A Brave New World With Mergers and Acquisitions of Behavioral Health Care Providers: Not Always Happily Ever After!

Unintentionally, I misrepresented the Benchmark panel discussion on which I appeared last Thursday. See blog.  I thought that I would be sitting on the panel along with MCO representatives. I honestly cannot tell you from where I got this idea. Maybe it was a subconscious desire. Regardless, the panel discussion was about merges and acquisitions among behavioral health care providers. While the subject of managed care organizations (MCOs) did come up, managed care was not the primary subject.  And the only MCO representative that I saw was Smokey Mountain’s attorney.

panelpic2

Nevertheless, the panel discussion went fantastic and was informative for those who attended.  I will summarize the panel discussion here for those who could not attend.  First, if you are a behavioral health care provider in NC, joining an association, such as Benchmarks, is an asset.  Not only do you get the benefit of attending educational programs, but you also have the opportunity to meet other behavioral health care providers across the state at the events.  You never know the potential relationships that could be created by attending a Benchmark event.

Going back to the panel…

There were 5 people sitting on the panel.  Besides myself, the panel consisted of Robert Shaw, Senior Counsel with me at Gordon & Rees, Frank Williams, a broker who facilitates mergers and acquisitions for health care providers, and two CEOs of health care providers who have undergone successful mergers and/or acquisitions.

The general consensus of the panel was that the future of behavioral health care will be larger companies which offer multiple services, instead of mom and pop shops that provide few types of services.  The panel was intended to bring potential mergers/acquisitions together in one venue and to educate the providers on “Do’s and Don’ts of Merging/Acquiring,” which is summarized below.

This consensus is generally derived from the MCO atmosphere here in NC.  Right or wrong, the MCOs are operating in closed networks and have the financial incentives to save money by contracting with fewer providers and decreasing authorizations for Medicaid services requested by Medicaid recipients.  See blog. And blog. And blog.

The MCOs seem to be terminating or refusing to contract with smaller health care providers, which, in turn, incentivize small health care providers to join other providers in order to grow its footprint.

Merging or acquiring a company is similar to partnering with another person in marriage.  Both parties have to familiarize themselves with the other’s habits, expectations, learn the other’s faults/liabilities, and, ultimately, have to work together on projects, issues and other matters.  And as we can discern from today’s high divorce rate, not everyone lives happily ever after.

Some marriages, as well as mergers, simply do not work.  Others live happily ever after.

The two provider panelists shared successful merger/acquisition stories.  Both shared experiences in creating new and larger entities effectively.  Both panelists were happy with the mergers/acquisitions and hopeful as to what the future will bring both new entities.

But all mergers and acquisitions do not have happy endings.  The two entities do not always live happily ever after.

Robert and I shared a story of an acquisition from Hades. There is no other way to describe the outcome of the acquisition.

The story of these two companies begins with the fact that the companies leased space in the same building.  One company was on floor 2 and the other was on floor 1.  The staff knew each other in passing.

The problem with the merger of these companies stemmed from a difference in culture.

Theoretically, the two companies did everything right.  The owner of the company getting acquired agreed to stay and work for the company buying it in order to ensure consistency. The buying company agreed to hire all the seller’s employees at their current salaries.  The acquisition was to be seamless.

The problems arose when news of the acquisition passed to the employees.  There was genuine discontentment with the arrangement.  The employees from the seller reacted with hostility and resentment.  Prior to the acquisition, the seller was fairly lax in regulatory compliance.  For example, if a service note was not drafted and filed the date of services….eh?…not that big of a deal.  Well, the buyer had strict document compliance rules for daily service notes.  Anytime more stringent policies are enacted on employees, there is sure to be a negative reaction.  The buyer also expected the seller’s employees to provide more services for the same salary received before the acquisition.

There was no legal or logical step omitted in the acquisition of the one company to the other.  On paper, the acquisition should have been successful.  But, then, personalities got in the way of happily ever after.

