QUARTERLY NEWSLETTER - FALL ISSUE 2011 - #1

HOT TOPIC - THE ROGERS AMENDMENT

Dear Client,

We are pleased to announce the launch of our quarterly newsletter - SAC Review. Our firm is constantly seeking new ways to assist healthcare providers in identifying payment sources and obtaining appropriate reimbursement. We embrace the idea that responsible collaboration with providers can be a vehicle for progress. SAC Review facilitates this pro-cess by providing useful tools to encourage financial success. The newsletter will feature key industry developments as well as spotlight the family we have created at SAC that cares about our clients’ future. SAC Review will be distributed to you by mail, email and available on our website at www.sacfirm.com. We welcome your feedback and suggestions on top-ics of importance to you and your facility. Please email comments to SACReview@sacfirm.com. We hope you enjoy our first issue!

Joy, George, Vince

PROVIDERS SHOULD TAKE ACTION THROUGH LEGISLATIVE AND LEGAL CHANNELS TO RE-VERSE CALIFORNIA’S IMPLEMENTATION OF THE ROGERS AMENDMENT AND ENSURE A FAIR AND REASONABLE PAYMENT FOR SER-VICES RENDERED TO MEDICAID OR MEDI-CAL PATIENTS IN NON-CONTRACTED EMERGENCY SITUATIONS

By: Celim Huezo, Esq., George Colman, Esq. & Karlene J. Rogers-Aberman, Esq.

Providers have become painfully aware of the downsides of the Rogers Amendment as it has been implemented in California. In a decidedly overzealous attempt to com-ply with the federal version of the Rogers Amendment, California lawmakers unnec-essarily expanded the scope of the feder-al law by making it applicable not only to emergency services provided by non-con-tracted providers, but also to outpatient ser-vices and post-emergency stabilization ser-vices. The law as currently written provides only for payment of the CMAC (California Medi-Cal Assistance Commission) rate for these non-contracted services, California’s overly expansive implementation of the Rogers-Amendment has further hampered non-contracted providers’ ability to recover a fair and reasonable payment for Medicaid services as originally intended by federal lawmakers. Providers must take action to challenge the current state of California law by supporting pending legal actions and en-gaging in legislative advocacy in support of their rights.

THE FEDERAL VERSION OF THE ROGERS AMENDMENT

Section 6085 of the Federal Deficit Reduc-tion Act of 2005 (aka. Rogers Amendment) was incorporated into Section 1932(b)(2) of the Social Security Act. In a nutshell, the Rogers Amendment states that for emer-gency services in a non-contracted pro-vider, the provider must accept as payment in full no more than the amounts it could collect if the beneficiary received medical assistance other than through enrollment in such an entity. The Rogers Amendment further provides that in a State (e.g. Cali-fornia) where rates paid to hospitals under the State plan are negotiated by contract and not publicly released, the payment amount shall be the average contract rate that would apply under the State plan for general acute care and tertiary hospitals.

THE CALIFORNIA ROGERS AMENDMENT

In order to comply with the Rogers Amend-ment, the California Assembly introduced AB 1183, which ultimately became Sec-tion 14091.3 of the Welfare and Institutions Code. Section 14091.3 is referred to as the California Rogers Amendment and is the applicable law at this time.

Section 14091.3 goes well beyond the scope of the Federal Rogers Amendment in several significant ways. The Federal Rog-ers Amendment is, by its plain language, limited to emergency services provided by

non-contracted providers. California’s ver-sion is much broader as it states:

• Outpatient services are to be paid ac-cording to the Medi-Cal Fee-For-Ser-vice payment amounts;

• Emergency inpatient services are to be paid the California Medi-Cal Assis-tance Commission (CMAC) rate (note that tertiary hospitals have a different CMAC rate); and

• Post-stabilization services following an emergency admission are also to be paid at the CMAC rate.

