Key Medicaid Questions Post-Election

Disclosure: This is the opinion/facts from the Kaiser Family Foundation, not me. But I found this interesting. My opinion will be forthcoming.

Kaiser Family Foundation article:

Medicaid covers about 73 million people nationwide.  Jointly financed by the federal and state governments, states have substantial flexibility to administer the program under existing law.  Medicaid provides health insurance for low-income children and adults, financing for the safety net, and is the largest payer for long-term care services in the community and nursing homes for seniors and people with disabilities.  President-elect Trump supports repeal and replacement of the Affordable Care Act (ACA) and a Medicaid block grant. The GOP plan would allow states to choose between block grant and a per capita cap financing for Medicaid. The new Administration could also make changes to Medicaid without new legislation.

1. HOW WOULD ACA REPEAL AFFECT MEDICAID?

A repeal of the ACA’s coverage expansion provisions would remove the new eligibility pathway created for adults, increase the number of uninsured and reduce the amount of federal Medicaid funds available to states. The Supreme Court’s 2012 ruling on the ACA effectively made the Medicaid expansion optional for states. As of November 2016, 32 states (including the District of Columbia) are implementing the expansion.  The full implications of repeal will depend on whether the ACA is repealed in whole or in part, whether there is an alternative to the ACA put in place and what other simultaneous changes to Medicaid occur. However, examining the effects of the ACA on Medicaid provide insight into what might be at stake under a repeal.

What happened to coverage? The ACA expanded Medicaid eligibility to nearly all non-elderly adults with income at or below 138% of the federal poverty level (FPL) – about $16,396 per year for an individual in 2016. Since summer of 2013, just before implementation of the ACA expansions, through August 2016 about 16 million people have been added to Medicaid and the Children’s Health Insurance Program.  While not all of this increase is due to those made newly eligible under the ACA, expansion states account for a much greater share of growth. States that expanded Medicaid have had large gains in coverage, although ACA related enrollment has tapered.  From 2013 to 2016 the rate of uninsured non-elderly adults fell by 9.2% in expansion states compared to 6% in non-expansion states.

What happened to financing? The law provided for 100% federal funding of the expansion through 2016, declining gradually to 90% in 2020 and beyond. Expansion states have experienced large increases in federal dollars for Medicaid and have claimed $79 billion in federal dollars for the new expansion group from January 2014 through June 2015.  Studies also show that states expanding Medicaid under the ACA have realized net fiscal gains despite Medicaid enrollment growth initially exceeding projections in many states.

What other Medicaid provisions were in the ACA? The ACA required states to implement major transformations to modernize and streamline eligibility and enrollment processes and systems.  The ACA also included an array of new opportunities related to delivery system reforms for complex populations, those dually eligible for Medicare and Medicaid and new options to expand community-based long-term care services.

2. WHAT WOULD CHANGES IN THE FINANCING STRUCTURE MEAN FOR MEDICAID?

A Medicaid block grant or per capita cap policy would fundamentally change the current structure of the program. These policies are typically designed to reduce federal spending and fix rates of growth to make federal spending more predictable, but could eliminate the guarantee of coverage for all who are eligible and the guarantee to states for matching funds.  States would gain additional flexibility to administer their programs but reduced federal funding could shift costs and risk to beneficiaries, states, and providers.

How would it work? Block grants or per capita caps could be structured in multiple ways. Key policy decisions would determine levels of federal financing as well as federal and state requirements around eligibility, benefits, state matching requirements, and beneficiary protections. Previous block grant proposals have determined a base year financing amount for each state and then specified a fixed rate of growth for federal spending. Under a Medicaid per capita cap, the federal government would set a limit on how much to reimburse states per enrollee.  Payments to states would be based on per enrollee spending multiplied by enrollees. Spending under per capita cap proposals fluctuate based on changes in enrollment, but would not account for changes in the costs per enrollee beyond the growth limit.  To achieve federal savings, the per capita growth amounts would be set below the projected rates of growth under current law.

What are the key policy questions? Key questions in designing these proposals include: what new flexibility would be granted to states, what federal requirements would remain in place, what requirements would be in place for state matching funds, what is the base year and growth rates, and how would a potential repeal of the ACA work with a block grant proposal?  Given the lack of recent administrative data, setting a base year could be challenging.  These financing designs could lock in historic spending patterns and variation in Medicaid spending across states, resulting in states deemed “winners” or “losers.”

What are the implications? Capping and reducing federal financing for Medicaid could have implications for beneficiaries, states, and providers including: declines in Medicaid coverage or new financial barriers to care; limited funding for children (the majority of Medicaid enrollees) as well as the elderly and those with disabilities (populations that represent the majority of Medicaid spending); reduced funding for nursing homes and community-based long-term care (Medicaid is the largest payer of these services); reductions in federal revenues to states and Medicaid revenues for safety-net providers.  A block grant would not adjust to increased coverage needs during a recession.  Block grants or per capita caps would not adjust to changes in health care or drug costs or emergencies.  Recently Medicaid costs have increased due to high cost specialty drugs and Medicaid has been used to help combat the growing opioid crisis.

