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…
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.
Judge Orders State’s Termination of Provider’s Medicaid Contract To Be REVERSED, Despite the Unilateral Termination!!
THE CASES LISTED BELOW ARE ILLUSTRATIVE OF THE MATTERS HANDLED BY THE FIRM. CASE RESULTS DEPEND UPON A VARIETY OF FACTORS UNIQUE TO EACH CASE. NOT ALL CASE RESULTS ARE PROVIDED. CASE RESULTS DO NOT GUARANTEE OR PREDICT A SIMILAR RESULT IN ANY FUTURE CASE UNDERTAKEN BY THE LAWYER.
[The names and services involved have been changed to protect the innocent. Lawyers have so many rules to follow…probably due to litigation].
Imagine that the State of North Carolina knocks on your office door and informs you that you are no longer allowed to accept Medicaid and/or Medicare reimbursement rates. That for whatever reason, you are no longer allowed to bill for Medicaid and/or Medicare services. You would expect a reason, right? You would expect the reason to be correct, right?
But what if the reason is invalid?
A North Carolina administrative judge recently held that the State’s reason for terminating a Medicaid provider’s contract must be accurate, and REVERSED the State’s decision to terminate its Medicaid contract with my client. Here’s the story:
The State terminated my client’s contract to provide chiropractic services.
In this case it was a bit of a duress contract (as are most Medicaid contracts) – a “take or leave it” offer to the local service provider. If you are a provider and want to continue to serve Medicaid recipients, you have no choice but to sign whatever contract the State gives you. You cannot negotiate. You’d be told to sign the contract “as is,” or you do not provide services. I know of a provider who, before he signed a contract with the State, crossed out a number of clauses. The State just sent him a clean, un-altered contract, same as the original, and told him sign it, no changes allowed.
Going back to my case…
My client is a provider that provides chiropractic services. In this case, the State inaccurately claimed that my client provided services without a proper license.
Upon the State’s termination of my client’s contract for chiropractic services, we filed a petition to the Office of Administrative Hearings in 2013 and asked the administrative law judge for a temporary restraining order, a motion to stay the termination, and a Preliminary Injunction to enjoin the State from terminating my client’s Medicaid provider contract.
The administrative law judge (ALJ) issued the temporary restraining order in May 2013. According to judge, we demonstrated a likelihood of success on the merits and that any failure to award the injunction would cause irreparable harm.
Obtaining an injunction, however, was not a complete victory. We had won an opening battle, but not the war.
A temporary injunction is exactly that…temporary. We had two additional hurdles to overcome: (1) a hearing at which we would have to prove to the judge that we were likely to succeed and the irreparable harm would be so irreparable that the judge should award us a longer injunction, at least until we could have a full hearing on the merits; and (2) a final hearing on the merits.
We received the Final Decision from the ALJ last week. The judge found that my client performed its contractual and legal obligations and that the State acted erroneously in determining that my client had breached its contract. The judge found the weight of the evidence sufficient to prove that my client provided services with a proper license.
If you think a 2 year injunction is pretty long, from May 2013 to now, you are right.
But think about this…from May 2013, through today and into the foreseeable future, as long as the contract is in effect, my client has been and will be able to provide medically necessary chiropractic services to those in need and receive reimbursements for those medically necessary services. This case shows why it is important for providers to assert their rights when those are violated.
And it shows also that the State is not allowed to arbitrarily violate those provider rights.
NC Medicaid Reimbursement Rates for Primary Care Physicians Slashed; Is a Potential NC Lawsuit Looming?
Here is my follow-up from yesterday’s blog post, “NC Docs Face Retroactive Medicaid Rate Cut.”
Nearly one-third of physicians say they will not accept new Medicaid patients, according to a new study. Is this shocking in light of the end of the ACA enhanced payments for primary physicians, NC’s implementation of a 3% reimbursement rate cut for primary care physicians, and the additional 1% reimbursement rate cut? No, this is not shocking. It merely makes economic sense.
Want more physicians to accept Medicaid? Increase reimbursement rates!
Here, in NC, the Medicaid reimbursement rates for primary care physicians and pediatricians have spiraled downward from a trifecta resulting in an epically, low parlay. They say things happen in threes…
(1) With the implementation of the Affordable Care Act (ACA), the Medicaid reimbursement rate for certain primary care services increased to reimburse 100% of Medicare Cost Share for services paid in 2013 and 2014. This enhanced payment stopped on January 1, 2015.
