Legal Notice

Commonwealth of Virginia

Department of Medical Assistance Services

Notice Regarding the Cancellation/Rescheduling of the September 11, 2017, Medicaid Appeals Workgroup

The Department of Medical Assistance Services (DMAS) scheduled a meeting of the Medicaid Appeals Workgroup for Monday September 11, 2017. Representatives from the Virginia Bar Association requested that DMAS cancel that meeting on the morning of Monday September 11 due to the fact that their members would not be able to attend. Without the participation of the members of the Virginia Bar Association, the Workgroup would not have met its intended purpose. Therefore, DMAS has rescheduled the meeting for Wednesday, September 27th.

In order to ensure the efforts of the Workgroup are as productive as possible, DMAS has summarized the information DMAS staff intended to present to the Workgroup at the September 11 meeting below. In addition, DMAS invites the Workgroup and members of the public to submit comment regarding the information presented below.

1. Discussion with Center for Medicare and Medicaid Services

DMAS is required to repay to the federal Centers for Medicare and Medicaid Services (CMS) approximately fifty percent of all monies that the Agency retracts from providers through the audit process.   Therefore, one of the primary questions for the Workgroup is whether CMS would approve the implementation of a substantial compliance or material breach standard for DMAS retractions and appeals.  In order to address this essential question DMAS staff held a teleconference with CMS representatives on August 31, 2017.  During this call DMAS presented three separate appeal scenarios based upon actual cases.  DMAS used appeals often cited as examples of unfair or inequitable cases -- those involving retractions of multiple service days for lack of a signature or incorrect documentation.  DMAS also queried whether CMS would adjust their state audit pay back requirements if the Commonwealth implemented a substantial compliance/material breach review standard.

CMS responded that, with respect to state provider audit paybacks, CMS follows a strict documentation compliance standard from the federal Office of the Inspector General.  These standards do not recognize substantial compliance or material breach.  In applying the federal standard to the examples DMAS presented, CMS stated that they would require the full amount of the federal payback in each case regardless of any adjustments DMAS might make based upon substantial compliance or material breach.  They affirmed that federal law prevails over state law, and therefore Virginia would be required to make up the difference in the payback amounts owed under federal standards, regardless of state retraction and appeal standards.   

2. DMAS Addresses Requested Statistics

In order to address a question raised by the Workgroup about the “net” results of audits through the appeal process, DMAS reviewed overpayment letters issued from January 1, 2015 through December 31, 2016.  Of the approximately $38 million of overpayments identified, $18 million were not appealed.  For the $20 million appealed, DMAS retained close to $12 million after the appeal process was concluded (through Circuit Court and removing attorney fees paid).  Therefore, for the two-year period reviewed, the net result of the audits was approximately $30 million returned to the Medicaid program.

Various members of the Workgroup also asked DMAS to provide statistics about the results of informal appeals.  611 audit decisions were issued between 2014-2016, broken down into 293 completely upheld, 100 not timely filed, and 218 where a reduction in the overpayment occurred.

DMAS shall provide a presentation of all requested statistics at the rescheduled September 27, 2017 Workgroup Meeting.

3. Process Change for Consideration from Appeals

Some Workgroup members expressed a desire for the ability to present a settlement offer to DMAS at the informal appeal level, rather than filing a formal appeal. DMAS is considering developing a proposal that would authorize the formal appeal representative to discuss and consider any settlement offer made at the informal appeal level, provided this process is completed in a timely fashion prior to the regulatory deadline for issuance of the informal appeal decision.  The Formal Appeal Representative would then submit the offer to DMAS Management for a response and, assuming the agency wishes to settle, would obtain the Office of the Attorney General’s approval. This proposal allows providers the opportunity to submit settlement offers during the informal appeal, without the need for filing a formal appeal.

4. Process Changes for Consideration from Program Integrity (PI)

DMAS’s Office of PI presents the following discussion topics in response to provider concerns:

a. Potentially extending the period between the preliminary letter and the overpayment report, to an agreed upon time frame – Currently Program Integrity allows providers 30 days to provide additional documentation that may possibly mitigate audit findings identified during the preliminary review process.

b. Shortening the audit period – DMAS shall work with providers to fully implement a change in the claims period under review from 15 to 12 months.  Reducing the claims period will limit provider burden as it relates to gathering medical documentation for review and lessen any potential overpayment amounts.  Also, the claims period will apply to all provider types which will ensure consistency and fairness.

c. Including provider groups and stakeholders in error matrix process – Every year prior to the beginning of the new audit cycle, PI staff meet with subject matter experts and receive suggestions and recommendations for each error code within the audit matrix.  This process gives PI guidance as to what error codes are worthy of an audit.  PI also uses appeals findings and provider concerns as guidance.  More provider involvement in this process will allow for more expertise from the field and will provide PI a better understanding of error codes that providers feel are important and accurately reflect the care they render Medicaid recipients.

5. Medicaid Fraud Control Unit (MFCU)

 The MFCU appreciated the open discussion during the initial meeting and the perspective it provided on the concerns of the provider community and DMAS staff. DMAS audits are integral to the fraud detection and prevention efforts of the MFCU. MFCU investigations, prosecutions and civil actions are primarily driven through a complaint based system. MFCU does not conduct routine audits and relies, in part, on DMAS audits as a source of referrals. Accordingly, the first indication that there may be a concern with a provider is the DMAS audit process. MFCU routinely communicates with DMAS on a number of topics and the have developed a strong dialogue related to their concerns and referrals. If an audit shows indications of fraud – billing for services not provided, upcoding, patient harm, stock notes/text, consistently misdated materials, etc. those matters may be brought to the attention of the MFCU. A number of audits have been referred from DMAS for review by MFCU – of the current 108 open investigations, 31 came from DMAS referrals.  In addition, if MFCU receives a referral thorough the MFCU hotline, MFCU contacts DMAS to discuss previous audits of the provider. MFCU would need to see any proposed audit process changes to appreciate if such changes could impact the ability to detect a pattern or practice of conduct that is indicative of fraud.

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DMAS has been directed by the General Assembly to convene the Medicaid Appeals Workgroup. The Workgroup is mandated to develop a plan to avoid or adjust retractions for non-material breaches of the Provider Participation Agreement when the provider has substantially complied with the Provider Participation Agreement. The plan shall include an assessment of any administrative financial impact that implementation of such plan would have on the department and an analysis of any implications for the department's efforts to combat fraud, waste, and abuse. DMAS invites the Workgroup and members of the public to submit public comment with suggestions and recommendations on how to meet the mandate of the General Assembly considering the feedback from CMS noted above.