have written a good deal about Medicaid temporary suspensions in the past. Well, my new colleague at Gordon & Rees, Knicole Emanuel (whose blog I have followed for years), recently pointed out that a recent federal OIG audit of California pediatric dentists participating in the state’s “Denti-Cal” (i.e., Medicaid for dentists) program found that 335 of those dentists – or about 8% of the pediatric dentists providing Medicaid services – were engaging in “questionable” billing practices. The formal OIG report is located here. The California state Medicaid agency – the Department of Health Care Services (DHCS) – has vowed to step up monitoring and take action “if needed.”

Uh-oh. We’ve been down this road before with DHCS. For those who don’t click through, in the summer of 2013, a joint investigation by CNN and the Center for Investigative Reporting “uncovered” a widespread pattern of suspicious Drug Medi-Cal (DMC) billing activity in the substance abuse treatment industry in Los Angeles County. The response by DHCS and its investigators and auditors – whether warranted or not – was draconian. I’ve heard estimates that a third of the DMC providers in LA County that were investigated were “temporarily” suspended by fall 2014. As is often the case with temporary suspensions, most of these providers essentially were forced to shut down. In my experience, the DMC providers with a sufficient source of DMC revenue to wait out the temporary suspensions survived; the ones without non-DMC revenue did not.

Knicole has a number of good tips and suggestions concerning the Medicaid audit and investigation process generally (and she should! She has a ton of experience doing this sort of work). I thought I’d chime in as well. In the past few years, our firm represented a number of California providers that were the target of a temporary suspension by DHCS.  All were in the context of the DMC crackdown alluded to above. Based on that experience, I have several California- and DHCS-specific tips to offer.

  • Under California Welfare & Institutions Code Section 14043.36(a), in addition to payment suspensions, providers will be temporarily suspended from participating in the Medi-Cal program altogether, and their NPI numbers will be deactivated, while they are under investigation. This is automatic. It doesn’t matter how much (or little) evidence of fraud there is, or what that evidence is – if the matter is referred to the California Department of Justice, the referred provider’s NPI is suspended, and its ability to treat Medi-Cal patients is stopped until the investigation is resolved. Oh, and these investigations can last a long time, especially in cases involving industry-wide crackdowns, where dozens (or more) of providers are being investigated simultaneously.
  • The audits are oftentimes hectic and incomplete. It’s not uncommon for auditors to be there for less than two hours. That 90 minute visit then becomes the entirety of the basis for a finding of credible evidence of fraud. Any evidence of compliance – or at least non-fraudulent activity – produced later is typically considered suspect.
  • In this regard, audited providers should always have staff members accompany and assist the auditors. Neverlet the auditors pull documents for themselves. Staff should repeatedly ask if the auditors have found everything they need, and offer assistance in finding any “missing” documents. I have seen more than one instance in which the auditors left to their own devices with a provider’s files couldn’t find documents, refused to ask for help in locating them, and then concluded that the documents didn’t exist – which, of course, became Exhibit 1 in support of the finding of credible evidence of fraud. Even if the provider finds and produces the “missing” documents after-the-fact, DHCS often will view them as fabricated.
  • Staff members of an audited provider should do whatever they can to identify and copy the documents reviewed by auditors immediately after (or even during) the audit. In my experience, half of the battle in defending a temporary suspension is trying to recreate what the auditors looked at.
  • Doublecheck the copies made by auditors. Again, I can’t stress this enough. If auditors overlook a document (say the back side of a two-sided document), and then subsequently can’t find it when they go back through their copies, they’re going to assume that the document didn’t exist. Don’t give them that opportunity.
  • Audits will almost always be unannounced. That means it is crucial now to go through your files and make sure they are as squeaky clean as possible. Providers will not have notice and lead time to do so before the auditors arrive. Providers should consult their attorneys if they are worried in this regard – many attorneys provide billing compliance self-audit services, and spending that money now may well save a provider many times the cost in future legal fees if a temporary suspension can be avoided.
  • Providers should prepare their staff in advance if they think they might be audited. I’ve heard of instances of DHCS investigators pounding on the door and demanding to be admitted in a fairly confrontational manner. I’ve even heard rumors of some investigators being armed, though I have to stress that this is all second- or third-hand, so I cannot confirm whether it actually happened.  In any event, the process can feel like a stressful police ambush. That can be scary for office staff – and scared staff members oftentimes look like they’re trying to hide something, plus they can be distracted and confused.
  • If a provider does receive notice that payments and NPIs are being suspended (usually with fifteen days notice), the absolute best chance to resolve the matter quickly and efficiently will come up front at the meet-and-confer stage. This is a meeting with DHCS auditors, program people, and the staff who are ultimately responsible for the decision to suspend. It will occur quickly, often within a month or two of the suspension. This is the provider’s first and best opportunity to plead its side of the case. It is crucial to consult with your lawyer and – ideally – be represented in the meeting. Providers can come across defiant and defensive if they try to go it alone – which isn’t surprising, of course, because they have been accused of fraud and even had their livelihoods threatened! That isn’t what DHCS wants to hear. DHCS wants to hear the provider acknowledge any mistakes, and it wants to hear how the provider is going to fix them.
  • If the matter is not resolved at the meet-and-confer stage, it’s going to go to administrative briefing. Pursuant to California Welfare and Institutions Code Section 14043.65, there is no in person hearing – the entire appeal is decided on the papers. It is crucial for a provider to put the most persuasive and polished brief on record – not only because it gives you a better chance to win at the administrative stage, but also because if you lose there, it is going to be the record of your defense on judicial appeal or even in further informal settlement discussions.

I know that some of this might be frightening. My first thought after putting pen to paper on this post was to that scene in Empire Strikes Back, when Luke tells Yoda he isn’t afraid, and Yoda tells him ominously “you will be.” But there is a reason for my sturm und drang. As Knicole says, state Medicaid agencies have a good bit of leverage in these overpayment and fraud and abuse investigations, and in my opinion, DHCS falls towards the very top end of that list. This isn’t a time for providers to put their heads in the sand and figure that they’ll deal with any problems with DHCS later down the line if and when something happens. By that point, it very well might be too late – or at the very least, the providers will have missed the best chance (or even the second best chance) to prevent or resolve any problems cheaply and quickly.