Waukesha County Court Protects Health Care Providers’ Medicaid Payments from Unfair Government Recoupment Efforts

On Behalf of | Aug 15, 2016 | 2016 News |

On August 12, 2016, the Waukesha County Circuit Court ruled that the Wisconsin Department of Health Services (“DHS”) exceeds its authority when it applies a perfection standard, then uses that standard as a basis for recouping Medicaid payments that were made for necessary services provided to Medicaid enrollees. The Court declared that DHS’s authority under Wis. Stat. § 49.45(3)(f) is limited to circumstances where either: 1) DHS is unable to verify from the provider’s records that services were actually provided; or 2) the payment was inaccurate or inappropriate for the service provided (such as a mathematical error or duplicative charge).

The ruling protects health care providers from efforts by DHS to take back Medicaid income that the providers had earned over the last five years for mere imperfections-such as documentation shortcomings-when there was no question that the services were provided. Under the DHS policy, even when providers have actually administered necessary and appropriate care and been reimbursed the proper amount for their services, DHS has based audit findings on minor documentation or other flaws–with a “gotcha” mentality–as a basis to order Medicaid providers to pay back months’ or years’ worth of the reimbursements the provider earned for these services, going back as far as five years in the past. The Court found that DHS is not authorized under law to enforce this policy and can no longer do so unless and until DHS properly promulgates such a policy through the legislative rulemaking process. Although compliance with Medicaid policies is important, DHS may now only recoup past payments based on a provider’s inability to verify that a service was provided or on evidence that the reimbursement made for it was inaccurate. The Court indicated that DHS is authorized is take other sanctions where a provider does not fully comply with Medicaid policies, including, for example: issuance of a corrective action plans, departmental monitoring, or suspension from the Medicaid program.

The Court expressed concerns about the impact of the DHS policy on the availability of home-based health care for medically complex individuals. The Court also made a point to state that nothing in the ruling should impede the agency’s ability to combat fraud, waste, and abuse and admonished DHS to focus on compliance, not perfection.

Attorney Diane Welsh brought the suit on behalf of Wisconsin Professional Homecare Providers, a nonprofit organization for independent nurses. The Court recognized that the DHS Office of the Inspector General had specifically targeted independent nurses. The ruling is a significant victory for the nurses and for the Medicaid enrollees with complex health needs who rely on nursing care. The decision also applies to other Medicaid providers who have been subjected to recoupment under this perfection standard.

Papa v. Wisconsin Department of Health Services, Waukesha County Case No. 2015 CV 2403