Category Archives: Medicaid Recipients

BREAKING: House and Senate appear close to a Medicaid deal!!

In our last post on Medicaid reform, we updated you on the recent bill passed by the North Carolina Senate relating to the long-standing thorn in the side of the General Assembly, especially regarding the states’ budget – the Medicaid program. The Senate’s version of Medicaid reform is quite different from what we have previously seen and is a hodge-podge of managed care and a new idea: “provider-led entities.”

In a strong sign that this proposal is a compromise between competing sides that could end up getting passed, both House and Senate leaders are speaking positively on the record to news media about the prospects for a deal. Given how public the issue is and how big it is (an expected $14.2 billion in North Carolina in the coming year), that means they expect to get a deal done soon. The fact that the issue is so tied up with the budget that is overdue to be passed is a further headwind to passing a bill.

Right now, the bill is in a conference committee of negotiators from the House and Senate to work out an agreement, given the differences between the two chambers.

One major issue that the committee needs to look at is whether there will be a whole new state agency: the “Department of Medicaid.” The Senate endorsed that idea last week.

Our prediction: The legislators will chart a cautious course and not erect a whole new agency at the same time they are overhauling the system.

With Wos having (coincidentally?) just stepped down as Secretary of the Department of Health and Human Services, perhaps the lack of a lightning rod for criticism of DHHS will let the air out of the proposal to remove Medicaid from DHHS’s hands.

Stay tuned.

By Robert Shaw

Robert

The Nine Habits of a Highly Effective Secretary for DHHS

With the recent passing of the torch from Aldona Wos to Rick Brajer (see blog), I’ve been thinking about…

What are the qualifications of a Secretary of DHHS?

What exactly are the qualities that would make a great Secretary of DHHS?  Remember, in Mary Poppins, when the children draft their requirements for a nanny?  Or, better yet, what are the “Seven Habits of a Highly Effective” Secretary for DHHS?  Or…in this case, the “Nine Habits”…

Here are my “Nine Habits of a Highly Effective Secretary of DHHS;” our Secretary of DHHS should have the following:

  1. A health care background
  2. A successful track record of his/her ability to manage large companies or agencies
  3. An understanding of the Medicaid system, and, maybe, even have first-hand knowledge of how the system affects recipients and providers
  4. A relationship with someone on Medicaid or a parent of someone on Medicaid
  5. A working knowledge of clinical coverage policies, reimbursement rates, and regulations surrounding Medicaid
  6. Both the capacity to listen and speak and do both eloquently and genuinely
  7. True empathy about the physical and mental health of Medicaid recipients and about providers, plus have the patience to handle all types of demographic differences
  8. An understanding that he/she is handling tax payers’ money, that redundancy in staff is excess administrative costs, and ability to trim the fat
  9. An ability to communicate with both the Senate and the House and to be frank with both

wosbrajer

Let us analyze the qualifications of Wos that we came to witness over the last few years, as well as, review the qualifications of soon-to-be Sec. Brajer with information to which we are privy.

Let’s see if both, either, or neither have these “Nine Habits of a Highly-Effective Secretary for DHHS.”

  1. Health care background:

Wos: Yes. And, yet, maybe not.  She is an M.D. Although I do not know whether she ever practiced medicine in North Carolina.  According to Wikipedia, (which is never wrong) Wos “prides herself on her work in the field of preventing HIV and AIDS.”  However, I was unable to find a single clinic in which Wos provided services.  While, generally, an “M.D.” automatically bestows a certain aura of understanding health care, I question whether this “M.D.” automatically has a working knowledge of billing for and receiving reimbursements under Medicaid in North Carolina.

Brajer: Hmmmm.  This one is more tricky. The two companies that Brajer owned, Pro-nerve LLC and LipoScience Inc., are health care related, in that Pro-nerve was an intraoperative neuromonitoring (IONM) company and LipoScience sold a diagnostic tool to health care providers.  Arguably, both companies are health care related, at least, in an ancillary way.  However, Brajer is not a health care professional, and, to my knowledge, has never rendered health care services. Furthermore, neither of Brajer’s companies was successful; quite the opposite is true, in fact. From my understanding, one company declared bankruptcy and the other was not far behind.  Which brings us to the next category…

Answer: Both…kinda.

