Legislative Efforts to Improve Due Process for the Medicaid Audit Appeal Process

Responding to concerns raised by members of its Health Law Section, the Virginia Bar Association pursued budget language during the 2017 legislative session to address due process concerns with the manner in which the Department of Medical Assistance Services (DMAS) conducts its provider audit appeal process. The concerns arose from DMAS’ application of recent Court of Appeals decisions to impose strict application of documentation requirements. This has resulted in numerous cases where DMAS sought full retractions for services clearly necessary, authorized and rendered, but where minor or technical documentation errors existed.

The General Assembly enacted budget language during its 2017 legislative session requiring DMAS to convene a workgroup with members of the Virginia Bar Association and provider groups to address these concerns by developing a plan to address non-material breaches of the provider agreement such as those minor documentation errors. The budget language called for:

The Department of Medical Assistance Services shall convene a workgroup with representatives from the provider community, and the legal community, and the Office of Attorney General to develop a plan to avoid or adjust retractions for non-material breaches of the Provider Participation Agreement when the provider has substantially complied with the Provider Participation Agreement. The plan shall include an assessment of any administrative financial impact that implementation of such plan would have on the department and an analysis of any implications for the department's efforts to combat fraud, waste, and abuse. The workgroup shall report on the status of this plan to the Chairmen of the House appropriations and Senate Finance Committees no later than December 1, 2017.

The workgroup has met three times to discuss Medicaid appeals. While DMAS and provider representatives do not agree on whether a non-material breach and substantial compliance with the provider agreement should be allowable defenses, the workgroup has made progress on several issues.

For example, DMAS and the provider members of the workgroup are discussing changes to the audit appeal process to permit settlements of audit claims to occur earlier, during the informal appeals process, which will reduce the time and expense providers face in some appeals. In addition, DMAS is considering reducing the review period during an audit from 15 months of claims to 12 months. The workgroup is also discussing ways to improve the flow of information between DMAS and the provider before, during and after the audit process.

The workgroup will report its effort and recommendations to the General Assembly on December 1, 2017.  Williams Mullen will provide an update on the final outcome of the workgroup’s efforts.