Illinois Posts Medicaid Managed Care Performance Report

In January 2018, The Office of the Auditor General for the State of Illinois published its Performance Audit (“Audit Report”) of Medicaid Managed Care Organizations (“Medicaid MCOs”) for Fiscal Year 2016. What was unleashed was a startling review of the Medicaid MCOs’ performance over FY 2016 in administering the Medicaid Program for what was then called the Integrated Care Program (“ICP”) or Medicare/Medicaid Alignment Initiative (“MMAI”) Programs. You may recall these ICP and MMAI Medicaid MCO programs in Illinois involved almost a dozen Medicaid MCOs that covered about 70% of the State of Illinois Medicaid recipients.

The Audit Report played into health care providers’ deepest fears in Illinois: showing that Medicaid Managed Care may not be working as it was intended; namely, to reduce costs and improve quality of care in the Medicaid Program in Illinois. For example, long term care providers in Illinois had to fight tooth and nail with Medicaid MCOs under the ICP and MMAI programs, experiencing cumbersome Medicaid contracts, denied claims, delayed claims, and worse yet, a prior authorization administration problem (administrative MCO delay) which in some instances prevented residents from receiving care timely. Most, but not all, of those issues are still being resolved, but providers had hoped that there was a good reason for this madness involving Medicaid MCOs: better and lower cost care for Medicaid beneficiaries. Continue reading Illinois Posts Medicaid Managed Care Performance Report


A new policy recently issued by the Justice Department states that the Department will not use its enforcement authority to effectively convert agency guidance documents into binding rules. The new policy has broad ramifications and applies to government enforcement actions as well as civil lawsuits. The policy prohibits Department components from issuing guidance documents that effectively bind the public without undergoing formal rulemaking.

The term “guidance documents” includes any agency statement of general applicability and future effect, such as Medicare billing manuals, special fraud alerts, and frequently asked questions. The Department may continue to use guidance documents to simply explain or paraphrase legal mandates from existing statutes or regulations, but guidance documents cannot create binding requirements that do not already exist by statute or formal regulation.

While the new policy is viewed favorably by most in the health care industry and gives health care providers a new tool to fend off allegations of wrong doing, it may lead to confusion as providers try to interpret complex and confusing statutes and rules.

False Claims Act Enforcement Activity Continues

By Susan V. Kayser

New U.S. Department of Justice (DOJ) statistics released in January 2018 show that False Claims Act (FCA) whistleblowers who are not joined by the DOJ in their lawsuits reaped $898 million in proceeds in 2017, far greater than the $425 million initially reported by the DOJ. However, in a coincidental turn of events, just hours after the new statistics were released a Florida federal court judge overturned a $350 million FCA verdict against a nursing home operator, Salus Rehabilitation, LLC. Accordingly, the DOJ statistics will likely be revised again to reflect 2017 proceeds of $548 million for whistleblowers.

The ruling in the Salus Rehabilitation case is itself worthy of attention. The Salus whistleblower alleged record-keeping violations and a scheme to boost Medicare and Medicaid reimbursement by exaggerating the medical needs of nursing home residents. Overriding a jury verdict, U.S. District Court Judge Steven D. Merryday ruled that a whistleblower’s allegations that the provider defrauded Medicaid were not sufficient to sustain a hefty FCA judgment. He wrote “… the evidence and the history of this action establish that the federal and state governments regard the disputed practices with leniency or tolerance or indifference or perhaps with resignation to the colossal difficulty of precise, pervasive, ponderous, and permanent record-keeping in the pertinent clinical environment.”

In making his ruling, Judge Merryday relied heavily on Universal Health Services v. Escobar, a 2016 U.S. Supreme Court ruling that established a set of requirements that must be met before a FCA judgment can be brought against a provider. Among the requirements are that the government and whistleblowers must show the government would not have paid the underlying claims if it knew of the regulatory violations alleged. The Escobar decision found that continued government reimbursement after fraud allegations are made is strong evidence that the allegations are not material. Judge Merryday noted that in the Salus case the government continued to pay for services rendered and stated that the whistleblower did not provide enough evidence to prove that Medicaid reimbursement would have stopped even if the government were aware of paperwork problems at the Salus facility. Clearly, the Salus decision is a victory for providers.

