New Mexico Human Services Department Medical Assistance Division PO Box 2348 Susana Martinez, Governor Santa Fe, NM 87504-2348 Sidonie Squier, Secretary ‘Phone: (50S) 827-3103; Fax: (50S) 827-3185 June 15, 2012 ‘Ms, Jackie Gamer ‘Consortium Administrator ‘Consortium for Medicaid and Children’s Health Operations ‘Centers for Medicare & Medicaid Services 233 North Michigan Avenue, Suite 600 ‘Chicago, Illinois 60601 Re: Proposed Resolution of HHS OIG Audits of Medicaid Personal Care Services Provided by Certain Personal Care Providers in New Mexico Dear Ms. Gamer: ‘The purpose of this letter is to propose an overall resolution of the outstanding audits of “Medicaid pessonal care service providers in New Mexico. ‘The Office of Inspector General (OIG) has issued four audit reports reviewing personal care services provided by four personal care providers in New Mexico: Ambsreare Home Health (“Ambercare")(A-06-09-00062) (Final Audit) ‘Coordinated Home Health (“Coordinated”) (A-06-09-00068) (Draft Audit) Clovis Homecare, Inc. (*Clovis") (A-06-09-00117) (Dat Audit) Heritage Home Healtheare (“Heritage”) (A-06-09-00063) (Final Audit)’ ‘These are highly compliant providers and the State is encouraged by the results of the audits. None ofthe suited claims involved beneficiaries who were ineligible for prsoal care services, and in almos every case include inthe audit samples, there is no question that ae personal care tervins clained were infact provided. Moreover, the Stats hes been and conte to be vigilant abovt monitoring providers to ensure compliance with applicable Medicaid requirements Nonetheles, the OTG recommends that CMS disallow almost $17 milion in Drdments made to these four providers, which sntry a querer of the oa federal share paid for personal sare services provide by the four providers during the time periods covered by the suits ($70,760:987). "For pesonalcare services provided by Ambercare, Coordinated, and Heritage, the OIC reviewed claims submited from October 1, 2006 to September 30,2008, For Covis the O1G reviewed claims submited from October, 2008 to March 31,2009,‘The deficiencies on which the recommended recoupment is based are primarily predicated on the providers alleged non-compliance with various state requirements. As a practical matter, the burden of any recoupment would fll on the State because the providers could not possibly afford to pay the huge sums recommended by the OIG reports. I. The OIG Has Adopted an Overly Technical Approach. ‘As has been explained to CMS and the OIG in previous communication, the State is deeply cconcemed about the approach the OIG has taken in its four audits of personal care providers in New Mexico. The auditors have transformed every deviation from perfection inthe maintenance of case and attendant files that are several years old, and every delay in establishing or confirming provider qualifications, into an overpayment determination, without regard to whether the alleged deficiency is reflective of any mistaken payment tothe provider. A few examples illustrate ow narrow of an approach the OIG has taken: ‘+ Physician Authorization: For the only laim for which Ambercare allegedly failed to produce & physician authorization form predating the service date, Ambereare in fact provided such a form, but the handwritten date on the form was dificult to read due tothe poor qualityof the handwriting. The OIG would disallow this claim in fall ‘© 12 Hours of Annual Training: In $ ofthe sampled Heritage claims, the attendant completed 12 or more Fours of training within two weeks ofthe anniversary period (beginning onthe date of hire). This indicates the attendants were adequately trained, even if not within the technical bounds ofthe anniversary period. For one ofthe Ambercare claims, which were evaluated ona calendar year basis, an attendant provided services on January I and 2. It stretches credulity to believe that a State would find a violation of its requirements in such circumstances. The OIG would disallow ths claim in full, * Cardiopulmonary Resuscitation (CPRYFirst Aid Certification: For the sole CPRVFirst Aid- related “deficiency” in Clovis, the attendant had CPR and frst aid certification, bu this cettification lapsed before the services were provided. The provider alerted the attendant that the certification was lapsing and made numerous good faith efforts to contact the attendant to renew this certification, which the attendant completed within 6 months ofthe service date. ‘The OIG would disallow this claim in ful. * Tuberoulosis (TB) Testing: For 9 of 10 “deficiencies” in Clovis, and 8 of 9 “deficiencies” in ‘Coordinated, the attendant tested negative for TB after the services were furnished, demonstrating thatthe beneficiaries in question were not exposed to TB. The OIG would disallow this claim in full. ‘The OIG then extrapolates these results and others tothe entre universe of claims over the full period of the audit to arive at overpayment recovery recommendations forthe four providers {otaling nearly $17 million an amount that is utterly disproportional tothe actual degree of provider misclining and would represent a significant outlay of State funds. ‘The auditors’ recommended recoupment is particularly inappropriate given the high level of provider performance reflected in the audit results which demonstrate that the providers correctly billed a substantial majority of the claims. The audit results confirm that the federal Medicaid funds in question overwhelmingly were used as they were intended to be used—to pay forcligible services to eligible recipients in accordance with approved payment rates. There is no legitimate cause to seek recoupment in the amounts recommended by the OIG. Before proposing a resolution ofthe audits, we wish to comment on the “deficiencies” found by the O1G. IL The Overwhelming Majority of Alleged Deficiencies Involved State Law Violations for Which Recoupment is Inappropriate. In each ofthe audits in question, almost all ofthe “deficiencies” for which the OIG seeks recoupment involve alleged non-compliance with State requirement, rather than federal regulations” It would be inappropriate to withhold federal funding for these types of “deficiencies” because nating inthe applicable State laws require that funds be withheld simply because a case record fails to document compliance with these requirements, The State documentation regulations in effect during the audit period required recoupment only if HSD audits “show inappropriate billing for