(2) Concurrently on January 1, 2015, Medicaid reimbursement rates for evaluation and management and vaccination services were decreased by 3% due to enactments in the 2013 NC General Assembly session.
(3) Concurrently on January 1, 2015, Medicaid reimbursement rates for evaluation and management and vaccination services were decreased by 1% due to enactments in the 2014 NC General Assembly session.
The effect of the trifecta of Medicaid reimbursement rates for certain procedure codes for primary care physicians can be seen below.
As a result, a physician currently receiving 100% of the Medicare rates will see a 16% to 24% reduction in certain E&M and vaccine procedure codes for Medicaid services rendered after January 1, 2015.
Are physicians (and all other types of health care providers) powerless against the slashing and gnashing of Medicaid reimbursement rates due to budgetary concerns?
No! You are NOT powerless! Be informed!!
Section 30(A) of the Medicaid Act states that:
“A state plan for medical assistance must –
Provide such methods and procedures relating to the utilization of, and the payment for, care and services available under the plan (including but not limited to utilization review plans as provided for in section 1396b(i)(4) of this title) as may be necessary to safeguard against unnecessary utilization of such care and services and to assure that payments are consistent with efficiency, economy, and quality of care and are sufficient to enlist enough providers so that care and services are available under the plan at least to the extent that such care and services are available to the general population in the geographic area.”
Notice those three key goals:
- Quality of care
- Sufficient to enlist enough providers
- So that care and services are available under the plan at least to the extent that such care and services are available to the general population in the geographic area
Courts across the country have held that low Medicaid reimbursement rates which are set due to budgetary factors and fail to consider federally mandated factors, such as access to care or cost of care, are in violation of federal law. Courts have further held that Medicaid reimbursement rates cannot be set based solely on budgetary reasons.
For example, U.S. District Court Judge Adalberto Jordan held in a 2014 Florida case that:
“I conclude that while reimbursement rates are not the only factor determining whether providers participate in Medicaid, they are by far the most important factor, and that a sufficient increase in reimbursement rates will lead to a substantial increase in provider participation and a corresponding increase to access to care.”
“Given the record, I conclude that plaintiffs have shown that achieving adequate provider enrollment in Medicaid – and for those providers to meaningfully open their practices to Medicaid children – requires compensation to be set at least at the Medicare level.
Judge Jordan is not alone. Over the past two decades, similar cases have been filed in California, Illinois, Massachusetts, Oklahoma, Texas, and D.C. [Notice: Not in NC]. These lawsuits demanding higher reimbursement rates have largely succeeded.
There is also a pending Supreme Court case that I blogged about here.
Increasing the Medicaid reimbursement rates is vital for Medicaid recipients and access to care. Low reimbursement rates cause physicians to cease accepting Medicaid patients. Therefore, these lawsuits demanding increased reimbursement rates benefit both the Medicaid recipients and the physicians providing the services.
According to the above-mentioned study, in 2011, “96 percent of physicians accepted new patients in 2011, rates varied by payment source: 31 percent of physicians were unwilling to accept any new Medicaid patients; 17 percent would not accept new Medicare patients; and 18 percent of physicians would not accept new privately insured patients.”
It also found this obvious fact: “Higher state Medicaid-to-Medicare fee ratios were correlated with greater acceptance of new Medicaid patients.”
Ever heard the phrase: “You get what you pay for.”?
A few months ago, my husband brought home a box of wine. Yes, a box of wine. Surely you have noticed those boxes of wine at Harris Teeter. I tried a sip. It was ok. I’m no wine connoisseur. But I woke the next morning with a terrible headache after only consuming a couple of glasses of wine. I’m not sure whether the cheaper boxed wine has a higher level of tannins, or what, but I do not get headaches off of 2 glasses of wine when the wine bottle is, at least, $10. You get what you pay for.
The same is true in service industries. Want a cheap lawyer? You get what you pay for. Want a cheap contractor? You get what you pay for.
So why do we expect physicians to provide the same quality of care in order to receive $10 versus $60? Because physicians took the Hippocratic Oath? Because physicians have an ethical duty to treat patients equally?
While it is correct that physicians take the Hippocratic Oath and have an ethical duty to their clients, it’s for these exact reasons that many doctors simply refuse to accept Medicaid. It costs the doctor the same office rental, nurse salaries, and time devoted to patients to treat a person with Blue Cross Blue Shield as it does a person on Medicaid. However, the compensation is vastly different.
