals at the Administrative Law Judge (ALJ) level. Six years ago, prior to the Affordable Care Act (ACA), the number of Medicare appeals at the ALJ level was sustainable. Six years later, in 2015, the Medicare appeal backlog has skyrocketed to numbers beyond the comprehension of any adversely affected health care provider, i.e., over 547 days for adjudication!

So in order to combat these overwhelming, bottle-necked and “anything but speedy Medicare appeals,” CMS attempted to rectify the situation by setting new limitations (among other measures) as to the scope of authority that MACs and QICs may present on an audit.  However, these new limitations remind me of the hole that is in my front yard. Yes, a hole. The title of this story is “Inertia: What is Easy to Keep Going, Is Impossible to Pull Back” or “I love my husband’s intentions, but the result looks like the Medicare backlog.”

My wonderful husband and I purchased a small farm at the beginning of the year. If you have been following my blog over the past year, you will know that we have horses, peacocks, a micro pig, two dogs, and a 10-year-old. It is a whirlwind of fun.

Well, included in our purchase was a very shallow, very mosquito-ridden pond. It was about 4-5 inches deep and I never really thought about it. It was a pond. It was not beautiful, but it was not ugly. It was just there.

My husband tells me one day that he is going to “clean out the pond.”

BEFORE (except he already tore up the grass, so I do not have a true before picture):


Every day, for three months, I come home to a deeper and deeper pond.

“I’m bound to hit a spring,” he would say. Or “Leroy says that there is a lot of water under our ground.” How Leroy came to this conclusion, I do not know. But, slowly, and almost unperceptively, each day the hole grows wider and deeper.

Until, one day, I come home to this:



It would be funny if it were in your yard. (BTW: For scale, check out the horses (one is white, one is brown) in the top left corner.)

“I love my husband’s intentions, but the result looks like the Medicare backlog.”

You cannot undo digging a hole in your front yard that could swallow an elephant..or maybe two or three elephants. Just like you cannot undo a Medicare appeal backlog that could, potentially, fill my hole with its paperwork. You just have to make do, sit on your front porch, and admire the meteor-like hole that resides in your front lawn.

We (He) have (has) high hopes that our hole will become a lake or a swimming hole. In order to help the cause, I spit in it every time I walk by it. In the alternative, we sometimes aim the sprinkler toward the hole and let it run for a few hours. These are examples of our attempts of reconciling our hole into a beautiful swimming hole.

Similarly, when CMS created these MACs and QICs for Medicare audits, at first, it seemed that the MACs and QICs had no limits as to their scopes of authority to audit. Due to these overzealous and, sometimes, overreaching audits, the appeal backlog increased in number, then multiplied. Similar to the construction of my hole, the appeal backlog grew slowly, at first, then exponentially until the backlog is out of hand and uncontrollable. See blog.

One example of the seemingly limitless authority that the MACs and QICs wielded was that the auditors would provide reasons why claims were noncompliant, the defect could be cured, and the MACs and/or QICs would deny the claim for an entirely different reason.

The auditor would, in essence, be moving the goalposts after you kicked the ball. And the appeal backlog continued to swell.

The ability for the auditors to expand the review of claims beyond which was initially reviewed contributed the massive backlog of Medicare appeals at the ALJ level because more providers appeal an audit with which they disagree (common sense). Just like my hole in my front yard, the backlog of appeals grew, then ballooned until the number of Medicare appeals stuck in the backlog could possibly fill my hole. See blog for the Medicare appeal process and appeal deadlines.

According to the most current statistics available, there is a Medicare appeal backlog of approximately 870,000 appeals.  The average processing time for appeals decided in fiscal year 2015 is 547.1 days.

average time

Look at the balloon effect of “average processing time by fiscal year.” In 2009, the average processing time was 94.9 days (a little over 3 months). Now it is over 540 days (almost a year and a half)!!

“I love my husband’s intentions, but the result looks like the Medicare backlog.”

