Another Day, Another “Temporary” Medicaid Suspension Post

This isn’t that recent, but I was reading something else that reminded me of the ongoing proceedings involving alleged Medicaid fraud in the New Mexico behavioral services industry.  Knicole Emanuel has written and presented on this.  Just as we saw with (alleged) orthodontic fraud in Texas in 2012, and as we are seeing with the substance abuse treatment industry in California, last summer New Mexico Medicaid regulators became aware of possible fraud in a particular field, and they responded with a large-scale effort to shut down many or most of the providers in the industry.  This campaign had the added wrinkle that New Mexico apparently decided to go the extra mile and bring in a new company to take over management of the target facilities.  So there wasn’t even a pretense of “temporarily” suspending payments or licenses – New Mexico Medicaid just wanted the people running the operations out of the business, and the sooner the better.

This reminded me that I owe everyone a proposal on how to address the problems inherent in using temporary suspensions as de facto Medicaid provider exclusions (but with a lower burden of proof, and without many of the due process protections afforded to providers before they can be excluded).  If you recall, the problem is that it’s very hard to reconcile two fundamental principles. First, we don’t want to let shady providers continue to bilk Medicaid out of taxpayer dollars by running a fraudulent operation, and we certainly don’t want to keep paying them for services we suspect might be fraudulent.  And second, it is wildly unfair to use temporary suspensions as an easier-to-prove substitute for provider exclusion from the Medicaid program.

This actually isn’t all that novel of a dilemma.  There are many situations where we want to make sure that an entity suspected of wrongdoing doesn’t continue to engage in it or profit from it, but at the same time, we don’t want to see the entity cease to exist as a viable operation, at least without a manageable wind-down.  In the health care context, the most obvious example is a nursing home or other long-term care facility that is tagged with an unacceptable number of deficiencies during a survey.  On the one hand, the state licensing agency is usually unwilling to let the facility try to fix the problems itself.  On the other hand, shutting down a nursing home can be an enormously difficult and painful process.  It’s not like you can just turn the sign on the door to “CLOSED” – you usually have to find beds for hundreds of hard-to-transport patients, which can be a nightmare for them and their families.  In those cases, the licensing agency often will bring in an outside consultant to prepare and implement a plan of correction.  Here is an example of one such company providing those sorts of services.  The independent consultant will sometimes even stay at the company for some set period of time to monitor compliance.  And this is just an industry-specific example of the broad corporate compliance monitor trend that has emerged over the past decade or so.

So why can’t we do that in the context of a Medicaid temporary suspension?  If there is “reliable evidence” or “credible allegation” of fraud – though not necessarily enough to support an immediate provider exclusion sanction absent further investigation – why not give the provider subject to the suspension the option of paying for an independent consultant or compliance monitor to come in and oversee operations until the investigation is resolved?  This monitor could make sure that the provider is conducting a legitimate business, and it could make sure the provider reserves enough money to satisfy any penalty or sanction that might be assessed.  This solution even would have the added benefit of signaling the providers most likely to be committing fraud – obviously, they won’t want an independent observer coming in and having full access to their books.

Now, a few caveats.  First, in cases where the suspected fraud is particularly egregious and/or uncontroverted, this shouldn’t affect the ability of Medicaid regulators to come in and shut down blatant criminals.  But they can do that under the existing provider exclusion framework; if that’s too difficult or onerous for regulators, it’s a problem, but one that should be addressed directly by changing that framework.  Second, there is no dispute that it will be tough to strike the balance between releasing enough withheld claims to give the provider the funds they need to maintain operations, while at the same time, making sure there is enough money held back to account for any fraudulent claims (or even just to reimburse Medicaid for any nonfraudulent overpayments, which in my experience, often is really what’s going on).  The devil is in the details on that score, and it’s going to have to be figured out on a case-by-case basis by the state, the company under investigation, and the independent consultant/monitor.

Finally, even under this sort of regime, the temporary suspension power should still be used judiciously.  It’s expensive to hire a skilled professional to come in and basically run a health care provider for months or (potentially) years at a time.  Some smaller – though ultimately innocent – providers no doubt will be driven out of the business, just as they are now.  But that’s the best compromise I can think of, at least for now.

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