The other panelists offered great advice as to mergers and acquisitions, both from the providers’ view and a broker’s view.  I have compiled the advice that I recall below.  I have taken the liberty to provide analogous dating advice, as well, since marriages and mergers/acquisitions are so similar.  Hope it helps!!

Do’s and Don’ts of Mergers/Acquisitions

  • Do not let the secret out.

One provider panelist explained that if your employees learn of a possible merger/acquisition, they will kill the deal. Confide only in the CEO of the firm of which you are looking to merge, acquire, or sell.  Those dating: Never tell other that you want to marry (until the appropriate time).

  • Look outside your catchment area.

The reason companies merge/acquire is to grow.  Think of potential companies outside your own catchment area to grow even more.  For example, if you are in Alliance’s catchment area, think of merging with a company in ECBH/Eastpointe’s area.  Those dating: Have you exhausted your resources? Think of others, such as church, Match.com, etc.

  • Do your due diligence

This is a task as important as the oxygen you breath.  The last thing that you want is to acquire or merge with a company that owes $500,000 in employment taxes or an alleged overpayment.  Part of due diligence will be to check the credentials of every single staff member.  If someone is acting in the role of a LCAS, ensure the person is appropriately licensed.  Those dating: Is he/she employed? Have significant debt?

  • Review the other company’s documentation policies

This could be lumped into the due diligence section, but I think its importance is worth emphasizing.  Whatever service(s) the other company provides, what are its policies as to documentation? Does the provider have a computer program to maintain electronic health records (EHR)? Does it employ paper copies? Does the other company require the providers to submit daily service notes? Look at your own documentation policies.  Contemplate whether your own documentation policies would mesh well with the other company’s policies.  Those dating: How does your potential partner document spending, taxes, and calendared events?

  • Analyze both company’s corporate culture

Merging or acquiring a company is difficult in many ways, but it’s also hard on staff.  Imagine walking into work one day and you notice that the staff had doubled…or tripled.  And you and your colleagues are being told what to do by someone you never met.  This is not an uncommon occurrence with mergers and acquisitions.  Sometimes accepting change of supervision or team members can be a bitter pill to swallow.  How will you work through employee issues?  Personality clashes?  Ego fights?  Those dating: Analyze both person’s personalities, dispute resolutions, religion and beliefs.  Do you like his/her friends?

In addition to the potential conflicts with employees that stay with the merged entity, you also need to contemplate which employees, if any, may, potentially leave the new entity.  Disgruntled employees are a liability.  Those dating: How does he/she treat ex-partners?

  • Research the company’s relationship with its MCO

In our current MCO atmosphere, it is imperative to know, before merging or acquiring, whether the company has a good relationship with its MCO.  What if you acquire the company and its MCO refuses to continue to contract with the new entity.  Knowing the company’s relationship with the MCO is not an absolute.  As in, the company may believe it to have a good relationship with the MCO, while, in truth, it does not.  Ask to review some correspondence between the company and the MCO to discern the tone of the communications.  Those dating: How does he/she treat his/her mother/father?

  • Surround yourself with knowledge

Have a broker and an attorney with expertise in Medicaid.  Those dating: What do your friends think?

To watch the video of me speaking as a panelist for Benchmark, click here.  Scroll down until you see the video with Robert and me.

Otherwise, I hope you live happily ever after!

Knicole Emanuel: Panel Discussion – David Is To Goliath As NC Behavioral Health Care Providers Are To MCOs

Isn’t that analogy apropos? (And it’s not mine…its Benchmarks’)

I will be sitting on a panel today in Raleigh, NC.  See below.

A wonderful association, Benchmarks, is hosting a panel discussion for behavioral health care providers. While it is meant for smaller providers, in my own humble opinion, all behavioral health care providers would benefit from this panel discussion.