In an attempt to clear the backlog, CMS released MLN Matters® Number: SE1521, on August 1, 2015, in which “CMS has instructed MACs and QICs to limit their review to the reason(s) the claim or line item at issue was initially denied.” (emphasis added).

An exception, however, is if claims are denied for insufficient documentation and the provider submits documents, the claim may still be denied for lack of medical necessity if the documents submitted do not support medical necessity.

This new instruction found in MLN Matters No. SE1521 is an attempt by CMS to reconcile the huge backlog of Medicare appeals at the ALJ level. It is a small gesture. Quite frankly, this instruction should be self-evident as it is inherently unfair to providers to move the goalposts during an audit. I liken this gesture to my husband aiming the sprinkler toward the hole.


In other words, in my opinion, this feeble gesture alone, will not solve the problem. But, in the meantime, it will benefit providers who have been suffering from the goalposts being moved during an audit.

Once something is so big…

“I love my husband’s intentions, but the result looks like the Medicare backlog.”

Maybe the backlog will be fixed when my hole has transformed to a swimming hole.

Alphabet Soup: RACs, MICs, MFCUs, CERTs, ZPICs, PERMs and Their Respective Look Back Periods

I have a dental client, who was subject to a post payment review by Public Consulting Group (PCG). During the audit, PCG reviewed claims that were 5 years old.  In communication with the state, I pointed out that PCG surpassed its allowable look back period of 3 years.  To which the Assistant Attorney General (AG) said, “This was not a RAC audit.”  I said, “Huh. Then what type of audit is it? MIC? ZPIC? CERT?” Because the audit has to be one of the known acronyms, otherwise, where is PCG’s authority to conduct the audit?

There has to be a federal and state regulation applicable to every audit.  If there is not, the audit is not allowable.

So, with the state claiming that this post payment review is not a RAC audit, I looked into what it could be.

In order to address health care fraud, waste, and abuse (FWA), Congress and CMS developed a variety of approaches over the past several years to audit Medicare and Medicaid claims. For all the different approaches, the feds created rules and different acronyms.  For example, a ZPIC audit varies from a CERT audit, which differs from a RAC audit, etc. The rules regulating the audit differ vastly and impact the provider’s audit results greatly. It can be as varied as hockey and football; both have the same purpose of scoring points, but the equipment, method of scoring, and ways to defend against an opponent scoring are as polar opposite as oil and water. It can be confusing and overwhelming to figure out which entity has which rule and which entity has exceeded its scope in an audit.

It can seem that we are caught swimming in a bowl of alphabet soup. We have RACs, ZPICs, MICs, CERTs, and PERMs!!

alphabet soup

What are these acronyms??

This blog will shed some light on the different types of agencies auditing your Medicare and Medicaid claims and what restrictions are imposed on such agencies, as well as provide you with useful tips while undergoing an audit and defending the results.

First, what do the acronyms stand for?

  • Medicare Recovery Audit Contractors (RACs)
  • Medicaid RACs
  • Medicaid Integrity Contractors (MICs)
  • Zone Program Integrity Contractors (ZPICs)
  • State Medicaid Fraud Control Units (MFCUs)
  • Comprehensive Error Rate Testing (CERT)
  • Payment Error Rate Measurement (PERM)

Second, what are the allowable scope, players, and look back periods for each type of audit? I have comprised the following chart for a quick “cheat sheet” when it comes to the various types of audits. When an auditor knocks on your door, ask them, “What type of audit is this?” This can be invaluable information when it comes to defending the alleged overpayment.

Name Scope Auditor Look-back period
Medicare RACs


Medicare zaqoverpayments and underpayments

Medicare RACs are nationwide. The companies bid for federal contracts. They use post payment reviews to seek over and under payments and are paid on a contingency basis. Region A:  Performant Recovery

Region B:  CGI Federal, Inc.

Region C:  Connolly, Inc.

Region D:  HealthDataInsights, Inc.

