MCOs Terminating Providers and Restricting the Freedom of Choice of Providers for Medicaid Recipients: Going To Far?

by Williams Mullen
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Who remembers Dennis Kozlowski?  He is the former CEO of Tyco International, and his net worth is estimated at $600 million.  However, his residence? A mansion? On his own island?

Nope.  He is currently serving 8.33 to 25 years at the Mid-State Correctional Facility in Marcy, New York.

In 2005 he was convicted of crimes related to $81 million in unauthorized bonuses and the payment by Tyco of a $20 million investment banking fee to Frank Walsh, a former Tyco director.  See Wikipedia.

So here you have this “rich-as-crap,” millionaire…going about his business, no doubt believing that he is smarter than anyone else and that he will never get caught.  Then all Hades breaks lose and he goes from Armani $10,000 suits to an orange, cotton jumpsuit.  Talk about riches to rags!

Now, I am by no means comparing Kozlowski’s criminal actions to NC managed care organizations (MCO).  By no means.  I am merely demonstrating that it is easy to continue doing the wrong thing…UNTIL you get caught.

Here’s a less dramatic example:

My eight-year-old has a hard time with food.  She eats slowly and we constantly have to tell her to eat.  (We think she has sinus problems and can’t taste the food…which we are looking into).  Anyway, last week when we cleaned her room, I found a stack of bags of carrots.  Like 10 bags of carrots.  I had been putting bags of carrots in her lunch and each day, she was hiding the carrots under the bed.  She didn’t want me to know that she wasn’t eating her carrots.  Again, she thought she wouldn’t get caught, so she kept doing the wrong thing….UNTIL she got caught.

Here in North Carolina, we have now set up this MCO system for Medicaid recipients needing behavioral health care services.

These MCOs have only gone live this past year.  These are new entities.  Our 1915 b/c Waiver (Waiver), which gives the MCOs the authority to do certain things is new. 

But, what if, these new entities are NOT following the Waiver?

Won’t they just keep not following the Waiver until they get caught?

That’s what Kozlowski did.  That’s what my 8-year-old did.

If you know Medicaid, you understand that federal law requires a “single state entity” to manage Medicaid.  In North Carolina the Department of Health and Human Services (DHHS), Division of Medical Assistance (DMA) is our “single state entity.” 

The Center for Medicare and Medicaid Services (CMS) is the federal agency that has to “ok” our State Plan and all Waivers.  The State Plan outlines the organization and function of DMA.  CMS has to authorize our State Plan, including each and every amendment to our State Plan.  Our State Plan is basically “The Law of Medicaid in NC.”  NC is required to follow the State Plan or risk losing federal funding for our Medicaid system.

Our Waivers, on the other hand, are our allowable exceptions to “The Law of Medicaid in NC.”  Think of the State Plan as the general rule and the Waivers as the exceptions.  Generally, all cars must stop at a red light.  The exceptions are police cars, ambulances and fire trucks with the sirens blaring and lights flashing.

Our State Plan states, generally, DHHS, DMA is the single state entity for Medicaid and must make all administrative and managerial decisions for the program.  The 1915 (b)/(c) Waiver says…well, the exception is that the local management entities (LMEs) or managed care organizations (MCOs) have SOME responsibilities. 

BTW: People in NC keep calling the MCOs:”LME/MCOs.”  In fact, I was at a meeting during which a a representative from DHHS called the MCOs ”LME/MCOs.”  The woman asking the question with the microphone asked, “Why don’t we just drop the “LME” portion and call them “MCOs,” not “LME/MCOs?”  To which the gentleman answered, “Old habits are hard to break.”

Our 1915 b/c Waiver “waives” Section 1902(a)(4) of the Social Security Act, the freedom of choice of providers.  Generally, a Medicaid recipient has the freedom to choose a provider from whom he or she wants to receive services.  Our Waiver says, “Ok, Medicaid recipient, you can choose from any provider within your MCO’s catchment area.”  Meaning, if Sally the Medicaid recipient lives in Wake county, Sally could choose any provider within Alliance’s catchment area, Cumberland, Durham, Wake and Johnson counties.

But the Waiver does not stop there.

In order for the federal government to allow NC to place this restriction on Medicaid recipients, because it is a restriction, NC had to make some promises.

We promised in our Waiver to the feds:

“These providers support this initiative and consumers have at least as much choice in individual providers as they had in the non-managed care environment.”

Hmmmmmm.

I do not have exact numbers, but I would wager that Alliance has terminated, refused to contract with, or denied a contract to at least 100 providers.  Considering in the recent RFP Alliance chose so few providers to serve its catchment area, I can only imagine how many providers no longer can provider services within Alliance’s catchment area.  100? 200?  See my blog: “An Ominous Cloud Looms Over NC’s Mental Health System! And Radix Malorum Est Cupiditas!”

Is terminating providers giving the consumers as much choice as they had in the non-managed care environment?

I think not.

 But who is going to stop them from continuing down this path of eliminating choice of providers within the catchment areas?

Obviously, DHHS has proved itself to be incapable of such a feat.

So the MCOs are going about their businesses…thinking no one will ever catch them…that they are free to do whatever they want…just like Kozlowski (without the criminal behavior…we hope)…just like my daughter hiding the carrots….

It’s human nature.

We just keep doing the same things over and over…UNTIL someone tells us we have to change. 

Who will tell the MCOs to follow the Waiver?  Will it take a judge?

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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