3. HOW COULD MEDICAID BE CHANGED THROUGH ADMINISTRATIVE ACTIONS?

The Administration could make changes to Medicaid without changes in legislation.

How can changes be made through guidance? A new administration can reinterpret existing laws through new regulations and new sub-regulatory guidance. While there are rules that govern how to change regulations, a new administration has more flexibility to issue or amend sub-regulatory guidance, such as state Medicaid director letters. Rules promulgated by the Obama administration could be rolled back or changed.

How can changes be made through waivers? Throughout the history of the Medicaid program, Section 1115 waivers have provided states an avenue to test and implement demonstrations that, in the view of the Health and Human Services Secretary, advance program objectives but do not meet federal program rules. Longstanding federal policy has required waivers to be budget neutral for the federal government.

What kind of waivers may be considered?  Seven states are using waivers to implement the ACA Medicaid expansion, including Indiana.  The Indiana waiver, implemented under then Governor Pence, includes provisions to impose: premiums on most Medicaid beneficiaries; a coverage lock-out period for individuals with incomes above the poverty level who fail to pay premiums; health savings accounts; and healthy behavior incentives.  The Obama administration has not approved waivers that would require work as a condition of Medicaid eligibility.  It also has denied Ohio’s waiver request to impose premiums regardless of income and exclude individuals from coverage until all arrears are paid on the basis that this would restrict or undermine coverage from existing levels.  Many other states are using waivers to implement payment and delivery system reforms.  The incoming administration could decide whether or not to renew existing waivers and can approve a new set of waivers to promote its own program goals.

Knicole Emanuel Interviewed on Recent Success: Behavioral Health Care Service Still Locked in Overbilling Dispute with State

Last Thursday, I was interviewed by a reporter from New Mexico regarding our Teambuilders win, in which an administrative judge has found that Teambuilders owes only $896 for billing errors. Here is a copy of an article published in the Santa Fe New Mexican, written by Justin Horwath:

Source: Behavioral health care service still locked in overbilling dispute with state

The true tragedy is that these companies, including Teambuilders, should not have been put out of business based on false allegations of fraud. Not only was Teambuilders cleared of fraud, but, even the ALJ agreed with us that Teambuilders does not owe $12 million – but a small, nominal amount ($896.35). Instead of having the opportunity to pay the $896.35 and without due process of law, Teambuilders was destroyed – because of allegations.

Another Win! 12 Million Dollar Recoupment Reduced to $896 – But There is a Twist

One of our clients in New Mexico had an alleged Medicaid recoupment of over $12 million!! Actually, $12,015,850.00 – to be exact. (See below). After we presented our evidence and testimony, the Judge found that we owe $896.35. I call that a win!

In this case, the Human Services Department (HSD) in New Mexico had reviewed 150 random claims. Initially, HSD claimed that 41 claims out of 150 were noncompliant.

fullsizerender-jpg

But, prior to the hearing, we saved over $10 million by pointing out HSD’s errors and/or by providing additional documentation.

And then the ALJ’s decision after we presented our evidence and testimony –

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Boom! Drop the mike…

…………………………….not so fast…

……………………………………………..picking the mike back up…

You see, in New Mexico, the administrative law judges (ALJs) cannot render decisions. Look in the above picture. You see where it reads, “Recommendation?” That is because the ALJs in New Mexico can only render recommendations.

Because Medicaid has a “single state agency” rule; i.e., that only one agency may render discretionary decisions regarding Medicaid, and HSD is the single state agency in New Mexico charged with managing Medicaid, only HSD may render a discretionary decision. So in NM, the ALJ makes a recommendation and then the Secretary of HSD has the choice to either accept or reject the decision.

Guess whether HSD accepted or rejected the ALJ’s recommendation?

reject

Now we will have to appeal the Agency’s Decision to overturn the ALJ recommendation.

Here, in NC, we obtained a waiver from the Centers of Medicare and Medicaid Services (CMS) to allow our ALJs to render Decisions. See blog.

I still consider this a win.

Medicaid Law: What Are Policies Versus Law and Why Does It Matter?

“Always follow the Golden Rule. Always treat others how you want to be treated.”

What is so great about following rules? Do we have to follow all rules? What if other people do not follow the rules? What if the rules contradict? Are some rules more important than others?

The answer is – it depends.

When you sign your provider procurement agreement with NC to provide Medicaid services, there is a sentence in it that says, something to the effect, “The provider agrees to follow all applicable state and federal rules, laws, and regulations.” Yet, I am constantly shocked how many providers are completely oblivious to what are the “applicable state and federal rules, laws, and regulations” (although it does keep me in business).

