Late Wednesday, the North Carolina Medical Society received assurances from state officials that an obscure and problematic provision in the Medicaid Provider Agreement would be fixed. The provision places a physician practice in breach of its contract with Medicaid when the practice pays a billing company a percentage of collections on Medicaid claims. After the NCMS was alerted by the NC Medical Group Managers to the dangers of this provision last week, NCMS worked with the Division of Medical Assistance and the NCHA (who both agreed with our position) to convince the Attorney General’s office that an immediate fix to the contract was necessary.
Provision Would Have Left Practices Vulnerable
Physician practices commonly recruit billing companies to manage the practice’s claims, with payment to those companies being a percentage of what the practice receives for each approved claim. These arrangements encourage billing companies to submit clean, accurate claims that will be approved by payors like Medicaid. The billing companies do not receive the practice’s payment from the payor; those funds are usually transferred electronically by the payor into an account accessible only by the practice.
The Attorney General’s Office tried to defend the provision by arguing that the State has never strictly enforced the provision and held no intention to begin. NCMS responded that physician practices and billing services would feel pressure to adjust their business to avoid breach, that the provision ignores the realities of the health care industry, and that the State could always change its lax approach to contract enforcement. Moreover, the provision would leave practices vulnerable to third-party RAC audits and create a huge disruption in N.C. Medicaid and the larger health care industry.
New Language Will Track Federal Law
The contract provision will be scaled back to align with a long-standing federal rule that prohibits practices from assigning Medicaid claims to third parties, and bars (in most cases) percentage arrangements with billing companies when the company receives the claim payment directly from Medicaid. The new language should not affect the billing arrangements of most practices.
DMA has indicated that it will make the changes and repost a new and improved Medicaid Provider Agreement. Stay tuned for more details on the timeline.
Mini-Seminar to Cover Legal Issues for Medicaid Providers
The North Carolina Society of Health Care Attorneys (NCSHCA) will hold a mini-seminar, “Current Legal Issues for Medicaid Providers,” on Thursday, July 29, 2010 at the Society’s headquarters, 1500 Sunday Drive, Suite 102, in Raleigh. Participants can choose to go on-site (with lunch) or view by webinar. Presenters will be Linwood Jones and Wendell Ott. Click here to download a registration form, which includes more information about the mini-seminar.