Thus, Section 14091.3 covers not only emergency services, but all outpatient ser-vices, as well as post-stabilization services after an emergency admission where a non-contracted provider has rendered ser-vices.Section 14091.3 also defines “Medi-Cal managed care health plan” as “an individu-al, organization, or entity operating under a Medi-Cal managed care plan contract with the [California Department of Health Care Services] ….” This definition includes plans such as Blue Cross Medi-Cal Managed Care Programs and is what allows health plans such as Blue Cross to pay the CMAC rate where no contract exists.

ALL PLAN LETTERS ISSUED BY THE CALIFOR-NIA DEPARTMENT OF HEALTH CARE SERVIC-ES FURTHER CLARIFY THAT PROVIDERS ARE BOUND TO ACCEPT THE CMAC RATE

WHAT YOU SHOULD KNOW AND WHAT YOU CAN DO TO FIGHT IT

ROGERS - CONTINUEDAfter the implementation of Section 14091.3, the Department of Health Care Services (the “DHCS”) issued several “All Plan Letters” to assist providers and health plans in applying the Rogers Amendment. Significantly, these All Plan letters define a “non-contracted” hospital as “a general acute care hospital, including hospitals that contract with the DHCS under the Medi-Cal Selective Provider Contracting Program (SPCP) that does not have in effect a con-tract for general acute care inpatient ser-vices with a Medi-Cal managed care health plan.” These All Plan letters also published the current non-tertiary and tertiary CMAC rates. Thus, from the definitions found in Sec-tion 14091.3 and the Department of Health Care Services definition of what qualifies as a “non-contracted” hospital it appears that hospitals must accept the CMAC (or Fee-For-Service rate) if there is no contract be-tween itself and a Medi-Cal managed care health plan such as a Blue Cross Medi-Cal plan.

A LAWSUIT HAS ALREADY BEEN FILED WHICH CHALLENGES THE CALIFORNIA ROGERS AMENDMENT

The California Hospital Association (the “CHA”) has filed a lawsuit in Federal Court in Los Angeles County to: (i) prevent the Department of Health Care Services from enforcing the implementation of the emer-gency and post-stabilization rates, (ii) in-validate the California Rogers Amendment, and (iii) reconsider the CMAC rates imple-mented through an All Plan Letter dated October 2, 2008. For the time being, the lawsuit has been stayed (i.e., put on hold) since January 18, 2011 so that the United States Supreme Court can first decide whether a provider even has standing (i.e., the right to pursue legal action) to enforce the provisions of the Medicaid Act in the federal courts.

WHAT PROVIDERS CAN DO AND SHOULD BE DOING ABOUT THE CALIFORNIA ROGERS AMENDMENT The law, as it is currently written, is clear. Accordingly, in order to effectuate real change on behalf of the health care pro-viders in this state, the issue must be ad-dressed either at the legislative level or challenged in the courts. Providers should support the CHA’s pending legal action and engage in legislative advocacy through their representatives in both state and federal courts to overturn the applicability of the California Rogers Amendment and the All Plan Letter dated October 2, 2008. Section §1396 of the United States Code (i.e., the Medicaid Law), was designed to safeguard the utilization of care and services provided to Medicaid beneficiaries by ensuring that such care and service is made available to the general population in all geographic areas throughout the United States. How-ever, the Medicaid law was also enacted to

ensure that providers receive fair and rea-sonable payment for the provision of such services. This latter intent of the Medicaid law has not been fulfilled. Over the last several years, providers have been seriously impacted by the imple-mentation of the Rogers Amendment and their forced acceptance of the payment of the CMAC rate when providers are non-contracted with a Medi-Cal Managed Care payor. Under EMTALA mandates, Provid-ers are obligated to treat the patient by vir-tue of the patient’s entry into the hospital through the emergency room. This natu-rally begs the question: “Why should a hos-pital be paid less than what it would be paid in its negotiated rate with the State under the Medi-Cal program, by treating a Medi-Cal beneficiary insured through a Medi-Cal Managed Care Plan?” In other words, the non-contracted provider is compelled to ac-cept something less than what it would be paid if that patient entered the hospital as a “straight Medi-Cal beneficiary.” Under the circumstances, since a provider cannot receive their Medi-Cal contracted rate with the State (as that rate is confidential and cannot be disclosed to the non-contracted plan), a provider should be able to receive either its usual and customary rates (tak-ing into account the criteria set forth under