Why? Why the different rates if the cost of care is equal?
Unlike private insurance, Medicaid is paid with tax dollars. Each year, the General Assembly determines our Medicaid budget. Reducing Medicaid reimbursement rates, by even 1%, can affect the national Medicaid budget by billions of dollars.
But, remember, rates cannot be set for merely budgetary reasons…
Is a potential lawsuit looming in NC’s not so distant future???
This is a story from NC Health News by Rose Hoban…a follow up blog to come…
In the 2014 state budget passed last August, state lawmakers inserted what could be considered a poison pill for Medicaid providers: a 3 percent pay cut that for specialists could be effective retroactively to January 2014.
Primary care providers such as pediatricians, internists and family doctors will see the same pay cut, effective back to Jan. 1, 2015.
But the cut is only now being implemented.
“All of us were optimistic that the cut wouldn’t happen,” said Karen Smith, a family doctor in Raeford who runs her own practice.
Smith said she and other physicians have been writing, calling and talking to legislators, working to convince them not to implement the cut.
But she and thousands of other primary care providers received notification late last week that on March 1 they would begin seeing the 3 percent cut.
And for specialists, the reduction will go back 14 months.
“It’s quite a hit,” said Elaine Ellis, spokeswoman for the North Carolina Medical Society.
Failed shared-savings plan behind the problem
The origin of the 3 percent cut goes back to the 2013 budget for Medicaid, the program that covers health care for low-income children, some of their parents, pregnant women and low-income seniors. In 2013, the federal government paid North Carolina 65.5 percent of every dollar billed for Medicaid-eligible care, while the state covered the other 34.5 percent (The rate, which changes annually, is 65.9 percent for 2015).
In 2013, the Medicaid budget had grown to close to $4 billion in state dollars, and lawmakers at the General Assembly were looking for ways to trim costs. So they devised a “shared-savings” program, in which Medicaid providers would take a 3 percent rate cut that would be collected by the state Department of Health and Human Services. If doctors and hospitals saved money by operating more efficiently, DHHS would share those savings back with the providers, effectively reducing the amount of the 3 percent cut.
But DHHS needed federal approval to initiate the program, which would have been complicated. The agency never submitted a plan to the federal government, so neither part of the program was initiated.
That created a problem for lawmakers, who had calculated the savings from the rate cut into their state budget. When lawmakers returned to Raleigh in 2014 to adjust the state’s biennial budget, they implemented the rate cut retroactively to Jan 1, 2014 for specialists. Primary care providers, such as Karen Smith, had their rate cut put off until the beginning of 2015.
Officials from the Medical Society have been gathering numbers from around the state and are finding that some specialty practices could owe tens of thousands of dollars that would need to be repaid to state coffers.
The need for retroactive payment is in part a logistical problem: The computerized Medicaid management information system, known as NCTracks, has not been able to process the cuts. NCTracks has had technical issues since it was rolled out in mid-2013; at that time, glitches in the system created months of delays and tens of thousands of dollars in unpaid services for providers.
“Requiring these [specialist] medical practices to pay back 3 percent of what the state has already paid them for the last 14 months would wreak havoc with the finances of these businesses – really, any business would struggle to recover from such a financial blow,” Robert Schaaf, a Raleigh radiologist and president of the Medical Society, wrote Monday in a press release.
And primary care doctors like Smith are also fretting over paying back 3 percent of what she earned from Medicaid for the past two months.
“Practices such as my own are functioning on an operating budget that’s month by month,” said Smith, who said that a great many of her patients are Medicaid recipients.
“We simply do not have that type of operating reserve to allow for that,” she said.
The cuts will be especially tough for rural providers, who have high numbers of Medicaid patients, said Greg Griggs from the N.C. Academy of Family Practitioners (The Academy of Family Practitioners is a North Carolina Health News sponsor).
“It’s one thing to make the cuts going forward, but to take money back, especially for that period of time, is pretty significant for people who’ve been willing to take care of our most needy citizens,” Griggs said.
“It’s pretty bad,” he said, “and its not like Medicaid pays extraordinarily well to begin with.”
In addition to the state cut is a federal cut of 1 percent to Medicaid reimbursements for primary care providers that went into effect on Jan. 1.