Senior Counsel, Robert Shaw, and I will be sitting on the panel…with managed care organizations (MCO) representatives.  It is without question that I have not been a big fan of the MCOs.  If I were to suggest otherwise, I believe that my blog followers would scoff. However, I am interested in hearing these MCO representatives’ side of the argument.

Will these MCO reps merely parrot? Or will they truly engage in worthwhile conversations to understand what it is like for a behavioral health care provider in NC today?

Feel free to join the discussion at 12:30-2:30.  Below is the Evite: 3801 Hillsborough St.

david and goliath

State Auditor Finds Taxpayer Waste at OMMISS!!!!

New State Auditor report investigates the Office of Medicaid Management Information Systems Services (OMMISS) within the North Carolina Department of Health and Human Services (DHHS).

With DHHS’ emphasis on detecting health care providers’ fraud, waste, and abuse (FWA) across the state, it seems ironic that its own agency is deemed guilty of wastefulness by our State Auditor.  What’s that about glass houses……??

What exactly does OMMISS do?  Well, for one, OMMISS works with Computer Sciences Corporation (CSC) regarding NCTracks.  We all know how wonderfully NCTracks has operated since inception….See blog. And blog.

State Auditor Beth Wood finds:

KEY FINDINGS

 At least $1.6 million wasted through excessive wages and commissions, unjustified overtime, and
holiday pay to ineligible employees

 OMMISS Director engaged in or allowed nepotism

 OMMISS Director received unauthorized compensatory time that may result in inflated retirement
benefits

 Reports to General Assembly omitted at least $260,000 of overtime and compensatory time

 Lack of adequate oversight of OMMISS despite findings in prior audit reports

 

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

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

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

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

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

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

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

Why?

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

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

You may be thinking…so what?

But attorney/client privilege is key in trial.

Let me give you an illustrative example:

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

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

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

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

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

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

Why?

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

Why does that matter?

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

For example:

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

A: “Yes.”

Q: “When exactly was that?”

A: “Two weeks ago.”

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

A: “She showed me my direct examination.”

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

A: “Yes.”

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

Me: “Not at all.”

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

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

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

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

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

Judges do not look favorable on coached testimony.

TIPS:

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

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

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

2. Re-hire the employee.

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

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

3. Be knowledgeable or hire a knowledgeable attorney.

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

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

4. Test the waters.

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

5. Pay for Lucy’s time

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

6. Think ahead

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

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

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

New Contact Information at Gordon & Rees

All, Here is my new contact information
 

Knicole C. Emanuel   | Partner
GORDON & REES LLP
3737 Glenwood Avenue, Suite 100
Raleigh, NC 27612 

D: 919-573-6037 |  P: 919-787-4555  |  C: 919-219-9319  |  F: 919-741-5840
 
Arizona • Alabama • California  • Colorado • Connecticut  •  Florida • Georgia • Illinois
Maryland • Missouri • Nevada • New Jersey • New York • North Carolina  • Oregon • Pennsylvania
South Carolina  •  South Dakota  •  Texas  •  Virginia  •  Washington  • Washington, D.C.      

 

 

NC MCOs and Consolidation: “When the Music Stops? Nobody Knows!”

Our General Assembly is pushing for the managed care organizations (MCOs) to consolidate and/or morph.  Consolidating the MCOs makes fiscal sense for our state, but if I were executive management at an MCO, I would be be anxiously awaiting direction from our General Assembly.  A metaphoric 3-4 chair game of”Musical Chairs” is proceeding with 9 (now 8) players.  Five to six players will have no chairs when the music stops.

What are MCOs?  See blog and blog.

Multiple bills have been proposed.

Senate Bill 703 proposes 3 statewide MCOs. Senate Bill 574 seems to incorporate provider-led capitated health plans, but is unclear as to the exact model. Senate Bill 696 seems to create a symphony of provider-led and nonprovider-led, risk-based entities. Senate Bill 568 contemplates licensed commercial health insurers offering health care plans.