2. A successful track record of his/her ability to manage large entities:

Wos: Prior to acting as the Secretary to DHHS, Wos served as the Ambassador to Estonia until 2006.  What she did besides political functions between 2006 and 2012, I do not know. Acting as an Ambassador does not entail managing large entities.  The most managerial skills that I can find in her background, prior to being appointed Secretary, are related to political fund-raising. Since I would not call her brief reign as Secretary of DHHS a success, I give Wos a “two thumbs down” on this criterion.

Brajer: He managed two companies.  We can bicker as to whether these companies should be considered large…neither employed 17,000 employees.  Regardless, the “successful” criterion appears to be lacking.

Answer: Neither…pickles.

3. An understanding of the Medicaid system:

Wos: “You’re asking me without having all the data available to answer a question,” she told lawmakers on October 8, 2013.  In her defense, she responded as such when asked whether the State was moving toward privatization for Medicaid.  No one could know the answer, except, maybe, McCrory.

On the other hand, the implementation of NCTracks was nothing short of a catastrophe of epic proportion. See blog. See blog.  Anyone with nominal knowledge of the Medicaid system would have, at least, paused to consider keeping HP Enterprises under contract during the switch to NCTracks or pushed back the go-live date.

Brajer: Unknown

Answer: Here’s to hoping that Brajer does.  I’m cheering for you! Go! Fight! Win!

4. A relationship with someone on Medicaid or a parent of someone on Medicaid:

Wos: Unknown.  If I were shaking a proverbial “8 Ball,” it would read, “Doubtful.”

Brajer: Unknown. Perhaps one of his former employees at Pro-nerve, LLC and LipoScience, Inc. is on Medicaid.

Answer: Gimme a ‘B’! B! Gimme a ‘R’! R! Gimme a ‘A’! A! Gimme a ‘J’! J! Gimme a ‘E’! E! Gimme a ‘R’! R! Whats that spell? Brajer!!

5.  A working knowledge of clinical coverage policies, reimbursement rates, and regulations surrounding Medicaid.

Wos: Unknown. Whatever Wos’ knowledge of regulations and clinical coverage policies is or lacked, she, initially, made up for any knowledge lacked with the key hire and quick resignation of Carol Steckel.  Unfortunately, Steckel’s experience was never replaced.

January 2013: “I am pleased to say that we are already taking steps to address some of these issues,” Wos said. “Now, the most important of this is that we have hired Ms. Carol Steckel, a nationally recognized — nationally recognized — expert in Medicaid to run our Medicaid program for the state. Carol is already moving ahead with systemic reviews of operations in this division. She is reviewing and establishing new policies and procedures.”

September 27, 2013: Steckel resigns. And blog.

Brajer: Unknown.

Answer: B! R! A! J! E! R! Let’s go, Brajer!

6. Both the capacities to listen and speak and do both eloquently.

Wos: Wos brandished an ability to speak publicly with ease.  Listening, on the other hand….eh?

Brajer: Unknown

Answer: I think you can, I think you can, I think you can…

7. Genuine concern about the physical and mental health of Medicaid recipients AND about providers PLUS have the patience to handle all types of demographic differences

Wos: She seems to think so. Her country club does not discriminate.

Brajer: Unknown

Answer: Go! Go! Go! Go! Go, Brajer!!