New York Times Critical of Nursing Home Arrangements with Related Companies

By Susan V. Kayser

The New York Times reported on January 2, 2018, that according to financial disclosures to Medicare, nursing home contracts with related companies accounted for $11 billion of nursing home spending in 2015. According to the report, this amounts to a tenth of nursing home costs. The basis of the Times report was an analysis undertaken by Kaiser Health News. The Times article, which focused on care problems encountered by a family at a New York nursing home, was critical of related-company arrangements, saying that they allow nursing home owners to arrange contracts where the nursing homes pay more than they might in a competitive market. Further, the article said, owners can “siphon off” profits that are not recorded on the nursing home’s books. The Times report stated that the Kaiser Health News analysis found that nursing homes doing business with related companies (1) employ, on average, 8 percent fewer nurses and aides; (2) were 9 percent more likely to have hurt residents or immediate jeopardy findings; (3) had 53 substantiated complaints for every 1,000 beds, compared with 32 per 1,000 beds where no related party arrangements were in place; and (4) were fined 22 percent more often for serious health violations and penalties at an average of $24,441, a rate 7 percent higher than homes with no related-party arrangements. The Kaiser analysis also found that for-profit nursing homes use related company arrangements more frequently than nonprofit corporations.

New SAMHSA Rule Allows Disclosure of Patient Substance Use for Payment, Healthcare Operations

By Lisa W. Clark and Erin M. Duffy

On January 3, 2018, the Substance Abuse and Mental Health Services Administration (SAMHSA) finalized revisions to the Confidentiality of Substance Use Disorder Patient Records regulations, found in 42 CFR Part 2. The new final rule implements the changes proposed a year ago by SAMHSA in its supplemental notice of proposed rulemaking (SNPRM), which was issued alongside the first major changes to the federal regulations governing Part 2 covered data since 1987. After receiving public comment on the SNPRM, SAMHSA has finalized provisions relating to the disclosure of patient-identifying substance use information for payment and healthcare-related purposes and the disclosure of patient-identifying substance use information for the purposes of carrying out a Medicaid, Medicare or Children’s Health Insurance Program (CHIP) audit or evaluation. The new final rule also permits lawful holders to issue an abbreviated notice of the prohibition on redisclosure to accommodate electronic health record systems with standard character limitations on free text fields.

Read the full story on the Duane Morris LLP website.

PHI Goes Beyond Medical Records

In the 1990s, I wrote about a health care entity’s responsibility for medical waste. At that time, a hospital client had contracted with a low cost medical waste disposal company thinking that they would be saving money. The medical waste disposal company dutifully picked up the hospital’s medical waste and provided documentation to the hospital showing that the waste had been properly disposed of in accordance with legal and regulatory requirements. The hospital was happy, until the day they received notice that the hospital was a potentially responsible party for a super fund waste site located several thousand miles away from the hospital. It turned out that the medical waste disposal company had forged the documentation and dumped the untreated medical waste at the super fund waste site. The hospital was linked to the waste site through IV bags found at the site, with patient names and the hospital’s identification attached.

HIPAA had not yet been enacted in the 1990s and protected health information (PHI) was not the hospital’s primary concern. However, had the medical waste dumping happened today, the hospital would have to address not only the EPA super fund waste problem, but also HIPAA issues.

The take away. Think beyond medical records when addressing PHI and beware of low cost solutions to waste disposal.

eNLC and Telehealth

Licensure compacts allow nurses to have one multistate license, with the ability to practice in their home state and other compact states. The Enhanced Nursing Licensure Compact ( eNLC) was recently implemented and allows nurses to practice in person, or via telehealth, across states that are a part of the compact. The eNLC covers registered nurses, licensed practical nurses and vocational nurses. The Enhanced Nurse Licensure Compact (eNLC) is intended to increase access to care while maintaining public protection at the state level. Under the eNLC, nurses are able to provide care to patients in other eNLC states, without having to obtain additional licenses. Nurses with an original NLC multistate license will be grandfathered into the eNLC. New applicants residing in compact states will need to meet the uniform license requirements for a multistate license.

