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DEALING WITH THE TEXAS OIG

HCCA Southwest Regional Conference

Grapevine, Texas

February 21, 2014

DISCLAIMERS

�Do not represent the Texas Health and Human Services Commission Office of Inspector General.

�Do not speak on behalf of DLA Piper LLP (US). Personal opinions only.

�Not to be construed as legal advice. Each case will differ.

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FOUNDATIONS

AUTHORITY CLARIFIED

�Authority vested in OIG rather than HHSC

�Adds “prevention” and “detection”

�Adds “waste”

�Adds “audit, inspection, and review”

�Authority includes any state-administered health or human service program that is wholly or partly federally funded

GOVERNMENT CODE § 531.102

�Office of Inspector General responsible

�Prevention, detection, audit, inspection, review, and investigation

�Fraud, waste, and abuse

�Provision and delivery of

�All health and human services in the state

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GOVERNMENT CODE § 531.102

� Including state-administered health or human services that are wholly or partly federally funded

�Enforcement of state law relating to those services

�HHSC may obtain necessary information or technology

�Statute does not limit any other agency’s authority

FEDERAL COORDINATION

�Federal funding of Medicaid at approximately 60%

�State must report and repay any identified overpayments within 60 days or one year if related to fraud or abuse

�State must refund the federal share of that overpayment unless provider bankrupt or out of business

SIGNIFICANT MATTERS

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MEDICAID INCREASING

�Even without expansion, the Exchanges will capture some people currently eligible for Medicaid but unenrolled

�Estimated 300,000 new enrollees by end of 2014

�Assuming no poverty rate increases

�States reaching out to beneficiaries are seeing higher than expected growth though Exchanges

STAFFING EXPANSION

�Legislature authorized 127 new investigators and auditors

�New Medical Director and Dental Director

�Ensure that a qualified expert reviews

�Medical necessity findings and

�Quality of care findings

�Prior to any payment hold, recoupment, or penalties

STAFFING EXPANSION

�Legislature added five commissioned peace officers to the OIG Medicaid Provider Integrity section

�Administratively attached to Department of Public Safety.

�Must obtain Attorney General approval for some activities

�Access to certain databases and information

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EXPANDED FUNCTIONS

�New Intelligence Unit in Enforcement:

�LYNXeon graph pattern analytics

�Identified $ 100 M in suspicious claims by last June

�SSLC investigations of abuse, neglect, or exploitation extended to State Hospitals

PERENNIAL ISSUES

NEW RULES - INVESTIGATIONS

�Preliminary Investigation

�Begins within 30 days of receiving complaint

�Settlement discussions to avoid further investigation

�Routine payment correction by fiscal agent if no wrongdoing found

�Forward for full investigation

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�Preliminary report with findings

�Allegation

�Evidence reviewed

� Procedures used in preliminary investigation

�Findings

�Whether full investigation is warranted


�After Preliminary Investigation

�Full investigation if warranted

�Annual training for investigators required

�OIG required to post description and video on its website explaining process for determining payment holds

RULE AMENDMENT - AUTHORITY

�preventing, detecting, auditing, inspecting, reviewing and investigating fraud, abuse, overpayments, and waste in the provision and delivery of Medicaid and all other state-administered HHS programs and services that are wholly or partly federally funded;

�ensuring compliance with state law relating to the provision of health and human services.

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RULE AMENDMENTS - SANCTIONS

�New Violations

�Treating or billing for service to child not accompanied by authorized adult

�Privacy violations in marketing

�MCO failure to obtain prior authorization for marketing

�HITECH incentive program compliance

RULE AMENDMENTS - SANCTIONS

�Reinstatement

�Written finding of good cause required

�Contract cancellation

�Exclusions

DUE PROCESS - NOTICE

�Specific Basis of the Debt or Overpayment

�Description of Supporting Facts

�Representative Sample of Documents

�Extrapolation Methodology

�Calculation of Debt or Overpayment

�Amount of Debt or Overpayment

�Description of Due Process Remedies

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DUE PROCESS – INFORMAL RESOLUTION

� Informal Resolution Meetings (IRM)

�Provider Must Request Within 30 Days

�OIG Schedules IRM Within 60 Days

�OIG Gives 30 Days’ Advance Notice of IRM

�OIG Schedules Later Date Upon Provider’s Request

DUE PROCESS – INFORMAL RESOLUTION

� Informal Resolution Meetings (IRM)

�OIG Records IRM at No Expense to Provider

�Provider May Request Second IRM

�OIG Schedules Second IRM Within 45 Days and Gives 20 Days’ Advance Notice of Setting

