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EASLEY v. ARKANSAS DEPT. OF HUMAN SERVS.

October 20, 1986

CATHERINE EASLEY, ET AL., Plaintiffs
v.
ARKANSAS DEPARTMENT OF HUMAN SERVICES, DIVISION OF SOCIAL SERVICES, ET AL., Defendants



The opinion of the court was delivered by: ROY

 This matter comes before the Court on briefs and stipulations of the parties. The parties agreed that the only issues to be decided were legal issues, and therefore agreed to submit the case on briefs. The Court makes the following findings of fact and conclusions of law, which incorporate the stipulations entered into by the parties.

 FINDINGS OF FACT

 1. Plaintiffs Catherine Easley, Bessie Jenkins, Carolyn Johnson, Mary Matthews and Alice Smith were Medicaid recipients pursuant to Title XIX of the Social Security Act at the time the case at bar was filed (42 U.S.C. § 1396, et seq.). Mary Matthews and Alice Smith continue to be Medicaid recipients.

 3. The present lawsuit results from the denial of payment on claims submitted by providers for each of the plaintiffs. In the plaintiffs' cases, Medicaid providers sought payment for the treatment of plaintiffs from the defendant Department by filing requests for payment. In the case of each plaintiff, the request for payment filed by the Medicaid provider was denied in whole or in part because of the providers' failure to comply with the procedural requirements of Arkansas Medicaid or because the service rendered was not covered by Medicaid. The Medicaid providers did not attempt to timely refile corrected requests for payment subsequent to the defendant Department's informing them of their procedural or clerical mistakes.

 4. Medicaid is a welfare program in which states that choose to participate work with the federal government to provide medical assistance to eligible individuals. It is a cooperative federal and state cost-sharing venture in which participating states must submit a plan to the Secretary of Health and Human Services for approval and must comply with all federal statutes and regulations governing the Medicaid program. Once its plan is approved, the state agency responsible for administering the program has authority to contract with public and private medical providers relative to the rendition of medical services to eligible Medicaid recipients.

 5. In Arkansas there are four types of individuals who are eligible for Medicaid benefits. Low-income individuals who qualify for Supplemental Security Income or Aid to Families with Dependent Children automatically qualify for Medicaid benefits. In addition, foster children and other medically needy individuals may be eligible for benefits. Arkansans may be determined eligible for Medicaid benefits as "categorically needy" if they meet the categorical requirements for Supplemental Security Income or Aid to Families with Dependent Children but are ineligible for those two welfare programs because of their income or assets. (42 U.S.C. § 1396d(a)).

 Once an individual is determined eligible for Medicaid benefits, he or she is issued a Medicaid card. When a Medicaid card is presented and accepted by a medical provider who has contracted with Arkansas Medicaid, the provider is obligated to render medical services to the Medicaid recipient and seek payment for those services from Arkansas Medicaid. The provider is also obligated to follow policy and procedural requirements. When a physician, hospital, or other medical provider contracts with Arkansas Medicaid, a Provider's Manual is furnished the provider which outlines the procedures for securing payment for medical services rendered and otherwise complying with Medicaid regulations. When a Medicaid provider seeks payment from the defendant Department, a request for payment is filed specifically delineating the date(s) and nature of the medical services rendered. As a general rule, a Request for Payment will be denied by defendant Department unless the Medicaid provider submits the request within six (6) months from the date the medical services were rendered.

 6. The various circumstances under which the defendant Department denies a Medicaid provider's request for payment are:

 (a) Prior Authorization. The Department has developed policies that require a provider to seek prior approval for certain listed surgical treatment prior to actually performing surgery. The basis for denying prior authorization is that the anticipated surgery is not medically necessary.

 (b) Non-Covered Services. Requests for payments will be denied if the services are not covered within the scope of the program. For example, if prior authorization is denied for a particular surgical procedure and the service is still rendered, request for payment will be denied as a non-covered service.

 (c) Lack of Medical Necessity. In addition to denials of prior authorization, the Department will deny a request for payment if the services rendered were not medically necessary. The Department places a limit on the number of days a Medicaid recipient may stay in the hospital for a particular type of surgical treatment (e.g. tonsillectomy -- three days in hospital). If a patient stays longer than the Department allows, the extra days will be considered not medically necessary unless the Medicaid provider proves otherwise.

 (d) Not Medicaid Eligible. Requests for payments are denied when providers seek payment for services rendered to an individual who has not applied for Medicaid or who did not have a valid Medicaid card at the time the service was rendered.

 (e) Technical Denials. If the Medicaid provider fails to correctly complete the request for payment form, the claim is denied. (e.g. wrong Medicaid I.D. number, incorrect diagnosis code).

 7. Most of the plaintiffs herein or their children received medical treatment from Medicaid providers at a time at which they were determined eligible for Medicaid benefits. Others were eligible retroactively after medical services had been provided. More specifically, a brief statement of the facts of each plaintiff's case is as follows:

 (a) Catherine Easley: Ms. Easley received a retroactive Medicaid card for the period of time she was hospitalized and treated for exogenous obesity and chronic obstructive pulmonary disease. Gastric by-pass surgery was performed during her period of Medicaid eligibility. According to defendant Department's regulations, a treating physician must obtain the approval of Arkansas Medicaid prior to performing gastric by-pass surgery. The request for payments filed by Plaintiff Easley's Medicaid providers were denied for failure to obtain prior approval.

 (b) Bessie Jenkins: Ms. Jenkins was issued a retroactive Medicaid card for the period of time she was hospitalized and treated for cervical cancer. She provided copies of her Medicaid card to her treating physicians and hospitals. However, several of the requests for payments were ...


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