Doctors sue NC over Medicaid billing system

lbonner@newsobserver.comJanuary 16, 2014 

Doctors are suing the state, a software vendor and consultants over the troubled Medicaid claims system, saying that complications and errors resulted in financial losses and harm to patients.

The medical practices are suing the state Department of Health and Human Services, Computer Sciences Corp., which built and is operating the system, SLI Global Solutions, a company hired to test the software, and Maximus Consulting Services, which provided independent reviews.

Seven medical practices filed the suit Thursday in Wake County Superior Court. They ask to be certified as a class, saying a majority of the state’s 70,000 Medicaid providers suffered damages that should be recovered.

NC Tracks’ flaws have been chronicled in state audits, news reports and medical workers’ comments at legislative hearings. The NC Tracks system was trouble almost as soon as the state started using it on July 1.

“The proof of CSC’s wrongdoing was the disastrous state of the software upon go-live,” the lawsuit says. “Medicaid providers experienced hundreds of problems with NC Tracks, and the system could not reliably perform its core function of processing reimbursement claims.”

CSC said in a statement that the lawsuit is baseless.

“We believe the lawsuit against CSC is without merit, and CSC will defend it vigorously,” the company said in a statement.

Efforts to replace the previous claims-paying system proceeded in fits and starts over the last 10 years. The state dropped one contractor, settled a lawsuit with that company and rebid the work. CSC won the job in December 2008, but the project was delayed and over budget. The state is paying CSC $484 million for its work building the system and to run it until 2020.

State Auditor Beth Wood has released audits critical of the system. One released last year before the state started using NC Tracks questioned the testing regimen. An audit released in December said the system had more than 3,200 defects since July 1, and more than 600 had not been fixed by Nov. 5. In its response, DHHS said NC Tracks had fewer defects than the industry average for software systems of its complexity.

DHHS said Thursday that it would not comment on a pending lawsuit, but sent a statement from its IT chief and a fact sheet emphasizing the system’s merits.

“As with any implementation of an IT system of this size and complexity, the transition has not been without challenges,” DHHS computer systems chief Joe Cooper said in a statement. “To date, the new system has processed more than 104 million claims and paid more than $5.5 billion to North Carolina healthcare providers, out-performing the 35-year old system it replaced. DHHS continues to address provider issues as they arise.”

A loss for patients

Lawyers for the medical practices said NC Tracks has done more damage than just its failure to pay claims. Some health providers had to hire extra people to address all the problems, they said. Some took out loans to maintain cash flow when they couldn’t get Medicaid payments. Some offices laid off employees because there wasn’t enough money to pay them.

“It’s the financial impact from the reimbursements not happening in the first place,” said Camden R. Webb, one of the lawyers. “If every reimbursement that’s owed is paid today, you still aren’t made whole.”

Among the NC Tracks’ problems listed in the lawsuit are rejected claims for injections and vaccines, including for injections that prevent early labor in high risk pregnancies.

The medical offices suing referred questions to their lawyers, but at least one of the suing practice’s problems was well-known to legislators. Nash OB-GYN Associates sent its practice administrator to a legislative committee meeting last year to participate on a panel of NC Tracks users asked to detail their problems.

Doctors with the practice sent committee members a letter Dec. 23 saying they would stop taking new Medicaid patients.

“We have always felt very strongly about serving all of the women in our community and the surrounding areas,” they wrote. “However, we now find that with decreased reimbursement coupled with the time consuming process of receiving payment due to all of the NC Tracks problems that as of January 1, 2014 we will no long be able to accept new Medicaid patients into our practice. This was not a decision easily made, but we feel that we have no other choice.”

Knicole C. Emanuel, a lawyer representing the medical practices, said the Nash OB-GYN “was the place to go” for women on Medicaid.

“Not only the Medicaid providers have been effected; the recipients have too,” she said.

DHHS: working on fix

Medicaid, the government insurance program for low-income children and their parents, the elderly and disabled, is one of the biggest insurers in the state. The state spends about $13 billion on Medicaid each year – most of the money comes from the federal government – covering 1.7 million recipients.

Senate Minority Leader Martin Nesbitt has repeatedly voiced the worry that NC Tracks would cause so many problems that doctors would stop treating Medicaid patients. He and other Democrats have called on Gov. Pat McCrory to replace DHHS Secretary Aldona Wos because of multiple problems at the agency.

“We’ve said from the beginning, the challenges facing DHHS are not about politics, they’re about people,” Nesbitt said in a statement. “And thanks to the continued failures of the McCrory administration, people have been hurt. In this case, doctors were being put of business. They’ve been shouting for help, but Governor McCrory refuses to demand a plan from his appointees to solve these problems – and so now doctors are forced to sue. This is no way to govern.”

Wos has repeatedly defended her decision to switch to the new claims system on July 1 despite questions about whether it was ready.

In public meetings, DHHS officials have said they are working to repair defects and get providers their money.

The lawsuit says that even when software errors were fixed, doctors weren’t paid for claims that had been improperly denied.

The N.C. Medical Society said in a statement that it supports the lawsuit.

“We believe that NC Tracks is a poorly tested, defective and very expensive software product,” the statement said. “The resulting problems for the State of North Carolina and its citizens have no doubt been a huge challenge for the DHHS and required additional resources that the department was not expecting to incur. So far none of us received what we were promised.”

Medical Society CEO Robert W. Seligson said in an interview that CSC bears more of the blame than DHHS.

When the state is paying a vendor so much money, Seligson said, “they ought to be able to do it right the first time.”

Bonner: 919-829-4821; Twitter: @Lynn_Bonner

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