LegalEase: Medicaid reimbursement crisis: How it affects you
By Elizabeth E. Hogue, Esq.
Burtonsville, MD
(Editor’s note: This is the first of a two-part LegalEase column that addresses home health agency concerns related to changes in state Medicaid programs. This column presents background on the Medicaid reimbursement crisis and describes program changes that can affect home health agencies with charges of fraud and abuse, risk of legal liability, and loss of professional licensure. Next month’s column will look at nursing implications and violation of ethical principles.)
There is a growing fiscal crisis in state Medicaid programs. Those programs have increasing concerns about the fiscal burden of caring for elderly and chronically ill patients.
The New York Times reported Feb. 2, 2002, that at a conference for governors, participants pleaded with the federal government for financial help with ever-increasing spending for Medicaid programs.
The Washington Post subsequently reported on June 5, 2002, the following relevant statistics:
- State individual income tax collections in the first three months of the year dropped 14% from the same period in 2001, a loss of $14.5 billion.
- In April 2002, a key month for receipt of tax revenues, collections were down 21%, a loss of $8.5 billion.
- Payment of estimated taxes in the first quarter of 2002, a frequent early indicator of receipts for the remainder of the year, were running 27% behind those in 2001.
- Refunds processed during the first quarter of 2002 were 14% higher than last year, a $3.5 billion hit to states’ budgets.
The issue surfaced again in The New York Times May 26, 2002, when the United States Courts of Appeals for the 4th and 6th Circuits ruled that Medicaid beneficiaries may sue state officials to compel them to provide benefits mandated by federal law.
These revenue reductions and court rulings, among other factors, have undoubtedly contributed to states’ concerns about funding Medicaid programs. Since state Medicaid programs cannot save money by cutting benefits because many benefits are mandated by the federal government, programs likely are to turn to other mechanisms to reduce spending.
State Medicaid programs may use a variety of mechanisms to reduce spending for home care services to help address fiscal shortfalls. Some mechanisms that programs are already using have serious implications for home care agencies, including allegations of fraud and abuse, risk of legal liability, loss of professional licensure, and potential violations of key ethical principles.
Allegations of fraud and abuse
State Medicaid programs recently have attempted to implement changes to reimbursement for home care services that include allegations of fraud and abuse.
For example, North Carolina’s Medicaid program recently proposed the following two changes in reimbursement:
- If agencies initiated services based on attending physicians’ verbal orders, these verbal orders must be signed by physicians and returned to agencies within 30 days of the date of admission. If agencies do not receive the signed verbal orders within the 30-day time period, agencies would not be paid for services provided to patients.
- If patients eligible for services paid for by both the Medicare and Medicaid programs — called dually eligible patients — begin receiving Medicare home care services, they no longer can receive home care services paid for by the Medicaid program even though those services were not provided on the same day as services paid for by Medicare.
Agencies in North Carolina first learned of these changes in reimbursement when they were published in bulletins from Medicaid.
At the same time, the Medicaid program in North Carolina conducted a series of audits and attempted to recoup monies retrospectively based on the above changes.
Providers should be concerned that Medicaid programs in other states will follow the lead of the program in North Carolina as they shoulder ever-increasing costs.
Instead of direct cuts to benefits or reimbursement rates, programs may attempt to save money through the back door by changing payment criteria and auditing retrospectively to recoup monies based on modified-payment criteria.
When these audits result in allegations of fraud and/or abuse, the potential consequences for providers are even more serious.
For example, representatives of state Medicaid programs may allege fraudulent/abusive activity in the form of false claims when agencies provide services that do not meet the modified-payment criteria described above.
To the extent that such allegations may result in even greater recoupments in the form of collections of penalties and/or interest based on fraudulent submission of false claims, regulators may be tempted to make these claims.
Liability risk and license loss
State Medicaid programs may require prior or preauthorization of services. When services are not preauthorized, programs typically have no obligation to pay for such services.
Difficulties arise, however, when the authorization process does not occur as promptly as necessary to ensure appropriate care. For example, patients’ plans of care (POC) may require relatively frequent visits.
When agencies do not receive authorizations to make additional visits on a timely basis, they are left with two choices, neither of which is acceptable from the point of view of risk management and fiscal responsibility.
Agency managers can decide not to make the visits for which they have not received authorization prior to the scheduled visit. This means that patients will not receive care consistent with their POCs. Deviations from POCs always equal greater risk of legal liability for both agencies and their staff members.
The second choice is that agency managers could decide to make the visit and accept nonpayment from the Medicaid program because they did not obtain appropriate authorization prior to making the visits. While agencies may be able to absorb the cost of loss of reimbursement for an occasional visit, they cannot afford to do so on a regular basis.
In order to avoid liability and loss of licensure by deviating from patients’ POCs, agencies may choose to forego reimbursement. Thus, state Medicaid programs may successfully reduce expenditures by placing agencies and their staff members between a rock and hard place with a choice between legal liability and loss of licensure vs. nonpayment for services.
[A complete list of Elizabeth Hogue’s publications is available by contacting: Elizabeth E. Hogue, Esq., 15118 Liberty Grove, Burtonsville, MD 20866. Telephone: (301) 421-0143. Fax: (301) 421-1699. E-mail: [email protected].]
There is a growing fiscal crisis in state Medicaid programs. Those programs have increasing concerns about the fiscal burden of caring for elderly and chronically ill patients.You have reached your article limit for the month. Subscribe now to access this article plus other member-only content.
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