Three years after the date the claim was filed.
Medicaid RACs


Medicaid overpayments and underpayments

Medicaid RACs operate nationwide on a state-by-state basis. States choose the companies to perform RAC functions, determine the areas to target without informing the public, and pay on a contingency fee basis. Each state contracts with a private company that operates as a Medicaid RAC.

In NC, we use PCG and HMS.

Three years after the date the claim was filed, unless the Medicaid RAC has approval from the state.


Medicaid overpayments and education

MICs review all Medicaid providers to identify high-risk areas, overpayments, and areas for improvement. CMS divided the U.S. into five MIC jurisdictions.

New York (CMS Regions I & II) – Thomson Reuters (R) and IPRO (A) • Atlanta (CMS Regions III & IV) – Thomson Reuters (R) and Health Integrity (A) • Chicago (CMS Regions V & VII) – AdvanceMed (R) and Health Integrity (A) • Dallas (CMS Regions VI & VIII) – AdvanceMed (R) and HMS (A) • San Francisco (CMS Regions IX & X) – AdvanceMed (R) and HMS (A)

MICs are not paid on a contingency fee basis.

MICs  may review a claim as far back as permitted under the laws of the respective states (generally a five-year look-back period).


Medicare fraud, waste, and abuse

ZPICs investigate potential Medicare FWA and refer these cases to other entities.

Not random.

CMS, which has divided the U.S. into seven ZPICs jurisdictions.

Only investigate potential fraud.

ZPICs are not paid on a contingency fee basis.

ZPICs have no specified look-back period.


Medicaid fraud, waste, and abuse

MFCUs investigate and prosecute (or refer for prosecution) criminal and civil Medicaid fraud cases. Each state, except North Dakota, has an MFCU.

Contact info for NC’s:

Medicaid Fraud Control Unit of North Carolina
Office of the Attorney General
5505 Creedmoor Rd
Suite 300
Raleigh, NC   27612

Phone: (919) 881-2320


MFCUs have no stated look-back period.


Medicare improper payment rate

CERT companies indicate the rate of improper payments in the Medicare program in an annual report. CMS runs the CERT program using two private contractors (which I am yet to track down, but I will). The look back period is the current fiscal year (October 1 to September 30).


Medicaid improper payment rate

PERM companies research improper payments in Medicaid and the Children’s Health Insurance Program. They extrapolate a national error rate. CMS runs the PERM program using two private contractors(which I am yet to track down, but I will). The look back period is the current fiscal year (the complete measurement cycle is 22 to 28 months).

 As you can see, the soup is flooded with letters of the alphabet. But which letters are attached to which audit company determines which rules are followed.

It is imperative to know, when audited, exactly which acronym those auditors are

Which brings me back to my original story of my dental provider, who was audited by a “non-RAC” entity for claims 5 years old.

What entity could be performing this audit, since PCG was not acting as its capacity as a RAC auditor? Let’s review:

  • RAC: AG claims no.
  • MIC: This is a state audit, not federal. No.
  • MFCU: No prosecutor involved. No.
  • ZPIC: This is a state audit, not federal. No allegation of fraud. No.
  • CERT:This is a state audit, not federal. No.
  • PERM: This is a state audit, not federal. No.


If it walks like a duck, talks like a duck, and acts like a duck, it must be a duck, right?

Or, in this case, a RAC.

Gordon & Rees Ranked #1 in 2015 Growth!!

Recent article released by my firm (a little horn tooting…Toot! Toot!)

The continued national growth of Gordon & Rees has led to its recognition as the fastest growing law firm among the AmLaw 200 thus far in 2015. (The firm has grown 6.5% since the beginning of the year.)

The firm also leads the way among the nation’s top 200 grossing firms in net partner acquisitions since January and in associate gains over the last nine months. Lateral Link (the report’s author) declares the gain of lateral partners one of the most revealing measures of a firm’s health.

This year the firm has surpassed the 650-attorney mark, and over the past 10 years, lawyer count has grown by 230 percent, the number of offices has grown from eight to 35, and the firm’s national, regional, and local practices have quadrupled — all without merging with other firms or incurring any long-term debt.

