Medicaid Billing Errors Roil Industry

By Garrett Daniel

Originally published by NC Capitol Connection on June 9, 2015
Reprinted with permission from NC Capitol Connection

Medicaid billing errors and the attempt to rectify them are wreaking havoc with the finances of thousands of North Carolina doctors and hospitals.

The state’s Division of Medical Assistance, which administers Medicaid and is located in the Department of Health and Human Services, is attempting to recover $20 million from 29,000 Medicaid providers, payments DMA officials say the providers received in error.

This problem begins with a provision in the 2013 state budget (later modified in 2014) that reduced reimbursement rates by 3 percent to providers of several services, including physicians, inpatient hospital services, dental and nursing homes. The rate reductions were scheduled to be effective as of Jan. 1, 2014, but the state’s new Medicaid billing system – known as NC Tracks – has been plagued with problems.

When NC Tracks was rolled out in mid-2013, “Glitches in the system created months of delays and tens of thousands of dollars in unpaid services for providers,” said Steve Shore, former director of the North Carolina Pediatric Society. He admitted problems with NC Tracks were widespread, the system had communication problems, and was confusing.

Service providers continued to be reimbursed by Medicaid at the old rates while the $500 million NC Tracks system underwent updates until March of this year. (Some primary care physicians who were eligible for temporary enhanced Medicaid reimbursements under Obamacare were slated for the cut effective Jan. 1, 2015.) Now NC DHHS is clawing back those “overpayments.”

Providers were not provided any payment plan options to repay Medicaid for these “reprocessed” reimbursements. Instead, some providers are seeing sizeable chunks garnished out of their current reimbursement checks, presenting significant cash flow challenges. And because of massive weekly billing reports – sometimes totaling thousands of pages – Medicaid providers don’t have the time or resources to verify the amount or accuracy of the repayments being seized by the Division of Medical Assistance.

Moreover, the state failed to institute reforms meant to at least partially offset the cuts. The 3 percent reduction included in the 2013 budget was originally intended to be a part of a broader shared savings plan to “provide incentives to provide effective and efficient care that results in positive outcomes for Medicaid and N.C. Health Choice beneficiaries.” The shared savings plan was to be designed in 2014 and use a portion of the funds saved from the rate reduction to reimburse providers demonstrating “effective and efficient” care to patients.

The 2014 adjustment to the law, however, eliminated the shared savings plan, and the financial incentives that went along with it, while keeping the 3 percent rate reduction intact.

The April 2015 “North Carolina Medicaid Special Bulletin” from the Division of Medical Assistance highlighted the amount of claims that need to be reprocessed because of the implementation delay. Some 7.3 million claims are to be reprocessed, totaling $20.4 million and affecting nearly 29,000 Medicaid providers. Some practices are finding that they owe tens of thousands of dollars to the Department, with the largest single repayment topping $81,000.

Officials at the Department claim this should not have come as a surprise to providers due to the fact that the changes were announced in the January 2014 “North Carolina Medicaid Special Bulletin” and providers were notified that they were going to have pay the retroactive reduction from the initial start date.

Dr. Robin Cummings, former Deputy Secretary of the Department, was quoted in an article as saying that “all along, we’ve been communicating with our provider groups that this is coming, and so, yeah, multiple times, this should not be a surprise.”

Opposition has arisen from medical associations and individual providers about the department’s ex post facto collection of pay. Critics say the medical industry was not expecting these rate cuts to be collected retroactively, and it may even force some provider practices to close.

Opponents argue that since the providers were not responsible for the delay, they should not be “punished” for receiving payments without the 3 percent reduction deducted. The Chief Executive Officer of the North Carolina Medical Society, Robert Seligson, went on to say that “they don’t go back on any piece of legislation and say, well, we just passed a law banning smoking, now we’re going to hold you accountable for a smoking violation a year ago when the law wasn’t in effect.”

In an article by NC Health News, Greg Griggs of the North Carolina Academy of Family Physicians claimed, “It is one thing to make the cuts going forward, but to take money back, especially for that period of time, is pretty significant for people who’ve been willing to take care of our most needy citizens.”

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