Managed Care Medicaid and Medicare Fraud and Abuse

When we hear about Medicare and Medicaid fraud and abuse cases, we typically think of cases against the operation of mills and illicit billing practices of providers. When was the last time you heard of a Federal case against Managed Care Companies (MCC) for Medicare and Medicaid fraud? We all know it is happening, but no one seems to do anything about it. With CMS’ renewed interest in the misuse of Federal funds through Medicaid and Medicare programs, the time is now. However, ARA can’t use its existing clients’ database without expecting negative repercussions. We need a joint effort with as many psychiatric hospitals, corporations and other treatment providers as possible to launch an effect counter to the increased rate of denials you have no doubt experienced over the past 10 months.

The current recession plays a critical part in accelerating the trend of the denial of admissions in full or part by capitated MCC’s claiming 17% to 38% reductions in cost over other financial models. Is there a natural logic to this trend? The State Agencies that contract with Medicaid MCC's and are required to provide oversight of them would likely have had their budget cuts resulting in reduced staff. At the same time, many states required more Medicaid contracts to be outsourced to MCC’s under at-risk severely reduced flat-rates. To make a profit, the MCC’s must cut current costs. As the provision of review services is sub-contracted out by the MCC’s, the ability to detect fraud becomes increasingly problematic at the same time that the State Agencies’ reduced staff is less capable of providing the more numerous and complex oversight required by Federal statutes. This is the proverbial domino effect.

Capitated MCC’s have a perverse incentive to deny medically necessary care at the same time that they deny such actions, claim great savings to the States’ by controlling the greedy fee-for-service providers. Claims related fraud detection techniques are well developed, but there are few procedures and/or regulations to address fraud by MCC’s. The potential for illicit monetary gain by the MCC’s has to be suspect whether it be the result of underutilization and/or denial of clinically necessary services we are all familiar with. They also do this by not providing covered services, illicit subcontracts with physicians/review organizations, or business practices that result in an unnecessary cost to the Medicaid program.

ARA has identified patterns of denials of medically necessary services, questionable “peer” review procedures, misinformation, etc. that need to be considered, but we cannot act on this information on behalf of our existing clients without expecting negative consequences to their referral base at the very least. We need to join together to identify the MCC’s who you suspect of similar activities. Here are some examples:
· Patients who receive repetitive short-term treatment but who clearly require long-term treatment. Many of these are denied services under the pretext of “chronic” or “custodial” labels.
Reviewers who routinely label suicidal or homicidal ideations as being “without intent”;
Reviewers with inappropriate board certification e.g. Geriatric or Forensic Psychiatrists, denying Children and Adolescents.
Reviewers involved in more than one level of review on the same case.
An increase in MCC’s denials on admit or a day after that immediately go to “peer” review;
MCC’s from out-of-state not abiding by rules/statutes in your State.
Denials of children referred to treatment by Child Protective Services or denied days after a delayed discharge due to Child Protective Services issues.
State Agencies “rubber-stamping” the denials of care by MCC’s.

Payers Divide and Conquer Tactics in 2009-2010

In 2009 insurance payers became more brazen in their delay and deny tactics with providers and their increased premiums. Some of their tactics appear to be an effort to drive a wedge between providers and their medical staff. This was their response to what clearly looked like a dramatic change in the structure of healthcare in the U.S. Many would have expected a more congenial politically soothing approach from them. Did they know something we didn’t or were they simply scrambling to hoard every last dollar they could before the axe fell? What will happen now that the axe no longer is evident?

Some of the new tactics employed by payers using their increasing war chest has a potentially disastrous implication for free standing psychiatric facilities. Have you noticed what seems to be an increase in authorization requirements? Some payers have instituted a policy that seems to impose a peer to peer requirement on admission. Other payers instituted a short time window within which provider’s physicians must call, making it difficult at best to manage the morning after a busy night.

The immediate impact of these changes are an increase in denials resulting in delays in payments and greater pressure (time and other) on your referring MD’s. Apart from the immediate adverse impact on your cash flow, there are strategic issues to consider with your medical staff:

• Is it likely that your referring MD's reduce the number of admissions because of the added time and headaches imposed by the payers’ tactics?
• Are any key referring MD's likely to consolidate patients in one facility?
• Do any Major Medical facilities in your market area have a psych unit with a psychiatrist on duty at all times?
• Have you experienced friction with your MD's due to your added needs and their more restricted time limitations?
• Are you tightening your admission requirements to avoid cases most likely to be denied by payers? For example, restricting frequent readmit patients because the payers have labeled them “chronic” and/or will not pay for LTC that clearly is needed.

ARA is available to help you with the backlog of appeals as well as to tackle identifiable patterns of abuse by payers. Our success in winning appeals and getting cases before the proper authorities, even when there appears to be no viable options left, makes us a valuable partners for your hospital.

ARA’s staff is also experienced medical staff relations and practice management. We can work out solutions between you and your medical staff to not only counter the payers’ “divide and conquer” tactics, but to make your facility the one of choice in your market place.