State of North Carolina s70

.STATE OF NORTH CAROLINA IN THE OFFICE OF

ADMINISTRATIVE HEARINGS

COUNTY OF CUMBERLAND 07 DHR 0429

THE “M” COMPANY LLC, )

Petitioner; )

)

vs. ) DECISION

)

N.C. Department of Health and Human Services, )

Division of Medical Assistance, Program Integrity, )

Respondent. )

This case came on for hearing before the Honorable Judge Joe L. Webster, Administrative Law Judge, commencing on January 24, 2008 in the Old Cumberland County Courthouse, Fayetteville, North Carolina at 9:00 a.m.

APPEARANCES

Petitioners: R. Jonathan Charleston, Esq., Fayetteville, N.C. appearing.

Respondents: Roy Cooper, Attorney General, Raleigh, N.C. ,

Assistant Attorney General Brenda Eaddy, Esq., appearing

ISSUES

Whether Respondent’s decision to require Petitioner to repay Medicaid $82,023.08 for services already rendered to a Medicaid recipient was improper?

BASED UPON careful consideration of the sworn testimony of the witnesses presented at the hearing, the documents and exhibits received and admitted into evidence, and the entire record in this proceeding, the Undersigned makes the following findings of fact. In making the findings of fact, the Undersigned has weighed all the evidence and has assessed the credibility of the witnesses by taking into account the appropriate factors for judging credibility, including but not limited to the demeanor of the witness, any interest, bias, or prejudice the witness may have, the opportunity of the witness to see, hear, know or remember the facts or occurrences about which the witness testified, whether the testimony of the witness is reasonable, and whether the testimony is consistent with all other believable evidence in the case. Wherefore, the undersigned makes the following Findings of Fact, Conclusions of Law and Decision, which is tendered to the North Carolina Department of Health and Human Services for a final decision.

FINDINGS OF FACT

  1. This Petition was filed due to a recoupment action. The Program Integrity Section of the Division of Medical Assistance performed a post payment review of Medicaid claims submitted by Petitioner and discovered Petitioner was paid $82,023.08 over the course of one year for the care of a minor Medicaid recipient.
  1. Respondent (D.M.A.) is responsible for administering and managing the State Medicaid plan and program. Pursuant to N.C. Gen. Stat. §108A-54, Respondent is authorized to adopt the rules and regulations for program operation.
  1. Petitioner is a Medicaid Residential Treatment Level III service provider. Petitioner provided residential level III services for the minor Medicaid recipient in this matter from 1/10/03 through 12/31/03.
  1. As a provider of services Petitioner was required to sign a NC Division of Medical Assistance Medicaid Participation Agreement. By signing such document, Petitioner agreed to comply with Medicaid specific laws, regulations and policies governing services provided to Medicaid recipients for payment by Respondent. Respondent accepted Petitioner into its program as a provider of Residential Treatment - Level III services.
  1. The definitions, requirements, qualifications, and goals of Residential Treatment - Level III are contained in Respondent’s Clinical Policy No. 8D-2. The October 1, 2000 Clinical Coverage Policy is the Medicaid regulations that govern Petitioner’s type of residential treatment facility, and was in effect in January 2003 through December 2003.
  1. Clinical Policy No. 8D-2 requires that residential treatment - level III services must be ordered by a primary care physician, psychiatrist, or licensed psychologist and that a service order for this level of service must be made prior to or on the day that the provider begins service to the recipient. Medicaid Service Guidelines (Revised Edition July 1999 also indicates that service orders are required only once per service.
  1. Clinical Policy No 8D-2 indicates that “the recipient be discharged from this level of care if any one of the following is true:

A.  The level of functioning has improved with respect to the goals outlined in the service plan the recipient can reasonably be expected to maintain these gains at a lower level of treatment, or

B.  The recipient no longer benefits from service as evidence by absence of progress toward service plan goals and more appropriate service(s) is available; or

C.  Discharge or step-down services can be considered when in a less restrictive environment, the safety of the recipient around sexual behavior, and the safety of the community can reasonably be assured.

  1. Immediately prior to his admission to petitioner’s residential treatment facility there existed a service order for Residential Treatment - Level II services for this Medicaid recipient. Prior to this, the recipient had an order for Residential Treatment - Level III.