The fact is, however, not all rules are created equal.

First, what is the difference between a policy, a regulation, and a law?

A law must be followed. If you break the law, you are punished. A regulation also must be followed; however, regulations are created by state agencies through a rule-making process. Usually, the public may comment on proposed regulations prior to being enacted.

On the other hand, a rule (that has not been formally adopted by the State) is policy or guidance. For example, the DMA Clinical Coverage Policies are rules or guidance. The Policies are not promulgated; i.e., they have not undergone the official rule-making process. Don’t get me wrong – you should follow the DMA Clinical Coverage Policies. My point is that a violation of a Clinical Coverage Policy will not/should not warrant the same punishment as violating a regulation or law.

Let’s think about this in a “real-life” hypothetical.

You receive a notice of overpayment in the amount of $450,000.00 because, allegedly, your service notes are signed electronically and you do not have an electronic signature policy.

There is no law or regulation that dictates that you must have an electronic signature policy. It is best practice to have an electronic signature policy. The Medicaid Billing Guide suggests that you maintain an electronic billing policy.

N.C. Gen. Stat. 150B sets forth the rule-making process. Any policy or rule that has not undergone the official rule-making process is considered nonbinding interpretative statements. N.C. Gen. Stat. 150B-18 states that “[a]n agency shall not seek to implement  or enforce  against any person a policy, guideline, or other nonbinding interpretative statement…if the statement has not been adopted as a rule in accordance with this Article.” (emphasis added).

Because there is no law or regulation requiring you to have an electronic signature policy, the State cannot punish you for not having one. In other words, the State cannot hold you to arbitrary criteria unless that criteria was formally adopted in the rule-making process.

How do you know if a policy or rule has been formally adopted?

Any policy or rule that is formally adopted will have a legal citation. For example, N.C. Gen. Stat 150B is a formal law. 10A NCAC 27G .0104 is a formal regulation – it is part of our administrative code. NC DMA Clinical Coverage Policies and the Medicaid Billing Guide are comprised of nonbinding, interpretative statements, as well as law and regulations. Usually, when a law or regulation is cited in the Policies or Billing Guide the formal, legal citation is also provided, but not always. I know, it’s confusing, yet extremely important.

You cannot and should not be punished for violating suggestions, policy, or nonbinding, interpretative statements. You should not be punished for not “treating others how you would like to be treated.” – That is not a law.

It is important to know the distinction because, apparently, those in charge of our Medicaid program, at times, do not.

Exhaustion of Administrative Remedies: Futile as the Caucus-Race?

Answer – Sometimes.

How many of you have received Remittance Advices from NCTracks that are impossible to understand, include denials without appeal rights, or, simply, are erroneous denials with no guidance as to the next steps?  While these were most prevalent in the first couple years after NCTracks was rolled out (back in July 2013), these burdensome errors still exist.

You are allowed to re-submit a claim to NCTracks for 18 months. How many times do you have to receive the denial in order for that denial to be considered a “final decision?” And, why is it important whether a denial is considered a final decision?

  1. Why is it important that a denial be considered a “final decision?”

As a health care provider, your right to challenge the Department of Health and Human Services’ (via CSC or NCTracks’) denial instantly becomes ripe (or appealable) only after the denial is a final decision.

Yet, with the current NCTracks system, you can receive a denial for one claim over and over and over and over without ever receiving a “final decision.”

It reminds me of the Causus-race in Alice and Wonderlandalice“There was no ‘One, two, three, and away,’ but they began running when they liked, and left off when they liked, so that it was not easy to know when the race was over. However, when they had been running half an hour or so, and were quite dry again, the Dodo suddenly called out ‘The race is over!’ and they all crowded round it, panting, and asking, ‘But who has won?'” – Alice in Wonderland.

On behalf of all health care providers who accept Medicaid in North Carolina and suffered hardship because of NCTracks, at my former firm, I helped file the NCTracks class action lawsuit, Abrons Family Practice, et al., v. NCDHHS, et al., No. COA15-1197, which was heard before the NC Court of Appeals on June 12, 2015. The Opinion of the Court of Appeals was published today (October 18, 2016).

The Court of Appeals held that the plaintiffs were not required to “exhaust their administrative remedies” by informal methods and the Office of Administrative Hearings (OAH) prior to bringing a lawsuit in the State Court for damages because doing to would be futile – like the Caucus-race. “But who has won?” asked Alice.

Plaintiffs argued that, without a “final decision” by DHHS as to the submitted claims, it is impossible for them to pursue the denials before the OAH.

And the Court of Appeals, in a 2-1 decision, agrees.

The Abrons decision solidifies my contention over the past 4-5 years that a reconsideration review is NOT required by law prior to filing a Petition for Contested Case at OAH…. Boom! Bye, Felicia!

