D.C. Home Care Providers Lose Medicaid Challenge

     (CN) - The District of Columbia is no longer required to reimburse the home health care providers it suspended from its Medicaid program in March while it investigates fraud, a federal judge ruled Friday.
     The District of Columbia's Department of Health Care Finance abruptly cut off 52 percent of the city's providers on March 7 and March 21, citing "credible allegations of fraud."
     Its director, Wayne Turnage, testified before the D.C. Council Committee on Health that on Feb. 20, after 25 people were arrested on charges of Medicaid fraud, the agency suspended payments to the four providers implicated in the case.
     He said that only 10 percent of the 3,068 patients purportedly served by those four providers turned out to be legitimate.
     That launched a series of investigations resulting in the suspension of payments to 52 percent of the city's providers, none of whom were involved in the earlier arrests. The D.C. Department of Health also converted their home-care licenses to provisional status.
     Fraud was the suspected culprit in the home care program's annual growth rate of about 28 percent since 2008. By the end of fiscal year 2013, the program had more than 10,000 beneficiaries according to Turnage.
     But cutting off payments was tricky, as those providers served nearly 80 percent of the city's home care beneficiaries.
     Turnage proposed as a "temporary solution" that the DHCF step in as its own provider to continue services.
     Several suspended providers sued, claiming the city was merely angling to terminate their contracts and take their place.
     Initially, U.S. District Judge Rosemary Collyer agreed that the providers were likely to win on the merits. She issued a temporary restraining order requiring the agency to reimburse the plaintiffs by April 17 for Medicaid services provided on and after May 7.
     But after hearing more evidence, Collyer ruled Friday that the providers "have not shown that DHCF intended to terminate them from the Medicaid program."
     She lifted the temporary restraining order and refused to convert it to a preliminary injunction.
     "The facts presented ... refute plaintiffs' allegations that they were required to continue providing PCA [personal care aid] services indefinitely, without payment, and raised serious questions about whether they could have transferred their patients because there was an alleged insufficient number of non-suspended providers in the area," Collyer wrote.
     The judge found "uncontested evidence" that the city could have transferred the plaintiffs' patients to other providers during their suspensions.
     "In sum, plaintiffs have not persuaded the court that they are likely to succeed on the merits of their claim that they were terminated from the Medicaid program in violation of their right to due process," Collyer concluded.
     "The District did not terminate plaintiffs' licenses improperly or otherwise debar them from participating as providers in the Medicaid program," she added. "The District presented evidence that the temporary suspension of payment for PCA services ... was just that--temporary."
     She similarly rejected the providers' claims for breach of contract and unjust enrichment, and ruled that the conversion of their licenses did not violate due process.
     Collyer denied the injunction, lifted her April 9 order and dismissed the case, saying the providers should first appeal their suspensions to the D.C. Office of Administrative Hearings.