No one really knows how many MCOs will remain in the end…if any. Regardless, what the number of existing MCOs in the future will be, there is little dispute that the number will be fewer than the number of MCOs that exist now.

In an atmosphere where there is supposition that there are too many people or companies and that only a few will remain, competition brews. People/companies are forced to strategize if they want to survive.

Think about the childhood game, “Musical Chairs.” You start with a large group of people, but with one less chair than the number of people. The music plays and the players meander around at a relatively slow pace, around and around, until the music stops. And what happens when the music stops? The people scramble for a chair.  The person left standing is “out” and must sit on the sideline.

We have 9, soon to be 8, MCOs in NC right now. And the music is playing. But which MCOs will be left standing when the music stops?

Here is a map of our current MCOs:

2014 mco

 

As of July 1, CoastalCare and East Carolina Behavioral Healthcare (ECBH) will be merged. We will be down to 8 MCOs. Which means that the light blue on the bottom right hand side of the map will merge with the bright yellow on top right hand side of the map.

Mecklenburg county, which houses most of the Charlotte area, was not always light purple. It recently merged with Cardinal Innovations.

Partners (light yellow) and Smokey Mountain (dark blue) had serious discussions of a merger until, recently, when both walked away from negotiations of merger.

Why should it matter which MCOs are in existence or how many? Theoretically, it shouldn’t. These MCOs are created in order to manage behavioral health care (Medicaid services for those suffering from substance abuse, mental illness, and developmentally disabled), not to make a profit, right? The only issue of importance should be that medically necessary behavioral health care services are rendered to Medicaid recipients in the most efficient and most effective manner.

Yet competing interests come into play.

Think about it…each MCO employs hundreds of people. Each MCO has a CEO, who is not working for free. Generally, unless other arrangements have been negotiated, there can only be one CEO per MCO. When there are 2+ MCOs merging with 2 CEOs and only 1 “chair” for 1 CEO, it can seem like “Musical Chairs.” Multiple people are vying for one “chair.”

The money at issue for behavioral health care in NC is not a small amount. It is likened to a fire hose spouting money. We have a Medicaid budget in NC of approximately 14 billion dollars. To put it in perspective, with $14 billion dollars, you could purchase the LA Lakers 14 times. This is how much money we spend on Medicaid every year. It is really quite staggering when you think about it.

As every North Carolinian learns in the 6th grade, North Carolina is composed of 100 counties. The estimated Medicaid budget of $14 billion is allocated across 100 counties and among approximately 1.9 million Medicaid recipients.

When it was decided to implement the MCOs across the state, about 2012-ish (we actually obtained permission from CMS for the waiver years prior to 2012, but we began with a pilot and did not implement the MCOs statewide until 2012-13), we found ourselves, initially, with eleven MCOs, and now we have 9…soon to be 8.

The newly merged entity of CoastalCare and ECBH (CC+ECBH) will manage state funds and Medicaid dollars for behavioral health services across 24 counties in eastern North Carolina. In other words almost ¼ of the Medicaid budget will be handed to CC+ECBH, leaving approximately ¾ of the Medicaid budget for 7 other MCOs (the budget is determined by number of recipients, so I am assuming, for the purpose of this blog, that more counties mean more people).

The amount of counties controlled by the remaining 7 MCOs are as follows:

Smokey: 23
Partners: 8
Centerpointe: 4
Cardinal: 16
Sandhills: 9
Eastpointe: 12
Alliance: 4

chart for mcos

Looking at the chart above, it would appear that Smoky and CC+ECBH will manage almost 1/2 the state’s behavioral health care for Medicaid.

Prior to the 1915 b/c Waiver allowing the MCOs to manage behavioral services for Medicaid recipients in NC, DHHS managed it. (Obviously ValueOptions and other vendors had a part in it, but not with actual management).  As the single state agency for Medicaid, DHHS cannot delegate administrative duties to contracted parties without a “Waiver,” or permission for an exception from the federal government, or, more specifically, the Center for Medicare and Medicaid Services (CMS).