Years ago, I informed a client, who was terminated by an managed care organization (MCO), that she should file Petition for Contested Case at OAH without going through the informal reconsideration review. One – the informal reconsideration review was before the very agency that terminated her (futile); and two – going through two processes instead of one costs more in attorneys’ fees (burdensome).

We filed in OAH, and the judge dismissed the case, stating that we failed to exhaust our administrative remedies.

I have disagreed with that ruling for years (Psssst – judges do not always get it right, although we truly hope they do. But, in judges’ defenses, the law is an ever-changing, morphing creature that bends and yields to the community pressures and legal interpretations. Remember, judges are human, and to be human is to err).

However, years later, the Court of Appeals agreed with me, relying on the same argument I made years ago before OAH.

N.C. Gen. Stat. 150B-22 states that it is the policy of the State that disputes between the State and a party should be resolved through informal means. However, neither 150B-22 nor any other statute or regulation requires that a provider pursue the informal remedy of a reconsideration review. See my blog from 2013.

I love it when I am right. – And, according to my husband, it is a rarity.

Here is another gem from the Abrons opinion:

“DHHS is the only entity that has the authority to render a final decision on a contested medicaid claim. It is DHHS’ responsibility to make the final decision and to furnish the provider with written notification of the decision and of the provider’s appeal rights, as required by N.C. Gen. Stat. 150B-23(f).”

N.C. Gen. Stat. 150B-23(f) states, ” Unless another statute or a federal statute or regulation sets a time limitation for the filing of a petition in contested cases against a specified agency, the general limitation for the filing of a petition in a contested case is 60 days. The time limitation, whether established by another statute, federal statute, or federal regulation, or this section, shall commence when notice is given of the agency decision to all persons aggrieved who are known to the agency by personal delivery or by the placing of the notice in an official depository of the United States Postal Service wrapped in a wrapper addressed to the person at the latest address given by the person to the agency. The notice shall be in writing, and shall set forth the agency action, and shall inform the persons of the right, the procedure, and the time limit to file a contested case petition. When no informal settlement request has been received by the agency prior to issuance of the notice, any subsequent informal settlement request shall not suspend the time limitation for the filing of a petition for a contested case hearing.”

2. How many times do you have to receive the denial in order for that denial to be considered a “final decision”?

There is no magic number. But the Court of Appeals in Abrons makes it clear that the “final decision” must be rendered by DHHS, not a contracted party.

So which we ask – What about terminations by MCOs? Do MCOs have the authority to terminate providers and render final decisions regarding Medicaid providers?

I would argue – no.

Our 1915b/c Waiver waives certain federal laws, not state laws. Our 1915 b/c Waiver does not waive N.C. Gen. Stat. 150B.

“But who has won?” asked Alice.

“At last the Dodo said, ‘everybody has won, and all must have prizes.'” – Only in Wonderland!

Sometimes, you just need to stop running and dry off.

New OIG Report, But Same, Ole Results: Medicare and Medicaid Fraud Persistent in PCS

How many times have you heard, “Third time’s a charm?”If that is true, then what is the fifth time? The sixth time?

In an October 3, 2016, advisory report, the Office of Inspector General (OIG) recommends that the Center for Medicare and Medicaid Services (CMS) heighten its scrutiny on personal care services (PCS) in states across the country. The OIG claims “that home health has long been recognized as a program area vulnerable to fraud, waste, and abuse.” Past OIG reports have focused on Medicare. This new one focuses on Medicaid.

OIG is a division of the U.S. Department of Health and Human Services (HHS) and is charged with identifying and combating waste, fraud, and abuse in the HHS’s more than 300 programs. But, evidently, OIG is not happy, happy, happy, when HHS disregards its findings, which appears to be what has happened for a number of years.

PCS are nonmedical services for people who need assistance with activities of daily living (ADLs), such as bathing, eating, and toileting. Most of the time, PCS are allowing the person to remain in his or her home, instead of being institutionalized. However, according to OIG, PCS is fraught with fraud.

PCS is an optional service for Medicaid, i.e., states can choose to cover the cost of PCS with government funds. But, on the federal level, PCS is provided, if medically necessary, in all states.

The OIG report summarizes Medicaid fraud schemes from November 2012 through August 2016. OIG goes on to say that the fraud in this report is merely replicate of Medicare fraud found in a prior reports. In other words,OIG is basically saying that it has found Medicare fraud in home health in multiple, past reports and that CMS has not followed through appropriately. In fact, this report makes over five times, in recent years, that OIG has instructed CMS to increase its regulatory oversight of Medicare/caid personal care services. How many times does it take for your spouse to ask you to take out the trash until you take out the trash? Third time’s a charm??

Mark my words…in the near future, there will be heightened investigations and increased audits on home health.