As part of the Affordable Care Act, primary care providers like Smith got a bump in reimbursement last year, but that ran out with the new year. Smith said that legislators in other states found ways to keep paying that enhanced rate for primary care doctors.
“We were hoping our legislators would do the same,” she said.
Instead, Smith finds herself talking to her staff about possible reductions, and she’s hearing from providers in her area that they’re throwing in the towel.
“I already have colleagues who’ve left practice of medicine in this area,” she said. “My personal physician is no longer in this area. Another colleague who was a resident three years in front of me told me he cannot deal with the economics of practicing like this anymore.”
Smith acknowledged that North Carolina’s Medicaid program has a slightly higher reimbursement to physicians than surrounding states. But she said many of her patients are quite ill.
“We are in the stroke belt,” she said, referring to the high rate of strokes in eastern North Carolina. “When we look at how sick our patients are compared to other states, is it equivalent? Are we measuring apples to apples?
Medicare and Medicaid Appeal Deadlines and Procedures: Laws that EVERY Health Care Provider Should Know
If you are a physician, most likely, you are not a lawyer. And vice versa. While there are exceptions, generally, the professions of physicians and attorneys are mutually exclusive. Personally, one reason I went to law school is because I am awful at math. However, presumably, I would be able to write a killer essay on early Shakespearean comedies, much unlike my primary care physician.
That said, there are things that every physician who accepts Medicare or Medicaid should know: (1) appeal deadlines; and (2) appeal procedures.
Ignoring either appeal deadlines or procedures does not make them go away.
They exist. And if you fail to appeal an adverse decision within the required timeframe, you will be barred from appeal. Knowing the appeal deadline is imperative!
Putting off hiring legal counsel can lead to missing an appeal deadline.
A client came to me a year or so ago. We will call him Artagnan, or Art, for short. Art had received a Tentative Notice of Overpayment (TNO) alleging that Art owed the Department of Health and Human Service (DHHS) $1,780,534.15. Art hired Attorney Richie. Richie properly appealed the TNO to a reconsideration review and got the amount decreased by approximately $500.
Per NC statute, you have 60 days to appeal a reconsideration review decision to the Office of Administrative Hearings (OAH). Art asked Richie to appeal the reconsideration review and paid Richie additional money for the appeal.
Art came to me for a consultation over 90 days after the reconsideration review decision, and we found that no appeal had been filed. Obviously, Art was upset.
I offered to file a motion throwing ourselves on the mercy of the court, asking for an exception due to the former attorney’s failure to appeal and Art’s reliance on Richie to appeal. I warned Art that this was a longshot and, most likely, we would lose.
And we did.
The Judge determined (accurately, in my opinion) that OAH has no jurisdiction over the matter once the 60 days has lapsed.
Moral of the story: Know the appeal deadlines. Abide by the appeal deadlines.
Appeal deadlines (in NC) (these are the general rules and exceptions exist, so go to a lawyer for advice as to your particular situation):
For a Medicaid reconsideration review – 15 days
For a Medicaid petition to OAH – 60 days
For a Medicare redetermination – 120 days
For a Medicare reconsideration – 180 days
For a Medicare ALJ Hearing – 60 days
Procedures to appeal
There are different avenues to follow for appeals depending on the adverse decision that you are appealing.
For example, for a Medicare payment dispute, there are 5 levels of appeal.
The levels are:
- First Level of Appeal: Redetermination by a Medicare carrier, fiscal intermediary (FI), or Medicare Administrative Contractor (MAC).
- Second Level of Appeal: Reconsideration by a Qualified Independent Contractor (QIC)
- Third Level of Appeal: Hearing by an Administrative Law Judge (ALJ) in the Office of Medicare Hearings and Appeals
- Fourth Level of Appeal: Review by the Medicare Appeals Council
- Fifth Level of Appeal: Judicial Review in Federal District Court
For a Medicaid payment dispute, there are only, generally, 3 levels of appeal.
The levels are:
- Reconsideration review
- Petition for Contested Case at OAH
- Judicial Review at Superior Court
It is imperative that you and your lawyer follow each step without attempting to jump a level. There is a legal requirement to “exhaust your administrative remedies” prior to going to court. For example, if a Medicaid provider filed a lawsuit in Superior Court because of a TNO without first going through the reconsideration review and OAH, the Superior Court judge will dismiss the claim for failing to exhaust your administrative remedies.