Prior to the 1915 b/c Waiver, we did not have 9 companies with hundreds of employees managing behavioral health care for Medicaid recipients. We had DHHS, which employs approximately 18,000 employees.  To my knowledge DHHS did not terminate those employees who were in charge of behavioral health care issues in order to compensate the creation of new companies/employees.  In other words, say 1000 people at DHHS devoted their time to issues arising our of behavioral health care. Once we had an additional 9 (well, 11, at first), those 1000 employees were not asked to join the MCOs. Maybe some did, but, to my knowledge, there was no suggestion or incentive or requirement to leave DHHS and go to an MCO (to shift the administrative burden).

When we created an additional 9 (well, 11 at first) companies to, essentially, take over behavioral health care…

We created more administrative costs, in order to lift the risk of overspending the Medicaid budget off the state.  It is estimated that America wastes $190 billion in excess administrative costs per year.

Waste in health care

In theory, consolidating the MCOs would decrease administrative costs by having fewer paid employees, not dissimilar to why MCOs want a closed network.  See blog. Again, in theory, having fewer MCOs may create a more consistent statewide manner in managing behavioral health care.

Assume for the purpose of this blog that each MCO employs 100 people (which is a very low number) and each employee is paid $50,000, then the administrative cost associated with delegating behavioral health care to MCOs equals $500,000, counting only employee salaries. Multiple that number by 9 (number of current MCOs) and you get an increased administrative cost of approximately $4.5 million dollars per year, not counting the additional overhead each MCO bears (rent/mortgage, equipment, salary benefits, health care benefits, etc.). Plus you have to include the top management’s salaries, because you know the executives are receiving more than $50,000/year.

What motivated us to implement a MCOs system? With an MCO system, the General Assembly is able to allocate funds for Medicaid and place the risk of going over the budget on the MCOs, not the state. This is a completely understandable and reasonable objective. It is without question that the Medicaid budget is swelling to the point of unsustainability.

However, are we trading “control/supervision” for “knowability?” Are we also trading “risk” for “higher administrative costs,” which, in turn, equals less Medicaid dollars for providers and Medicaid recipients? Every dollar paid to an MCO employee is a dollar not going to a health care provider to reimburse for services.

For these reasons, the government’s push for consolidation of the MCOs is astute. Fewer MCOs = less administrative costs. Fewer MCOs = easier supervision by DHHS.

Less administrative costs = more Medicaid dollars going to providers…to serve our most needy. Because, at the end of the day, the most important issue when it comes to Medicaid is providing quality care for recipients.

It is no matter which entity controls/manages behavioral health care for Medicaid, because regardless the entity, that entity should be managing our tax dollars in the most efficient way that provides the best quality to services to those in need.

“Around and around we go, when we stop? Nobody knows…”  But we do know this…when the music stops, there will be scrambling!

CMS Certifies NCTracks!!! NC Will Get 19 Million from the Feds!

As I am driving back to the office after lunch, I hear on the news that CMS has certified NCTracks!  This is huge on so many levels, and I will have to add another blog about once I get more information.  So after 2 years and almost 8 months after its go-live date, NCTracks is certified.

Had CMS not certified NCTracks, then NC would have lost millions of dollars in federal dollars to fund the computer program created by Computer Sciences Corporation (CSC).

I am going to look into the standards for the certification…I know there are over 600 criteria that must be met for certification…but what is the threshold? An ‘A?’ Or do you squeak by with a ‘D?’

In the meantime, NC will receive approximately $19 million from the federal government.  NCTracks had replaced the decades-old computer system created by HP Enterprises back in the summer of 2013.

CSC is a named Defendant in a class action lawsuit filed on behalf of physicians across NC alleging that the computer system was fraught with errors when it went live, including erroneous denials and heavy administrative burdens.

