Elite Home Health Care, Inc. v. N.C. Dep't of Health & Hum. Serv.

896 S.E.2d 630

ELITE HOME HEALTH CARE, INC., and Elite Too Home Health Care, Inc., Petitioners,

v.N.C. DEPARTMENT OF HEALTH AND HUMAN SERVICES, Division of Medical Assistance, Division of Health Benefits, Respondents.

No. COA23-122

Court of Appeals of North Carolina.

Filed December 19, 2023

Appeal by petitioners from order entered 12 September 2022 by Judge Hugh B. Lewis in Mecklenburg County Superior Court. Heard in the Court of Appeals 3 October 2023. Mecklenburg County, No. 21 CVS 19462

Ralph Bryant Law Firm, Greenville, by Ralph T. Bryant, Jr., for petitioners-appellants.

Attorney General Joshua H. Stein, by Assistant Attorney General Adrian W. Dellinger, for the State.

ZACHARY, Judge.

This appeal concerns the definition of a "clean claim" for the purposes of prepayment claims review of Medicaid providers in North Carolina, pursuant to N.C. Gen. Stat. § 108C-7 (2021). After conducting prepayment claims review, Respondent North Carolina Department of Health and Human Services ("DHHS") terminated Petitioners Elite Home Health Care, Inc., and Elite Too Home Health Care, Inc., (collectively, "Elite")¹ from participation in North Carolina’s Medicaid program, due to Elite’s "failure to successfully meet the accuracy requirements of prepayment review pursuant to [N.C. Gen. Stat] § 108C-7." Elite appeals from the superior court’s order affirming the final decision of the administrative law judge, which upheld the termination. After careful review, we affirm.

I. Background

The dispositive issue in this appeal is the definition of a "clean claim" as used in N.C. Gen. Stat. § 108C-7. The relevant legal and procedural facts are undisputed.

A. Medicaid and Prepayment Claims Review

[1] "The Medicaid program was established by Congress in 1965 to provide federal assistance to states which chose to pay for some of the medical costs for the needy." Correll v. Division of Soc. Servs., 332 N.C. 141, 143, 418 S.E.2d 232, 234 (1992). "Whether a state participates in the program is entirely optional. However, once an election is made to participate, the state must comply With the requirements of federal law." Id. (cleaned up). In essence, "Medicaid offers the States a bargain: Congress provides federal funds in exchange for the States’ agreement to spend them in accordance with congressionally imposed conditions." Armstrong v. Exceptional Child Ctr., Inc., 575 U.S. 320, 323, 135 S.Ct. 1378, 1382, 191 L. Ed. 2d 471, 476(2015).

Among the conditions imposed by Congress for a State’s receipt of Medicaid funds is the requirement that "[a] State plan for medical assistance must … provide for procedures of prepayment and postpayment claims review[.]" 42 U.S.C. § 1396a(a)(37). Accordingly, N.C. Gen. Stat. § 108C-7 authorizes DHHS to conduct prepayment claims review "to ensure that claims presented by a provider for payment by [DHHS] meet the requirements of federal and State laws and regulations and medical necessity criteria[.]" N.C. Gen. Stat. § 108C-7(a).

Medicaid claims are generally paid upon receipt, and providers are subject to periodic audits thereafter. See Charlotte-Mecklenburg Hosp. Auth. v. N.C. Dep’t of Health & Hum. Servs., 201 N.C. App. 70, 74, 685 S.E.2d 562, 566 (2009), disc. review denied, 363 N.C. 854, 694 S.E.2d 201 (2010). Under certain circumstances, however, a Medicaid provider may receive notice that it has been placed on prepayment claims review. N.C. Gen. Stat. § 108C-7(b). The "[g]rounds for being placed on prepayment claims review" include:

[R]eceipt by [DHHS] of credible allegations of fraud, identification of aberrant billing practices as a result of investiga-tions, data analysis performed by [DHHS], the failure of the provider to timely respond to a request for documentation made by [DHHS] or one of its authorized representatives, or other grounds as defined by [DHHS] in rule.

Id. § 108C-7(a).

Before placing a provider on prepayment claims review, DHHS must "notify the provider in writing of the decision and the process for submitting claims for prepayment claims review," Id. § 108C-7(b). Such notice must contain:

(1) An explanation of [DHHS]’s decision to place the provider on prepayment claims review.

(2) A description of the review process and claims processing times.

(3) A description of the claims subject to prepayment claims review.