Therefore, any health care provider who accepts Medicare and/or Medicaid needs to be highly aware of appeal deadlines and appeal procedures. Allowing too much time to pass before hiring your attorney and filing an appeal can result in a loss of appeal rights.
For those of you who follow my blog, you know that the single state agency in New Mexico, Human Services Department (HSD), accused 15 behavioral health care providers, which made up 87% of the mental health care in NM, of credible allegations of fraud back in June 2013. HSD immediately ceased paying all companies’ Medicaid and non-Medicaid reimbursements causing most of the companies to go out of business.
Easter Seals El Mirador is one of those companies accused of fraud.
Then, a year later, May 2014, the Attorney General’s office clears Easter Seals El Mirador (ESEM) of any fraud. ESEM is the second company cleared of fraud. In other words, HSD accused 15 companies of fraud, and the first two reviewed by the AG were determined to have committed no fraud. Oops. Sorry. We were mistaken.
But you can’t fix a broken egg. The best you can do is clean it up.
But, no, HSD does not accept the AG’s determination that ESEM committed no fraud, and on or about June 25, 2014, HSD re-referred ESEM to the AG for credible allegations of fraud again.
Instead of me going on a rampage as to the violations committed (and alleged in our complaint), let me just explain that through the first referral and re-referral of credible allegations of fraud, HSD is withholding all ESEM’s reimbursements.
After the re-referral, in June 2014, we, on behalf of ESEM, and with the help of local counsel, Bryan Davis, filed a Complaint requesting declaratory judgment followed by a Motion for Summary Judgment.
Last Friday, January 23, 2015, the New Mexico judge agreed with us holding that HSD’s “temporary” withhold of reimbursements violates due process and that ESEM has a right to a fair hearing.
Here is an article from the Santa Fe New Mexican written by Patrick Malone:
Judge: State Human Services Department violated due process law
In a harsh rebuke of the 2013 behavioral health shake-up that thrust mental health care for indigent New Mexicans into disarray, a Santa Fe judge on Friday ruled that the state Human Services Department had denied due process to one of the providers accused of fraud.
State District Judge Francis Mathew ordered the department to hold a hearing that would allow Santa Fe-based Easter Seals El Mirador to hear the specific allegations against it for the first time — and give the provider a chance to respond to those claims. The ruling could open the door for other providers affected by the shake-up to do the same, according to the nonprofit’s lawyer.
In the 19 months since audit findings spurred Gov. Susana Martinez’s administration to cut off Medicaid funds to Easter Seals El Mirador and other providers in the state who treat Medicaid patients, the nonprofit has not been shown the audit findings that outline exactly what it is accused of doing wrong. Nor has the agency been afforded the chance to refute any of the findings. Meanwhile, the Human Services Department has withheld more than $600,000 in Medicaid funds that were owed to Easter Seals El Mirador at the time of its termination, citing federal guidelines that allow temporary withholding of funds from agencies that are suspected of Medicaid fraud.
“I don’t believe that 19 months is temporary,” Mathew said, particularly since the Human Services Department has prolonged the investigation by referring Easter Seals El Mirador’s case back to the Attorney General’s Office after the nonprofit already had been cleared once.
The judge blasted the department’s process from the outset of the shake-up.
“I think it’s a due-process violation,” he said.
In June 2013, Human Services halted Medicaid funding to 15 organizations that provided mental health and substance abuse services to low-income patients. The state pointed to audit findings that indicated the agencies had overbilled Medicaid by an estimated $36 million as grounds for the decision. The Martinez administration brought in five Arizona providers as replacements and paid them $24 million to set up shop in New Mexico.
This month, one of the replacement providers informed the state that it is financially failing and plans to pull out of New Mexico at the end of March, bringing new disruptions to a fragile population still reeling from the earlier provider changes.
“We have an obligation to protect taxpayer dollars and to help ensure that New Mexicans most in need receive vital behavioral health services,” said Matt Kennicott, a spokesman for Human Services. “We will provide a hearing on the credible allegations of fraud.”
He said the department has not yet decided whether it will appeal the judge’s ruling. Easter Seals El Mirador’s lawyer, Bryan Davis, said he expects the department to do so.
When Judge Mathew issues a written ruling in the days ahead, the Human Services Department will have 90 days to set a hearing date. Within 30 days, the department will be required to share with Easter Seals El Mirador the evidence it plans to present at the hearing. That could yield the agency’s first glimpse at the state’s basis for accusing it of fraud. The behavioral health audit that led to the shake-up has been largely shielded from public view while the Attorney General’s Office conducts a criminal investigation.