Here are some scenarios that can trigger an audit of home health:

  1. High percentage of episodes for which the beneficiary had no recent visits with the supervising physician;
  2. High percentage of episodes that were not preceded by a hospital or nursing home stay;
  3. High percentage of episodes with a primary diagnosis of diabetes or hypertension;
  4. High percentage of beneficiaries with claims from multiple home health agencies; and
  5. High percentage of beneficiaries with multiple home health readmissions in a short period of time.

While the above-mentioned scenarios do not prove the existence of Medicare/caid fraud, they are red flags that will wave their presence before health care investigators’ faces.

Here are the states (and cities) which will be targets:

Notice that North Carolina is not highlighted. Notice that Florida is highlighted and contained numerous “hotspots.” Certainly that has nothing to do with the abnormal number of people on Medicare…

Regardless, North Carolina will get its share of Medicare PCS audits. Especially, considering that we have the 7th most number of Medicare beneficiaries in the country – that should have gotten us highlighted per se.

Since the OIG Portfolio report issued in 2012, OIG has opened more than 200 investigations involving fraud and patient harm and neglect in the PCS program across the country. “Given the significant vulnerabilities in the PCS program, including a lack of internal controls, and that PCS fraud continues to be a persistent problem, OIG anticipates that its enforcement efforts will continue to involve PCS cases.”Report.

Fifth time is a ______?? (Sure thing).

Medicaid Auditors, Nitpicky Nonsense, and Journalistic Mistakes

In my experience with regulatory audits of health care providers, which is substantial, the auditors have zero incentive to perform audits conservatively…or even properly, if I am being completely honest. The audit companies themselves are for-profit entities with Boards of Directors, sometimes with shareholders, and definitely with executives who are concerned with the corporate bottom lines. The actual auditors are salaried employees (or contractors) who are given an audit checklist, which may or may not be correct) and instructions as to which companies to audit.

Think about it – you are hired as an auditor…what happens if you come back to your boss, saying, “Nope. I found no documentation errors.”I liken it to me hiring a housekeeper and that housekeeper showing up at my house and saying, “Your house is so clean. There is nothing for me to clean.” First of all, for those who know me, you know that no housekeeper would ever say that my house did not to be cleaned, but that is neither here nor there. The analogy remains. No employee or hired contractor will tell you that you do not need to hire him or her because he or she is not needed. It is only human nature and logic. Will a dog trainer tell you that your dog is fully trained? Will a personal trainer tell you are perfectly fit? Will a rug maker tell you that you don’t need a rug? Will an auditor tell you that your documents are perfect? If so, they would render themselves obsolete.

Disagree with my opinions on this blog all you want, but if you disagree with the principle that an employee will not argue himself or herself out of a job, then you are living in a fantasy land made up of rainbows and gummy bears.

So let’s begin with the basic logical principles: 2+2=4 and auditors have incentives to find errors.

Now, knowing the basic, underlying fact that auditors have incentives to locate documentation errors, an article was recently published entitled, “Audit says home health care companies overbilled Mass. Medicaid by $23m.” While I am not in a position to critique a journalist’s writing, I disagree with the broad, overreaching statements found in this article. While the article claims that 9 home health companies owe the State of Massachusetts $23 million, my guess is that (if the companies hire a competent attorney) the companies do not owe such a large amount. In my experience, there are many legal defenses to safeguard against allegations in an audit.

The follow-up article may be entitled, “Audit of Home Health Agencies Found to Be Erroneous.”

Here is the first paragraph of that article claiming home care agencies overbilled Medicaid for $23 million:

“The state’s Medicaid program was routinely billed for home health care services that were never provided or were not medically necessary. Providers submitted documents with missing dates and signatures. Sometimes basic information like a patient’s medical history was nowhere to be found.”

Let’s dissect.

First sentence: “The state’s Medicaid program was routinely billed for home health care services that were never provided or were not medically necessary.”

I call bull feces on this one. First, the audit, which is the topic of this article, only audited 9 home health agencies. Unless only 10 home health agencies exist in Massachusetts, an audit of 9 agencies can hardly be considered “routinely billing” Medicaid.

Second, who is making these determinations that the home health services are not medically necessary??? Considering that, in order to render home health services, the provider must obtain prior authorization that the services are medically necessary, I find it a hard pill to swallow that the rendered services are not medically necessary. These are prior authorized services!!

Third, providing home health services is anything but routine. Life happens. The assertion that home health care services were never provided fails to take into consideration – life. For example, a home health aide could present at the client’s home at the regularly scheduled time, but the consumer’s son is present. The son brought McDonald’s, in which case, the aide may render all services, but does not prepare a meal for the client. Or, perhaps, the consumer’s plan states that the aide must bathe the consumer. But the consumer recently had surgery and cannot take a bath or shower for a certain amount of time. In the above examples, services were not rendered, that is true, but did some sort of aberrant billing or fraud occur? I would argue, no.

Second sentence: “Providers submitted documents with missing dates and signatures.”