DUE PROCESS - APPEALS

�Contested Case Hearings

�Payment Hold heard at SOAH

�Other Sanctions have Choice of Forum

�Provider Pays One-Half of SOAH Costs

�Provider Pays One-Half of Court Reporter Costs

�OIG Will Produce Estimate and Collect Costs in Advance

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DUE PROCESS - APPEALS

�Contested Case Hearings

�OIG Will Schedule Hearing Within 60 Days of Receiving Cost Deposit

�Trial in Travis County District Court

�Substantial Evidence Review

NON-RECURRING SUBJECTS

INITIATIVES – HOSPITAL UR

�New Hospital Utilization Review Rules

�Present on Admission conditions are grounds for disallowance

�“Any other DRG error” may be grounds for conducting a review

�Rule refers to policy in defining observation stay period

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INITIATIVES - WHISTLEBLOWER

�Election of Alternate Remedy

�Attorney General elects to work with OIG in an administrative hearing

�Whistleblower’s private attorney also prosecutes

�Cooperation between OIG, Attorney General, and private counsel against the provider

INITIATIVES - WHISTLEBLOWER

�Election of Alternate Remedy, Continued

�OIG access to whistleblower’s evidence

�Seal partially lifted in favor of OIG

�Relator identified, interviewed, or deposed

�Inside operational information

�Outside Counsel Contracts

THORNY SITUATIONS

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CHALLENGES – ORTHO AND DENTAL

�Mixed Results from Appeals

�First Major Opinion

�Validated OIG’s legal basis for action

�Validated OIG’s interpretation of law

�Accepted Provider’s interpretation of policy

�Found Provider’s testimony more persuasive than OIG’s expert witness


�Mixed Results from Appeals

�Second Major ALJ Opinion re Orthodontics

�Policy subject to professional interpretation

�Not fraud because OIG did not evaluate every patient

�Disregarded OIG’s expert witnesses

�Technical violations did not support payment hold


Election of Alternate Remedy

�ALJ Denied Participation of whistleblower in one case

�Second Major ALJ Opinion re Orthodontics was first alternate remedy proceeding

�Two Hearings in Early 2014

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LESSONS LEARNED - ORTHO AND DENTAL

�Unclear policy hard to enforce

�State held to proving its exact allegations

�ALJs imposed proportionality and reasonableness onto technical basis for sanctions

�Battle of experts decided in favor of Providers

�ALJs unpersuaded by modest sampling

CHALLENGES – HEARING AIDS

�Rule required billing at lowest of actual acquisition cost, invoice, or published fee

�HHSC policy published a fee schedule

�HHSC staff instructed verbally to bill the published fee or the usual and customary cost

�Providers billed according to the schedule, many times higher than acquisition cost

�OIG sought to recoup the difference or disallow payments

CHALLENGES – HEARING AIDS

�Providers complained, asking for clarity

�Providers asked HHSC to change the rule

�HHSC declined to change the rule and issued guidance that going forward, OIG would enforce as written

�OIG declined retroactive enforcement and published guidance that it would begin enforcing as written

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LESSONS LEARNED – HEARING AIDS

�A rule has the force of law. Policy does not.

�Cannot rely on verbal representations of agency staff

�Different divisions of agency have competing and conflicting interests, and they may contradict each other

�Concerted stakeholder efforts may help alleviate conflicted situations

GOOD FOR YOU

PRACTICAL ADVICE: ON-SITE

�Be nice! They are walking into an unknown situation.

�Keep copies of everything you provide.

� If possible, Bates stamp the copies you deliver and a copy for yourself

�32 field offices

�Transfers to reviewing experts and back

�May transfer to other agencies

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PRACTICAL ADVICE: AFTER ON-SITE

�Review the same charts and internal data you provided

�Rectify any overpayments you find

�Claims administrator

�Voluntary disclosure

� Identify and begin to address root causes

�Make needed improvements to compliance plan

PRACTICAL ADVICE: SANCTIONS

�Fight or Flight Decision

�No Complaining or Whining

�OIG required to collect from beneficiaries, too – even if overpayment due to a state error

�New Due Process Rights

�Assess Findings for weaknesses rejected in previous cases

PRACTICAL ADVICE - SANCTIONS

�State must repay 60% of overpayment findings to federal government

�Whether or not recouped from provider

�State’s essential choices limited to:

�Proceed to adverse ruling from ALJ

�Negotiate for lesser repayment and absorb fiscal loss of the federal refund

�Drive the provider into bankruptcy

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PRACTICAL ADVICE

�Make contact with the person indicated on the notice letter.

�During IRMs and other meetings, be polite. Intimidation tactics do not work.

�Articulate valid reasons why the OIG should reconsider its findings.

CONTACT INFORMATION

Karen Nelson

Of Counsel

DLA Piper LLP (US)

401 Congress Avenue

Suite 2500

Austin, TX 78701-3799

512-457-7000

[email protected]