See blog.

Remember, this was not NCTracks’ first rodeo with an attempted certification from CMS.  Back in 2013, CMS did not certify NCTracks.

In 2013, NCTracks did not meet a federal certification deadline that could have saved the state more than $9 million in annual operation costs.  See article.

 

Breaking News: Knicole Emanuel and Team Move to the National Law Firm of Gordon & Rees!!

April 2015 has turned into a month of change for my family and me.

I am so excited to announce that as of today, I am a partner at Gordon & Rees.  Robert Shaw will be joining as a senior counsel and Todd Yoho, our paralegal, will also be joining.  So “Team Medicaid” is staying together!! Both Robert and Todd are integral parts of this team.

Yes, I will remain in Raleigh.  Yes, I will still maintain this blog!

I did not take this decision lightly.  I enjoyed every second of my time at Williams Mullen.  The attorneys over at WM are top-notch and will be greatly missed.

However, Gordon & Rees (GR) provides us with a national platform, as it is the 89th largest firm in the country!!!!!

GR has 600+ lawyers in 21 different states!! This national platform will enable us to grow our practice across the country.  We (GR) do not have an office in New Mexico yet…

In this type of practice, my clients are health care providers that provide health care to our most needy population.  Every time that we “win” for our clients, we are allowing that client/health care provider to continue to accept Medicare/caid and to continue to serve their patients.  Now we will have the opportunity to help health care providers all over the country!!! This is such an amazing opportunity, and I feel so blessed.

And it doesn’t stop there!

Concurrent with my transition to GR, my family has purchased a new house!!! We close on April 10th and the movers are coming April 11th.  It is almost 5 acres with a four-stall barn and a lighted round ring for evening riding.  For those who know me, my family and I have wanted a small horse farm for years.  We are so excited! Although, between you and me, I may be taking away my husband’s debit card soon.  He believes that prior to our move, we need to have a tractor, a golf cart, hay, fencing, a donkey, and multiple other farming paraphernalia.  I disagree.

Oh, and we cannot forget the trial in New Mexico fast approaching…and another trial 2 weeks afterward.  This is just how I like it! I love my family, and I love my job!

So, Happy Easter, everyone!!!

My new email is:

kemanuel@gordonrees.com

The appearance of my blog may change in the near future…but the content will not.  I will continue to blog on the ongoing plights of those health care providers who choose to accept Medicaid/care, the Goliaths who stand in their way, the laws and regulations surrounding this esoteric, but so important topic, and the impact of public health on our tax dollars!

“Nothing in the world can take the place of Persistence. Talent will not; nothing is more common than unsuccessful men with talent. Genius will not; unrewarded genius is almost a proverb. Education will not; the world is full of educated derelicts. Persistence and determination alone are omnipotent.” Calvin Coolige.

New NC Senate Bill Proposes 4-6 MCOs!! And the Creation of ARPLOs!!

Senate Bill 568 was filed today!!! It is a bill that you should follow!

SB 568 reads: “It is the intent of the General Assembly to transform the State’s health care purchasing methods from a traditional fee-for-service system into a value-based system that provides budget predictability for the taxpayers of this State while ensuring quality care to those in need.”

It proposes, among other things, a consolidation of the 9 current managed care organizations (MCO) here in North Carolina to “not more than 6″ and “no less than 4″ MCOs.

It further establishes another acronym: ARPLOs.

“At-Risk Provider-Led Organizations (ARPLOs). ARPLOs are capitated health plans administered by North Carolina’s provider-led Accountable Care Organizations that will manage and coordinate the care for the Patient Population, outside of the PCMHs, pending waiver approval where appropriate for this transformation by the Center for Medicare & Medicaid Services.”

Remember, the House has pushed for ACOs and the Senate has pushed for MCOs.  See blog.

Is the Senate bending toward the House??????

More to come…

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.

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