8. An understanding that he/she is handling tax payers money and that redundancy in staff is excess administrative costs and trim the meat

Wos: “My obligation as secretary is to find the best possible team in order to get the job done.”  Les Merritt served as CFO of DMA on a $300,000-plus contract.  Joe Hauck was paid over $228,000 for 6 months of advise to Wos.  Matt McKillip was paid $87,500 to serve as chief policy maker without any health care background.  Ricky Diaz pulled in $85,000 as communications director. Id.  Wos has handed out $1.7 million in pay hikes to 280 staffers, many with “no career or educational experience for the jobs they hold.” Id. The implementation of the MCOs also fell under Wos’ watchful eye.  The MCO system has created thousands upon thousands of high-paying jobs with our Medicaid dollars.  I believe that in the “trim the fat” category, Sec. Wos scores a goose egg.

Brajer: Unknown.

Answer: Please, Brajer! For the love of Pete!

9. Ability to communicate with both the Senate and the House and to be frank with both.

Wos: “Separation pay” v. “Severance pay?

In April 2013: “I think the word transparency can get pretty dangerous,” Wos said. “Because what does transparency mean? If transparency means that we’re in a planning process and you’re asking us, ‘Tell us all the things you’re planning,’ well, my goodness, allow us to work, and then we’ll give you everything that you want.”

Brajer: Unknown

Answer: Brajer, Brajer, He’s our man! If he can’t do it…[gulp].

____________________________________________

It concerns me that so many of future Sec. Brajer’s core abilities/habits to run and manage DHHS and the Medicaid program in a highly effective manner are unknown.  Nothing like placing all your money on red!  But we have HIGH hopes for Brajer!!!  Don’t let us down!!

The whole point of this blog is to pause and really contemplate what characteristics would comprise a great Secretary for DHHS. Obviously, the Governor has the full authority to appoint the Secretary, meaning that we taxpayers have little to no input as to whether we deem a person qualified, except in the indirect method of voting or not voting for the Governor.

Call this blog an exercise in examining what habits, if in existence, would make the most highly effective Secretary of DHHS and an opinion as to whether these habits exist in our former and future Secretaries.

We are cheering for Brajer!  But…

One fact about the future is that it is unknown.

Going to the Dentist? You May Need to Take a Pregnancy Test!

I go to the dentist for teeth cleaning. I go to an ob/gyn for my lady parts. They each are not entwined.

Recently, a number of dentists have contacted me they are receiving Tentative Notices of Overpayment (TNOs) stating that they owe money back to the state for dental services completed on women who had already given birth.

What?

First, what is Medicaid for Pregnant Women?

Basically, Medicaid for Pregnant Women (MPW) is a self-defining type of Medicaid coverage.  It is Medicaid coverage for pregnant women.

According to DHHS, “Medicaid for Pregnant Women (MPW) only covers services related to pregnancy:

  • Prenatal care, delivery and 60 days postpartum care
  • Services to treat medical conditions which may complicate the pregnancy (some services require prior approval)
  • Childbirth classes
  • Family planning services

A pregnant woman may apply for this program before or after she delivers. A woman who has experienced a recent pregnancy loss may also be eligible.”

And routine dental services are covered for MPW recipients through the date of delivery.

But, the day after the child is born…BOOM…no routine dental visits.

Here is a hypothetical example of this new issue that I have recently been made aware:

Mary is pregnant and is covered by MPW.  She makes a dental appointment for August 1, 2015.  She is due September 1, 2015.  She gives birth to a bouncing, baby boy, whom she names Paul on July 28, 2015.  Even though Paul is early, he is healthy (this is a happy hypothetical).  She shows up for her dental appointment with Dr. Peter on August 1, 2015.

Herein lies a delicate subject…due to its sensitive nature, I will now revert the hypothetical to myself, personally, and only for this narrow topic.

I had my beautiful 10-year old daughter at 28 weeks.  She came three months early. Despite the early delivery, I had expanded in the stomach area at least as much as a normal pregnant woman, if not more so.  Chalk it up to Harris Teeter birthday cakes. After my daughter was born, the insensitive, yet rule-following nurse actually had the audacity to place me on a scale (while I was conscious and alert!).  I was horrified to discover that after all that I went through that I had lost a mere 4 pounds.  She must have seen my look because she quickly explained that I had been pumped with so much fluid during the procedure that my weight was inflated. Likely story, I thought.  The point of this short anecdote is that I looked the same after giving birth that I did prior to giving birth.  Embarrassingly, my transition back to a normal, un-pregnant body extended for a much longer than expected period of time. Chalk it up to Harris Teeter birthday cakes.

