Provider: 'Drop dead' Medicaid

Friday, May 31, 2002

SANDWICH, Mass. - Mark Sheehan had two words for state Medicaid auditors who claimed he owned $247,000 due to faulty billing practices: "Drop dead."

"We've been in business 25 years, but I've never seen any thing quite as audacious as this," said Sheehan, owner of Cape Medical Supplies. "I just looked at it as if these people were from a different planet and said, 'We'll fight them."'

Fight them he did, and on March 29, the Division of Medical Assistance Board of Hearings issued a preliminary ruling that threw out most of the state's claims. Pending approval by DMA Commissioner Wendy Warring, it looks like Sheehan will be off the hook for less than $15,000. The commissioner generally follows the board's recommendation, provided it's fair and reasonable, and a source within the DMA expected that to happen.

"From my experience, that is an excellent result from a one-year examination of claims because there will always be mistakes made or documents missing," said Sheehan's attorney Paul Shaw.

Based on a random audit on 25 of Sheehan's Medicaid claims between Sept. 1, 1998, and Aug. 31, 1999, auditors said Cape Medical collected $21,000 in overpayments and extrapolated that out to $247,000. As Sheehan fought the audit, the state backed off its initial request and eventually offered to settle for about $65,000.

This time, Sheehan said, "See you in court."

"Their job is to get as much money back into the coffers as possible," he said. "They don't care that you provided a chair to a guy with cerebral palsy who couldn't sign his name. The rule says you have to have a signature. They thought they could take a $10,000 wheelchair back because we didn't have an original signature. I said, 'No, you can't do it."'

The hearing board agreed.

In issuing its decision, the board also faulted the state for applying a new documentation requirement to about 12 of the 25 claims in question. Although the division has implemented a new policy to require oxygen providers to obtain nursing home records during the prior approval process to confirm the need for "continuous oxygen," at the time Sheehan rendered the services in question, the DMA did not have such a requirement.

Roughly 70% of the $247,000 recoupment the state originally asked of Sheehan involved the new documentation requirement.

"The division's post payment unit takes every opportunity it can to generate revenue even if it is unfair, as in this case," Shaw said. "It galls providers to spend thousands of dollars in legal fees to defend such a claim."

Three of Shaw's other clients settled similar charges, rather than go through the uncertainty and expense of a drawn out hearing. A fourth client has a similar case pending, and Shaw has forwarded Sheehan's March 29 decision to the hearing officer in that case.

The auditors also cited Cape Medical for failing to get a client's signature on a delivery form. In response to these claims, Cape Medical obtained verifications from the patients or their caregivers that the deliveries were made. The hearing board ruled that permissible.

To make his company "audit proof," Sheehan recently asked employees to redouble their efforts to collect all the necessary documentation. But he's still questioning whether he wants to remain in the Medicaid program, which pays him only 20% above cost, and having to pay $35,000 to $40,000 in legal fees irks him.

"They have to do the audits, but they don't have to come down with such outrageous decisions," Sheehan said. "It could be an educational tool rather than a gun they stick to your head." HME