services," N.M. Admin. Code § 8.315.4,11(14) (2004) (emphasis added), The current State regulations similarly focus upon whether the underlying services were in fact rendered by requiring “recoupment of funds ... when audits show inappropriate billing o inappropriate documentation for services." Id. § 8.315.4.12B(8) (2012) (emphasis added), Instead, when the State determines that these requirements are not being followed, te Quality Assistance Bureau (*QAB") has a policy and practice of issuing corrective action plans to prevent future non-compliance. Corrective action, therefore, isthe appropriate remedy for failures to comply with the State laws in question. The four personal care providers at issue here have already voluntarily undertaken considerable corrective actions that help ensure future compliance with the underlying State and Federal requirements Additional policy concems caution against recouping for state documentation-related “deficiencies.” Firs, the wide variation in state requirements makes it particularly unfair to penalize states for violations of state documentation requirements, as such a remedy would result in significantly discrepazt results across states. The OIG itself has expressly found that “(s]tates ‘had established 301 sets of attendant requirements” that “often varied among the programs within a State and/or the delivery models within programs.” OIG, States’ Requirements for ‘Medicaid-Funded Personal Care Service Attendants, OEI-07-05-260, ati (Dec. 2006). In addition, ecoupment would discourage states from adopting, and could even incentivize them to ‘repeal, robust regulatory regimes to ensure that providers maintain high standards of eare. Thus, ‘ecoupment—which is a odds with both New Mexico state law and state practice—would actually undermine program quality IIL The O1G Identifed Only Isolated Instances of Overbilling. ‘The findings reveal no pattem or practice of non-compliance by the New Mexico personal care providers in question. To the conrary, the OIG auditors identified only afew, discrete instances ® CPR/First Aid certification, annual training, approval for legal guardian service delivery, tuberculosis testing, end nursing supervsion ae required by tate law.of overbilling, amounting to $1444.16 ofthe total $115,064 (Federal share) in personal care ‘option (“PCO”) claims reviewed inthe four audits. This would mean that the providers" calletive erorrate is only 1.26 percent, fa es than the tolerance levels established in vrious quality contro programs in Medicaid and other federally funded programs.’ In these programs, itis standard federal policy, when overall peeformance is within the established tolerance limits, to seek recoveses only for specific overpayments actually identified, and not to extrapolate the results ofa review to the caseload as a whole. That policy should be applied to the New Mexico PCO audits, where the level of erroneous payments is fr below the error rates described above. In addition, extrapolation ofthe results tothe caseload as a whole to recover nearly $17 million from the State is especially inappropriate given the ongoing efforts of the State to assure high ‘quality and compliant performance by PCO providers. HSD has maintained continuous ‘oversight over personal care services provided in the State. Even after the conversion to ‘managed care delivery system, effective April 1, 2009, the State nonetheless continues to overse= and monitor personal care providers, in addition to requiring the managed care organizations to bear responsibility for ensuring that providers comply wit applicable Medicaid requirements. ‘The managed care organizations have adopted claim processes that help assure that no ‘unsupported claims are paid, in part by requiring that timesheets be submitted before a claim will bbe paid. Moreover, the State is implementing an evidence-based program monitoring system called the “Continous Quality Improvement (CQ0) Model.” This is modeled after CMS's CQL ‘model for Home and Community Based Services waivers, and will greatly enhance the quality of| PCO services provided in the State. The State has taken a variety of other corrective measures Which are detailed in the appendix enclosed with HSD's response to each draft PCO audit, Proposed Reselution: For the reasons detailed above, a resolution of $1,444.16 would be fully warranted. This amount reflects the federal share of personal care payments made for claims submitted by Ambercare, Coordinated, Clovis, and Heritage for which there is affirmative evidence thatthe services were not provided (¢g, timesheets reflect a lower number of service hours than the 1ours for which the provider was paid). The State, however, acknowledges that ‘one of the providers (Ambercare) had 14 instances of incorrect billing. Ambercare's overall performance was still good and infact ts error rate measured against total billings was less then to percent, wll below tolerance levels that have been employed in federal programs. See supra note3. Nevertheless, in the interest of compromise and an effort to bring these audits to a conclusion, the State is proposing to extrapolate the incorrect billing amounts for that provider tc the universe of claims it submitted during the audit period. For the remaining providers (Clovis, Coordinated, and Heritage), extrapolation is unwarranted because each had only one isolated instance of ovetilling and there can be no argument that such an instance represents any » See, eg, 42CER. § 431.865 (establishing a3 percent tolerance limit for eligibility enors inthe Mosca Eligibility Quality Control program); 42 CFR. § 483.25(m) (requiring musing facilities to be fee of medication error rates ofS percent or greater, and be fre of significant medicatcn error), 45 CER, 6 205.2 (1980) (establishing 4 percent tolerance list for payment errors in the Aid to Families vith Dependent Children program).systemic patter of claiming for services that were not provided. Accordingly, the State Proposes that the four audits in question be resolved by its repayment of $194,541.75. HSD thanks CMS for considering this proposal. Please do not hesitate to contact Paula McGee, HSD/MAD Healthcare Operations Manager, at Paula McGee@state.nm us or (505) 827-6234 should you have any questions. Sincerely, Jalie B. Weinberg, Director ‘Medical Assistance Division Enclosure c Bill Brooks, Associate Regional Administrator, Region VI, CMS Sidonie Squier, HSD Secretary Brent Eames, HSD Deputy Secretary aula McGee, HSD/MAD Healthcare Operations Manager