Ok, going back to our hypothetical…

Mary really wants her teeth cleaned because, once she gives birth, she knows full well that she will not be able to undergo a teeth cleaning.  So when she presents herself at Dr. Peter’s  office and Dr. Peter asks whether she is still pregnant, she answers, “Yes, sir.”

Dr. Peter, undergoing all the due diligence that a dentist can be expected, has his assistant log on to NCTracks.  According to NCTracks, Mary is eligible for MPW. No changes are noted on her eligibility.  Satisfied with his due diligence, Dr. Peter cleans Mary’s teeth.

Two years later, Dr. Peter receives a TNO stating that he owes $10,000 back for services rendered to women after they gave birth.

Dr. Peter conducted his due diligence.  Dr. Peter inquired as to the pregnancy status to the patient.  Dr. Peter checked eligibility status with NCTracks.

What more would the state expect Dr. Peter do to determine whether his dental patients are indeed still pregnant? Ask them to pee in a cup? Hire a onsite ob/gyn?

You can imagine the consequences of each.

Yet, according to a number of dentists who have communicated with me, the state is placing the burden of knowing whether the dental patient is still pregnant on the dentist.

Talk about accountability! If NCTracks shows that the patient is eligible for MPW, shouldn’t NCTracks be held liable instead of the dentist?

Call me crazy, but I may or may not be extremely angry if my dentist asks me to pee in cup.

State Auditor Finds Robeson County School NOT Using Medicaid Money

Our State Auditor Beth Wood’s most recent audit finds that The Public Schools of Robeson County failed to spend approximately $1 million in Medicaid dollars intended for special needs children in schools!!

See audit report.

“The Public Schools of Robeson County (School District) did not use approximately $1 million per year in Medicaid administrative reimbursements to provide required services to students with disabilities. The School District missed this opportunity to better serve students with disabilities because it was unaware of a contractual requirement to use the Medicaid reimbursements to provide required services.

Over the last three years, the School District reported that it used $26,780 out of $3.16 million in Medicaid administrative reimbursements to provide services to students with disabilities.

The amounts reportedly spent each year are as follows:

• $ 8,969 out of $1,010,397 (0.89%) in 2013

• $12,043 out of $872,299 (1.38%) in 2012

• $ 5,768 out of $1,278,519 (0.45%) in 2011”

The question that I have after reading the audit report is…WHERE IS THE MONEY?

Was this $1 million given to the school system and spent on items other than services for children? Is the school district sitting on a surplus of money that was unspent? Or was this amount budgeted to the school system and the remainder or unspent money is sitting in our state checking account?

To me, it is relatively unclear from the audit report which of the above scenarios is an accurate depiction of the facts.  If anyone knows, let me know.

New Mexico AG clears third agency of Medicaid billing fraud!!!

BREAKING NEWS

Here is the article (my opinions will be forthcoming):

SANTA FE – The Attorney General’s Office has cleared a third behavioral health agency of Medicaid fraud, and it’s reaching out to audit firms for help in investigating the remaining dozen referred by the Human Services Department two years ago.

Attorney General Hector Balderas said Wednesday that he has issued requests for proposals from audit firms to help with the investigations, to speed up the process.

A spokesman for Balderas, meanwhile, said the AG’s Office has completed its investigation into Raton-based Service Organization for Youth and found no Medicaid fraud on the part of the agency, although there was overbilling.

The AG’s Office referred the case back to the Human Services Department to pursue the overbilling, according to spokesman James Hallinan. The alleged amount was not immediately available.

As an outgrowth of the SOY investigation, a former therapist for the agency was charged six weeks ago by the AG’s Office with Medicaid fraud. She allegedly provided false billing information to SOY.