Section 1300 of the California Code of Reg-ulations), or the interim rate - a standard rate applicable to all providers based on a percentage of charges. Notably, a non-published decision in favor of the Antelope Valley Health Care District (Civil Case No.: B207972) ruled that a plan must pay the interim rate where the hospital pursued the administrative appeals appro-priately and where it was treating a non-contracted Medi-Cal Managed Care benefi-ciary. Unfortunately, because the decision is unpublished, it has no effect on California courts whatsoever. It should be the provid-ers’ goal to obtain published decisions that hold as the Antelope Valley court did, as such decisions can ultimately turn the tide on California Rogers Amendment claims.

In conclusion, the suggested methodol-ogy for making changes that would allow hospitals to be appropriately reimbursed as intended by the Medicaid law, is to sup-port the pending legal action, and engage in legislative advocacy that amends our California Welfare & Institutions Code. In-deed, such legislative action should seek to go even further, beyond the state level, by revisiting the Deficit Reduction Act of 2005 and the Federal Rogers Amendment.

KARLENE ROGERS-ABERMAN

Ms. Rogers-Aberman joined the firm in 2005 and serves as one of the firm’s two supervising attorneys/team leaders in the Litigation Department. As such, she first chairs trials and arbitrations as well as manages a team of litigation attorneys in representing health care providers in arbi-trations, mediations, and state and federal court proceedings against health plans, in-surance companies, and the government. Litigated issues typically involve interpre-tation of California’s Knox-Keene Act, the federal Employee Retirement Income and Security Act (“ERISA”), the federal Emer-gency Medical Treatment and Labor Act (“EMTALA”), as well as general contract and other business disputes. Previously, Ms. Rogers-Aberman represented multi-national corporations in all areas of com-mercial litigation, including proceedings before the U.S. Securities and Exchange Commission (“SEC”). Ms. Rogers-Aber-man attended Cornell University for her un-dergraduate and received her law degree from Georgetown University Law Center. In March 2003, Business Week magazine

What is your area of expertise within SAC?I am a supervising attorney in our litigation division. Along with members of my team, I specialize in aggressively representing our provider clients in actions against recalci-trant commercial and governmental pay-ors. Because of the wide variety of issues we come across, and depending on wheth-er the parties are bound by written contract, we litigate in many different arenas: state courts, federal courts, administrative pro-ceedings, arbitrations and mediations.

What one piece of sage advice can you of-fer to our clients that can help them in the future?Representing our clients successfully is like putting together a puzzle. The more pieces we have from our clients at the beginning stages of a dispute, the better position we are in to see the big picture. Having the right information at the start allows us to as-sess the strength of the case right at the

featured Ms. Rogers-Aberman in an ar-ticle concerning her passion for mentoring young people.

there’s not too much TV-watching going on in my house. We like to be out and about, exploring all the amazing things to do in Southern California.

What are your favorite foods?I grew up in the Caribbean, so West Indian cuisine is a favorite, but I’m open to every-thing. If it tastes good, I eat it!

outset so that we can figure out how best to proceed on the client’s behalf.

Can you talk about a recent success story of yours? What was the challenge and how were you able to overcome it?As cheesy as it may sound, at SAC, most of our cases are “success” stories. This is because we try to evaluate the strength of claims as early on as possible, so that we do not take to trial or arbitration matters on which we are not likely to succeed. Thus, because we usually approach our cases from a position of strength, our opponents tend to settle on terms decidedly favorable to our client. On cases that go all the way to trial, we have a proven record of success. From time to time, of course, a judge’s decision will not be in our favor. In those instances, we are always prepared to take the matter up on appeal. We have noticed that counsel for the health plans all seem to be going to the same seminars on how best to defend reimburse-ment actions. For example, there seems to have been a spike over the last year or so in the number of challenges to our com-plaints filed by defense counsel. In re-sponse, we’ve retooled the way we allege our claims as a pre-emptive strike against some of the new defenses being raised. As a result, defendants’ efforts have been largely unsuccessful and the courts have permitted our claims to proceed.