(4) A specific list of all supporting documentation that the provider will need to submit to the prepayment review vendor for all claims that are subject to the prepayment claims review.

(5) The process for submitting claims and supporting documentation.

(6) The standard of evaluation used by [DHHS] to determine when a provider’s claims will no longer be subject to prepayment claims review.

Id.

Once a provider is placed on prepayment claims review, that provider must achieve an acceptable level of "clean claims submitted" to be released from review or else risk sanction, which potentially includes termination from the Medicaid program:

(d) [DHHS] shall process all clean claims submitted for prepayment review within 20 calendar days of receipt of the supporting documentation for each claim by the prepayment review vendor. To be considered by [DHHS], the documentation submitted must be complete, legible, and clearly identify the provider to which the documentation applies. If the provider failed to provide any of the specifically requested supporting documentation necessary to process a claim pursuant to this section, [DHHS] shall send to the provider written notification of the lacking or deficient documentation within 15 calendar days of the due date of requested supporting documentation. [DHHS] shall have an additional 20 days to process a claim upon receipt of the documentation.

(e) The provider shall remain subject to the prepayment claims review process until the provider achieves three consecutive months with a minimum seventy percent (70%) clean claims rate, provided that the number of claims submitted per month is no less than fifty percent (50%) of the provider’s average, monthly submission of Medicaid claims for the three-month period prior to the provider’s placement on prepayment review. If a provider does not submit any claims following placement on prepayment review in any given month, then the claims accuracy rating shall be zero percent (0%) for each month in which no claims were submitted. If the provider does not meet the seventy percent (70%) clean claims rate minimum requirement for three consecutive months within six months of being placed on prepayment claims review, [DHHS] may implement sanctions, including termination of the applicable Medicaid Administrative Participation Agreement, or continuation of prepayment review. [DHHS] shall give adequate advance notice of any modification, suspension, or termination of the Medicaid Administrative Participation Agreement.

Id. § 108C-7(d)–(e).

B. Procedural History

Elite was party to a Medicaid Participation Agreement, pursuant to which it was required to abide by the policies developed by DHHS in Elite’s provision of services. The Carolina Centers for Medical Excellence ("CCME") is a private corporation with which DHHS contracted to conduct prepayment claims reviews of particular Medicaid providers in North Carolina.

On 3 July 2019, at the direction of DHHS, CCME issued initial notices of prepayment claims review to Elite via certified mail, After a failed delivery attempt and after receiving no response to the notices left for Elite, CCME sent the notices to Elite by secured email on 22 July 2019, Between July 2019 and May 2020, CCME and Elite "made or attempted contact 263 times to discuss the prepayment review process, including, but not limited to, documentation requests, claims submissions, submission timelines, and denials." Elite submitted "roughly 60,000" claims while on prepayment claims review.

On 6 March 2020, DHHS sent to Elite, via certified mail, tentative notices of its decision to terminate Elite from participation in the North Carolina Medicaid program. The tentative notices stated that the decision was "a result of [Elite] not meeting minimum accuracy rate requirements of prepayment review[.]" On 20 April 2020, Elite filed a petition for a contested case hearing with the Office of Administrative Hearings.

The matter came on for hearing before the administrative law judge on 26 and 27 April 2021. On 3 November 2021, the administrative law judge entered a final decision upholding DHHS’s decision.

In his final decision, the administrative law judge made the following pertinent findings of fact:

12. The Notices informed [Elite] that CCME would conduct prepayment review of claims submitted by [Elite]. The Notices described the prepayment review process and specifically explained that the provider must attain a claims submission accuracy rate of at least 70% for three consecutive calendar months. Further, the Notices informed [Elite] that if this rate was not achieved within six months of being placed on prepayment review, … [DHHS] could implement sanctions, including termination of the provider from providing services.

13. The Notices specifically stated: "However, the prepayment review contractor will review the documentation for services billed, including prior authorized services, to determine if the documentation is compliant with policy. An example is obtaining staff credentials to verify that a service has been rendered by an appropriately credentialed person, as required by Medicaid policy."

14.The Notices from CCME also set out a list of documents CCME would need to review and included a sample Audit Tool. An Audit Tool lists what documentation the reviewer needs to review for each claim.

….

16. A claim submitted for a given date of service must be completely compliant with Clinical Coverage Policy as of that date of service.

17. This methodology has been approved by [DHHS] and is applied by CCME for all [personal care services] providers in the NC Medicaid Program that are on...