The Human Services Department in 2013 referred to the attorney general 15 nonprofits that provided services to the mentally ill and addicted, saying an audit it commissioned had found $36 million in overbilling, mismanagement and possible fraud.

Two of the providers – The Counseling Center of Alamogordo and Santa Fe-based Easter Seals El Mirador – had previously been cleared of fraud by the AG’s Office and are in disputes with HSD about what, if anything, they owe for alleged overbilling.

Former Attorney General Gary King, who left office at the end of December, had said it could take up to six years to complete the probes. Balderas said that was too long and got approval from the Legislature during the regular session to shift $1.8 million out of a consumer protection fund to hire extra help.

The request for proposals “is a critical infusion of resources to expedite the behavioral health Medicaid fraud investigations,” Balderas said Wednesday in a statement. He said expanding the pool of experts to work with his staff “will allow our investigation to proceed even more quickly and efficiently, which has always been my priority.”

The request for proposals, issued last week, requires that bidders respond by June 30.

After the Human Services Department cut off Medicaid funding to the providers and referred them to the AG’s Office, it brought in five Arizona companies to take over a dozen of them. SOY, however, had its Medicaid funding restored by HSD and continued to operate, with technical assistance from one of the Arizona firms.

The report on the SOY investigation was not immediately available from Balderas’ office. Hallinan said it was being reviewed before release to ensure that it didn’t affect the criminal proceedings against the former SOY therapist.

NC State Auditor Finds Eastpointe Guilty of Accepting Kickbacks!

Last week I traveled to Houston, Dallas, and Denver to meet with other health care attorneys of Gordon & Rees.  It was a great trip and I met some wonderful colleagues.  But I was happy to get home to my family, including our new addition of 9 peacock eggs.

Yes, 9 peacock eggs!!

Here is a pic:

peacock eggs

(I know that there are 10 eggs in the picture, but we will not talk about the 10th.  Just know that we have high hopes that the other 9 are viable and survive!!  As of today, at 1:00 pm, all 9 eggs are chirping, but no cracks yet!!)

Oh, and, before I forget…Watch ABC news tonight.  I was interviewed for a story about one of my clients.

Anyway, while I was gone, I was unable to post a blog regarding the State Auditor’s most recent audit report regarding Eastpointe.  So here it is…

As the managed care organizations (MCOs) continue to accuse health care providers of fraud, waste, and abuse (FWA), it seems from a recent State Auditor report that, at least, one of the MCOs itself is guilty of the very accusation that they are alleging against providers.  See blog. And blog.

There is an old story:

A wolf, passing by, saw some shepherds in a hut eating for their dinner a haunch of mutton. Approaching them, he said: What a clamor you would raise, if I were to do as you are doing!

Moral:
Men are too apt to condemn in others the very things they practice themselves

The audit findings beg the questions…Is it only Eastpointe? Or all 9 MCOs? How much Medicaid money is lining the pockets of MCO executives, instead of paying for medically necessary services for Medicaid recipients?  Beth Wood  only audited Eastpointe. Is this only the tip of the iceberg?

According to our State Auditor, Eastpointe former executive has lined his pockets with $547,595+…

Here are the key findings from the NC State Auditor’s report regarding Eastpointe:

KEY FINDINGS

  • Former CFO facilitated apparent kickbacks totaling $547,595 from two Eastpointe contractors
  • Former CFO purchased three vehicles totaling $143,041 without a documented business purpose
  • Former CFO purchased $18,600 of equipment for personal use
  • Former CFO, Chief Executive Officer (CEO), and other employees used Eastpointe credit cards to make $157,565 of questionable purchases
  • Inadequate CEO and area board oversight contributed to operational failures

Eastpointe is one of 9 MCOs in NC charged with managing and supervising Medicaid behavioral health care services. So what do we do when the entity IN CHARGE of managing Medicaid money is mismanaging tax dollars???

Where is the supervision??