9. Alberta Hemberger, employee of the State Division of Medical Assistant testified that it is the responsibility of the case manager to obtain the service order, and that the provider needs to make sure that there is a valid service order for the service they are delivering.

10. The case manager for the Medicaid recipient is Robin Harris, an employee of the

Cumberland County Mental Health, Developmental Disabilities and Substance Abuse

Authority (CCMH).

11. That CCMH’s standard operating procedure for signatures on service orders through

Cumberland County Mental Health, was if the service order has ever been signed by a

physician for authorization of a service, the service order was not signed again if the

service needed to be implemented. Pet. Ex. E and G. That this is what Petitioner was told

by the case manager, Robin Harris, and Petitioner justifiably relied on this information.

There was no other evidence in the record that contradicted this evidence that this was

CCMH’s policy.

12. There was no reason for Petitioner to question the reliability of the statements made to

her by the case manager, Robin Harris that the previous placement order was sufficient.

13. All of the records of the County suggest that the Medicaid recipient should have been

stepped up to Level III. Petitioner played no role in the assessment that was done by the

treatment team or any of the determinations of what level Petitioner’s placement should be.

Petitioner received the referral and relied upon the County’s representation that they had a

service order in place and that the prior service orders were valid.

14. That the Medicaid recipient had alternated between Level III and Level II placement for a

number of years and it was Robin L. Harris, the case manager, that placed the Minor with

Petitioner through CCMH’s portal for Residential treatment-Level III placement “as a

step-up in placement from a level II treatment facility due to an increase in aggressive

behavior in the previous (Level II therapeutic placement.” (Pet. Ex. D (January 10, 2003

Admission Note signed by Case Manager and Exhibit E).

15. That the minor Medicaid recipient was a ward of the state at the time recipient was placed

with Petitioner.

16. That the physician whose responsibility it was to sign new service order for the recipient

was a member of the treatment team that decided the Medicaid recipient’s condition had

worsened and therefore needed to be placed in a Level III treatment facility. The record

is devoid of evidence as to why the physician did not do so at the time the decision was

made by the treatment team for Level III placement. The County’s policy of not requiring

a new signed service order was consistent with what transpired in this case.

17.  That the case manager and physician responsible for signing any needed service orders the were either employees or agents of CCMH and agents of the Respondent for purpose of

administering and managing the State Medicaid plan with respect to this recipient.

18.  The case manager and members of the treatment team had the initial responsibility to

make sure the proper documents were in place to assure continued residential treatment to

the Medicaid recipient, a minor ward of the State.

19. That there is no dispute regarding the quantity or quality of care and services rendered to

the Minor Medicaid Recipient or the rate of reimbursement charged therewith.

20. That the Medicaid recipient was the first resident in Petitioner’s residential facility, and

Petitioner was not allowed to review the recipient’s records due to the HIPPA privacy

rules. (Resp. Ex. A)

21. That the undersigned takes official notice that cooperation between County area authorities, Division of Medical Assistance and providers is critical to the administration of mental health care to Medicaid recipients. After failing obtain to obtain another Level III Treatment order, the very issue which brought about this contested case, cooperation from CCMH with Petitioner was woefully lacking in this case. Petitioner could not get anyone from CCMH to respond to her with respect to the informal appeal with Respondent. Communication between Respondent and CCMH was also lacking. While Respondent takes the position that it is the sole responsibility of the Petitioner to prove they have fully complied with the Medicaid Rules and Clinical Policies, specifically, to make sure a proper service order was in place, it is indisputable that the County Area Program plays a role in assuring that the placement was proper. In this case, the case manager initiated placement and she, along with other members of the treatment team

determined the recipient should be placed in a Level III facility. There was no evidence

whatsoever that the Respondent contacted CCMH to determine the facts of this case.

22. There are no allegations of fraud, dishonesty, reckless or intentional disregard of policies or any other allegations of inadequacy of documentation by the Petitioner in this contested case.

CONCLUSIONS OF LAW

1. The Office of Administrative Hearings has jurisdiction over the subject matter and

the parties to this contested case, and this matter is properly before the undersigned

Administrative Law Judge.