On Friday, Attorney General Hector Balderas, who just took office this month, informally asked lawmakers for an additional $1 million in hopes of speeding up the probe to complete it within the next six to eight months. Balderas inherited the investigation from his predecessor, Gary King, whose office has faced criticisms from lawmakers and the ousted providers for its slow pace. To date, three investigations have been completed, four are actively being investigated and eight have not yet begun, Balderas’ spokesman said.
Easter Seals El Mirador and the Counseling Center of Alamogordo have been cleared of fraud by the Attorney General’s Office, but Human Services referred Easter Seals El Mirador back to the attorney general for a follow-up investigation.
Mark Johnson, chief executive officer of Easter Seals El Mirador, said he is confident that the organization would be cleared of any wrongdoing in a fair hearing.
With at least one of the replacement providers from Arizona already leaving the state and the New Mexico providers financially hobbled or already out of business because of the shake-up, Johnson said, he fears the most serious consequences of the Martinez administration’s abrupt actions lie ahead.
“There is no safety net. There is no New Mexico company that can fill the systemic void for services for the poor people who need them,” Johnson said. “It’s catastrophic.”
This is a copy of an article written by William Baude on SCOTUSblog.
In the article, William analyzes the oral arguments for Armstrong v. Exceptional Child Center, a very important Supreme Court case heard by the Justices January 20, 2015. If you don’t recall the lawsuit, see my blog: “Low Medicaid Reimbursement Rates Violate the Supremacy Clause?!… The Supreme Court to Weigh In!”
Here is the analysis:
The Supreme Court has heard a lot of preemption suits, but Tuesday’s arguments in Armstrong v. Exceptional Child Center suggest that the Court has not yet agreed on what exactly the formal underpinnings of those suits are.
The case features a debate about the intersection of two lines of precedent. One line restricts the availability of a federal statutory cause of action unless Congress has deliberately included one. The other line makes a cause of action broadly available when the plaintiff seeks an injunction to enforce a constitutional provision. At issue in this case is whether suits to enforce the preemptive effect of a federal statute are more like constitutional injunctions or statutory suits.
Both lines of precedent were on full display at yesterday’s argument. Shortly after his argument started the state’s counsel, Carl Withroe, was pressed with questions about the many prior preemption cases the Court had heard. Justice Ruth Bader Ginsburg adverted to a list of fifty-seven cases attached to the Medicaid recipients’ brief that are alleged to fail under the state’s theory. Withroe made several different attempts to distinguish those cases, although he did not seem to fully satisfy the Court. Towards the end of Withroe’s argument, Justice Anthony Kennedy asked “Did I miss something? … I thought you were going to give us a principled way to say why this case is different from our other preemption cases.”
Deputy Solicitor General Ed Kneedler took the podium next, attempting to supply that principled basis. He argued that Spending Clause legislation, and Medicaid specifically, was different from the usual preemption case for reasons rooted in the history of equity practice. Traditional equitable remedies, he said, could vindicate a person’s “liberty,” “property,” or “business,” but Medicaid was none of those things because it was a spending program created by a cooperative agreement with the state. Once again, Justice Kennedy chimed in at the end of Kneedler’s time to question whether his theory really distinguished one of the Court’s prior cases, American Trucking Associations v. City of Los Angeles.
Representing the Medicaid recipients, attorney James Piotrowski also faced skepticism about the implications of his position, and seemed to embrace them more than to distinguish them. He openly conceded that his clients would not have a right to sue under the Court’s statutory cause of action cases or under Section 1983. But the Supremacy Clause suit, he stressed, would seek only the narrow remedy of an injunction.
Justice Samuel Alito asked Piotrowksi whether his argument implied that someone could challenge a state’s decision to legalize marijuana as preempted by federal drug laws. Yes, Piotrowksi agreed, so long as Article III standing was satisfied, there would indeed be a cause of action. (Though Justice Alito did not specifically mention a suit by a state, the question might have been inspired by the recent marijuana preemption lawsuit filed in the Supreme Court’s original jurisdiction by two states — Oklahoma and Nebraska.)
And when Chief Justice John Roberts suggested to Piotrowski that his position would open “the courthouse door to everybody who says that federal law was not followed,” Piotrowski agreed: “Yes, your honor, that’s right. We open the courthouse doors.”