Over the last decade, Gordon & Rees has climbed 50 spots in the AmLaw 200, landing at number 126 this past year. The firm is also currently the 71st largest law firm in the United States as recognized by Law360, and ranks No. 26 on the American Lawyer’s Diversity Scorecard.

Here is the full article.

The Doctrine of Exhaustion of Administrative Remedies and Medicare/caid Providers

Originally posted on medicaidlaw-nc:

What is the doctrine of exhaustion of administrative remedies?  And why is it important?

If you are a Medicaid or Medicare provider (which, most likely, you are if you are reading this blog), then knowing your administrative remedies is vital.  Specifically, you need to know your administrative remedies if you receive an “adverse determination” by the “Department.”  I have placed “adverse determination” and the “Department” in quotation marks because these are defined terms in the North Carolina statutes and federal regulations.

What are administrative remedies? If you have been damaged by a decision by a state agency then you have rights to recoup for the damages.

However, just like in the game of Chess, there are rules…procedures to follow…you cannot bring your castle out until the pawn in front of it has moved.

Similarly, you cannot jump to NC Supreme Court without beginning at the lowest court.

What is an adverse determination?

In Medicaid…

View original 1,119 more words

NCTracks: There’s a Hole in My Bucket !!

My mom taught me a song when I was young called, “A Hole in the Bucket.” It is a maddening song about a lazy husband named Henry who begins the song telling his wife Liza that “There’s a hole in the bucket, dear Liza, dear Liza….” To which Liza sings, “Then fix it, dear Henry, dear Henry…”

The song continues with Henry singing excuses and impediments to his ability to fix the hole in the bucket and Liza explaining to Henry how to overcome these excuses. The song goes around and around until, in order to fix the bucket, Henry would have to sharpen an ax on a stone that “is too dry,” and the only way to wet the stone is with the bucket that has a hole. “There’s a hole in the bucket…” And the songs starts anew and can be sung continuously, never-ending.

My husband and daughter audibly groan when I begin such song.

And you can’t blame them! It is discouraging and frustrating when something is caught in a never-ending circle with no end and no conclusion.  It is human nature to try to resolve issues; it is also ingrained in Americans’ minds that hard work yields results. When hard work yields nothing but a big, fat goose-egg, it is exacerbating.

Kind of like claims in NCTracks…

When NCTracks went live on July 1, 2013, providers immediately began to complain the claims were being erroneously denied and they were receiving no reimbursements. Folks with whom I spoke with were at their wits-ends, spending hours upon hours trying to discern why claims were being denied and what process they could undertake to fix “the hole in the bucket.”

The problem persisted so long and I was contacted by so many providers that I instigated the NCTracks class action lawsuit, which is still pending on appeal, to the best of my knowledge, at my former firm.  Although it was dismissed at the Business Court level, I believe it is on appeal. See blog.

Providers complained that, when they contacted CSC’s Help Desk regarding denied claims, the customer service representatives would have little to no understanding of the claims process and instruct them to re-file the denied claims, which created a perpetual cycle of unadjudicated claims.

“It was infuriating!” One provider explained. “It was as if we were caught in the spin cycle with no hope of stopping. I wanted to yell, ‘I’m dry all ready!!'”

“I was spending 20+ a week on NCTracks billing problems,” another said.

To which, I said, “There’s a hole in the bucket, dear Liza, dear Liza.”

Over two years after the “go live” date, the Department has now (finally) informed providers that there is an informal reconsideration review process for denials from CSC.

The September 2015 Medicaid Bulletin states that:

“This article provides a detailed explanation of the N.C. Division of Medical Assistance (DMA)  procedures for Informal Reconsideration Review of adverse claim actions (denials, disallowances and adjustments) made by its fiscal agent, CSC.”