2. Respondent is responsible for administering and managing the State Medicaid Plan

and program. Pursuant to N.C.G.S. § 108-54, Respondent is authorized to adopt rules and

regulations for program operation. This authority includes investigating provider abuse as

found in 10A N.C.A.C. 22F.0202 et seq.

3. The participation agreement directs the provider to abide by Medicaid rules and regulations governing provider’s special area of expertise.

4. By signing the participation agreement, Petitioner accepted the responsibility of

providing a service to Respondent’s clients, and agreed to follow Medicaid rules and

regulations. In response, Respondent agreed to pay Petitioner for its services.

5. Petitioner met its burden of proving it substantially complied with Clinical Policy 8D

and other Medicaid Rules when it provided Residential Treatment-Level III services to

the Medicaid recipient without a new service order for the January 2003 admission to

Petitioner’s Residential Treatment – Level III facility.

6. 10A NCAC 22F .0601(b) provides, in relevant part, that Petitioner “may argue all or

part of a recoupment imposed by the Medicaid Agency.” Because Petitioner rendered the

services and did not violate the participation agreement, Medicaid rules, or Medicaid

regulations, Respondent should not be permitted to recoup the $82,023.08 from

Petitioner.

7.  Petitioner has met its burden of proof and has shown by the preponderance of the

evidence that Respondent acted erroneously, failed to use proper procedure, acted

arbitrarily or capriciously, failed to act as required by law or rule, deprived Petitioner of

property, or otherwise substantially prejudiced Petitioner’s rights, in requesting

Petitioner to repay the Medicaid reimbursements Respondent paid Petitioner for services

rendered.

8.  One remedy Respondent has available to it is to recover in full any improper payments the provider received. 10A N.C.A.C. 22F.0302©(2). However, this rule also allows for lesser sanctions where warranted, including 1. To place provider on probation with terms and conditions for continued participation in the program; 2. To negotiate a financial settlement with the provider; 3. impose remedial measures to include a monitoring program of the provider’s Medicaid practice terminating with a “follow-up” review to ensure corrective measures have been introduced; and 4. To issue a warning letter notifying the provider that he must not continue his aberrant practices or he will be subject to further division actions.

9.  Petitioner acted in good faith and reasonably and justifiably relied upon the information provided by the case manager that once a service order had ever been signed by a physician for authorization of a service, the service order was not signed again if the service needed to be re-implemented.

10.  Petitioner did not act fraudulently, dishonestly or recklessly or intentionally in attempting to comply fully with the Medicaid rules and Respondent’s policies. No other evidence of failing to obtain proper documentation was present in this contested case.

11.  Even if the undersigned were to find that Petitioner violated Policy 8D, which I do not find as a fact or as a matter of law, the remedy imposed by Respondent of recouping the $82,023.08 is so harsh under the specific facts of this case that it violates all notions of fairness and due process and to impose such a penalty would be unconsciousable.

12.  That the case manager and physician responsible for signing any needed service orders were either employees or agents of CCMH and agents of the Respondent for the purpose of administering and managing the State Medicaid plan with respect to this recipient.

DECISION

Based upon the foregoing Findings of Fact and Conclusions of Law, the undersigned

determines that Respondent’s Decision that Petitioner must repay $82,023.08 to Medicaid for

overpayments, should be REVERSED.

ORDER

It is hereby ordered that the agency serve a copy of the Final Decision on the Office of

Administrative Hearings, 6714 Mail Service Center, Raleigh, N.C. 27699-6714.

NOTICE

The agency making the final decision will review the decision of the Administrative Law Judge in this contested case per N.C.G.S. Section 150B-36(a) and N.C.GH.S. Section 150B-36(b),(b1), and (b2). The agency making the final decision is required to give each party an opportunity to file exceptions to the decision of the Administrative Law Judge and to prevent written argument to those in the agency who will make the final decision. The agency is required by N.C.G.S. Section 150B-36(b3) to serve a copy of the final decision on all parties and to furnish a copy to the parties’ attorney of record and to the Office of Administrative Hearings.

The agency that will make the final decision in this contested case is the N.C. Department of Health and Human Services, Division of Facility Services.

This the 29th day May 2008.

______

Joe L. Webster

Administrative Law Judge

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