At the same time, Piotrowski also conceded that Congress could expressly preclude a preemption suit if it spoke clearly. The key, he argued, is that Congress’s decision not to create a statutory cause of action was not the same as a congressional decision to prohibit a cause of action that came from other background legal principles. Justice Kennedy did not ask Piotrowski any questions.
Lest this abbreviated summary make it seem like argument followed a clear path, I should say that there were also plenty of side points raised throughout. There were questions about how the state’s reimbursement rates related to its formula, a question from Justice Elena Kagan about why nobody from the federal Department of Health and Human Services had signed the federal government’s amicus brief, a response from Chief Justice Roberts about whether DHS was just trying to help the health-care sector “get a bigger chunk of the federal budget,” and a series of questions from Justice Stephen Breyer about the doctrine of “primary jurisdiction,” including a nostalgic reminiscence about the Civil Aeronautics Board “of blessed memory.” But the Justices also constantly reminded one another that the question was whether the suit could be brought, not whether it should prevail.
Four Justices have already answered that question in their dissent three years ago in Douglas v. Independent Living Center. Over the next few months, we will see if they have persuaded any of their colleagues to join them.
Tomorrow is a big day. Not only will most of us return to work after a long weekend, but the Supreme Court will hear oral arguments on a very important issue.
On January 20, 2015, (tomorrow) the Supreme Court of the United States will hear oral arguments on a very important issue that will affect every health care provider in America who accepts Medicaid, and, yet, there has been very little media coverage over this lawsuit.
Legal Issue: Does a Medicaid provider have a private right of action under the Medicaid Act to bring a lawsuit against states under the Supremacy clause.
The Issue Translated from Legalese to English: Can a Medicaid provider sue the state in which the provider does business if the provider believes that the Medicaid reimbursement rate for a particular service or product is too low? For example, can a dentist sue NC for a higher Medicaid reimbursement rate for tooth extractions? Can a long-term care facility and/or a home care agency sue due to low Medicaid personal care services (PCS) rates?
It is my opinion that Medicaid providers across the country have not brought enough lawsuits demanding higher Medicaid reimbursement rates. It is without question that Medicaid reimbursement rates across the country are too low. Low reimbursement rates cause health care providers to refuse to accept Medicaid recipients. See my blog NC Health Care Providers Who Accept Medicaid: Thank you!.
If you hold a Medicaid card, you do not automatically have access to good quality health care. You are segregated from the privately insured and the care you receive is not equal. You are limited in your choice of doctors. If you are an adult, you can forget any dental procedures. Even if you aren’t an adult, you require prior approval for almost all services (regardless of whether you are suffering from pain), which will often be denied (or reduced…or require a significant waiting period). You want mental health care? You better get the very least amount of help possible until you prove you need more help. See my blog NC Medicaid Expansion: Bad for the Poor.
And why won’t more health care providers accept Medicaid? The Medicaid reimbursement rates are too low!! The Medicaid reimbursement rates are too low for health care providers to yield a profit…or, in many instances, even cover the overhead. In fact, providers tell me that when they do accept Medicaid, they are forced to accept more privately insured patients to offset the losses from accepting the finite number of Medicaid patients. In many states, the states refuse to cover psychology costs for Medicaid recipients, and other states refuse to cover the costs for PCS.
So, I say, bring on the lawsuits!!! Force states to increase Medicaid reimbursement rates!!
For example, in obstetrics, if the national Medicaid reimbursement rate for ob/gyn visits is $1.00, here, in NC, we reimburse ob/gyns 88¢. Which is why only 34% of North Carolina ob/gyns accept Medicaid. See Kaiser.
So far, across the country, federal courts have held that Medicaid providers do have a private right of action to sue states for low reimbursement rates. In fact, in most cases, the providers have PREVAILED and the states have been forced to pay higher rates!!!
Providers of all types have filed lawsuits across the country disputing the states’ Medicaid reimbursement rates as being too low. For example, in California, between April 2008 and April 2009, five lawsuits were filed against the state of California to stop scheduled reductions in reimbursement rates (on behalf of rehabilitation providers, nonemergency medical transportation providers, pharmacies, physicians, and emergency physicians).