Over the last few years, since the MCOs went live across the state, I have seen the MCOs terminate Medicaid providers for no cause, claim providers owed money, penalties, plans of corrections (POC), and/or refuse to contract with providers for reasons as silly as:

  • Failing to put shoes on a paraplegic (no feet), because the assessment included that the patient required help dressing;
  • Using green ink (a personal favorite) on a service note;
  • Having signatures on service notes that are difficult to read (so the auditors assume that the person doesn’t have the correct licenses).

Here, we have the State Auditor finding that Eastpointe’s former CFO unilaterally hired two contractors to improve Eastpointe’s building (paid for with Eastpointe’s funding), but the former CFO accepting over half a million dollars.  This is no green ink! This is no insignificant finding!!

What is Eastpointe’s funding?

eastpointe funding

As you can see, 72.7% of Eastpointe’s funding is pure Medicaid money. When Eastpointe’s former CFO received $547,595 in kickbacks, 72%, or $394,268.40, should have been used to provide Medicaid behavioral health care services.

These are our tax dollars, people!!  These are our tax dollars budgeted to aid our most needy population with behavioral health care services!!  These are our tax dollars budgeted to provide psychiatric services, substance abuse services, and services for those with developmental disabilities!!!!

Our State Auditor states in her report, “The former CFO may have violated several state laws including fraud, misrepresentation, and obtaining property by false pretenses.”

Let’s look at a couple of those statutes that may have been violated:

42 U.S. Code § 1320a–7b imposes criminal penalties for acts involving Federal health care programs, and federal dollars pay a portion of our Medicaid program.

North Carolina General Statute § 14-234 states: “No public officer or employee who is involved in making or administering a contract on behalf of a public agency may derive a direct benefit from the contract except as provided in this section, or as otherwise allowed by law.”

The question becomes was the former CFO of Eastpointe, at the time of the receipt of kickbacks a “public officer” or “employee who is involved in making or administrating a contract on behalf of a public agency?” I believe the answer is yes, at least as to the latter.

Here is the point in this blog that my personal views will be aired. I find the former CFO’s behavior significantly opprobrious and reprehensible.

Here we have an MCO which is in charge of behavioral health care for our most vulnerable and needy populations…not just those in poverty, but those in poverty suffering from mental illness, substance abuse, and/or developmental disabilities (MH/SA/DD). Obviously, those Medicaid recipients suffering from MH/SA/DD will not have the means to hire a private attorney to defend their interests. When they receive denials for authorizations or reductions in services, they are defenseless. Sure, some children have strong advocate parents, but, on the whole, those suffering from MH/SA/DD have little to no advocates.

Juxtapose someone sitting in the role of a CFO…a chief financial officer of a company. Think he or she can hire a private attorney?? Think he or she has advocates or means to hire advocates??
How can someone in power abuse that power to the detriment of the under-privileged and sleep at night? I find the State Auditor’s audit findings repugnant beyond comprehension.

We are left with a former CFO who may or may not have committed criminal activity, but, who, at least according to the State Auditor, has received kickbacks. We are left with questions.

Is it only Eastpointe? Or all 9 MCOs? How much Medicaid money is lining the pockets of MCO executives, instead of paying for medically necessary services for Medicaid recipients?  Will there be justice?

We can only hope that this audit is a catalyst to consequences.

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

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

panelpic2

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

Going back to the panel…

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Do’s and Don’ts of Mergers/Acquisitions

  • Do not let the secret out.

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

  • Look outside your catchment area.

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

  • Do your due diligence

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

  • Review the other company’s documentation policies

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

  • Analyze both company’s corporate culture

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

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

  • Research the company’s relationship with its MCO

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

  • Surround yourself with knowledge

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

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

Otherwise, I hope you live happily ever after!

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

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

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

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

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

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

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

david and goliath

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

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

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

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

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

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

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

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

And it doesn’t stop there!

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

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

So, Happy Easter, everyone!!!

My new email is:

kemanuel@gordonrees.com

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

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

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.

CCNC

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?

Budgetary reasons.

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???

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