This sentence is also troubling. Let’s say that a consumer requires home health services and receives prior authorization. The home health aide renders the services. In the subsequent documentation, the home health aide forgets to date the service note. There is no question that the home health services were needed. There is no question that the services were rendered. There is only a missing date written on the service note. Does this circumstance warrant a 100% recoupment for a minor documentation error? If you answer, yes, you may have a fulfilling career as a Medicaid auditor in your future. You also may believe that a documentation error as egregious as a missing date should warrant tearing up the provider’s Medicaid contract and burning it. You may also hate puppy dogs and ice cream.

My answer is no. There are less drastic measures to be implemented other than a 100% recoupment – for example, a plan of correction could be required.

Third sentence: “Sometimes basic information like a patient’s medical history was nowhere to be found.”

I have major issues with this sentence. Ever hear of the saying, “You only get what you ask for?” All health care providers, including home health care providers, maintain massive amounts of documentation, whether it be electronic or paper. Furthermore, one client file could have years and years of documentation. When an auditor comes to an agency, the auditor normally presents with a list of consumer names and dates of service.

For example, the auditor wants to review the documentation for Barack Obama, date of service 11/8/12. The provider hands over the service note, the plan of care, the prior authorization, etc. Information not found on the documents provided to the auditor: place of birth, past drug use, including, marijuana and cocaine, smoking history, exercise regimen, marital status, immunizations, list of surgical procedures…you get the picture.

The article goes on to state, “Executives at all of the companies reached by the Globe said they are appealing the audit findings and chalked up most of the violations to minor paperwork issues that were overblown by state auditors.”

“There’s mistakes here, I understand that,” said Debra Walsh, administrator at Able Home Care. “[But] how did a missing address escalate to a sanction? That doesn’t make any sense.”

She’s right. It doesn’t make logical, reasonable, human sense. But it does make sense when you remember that the auditors are sent to the agencies with an audit checklist and a list of consumers with dates of service. If the checklist requires an address of the provider and the consumer to be present on the service note, regardless whether the regulations, rules or law require an address to be present on a service note, and there is no address present on the service note, then the auditor will find noncompliance. Strict adherence to the “Stepford Auditors’ Handbook” is required, not strict adherence to the law.

Looking at the sunny side – Most audit findings are easy-greasy to defend with legal arguments. Have you seen the TV show, “What Not To Wear?” The first, initial meeting of the targeted person on “What Not To Wear” is the original audit results “before a good legal defense.” It’s exaggerated, ugly, and quite shocking.

Then Stacy and Clinton come to the rescue and teach the scraggly, poorly-dressed individual fashion tips and the former frumpy individual is transformed into a fashionable chichi – or a much more palatable overpayment amount.

(In this analogy, my team and I are Stacy and Clinton. I will be Stacy).

One of my favorite examples of a “before” and “after” audit results is the following:

Before (frumpy individual):

""before2
After (fashionable chichi):
photo (3)
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Next time you see an article claiming that a health care provider overbilled the government for Medicare or Medicaid reimbursements, check and see whether the determination was appealed by the provider(s).

The appeal may demonstrate an entirely new perspective on such alleged overpayments than the original audit, because, remember, an auditor would not maintain a job if he or she found compliance.

Medicare Audits: DRG Downcoding in Hospitals: Algorithms Substituting for Medical Judgment, Part 1

This article is written by our good friend, Ed Roche. He is the founder of Barraclough NY, LLC, which is a litigation support firm that helps us fight against extrapolations.

e-roche

The number of Medicare audits is increasing. In the last five years, audits have grown by 936 percent. As reported previously in RACmonitor, this increase is overwhelming the appeals system. Less than 3 percent of appeal decisions are being rendered on time, within the statutory framework.

It is peculiar that the number of audits has grown rapidly, but without a corresponding growth in the number of employees for Recovery Audit Contractors (RACs). How can this be? Have the RAC workers become more than 900 percent more efficient? Well, in a way, they have. They have learned to harness the power of big data.

Since 1986, the ability to store digital data has grown from 0.02 exabytes to 500 exabytes. An exabyte is one quintillion bytes. Every day, the equivalent 30,000 Library of Congresses is put into storage. That’s lots of data.

Auditing by RACs has morphed into using computerized techniques to pick targets for audits. An entire industry has emerged that specializes in processing Medicare claims data and finding “sweet spots” on which the RACs can focus their attention. In a recent audit, the provider was told that a “focused provider analysis report” had been obtained from a subcontractor. Based on that report, the auditor was able to target the provider.

A number of hospitals have been hit with a slew of diagnosis-related group (DRG) downgrades from internal hospital RAC teams camping out in their offices, continually combing through their claims data. The DRG system constitutes a framework that classifies any inpatient stay into groups for purposes of payment.

The question then becomes: how is this work done? How is so much data analyzed? Obviously, these audits are not being performed manually. They are cyber audits. But again, how?