Advanced practice nurses are covered by the Advanced Practice Registered Nurse (“APRN”) Compact. The APRN Compact, approved May 4, 2015, allows an advanced practice registered nurse to hold one multistate license with a privilege to practice in other compact states. The APRN Compact will be implemented when 10 states have enacted the legislation. So far, fewer than 10 states have enacted the APRN Compact. Hopefully, eNLC implementation and the expansion of telehealth will spur additional states to enact the APRN Compact.

With the implementation of the eNLC, a licensed nurse residing in compact states may treat a patient located in any of the compact states under one multistate license. Nurses are further enabled to provide services via telehealth with the added protection and standards of the eNLC. Reimbursement remains a concern.

OIG Rescinds Advisory Opinion

Health care providers have come to rely on the Office of the Inspector General (OIG) Advisory Opinions (AO) as regulatory guidance. For the first time ever, late last fall, the OIG rescinded an advisory opinion, that was originally issued in 2006 and modified in 2015.

According to the OIG, the charity that sought and received the AO, breached two commitments made in its AO request. The original AO, which contained assurances about protection from anti-kickback statute liability and civil monetary penalties was revoked retroactively, exposing the charity to potential liability for past acts that the charity believed were protected by the AO. The charity had proposed modifications to the AO when it learned of the potential revocation. But, the proposal was rejected by the OIG with the OIG stating that it did not trust the charity.

The take away for providers is that commitments made in a request for an AO must be kept. An AO is not a blank check. It can be revoked retroactively.

The Importance of Credentialing

Dr. Oluwafemi Charles Igberase entered the United States in October 1991 on a nonimmigrant visa. In November 1991, January 1995, and September 1998, Igberase obtained fraudulent social security numbers using other names and false identifying information. Between 1992 and 1998, Igberase obtained three certifications from the Educational Commission for Foreign Medical Graduates (ECFMG) under different names, dates of birth and fraudulent social security numbers, in order to practice medicine and get into a residency program in the United States. The ECFMG Committee on Medical Education Credential subsequently revoked or suspended two certifications in December 1995, after learning that they were fraudulently obtained. In 1998, after receiving his third ECFMG certification in the name of Charles John Nosa Akoda, Igberase was admitted to a residency program in New Jersey. Igberase was dismissed from the program two years later after officials learned that the social security number he used did not belong to him.

In 2016, Dr. Igberase pled guilty to using a fraudulent Social Security number to obtain his medical license. His medical license was subsequently revoked. Prior to revocation of his medical license, Dr. Igberase obtained medical staff privileges at a hospital and delivered hundreds of babies. The hospital was sued in a putative class action for negligent credentialing and the case is pending. In its defense of credentialing Dr. Igberase, the hospital recently argued that it had no duty to ensure that a physician is using his real name and placed the blame on the Maryland Board of Physicians for granting Dr. Igberase a medical license.

To our hospital clients, you should verify that a physician is using his or her real name and that he or she has proper training and credentials.

The Importance of Documentation

A Health System recently agree to pay $6 million to settle allegations that a subsidiary submitted false claims to Medicare for unnecessary rehabilitation therapy services. The Health System was also required to enter into a 5-year corporate integrity agreement with the U.S. Department of Health and Human Services Office of Inspector General. The billed services were allegedly unreasonable, not medically necessary and unsupported by the medical records.


The case was originally filed by whistle blower employees. In its defense, the Health System argued that the not medically necessary findings were highly subjective conclusions and that the care was appropriate. The Health System settled the case for $6 million, however, to avoid “an unsustainable and ultimately unacceptable allocation of financial and personnel resources.”  Assuming that the care was appropriate, better documentation of medical necessity might have saved the Health System $6 million.