Download a PDF of the Current Issue 2015 Volume 12 Number 3 July- September

Potential Long Lasting Repercussions of Medicaid Audits

Richard J. Brooderson, Ph.D., Esq.
JoAnn M. Guerrero, Esq., LHRM and Gregory A. Chaires, Esq.
9-4-1 In the past, a Medicaid audit was annoying, intrusive, costly, and frustrating. While the procedure for Medicaid audits have not eased any of those issues, newly implemented statutes and changes to the Florida Medical Practice Act have added a new and significant complexity to defending Medicaid and Medicare audits.   Not only has Medicaid increased its fines regarding decisions of overpayments, the Department of Health now has a directive that should a provider be terminated for cause from the Medicaid program, that provider’s professional license will not be renewed. In the past, fines for violation of the Medicaid payment rules were minimal ($1,000$5,000). Now, however, the fines have increased to $1,000 per violation cited and up to a maximum of $20,000, or the total repayment demand, whichever is less.   In the past, many Medicaid providers would ignore or regard repayment demands lightly. At times, providers would merely acquiesce to the request without putting up any defense to the audit, as the cost of defending the audit generally outweighed the amount demanded on repayment. In the past several years, however, the repayment demands have dramatically increased, due to the use of extrapolation; thus making it necessary for providers to respond to the audits in a more proactive way. Even with those demands, many providers have chosen to ignore audit requests or violate final orders with regard to settlement agreements, as Medicaid did not strongly seek reimbursement in the past. As a result, many providers would merely be terminated from the program. After enduring lengthy audits, providers often would welcome the opportunity to stop participating in Medicaid.   Two years ago, however, the Florida Legislature passed what has been referred to as Senate Bill 1986 which is presently codified under §456.063, Fla. Stat. That statute states, in pertinent part:   (2)   Each board within the jurisdiction of the department, or the department if there is no board, shall refuse to admit a candidate to any examination and refuse to issue a license, certificate, or registration to any applicant if the candidate or applicant or any principal, officer, agent, managing employee, or affiliated person of the applicant: ….   (c) Has been terminated for cause from the Florida Medicaid program pursuant to s. 409.913, unless the candidate or applicant has been in good standing with the Florida Medicaid program for the most recent 5 years;   (d) Has been terminated for cause, pursuant to the appeals procedures established by the state, from any other state Medicaid program, unless the candidate or applicant has been in good standing with a state Medicaid program for the most recent 5 years and the termination occurred at least 20 years before the date of the application; or (e) Is currently listed on the United States Department of Health and Human Services   Office of Inspector General’s List of Excluded Individuals and Entities. [Amendment in 2012]   Subsection 2(c) clearly indicates that the Department of Health can deny and “refuse to issue a license” to any healthcare provider who has been terminated for cause from the Florida Medicaid program. Of note, the additional sentence to include a “good standing” exception has been a focus of some interest. On its face, it would appear that this sentence may be an important exception. However, §409.913, Fla. Stat. requires a sanction of suspension for one year following any indictment for Medicaid or Medicare fraud, regardless of outcome. Thus, even if a provider is not convicted, they still run the risk of termination from the program pursuant to §409.913, Fla. Stat. Regardless of whether the provider has had a stellar record, that one-year suspension will remove the “good standing” exception as a means of protection for that provider. Initially, because all Medicaid audits are conducted pursuant to §409.913, Fla. Stat. through Medicaid Program Integrity, it will likely be argued that a failure to comply with the audit request or failure to comply with the terms of the final order would also be considered outside of the “good standing” exception and thus, the provider would lose that protection through such inaction or non-compliance. In fact, it could even be argued that any audit even one which is complied with by the provider might be considered to remove the “good standing” exception. It is a rare circumstance that Medicaid would terminate a provider for cause pursuant to §409.913 Fla. Stat without any prior audit or other history with Medicaid. Therefore, while it may appear that the exception sentence might be helpful, it is anticipated that Medicaid will assert that any action pursuant to §409.913, Fla. Stat. would remove that exception.   Fla. Stat. §456.063(2) (d), raises its own concerns. What may appear to be a disregarded subsection has significant impact, especially for Florida providers who are licensed in other states. For example, like most other states, the state of New York reviews Board of Medicine orders and other final agency actions in Florida. Interestingly, in New York, they automatically refer all investigations to their state Medicaid review board. It has come to our attention that in many circumstances, even those physicians with expired New York medical licenses will have their privileges to participate in New York Medicaid revoked based upon actions taken in Florida. We have seen this occur even in circumstances where the Florida actions did not involve Medicaid. Thus, should a provider possess even an expired New York state medical license and his or her Florida medical license is acted upon via a final order, whether through a settlement agreement or otherwise; it is important that the provider engage a New York attorney to make sure that there is no action taken against the provider’s expired New York license by New York Medicaid. This is an unfortunate pitfall that has been created by this new statute. While we have yet to see a Florida practitioner lose their Florida medical license based upon this scenario, no one wants to be the “example.”   Another very important change in 2012 was the addition of §456.063(2) (e), Fla. Stat. While This may not apply to many providers, for one reason or another, should a provider be placed on the Office of Inspector General (OIG) exclusion list, subsection (e) would be triggered. As such, we recommend that providers periodically check the OIG exclusion list, both to assure that the provider’s name is not inadvertently placed on the list, but also to ensure that any of the provider’s employees are not included on that list. While an employee’s exclusion would not lead to any direct action against the provider employer’s license, it will likely lead to repayments and fines to the OIG for submitting payments on behalf of the excluded participant. To view this list, visit http://exclusions.oig.hhs.gov/.   These recent changes to Florida law have added a new wrinkle to the defense of Medicaid audits. In the past, providers often ignored Medicaid audits due to the fact that they no longer desired to participate in Medicaid following the audit process. However, such inaction will now lead to significant, if not permanent effects upon their medical licenses. The take-home message is to be cautious, as Medicaid audits may affect much more than your pocketbook.