An examination of patent data sheds light on the answer. For example, Optum, Inc. of Minnesota (associated with UnitedHealthcare) has applied for a patent on “computer-implemented systems and methods of healthcare claim analysis.” These are complex processes, but what they do is analyze claims based on DRGs.

The information system envisaged in this patent appears to be specifically designed to downgrade codes. It works by running a simulation that switches out billed codes with cheaper codes, then measures if the resulting code configuration is within the statistical range averaged from other claims.

If it is, then the DRG can be downcoded so that the revenue for the hospital is reduced correspondingly. This same algorithm can be applied to hundreds of thousands of claims in only minutes. And the same algorithm can be adjusted to work with different DRGs. This is only one of many patents in this area.

When this happens, the hospital may face many thousands of downgraded claims. If it doesn’t like it, then it must appeal.

Here there is a severe danger for any hospital. The problem is that the cost the RAC incurs running the audit is thousands of time less expensive that what the hospital must spend to refute the DRG coding downgrade.

This is the nature of asymmetric warfare. In military terms, the cost of your enemy’s offense is always much smaller than the cost of your defense. That is why guerrilla warfare is successful against nation states. That is why the Soviet Union and United States decided to stop building anti-ballistic missile (ABM) systems — the cost of defense was disproportionately greater than the cost of offense.

Hospitals face the same problem. Their claims data files are a giant forest in which these big data algorithms can wander around downcoding and picking up substantial revenue streams.

By using artificial intelligence (advanced statistical) methods of reviewing Medicare claims, the RACs can bombard hospitals with so many DRG downgrades (or other claim rejections) that it quickly will overwhelm their defenses.

We should note that the use of these algorithms is not really an “audit.” It is a statistical analysis, but not done by any doctor or healthcare professional. The algorithm could just as well be counting how many bags of potato chips are sold with cans of beer.

If the patient is not an average patient, and the disease is not an average disease, and the treatment is not an average treatment, and if everything else is not “average,” then the algorithm will try to throw out the claim for the hospital to defend. This has everything to do with statistics and correlation of variables and very little to do with understanding whether the patient was treated properly.

And that is the essence of the problem with big data audits. They are not what they say they are, because they substitute mathematical algorithms for medical judgment.

EDITOR’ NOTE: In Part II of this series, Edward Roche will examine the changing appeals landscape and what big data will mean for defense against these audits. In Part III, he will look at future scenarios for the auditing industry and the corresponding public policy agenda that will involve lawmakers.

 

Another Win for the Good Guys! RAC Auditors Cannot Look Back Over 3 Years!!! (BTW: We Already Knew This -Shhhhh!)

I love being right – just ask my husband.

I have argued for years that government auditors cannot go back over three years when conducting a Medicaid/Care audit of a health care provider’s records, unless there are credible allegations of fraud. See blog.

42 CFR 455.508 states that “[a]n entity that wishes to perform the functions of a Medicaid RAC must enter into a contract with a State to carry out any of the activities described in § 455.506 under the following conditions:…(f) The entity must not review clams that are older than 3 years from the date of the claim, unless it receives approval from the State.”

Medicaid RAC is defined as “Medicaid RAC program means a recovery audit contractor program administered by a State to identify overpayments and underpayments and recoup overpayments.” 42 CFR 455. 504.

From the definition of a Medicaid RAC (Medicare RAC is similarly defined), albeit vague, entities hired by the state to identify over and underpayments are RACs. And RACs are prohibited from auditing claims that are older than 3 years from the date of the claim.

In one of our recent cases, our client, Edmond Dantes, received a Tentative Notice of Overpayment from Public Consulting Group (PCG) on May 13, 2015. In a Motion for Summary Judgment, we argued that PCG was disallowed to review claims prior to May 13, 2012. Of the 8 claims reviewed, 7 claims were older than May 13, 2012 – one even went back to 2009!

The Administrative Law Judge (ALJ) at the Office of Administrative Hearings (OAH) agreed. In the Order Granting Partial Summary Judgment, the ALJ opined that “[s]tatutes of limitation serve an important purpose: to afford security against stale demands.”

Accordingly, the ALJ threw out 7 of the 8 claims for violating the statute of limitation. With one claim left, the amount in controversy was nominal.

A note as to the precedential value of this ruling:

Generally, an ALJ decision is not binding on other ALJs. The decisions are persuasive. Had DHHS appealed the decision and the decision was upheld by Superior Court, then the case would have been precedent; it would have been law.

Regardless, this is a fantastic ruling , which only bolsters my argument that Medicaid/care auditors cannot review claims over 3 years old from the date of the claim.

So when you receive a Tentative Notice of Overpayment, after contacting an attorney, look at the reviewed claims. Are those reviewed claims over 3 years old? If so, you too may win on summary judgment.

