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Cost of Care

What Happens if Medicaid Denies a Service

This story also appears as a sidebar to The Kidney that Almost Wasn’t

Image of doctor holding up hand in denial

Image courtesy of, via Flickr Creative Commons

By Rose Hoban

When Medicaid denies a treatment or a service, recipients have the right to appeal the decision. Thousands of patients appeal decisions made by North Carolina Medicaid annually, and many others don’t, according to attorneys who handle the cases.

“These are denials that are going to really vulnerable people who are easily intimidated,” said Ann Shy, an attorney who has represented patients. “The initial denials are for frivolous reasons.”

According to a document submitted by the NC Department of Health and Human Services to the General Assembly last year, more than 12,000 people did petition for a change in decision over a one year period.

For those people, the state has a mediation program that allows recipients to sit down and work out a compromise – about 80 percent of petitions get resolved this way.

But if compromise is not possible, as in Quiñones case, then a patient can go to the Office of Administrative Hearings.

A judge without much legal power

The Office of Administrative Hearings is a branch of state government mandated to hear disputes about decisions made by state agencies. Hearings go before administrative law judges, who preside over proceedings that look like hearings in a regular courtroom but for one critical difference: If an administrative law judge rules against a state agency, in the past, the agency could simply choose to reverse the decision, nullifying the administrative law judge’s input.

And North Carolina’s Medicaid program has had a reputation of being one of the state agencies most inclined to reverse those decisions.

North Carolina Medicaid officials declined to comment on this story or on Quiñones’ case. But in the document submitted to the General Assembly last fall, the agency stated this type of reversal happened only occasionally in cases where the judge disagreed with Medicaid’s original decision.

John Rittelmeyer from Disability Rights North Carolina disagrees with that small number. He’s taken dozens of cases to the Office of Administrative Hearings over a five-year period.

“For our cases that went all the way through to the administrative law judge granting benefits, Medicaid has accepted the grant of benefits in only one case,” Rittelmeyer said, “One in five years.”

A study published in the NC State Bar Journal in 2010 found about 30 Medicaid cases per month went to administrative law judges, and that, “81 percent of all decisions that favor the recipient have been overturned pursuant to Medicaid’s power to render the final agency decision, and no decisions favoring Medicaid have been overturned.”

“It was something of a gamble to go before the administrative law judge,” said attorney Ann Shy, who wrote the study. “Once you took it to the Office of Administrative Hearings, you knew that Medicaid could always just overturn it if they didn’t like the judge’s decision.”

Legislators step in

All this is likely to change, thanks to the General Assembly. Last year, legislators passed a law requiring Medicaid to abide by decisions made by judges in the Office of Administrative Hearings. The law went into effect Jan. 1.

Ashley Quiñones’ attorneys declined to speculate whether the upcoming changes to the law prompted Medicaid to change it’s decision about her care. But the attorneys were preparing to ask for a delay to Quiñones’ case until after the new year, when they got word Medicaid would pay for Quiñones’ kidney transplant.

The new law is currently in effect, but still needs final approval from the federal Centers for Medicare and Medicaid Services (CMS). At least one other state, Maryland, has a similar system in place – that system was approved by CMS.

There’s one more wrinkle to the new law: Piedmont Behavioral Services, a mental health management organization located in Salisbury, sued over the new law in early February. That suit is making it’s way through the judicial system, but unless a judge rules otherwise, the law remains in effect.

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