A Florida lawsuit that was settled in December 2014 revolved around a young boy on Medicaid who was suffering from a painful sinus infection. His mother contacted multiple physicians and was denied appointments because the mother and her son were on Medicaid. He was forced to wait almost a week for an appointment. The judge in the case wrote, “I conclude that Florida’s Medicaid program has not compensated primary physicians or specialists at a competitive rate as compared with either that of Medicare or private insurance payers….I further conclude that Florida’s structure for setting physician reimbursement fails to account for statutorily mandated factors in the Medicaid Act, including the level of compensation needed to assure an adequate supply of physicians.”
Over the years, the Supreme Court has vacillated over even determining whether a Medicaid provider has a private right of action under the Medicaid Act to bring a lawsuit against states under the Supremacy clause.
In 2002, the Supreme Court denied certiorari (refused to hear the argument) on this very issue. Coming out of the 9th Circuit (which includes California), a Circuit which has been especially busy with lawsuits arguing Medicaid reimbursement rates are too low, the case of Independent Living Center of California v. Shewry would have squarely addressed this issue. But the Supreme Court denied certiorari and did not hear arguments.
In 2012, the Supreme Court decided to hear arguments on this issue. In Douglas v. Independent Living Center, Medicaid beneficiaries and providers sued the California state Medicaid agency, seeking to enjoin a number of proposed provider payment rate cuts. After the Supreme Court heard oral argument, but before it had issued its decision, the Centers of Medicare and Medicaid Services (CMS) approved California’s state plan amendment containing the rate cuts. Consequently, the Douglas majority held that the case should be sent back to the lower courts to consider the effect of CMS’s approval of the state plan amendment, without deciding whether the beneficiaries and providers had a right to sue.
Now the case Armstrong v. Exceptional Child Center will be heard by the Supreme Court on January 20, 2015.
How did this case come about?
In 2005, the Idaho state legislature passed a law requiring the state Medicaid agency to implement a new methodology to determine provider reimbursement rates, and in 2009, the state Medicaid agency published new, higher rates based, in part, on a study of provider costs. CMS approved the state’s new methodology. However, the new rates never were implemented because the state legislature failed to appropriate sufficient funding, making the refusal to increase the reimbursment rate a budgetary issue. A group of Idaho residential habilitation providers that accept Medicaid sued the Idaho state Medicaid agency and alleged that the state’s failure to implement the new rates conflicted with federal law (the Supremacy Clause).
Section (30)(A) of the Medicaid Act requires state Medicaid agencies to take provider costs into account when setting reimbursement rates. Under case law precedent, the rate must “bear a reasonable relationship to efficient and economical . . . costs of providing quality services.” To deviate from this standard of reasonableness, a state must justify its decisions with more than budgetary reasons.
The argument is that the state’s low reimbursement rate for X service, is too low to provide good quality services and that the low rates were set for purely budgetary reasons.
Once you prove that the reimbursement rates are too low to expect good quality care (which would be fairly easy for almost all Medicaid services in NC), then you argue that the state’s reimbursement rates violate the Supremacy Clause because the federal law requires good quality care.
What is the Supremacy Clause?
The Supremacy Clause can be found in Article VI, Paragraph 2 of the U. S. Constitution. Basically, it establishes that federal law trumps conflicting state laws , even state constitutional provisions, on matters within the Constitution’s grant of powers to the federal government – such as Medicaid..
In this case, we are talking about a state’s Medicaid reimbursement rate violating the federal law requiring that the rate must bear a reasonable relationship to quality of care.
This is not a small matter.
After all is said and done, the Armstrong case, which will be heard by the Supreme Court tomorrow, will be extraordinarily important for Medicaid health care providers. I believe it is obvious which way I hope the Supreme Court decides…in favor of providers!! In favor of a ruling that states are not allowed to underpay health care providers only because the patient holds a Medicaid card.
My wish is that Medicaid providers across the country bring lawsuits against their state to increase Medicaid reimbursement rates…that the providers prevail…that more health care providers accept Medicaid…and that more Medicaid recipients receive quality health care.
Is that too much to ask?
The Supreme Court will most likely publish its opinion this summer.
Its decision could have an extreme impact on both Medicaid providers and recipients. Higher Medicaid reimbursement rates would increase the number of physicians willing to accept Mediaid, which, in turn, would provide more access to care for Medicaid recipients.
Keep in mind, however, the issue before the Supreme Court in Armstrong is narrow. If, for whatever reason, the Supreme Court decides that Medicaid providers do not have a private right to sue under the Supremacy Clause…all is not lost!!! There is more than one way to skin a cat.