Q&A with Jeffrey S. Baird
by Jeffrey S. Baird
March 23, 2012

Jeffrey S. Baird is chairman of the Health Care Group of Brown & Fortunato, a law firm based in Amarillo, Texas. He represents HME providers, pharmacies and other health care providers throughout the United States. Here is a Q&A conversation with him about increasing audits and investigations involving state Medicaid programs:

In addition to being besieged by Medicare prepayment reviews and post-payment audits, I am seeing an increase in activity by state Medicaid programs. What is going on?

With 78 million baby boomers retiring at the rate of 10,000 per day, Medicare will continue to be a pivotal part of our nation’s health care delivery system. At the same time, the state Medicaid programs are increasingly taking a major role in how health care is delivered. This is due to two fundamental reasons: the number of Americans falling below the federal poverty line is increasing at an alarming rate; and the Patient Protection and Affordable Care Act (PPACA) mandates that millions of uninsured Americans must be added to state Medicaid rolls.

Why are state Medicaid programs becoming more aggressive in their audit and investigation activities?

The increased aggressiveness of state Medicaid programs is due to several factors:
• Because of funding shortages, state Medicaid programs are aggressively trying to recoup money previously paid—that which the programs believe should not have been paid.
• Medicaid programs are following Medicare’s lead.
• Medicaid agencies are becoming more sophisticated in policing providers.
• Recent federal legislation places additional responsibilities on Medicaid programs, and provides funding to fulfill the responsibilities.

What recent federal legislation are you talking about?

Under the PPACA, providers enrolling or re-enrolling in Medicare, Medicaid, or CHIP will be subject to screening measures. Providers will be subject to licensure checks and, if the Department of Health and Human Services (HHS) so determines, additional screening measures, such as criminal background checks, fingerprinting, database checks, and unscheduled and unannounced site visits. In short, Medicare and Medicaid are moving away from “pay and chase” to “guarding the henhouse.”

Is it true that PPACA mandates a number of disclosures by the HME provider?

Yes. PPACA states that providers enrolling or re-enrolling in Medicare, Medicaid, or CHIP will be subject to new disclosure requirements. Applicants will be required to disclose current or previous affiliations, directly or indirectly, with any provider that has uncollected debt, been subject to payment suspension under a federal health care program, has been excluded from participating in a federal health care program, or has had its billing privileges denied or revoked. The provider may be denied enrollment if such affiliations pose an undue risk of fraud, waste, or abuse.

What else does PPACA say?

PPACA provides that HHS may adjust payments to a provider that has the same tax ID number as a provider that owes past-due obligations under Medicare, Medicaid or CHIP, regardless of the provider’s Medicare billing number or NPI. Lastly, PPACA provides that states must establish contracts with RACs for the purpose of identifying underpayments and overpayments and recouping overpayments under the state Medicaid plan or any waiver of the state plan.

Is there any other federal legislation that affects Medicaid providers?

Yes. To encourage states to pursue Medicaid fraud more vigorously, the U.S. Congress enacted Section 6031 of the Deficit Reduction Act of 2005. This section is entitled “Encouraging the Enactment of State False Claims Acts,” and it provides a financial incentive for states to enact false claims laws similar to the federal False Claims Act. When a state Medicaid agency detects an overpayment, it is required to repay the federal government’s share of the overpayment within 60 days, whether or not it has recovered the overpayment from the provider. Section 6031 provides that if a state has a false claims law in effect that meets certain requirements then the share of recoveries under the law that must be repaid to the federal government is reduced by 10 percent.

OK, we have talked about federal legislation that affects Medicaid providers. Are there any state-specific laws that the Medicaid provider must be award of?

All states have one or more anti-kickback statutes that are similar to the Medicare anti-kickback statute. The state statutes will have the following words in their titles: kickback; referral; fee splitting; patient brokering; and similar words. A number of state statutes will apply only if the payer is the state’s Medicaid program; in other states, the statute applies regardless of whether the payer is Medicaid or a commercial insurer. In addition, a number of states have one or more false claims act statutes that are similar to the federal False Claims Act. Lastly, all state Medicaid programs have the authority to conduct audits and investigations. For example, Florida Medicaid regulations mandate that the provider permit “the (Medicaid) agency, the (state) attorney general, the federal government, and the authorized agents of each of these entities access to all Medicaid-related information, which may be in the form of records, logs, documents, or computer files, and other information pertaining to services or goods billed to the Medicaid program, including access to all patient records and other provider information if the provider cannot easily separate records for Medicaid patients from other records.”

So what does all this mean to the HME provider that bills state Medicaid programs?

For HME companies that bill state Medicaid programs, the bottom line is this: the provider must be as vigilant in understanding and adhering to state Medicaid regulations as the provider does with Medicare regulations and guidance. If the provider focuses only on Medicare guidelines, but gives scant attention to Medicaid guidelines, then the provider might be blindsided by a Medicaid audit or investigation.