Do you have any hobbies or interests out-side of work? I am a Scrabble, crossword and chess fanatic, all of which I like to play on-line against opponents from around the world. I also love to run, and hope to complete my second marathon next year.

Do you have any charitable causes that interest you and/or events you have par-ticipated in recently?I have always been interested in mentoring young people and routinely participate in, or contribute to organizations that share this passion, including Big Brothers/Big Sisters, icouldbe.org, etc. Last November, I was in-vited to speak at the L.A. based City Schol-ars Foundation’s AfterSchool Hero Awards Celebration. City Scholars Foundation trains, coaches and inspires non-profit, after-school program leaders to transform the lives of inner-city youth, helping them become inner-“City Scholars” who are pre-pared for college, career and community leadership.

Do you have family and/or pets you’d like to tell us about?I have been married to my husband Adam for 7 years, and we have a 4 year old daughter, Phoenix, and a 2 year old son, King. (Yes, we are one of “those” families that give our kids unusual names!). We also have a dog, Sausage, whom we adopt-

ed from a shelter 6 years ago. Contrary to what his name suggests, he’s not a dachs-hund, but a Min-Pin mix. We gave him the name because at the time, he looked like a stuffed sausage. We’ve since put him on prescription diet food, but we think his belly’s here to stay.

Do you have any guilty pleasure television shows, movies or other activities to tell us about?

I’ve never seen a show on HBO that I didn’t like. However, with two small children,

WHY WAS MY CLAIM DENIED? Many provider/hospital claims get denied because of some contract provision that prohibits a provider/hospital from being re-imbursed for services rendered to a Health Plan’s insured.

STATUTE OF LIMITATIONS PROVISIONS

In California, if you have a written contract with a health plan, you have four years from the breach of that contract to bring legal ac-tion to enforce that contract. If you don’t have a written contract, but an oral con-tract, you have two years to enforce your rights. Why in the world would a provider limit their legal rights to one (1) year or six (6) months? Beats me.

I have reviewed contracts requiring Provid-ers one year from discharge date (or denial date or underpayment date as appropriate) to bring legal action (whether arbitration or court action). You go beyond a year and your legal rights are gone. This would un-doubtedly cause a monetary loss even if you had a valid claim.

APPEALS

Many contracts have a dispute resolu-tion process agreed to by providers which places tight timeframes on a dispute dis-agreement with health plans (denials or un-derpayments of a claim). Some contracts impose 180, 90, or 30 day limits on filing a timely appeal. Guess what happens if you miss the filing time frame? The provider dis-pute resolution process is over and the in-surers decision is final and the case will be closed. I’ve seen no contract language that says if the insurer doesn’t respond in 30, 60, or 90 days, the providers appeal is sus-

tained and payment is made. By placing limitations in a dispute resolution process, especially if there are multiple appeals, will usually work to the health plan’s favor.

Additionally, what provider, with today’s reduced reimbursement, has the staff and procedure to respond within such limited and tight time frames? In this area, com-municating between the provider’s contract negotiators and the Business Office is es-sential.

ARBITRATION

Arbitration clauses came into vogue in the 90’s as a process to resolve disputes with-out going into the State or Federal Courts. It was supposed to be faster and less expen-sive. In our experience, that is not the case. An example of a filing fee in state court is $300 with minimal fees for other filings. For arbitration the minimum initial fee is $700 and could get up to $10,000 plus. Fees are based on the amount claimed in the filing. The higher the value of the case the higher the fee. You must also include the arbitra-tors fee of $400-$800 per hour for all time spent on the case.

Lastly, the arbitration process parallels the litigation process in motions, discovery, evidence producing, and time in the actual arbitration. This resolution is not faster but equivalent to a State Court case. So in my opinion, arbitration is more expensive than Court action and does not expedite the pro-cess.

So these are my pet peeves for now. These are not legal opinions but only my observa-tions in providing these services.

KARLENE - CONTINUED

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