All Medicare/Caid Health Care Professionals: Start Contracting with Qualified Translators to Comply with Section 1557 of the ACA!!

Being a health care professional who accepts Medicare and/ or Medicaid can sometimes feel like you are Sisyphus pushing the massive boulder up a hill, only to watch it roll down, over and over, with the same sequence continuing for eternity. Similarly, sometimes it can feel as though the government is the princess sleeping on 20 mattresses and you are the pea that is so small and insignificant, yet so annoying and disruptive to her sleep.

Well, effective immediately – that boulder has enlarged. And the princess has become even more sensitive.

boulder

On May 18, 2016, the Department of Health and Human Services (HHS) published a Final Rule to implement Section 1557 of the Affordable Care Act (ACA). Section 1557 of the ACA has been on the books since the ACA’s inception in 2010. However, not until 6 years later, did HSD finally implement regulations regarding Section 1557. 81 Fed. Reg. 31376.

The Final Rule became effective July 18, 2016. You are expected to be compliant with the rule’s notice requirements, specifically the posting of a nondiscrimination notice and statement and taglines within 90 days of the Final Rule – October 16, 2016. So you better giddy-up!!

First, what is Section 1557?

Section 1557 of the ACA provides that an individual shall not, on the basis of race, color, national origin, sex, age, or disability, be

  • excluded from participation in,
  • denied the benefits of, or
  • subjected to discrimination under

all health programs and activities that receive federal financial assistance through HHS, including Medicaid, most Medicare, student health plans, Basic Health Program, and CHIP funds; meaningful use payments (which sunset in 2018); the advance premium tax credits; and many other programs.

Section 1557 is extremely broad in scope. Because it is a federal regulation, it applies to all states and health care providers in all specialties, regardless the size of the practice and regardless the percentage of Medicare/caid the agency accepts.

HHS estimates that Section 1557 applies to approximately 900,000 physicians. HHS also estimates that the rule will cover 133,343 facilities, such as hospitals, home health agencies and nursing homes; 445,657 clinical laboratories; 1300 community health centers; 40 health professional training programs; Medicaid agencies in each state; and, at least, 180 insurers that offer qualified health plans.

So now that we understand Section 1557 is already effective and that it applies to almost all health care providers who accept Medicare/caid, what exactly is the burden placed on the providers? Not discriminating does not seem so hard a burden.

Section 1557 requires much more than simply not discriminating against your clients.

Section 1557 mandates that you will provide appropriate aids and services without charge and in a timely manner, including qualified interpreters, for people with disabilities and that you will provide language assistance including translated documents and oral interpretation free of charge and in a timely manner.

In other words, you have to provide written materials to your clients in their spoken language. To ease the burden of translating materials, you can find a sample notice and taglines for 64 languages on HHS’ website. See here. The other requirement is that you provide, for no cost to the client, a translator in a timely manner for your client’s spoken language.

In other words, you must have qualified translators “on call” for the most common 15, non-English languages in your state. You cannot rely on friends, family, or staff. You also cannot allow the child of your client to act as the interpreter. The clients in need of the interpreters are not expected to provide their own translators – the burden is on the provider. The language assistance must be provided in a “timely  manner. “Further, these “on call” translators must be “qualified,” as defined by the ACA.

I remember an English teacher in high school telling the class that there were two languages in North Carolina: English and bad English. Even if that were true back in 19XX, it is not true now.

Here is a chart depicting the number of non-English speakers in North Carolina in 1980 versus 2009-2011:

languages

As you can see, North Carolina has become infinitely more diverse in the last three decades.

And translators aren’t free. According to Costhelper Small Business,

Typical costs:
  • Interpreting may take place in person, over the phone or via video phone.
  • In-person interpreters typically cost $50-$145 per hour. For example, American Language Services offers interpreters starting at $100 per hour (or $125 for sign language) and a two-hour minimum is required.
  • Phone interpreters typically cost $1.25-$3 per minute. Language Translation, Inc. offers a flat fee of $1.88 per minute for phone interpreting, for example.
  • Video interpreters typically range from $1.75 to $7 per minute. For instance, LifeLinks offers video interpreting from $2.25 per minute for any language and $2.95 for sign language. A 15-minute minimum is common for phone or video interpreting.

It seems likely that telehealth may be the best option for health care providers considering the cost of in-person translations. Of course, you need to calculate the cost of the telehealth equipment and the savings you project over time to determine whether the investment in telehealth equipment is financially smart.

In addition to agencies having access to qualified translators, agencies with over 15 employees must designate a single employee who will be responsible for Section 1557 compliance and to adopt a grievance procedure for clients. Sometimes this may mean hiring a new employee to comply.

The Office of Civil Rights (“OCR”) at HHS is the enforcer of Section 1557. OCR has been enforcing Section 1557 since its inception in 2010 – to an extent.

However, expect a whole new policing of Section 1557 now that we have the Final Rule from HHS.