The Bulletin provides a 30 day time period during which a provider can appeal a denied claim:

“Time Limit for Submission of Request

  • A provider may request a reconsideration review within 30 calendar days from receipt of final notification of payment, payment denial, disallowances, payment adjustment, notice of program reimbursement and adjustments. If no request is received within the respective 30 calendar day period, DMA’s action will become final.”

(emphasis in original).

You must request reconsideration review within 30 calendar days of the final notification.  BUT what exactly is “final notification?” The initial denial? The second denial after re-submitting? The third? Or, what if, your claim is pending…for months…is that a denial?  When CSC tells you to re-submit, does the time frame in which to file a reconsideration review start over? Or do you have to appeal every single denial for every single claim, even if the claim is re-submitted and re-denied 10 times?

This new informal appeal process is as clear as mud.

Notice the penalty for NOT appealing within 30 days…”DMA’s action will become final.”

This means that, if you fail to appeal a denial within 30 days, then the claim is denied and you cannot request a reconsideration review. Theoretically, there is a legal argument that, once the “final decision” is rendered, even if it were rendered due to you failing to request a reconsideration review, you would have 60 days to appeal such final decision to the Office of Administrative Hearings (OAH). Although, acting as the Devil’s advocate, there is an argument that your failure to request a reconsideration review and taking the appeal straight to OAH is “failing to exhaust your administrative remedies.” See blog. Which could result in your appeal being dismissed for lack of jurisdiction. This goes to show you the importance of having your attorney involved at the earliest juncture, otherwise you could risk losing appeal rights.

Let’s think about the “time limit for submission of request” in a real-life hypothetical.

You keep receiving denials for dialysis claims for no apparent reason. You received 20 denials on September 4, 2015. You contact a CSC customer service representative on September 8, 2015, four days later, due to Labor Day weekend. The customer service representative instructs you to re-file the claims because you must include the initial date of treatment in order to have the claims processed and paid (which was not required with HP Enterprises’ system). Is this the “final notification?” It does not seem so, since you are allowed to re-submit…

You revise all 20 claims to include the first treatment date on the claim and re-submit them on September 9, 2015. Since you re-submitted prior to the September 10th cutoff, you expect payment by September 16, 2015, 12 days after the initial denial.

You receive your explanation of benefits (EOBs) and 5 claims were adjudicated and paid, while 15 were denied again.

You contact CSC customer service and the representative instructs you to re-submit the 15 claims.  The rep does not know why the claims were denied, but she/he suggests that you review the claims and re-submit. After hours of investigative work, you believe that the claims were denied because the NPI number was wrong…or the incorrect address was processed…or…

You miss the September 17th cut-off because you were trying to figure out why these claims were denied.  you submit them for payment for the September 29th checkwrite date (25 days after the initial denial).

At this point, if any claims are denied, you wouldn’t know until October 6th, 32 days after the initial denial.

In my scenario, when is the final adjudication?

If the answer is that the final adjudication is at the point that the provider tries all possible revisions to the claims and continues to re-submit the claims until he/she cannot come up with another way to re-submit, then there is never final adjudication. As in, the provider could continue various changes to the billing ad nauseam and re-submit…and re-submit…and re-submit…”There’s a hole in the bucket!”

If the answer is that the final adjudication is the initial denial, then, in my scenario, the provider would be required to appeal every single denial, even for the same claim and every time it is denied.

You can imagine the burden to the provider if my second scenario is correct. You may as well hire a full-time person whose only task is to appeal denied claims.

Regardless, this new “Informal Reconsideration Review” purports to create many more questions than answers.

So may rules are enacted with good intentions, but without the “real life” analysis. How will this actually affect providers?

“There’s a hole in the bucket, dear Liza, dear Liza.”

Then fix it.”

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.

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

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



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

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

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

Seem a bit harsh? It is.

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

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

What is the 60-Day Refund Rule?

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

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

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

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

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

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

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

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

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

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

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

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

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

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


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

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

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

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

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

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

Important take aways:

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

Get every new post delivered to your Inbox.

Join 1,324 other followers