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CAV: $1 million Medicaid repayment order upheld

A licensed Medicaid provider serving individuals with intellectual disabilities was ordered to repay a state agency for Medicaid reimbursements it issued, due to findings that the provider failed to submit and/or maintain required documentation to support its payment claims. Because the formal record didn’t contain evidence that such documentation was provided, and because the provider agreement called for repayments for failure to keep such records, the agency decision was affirmed.


The Director of the Department of Medical Assistance Services issued a final agency decision requiring Appellant Community Alternatives Virginia to reimburse the Department over $1 million based on a failure to maintain adequate documentation. Community Alternatives appealed the final decision to the circuit court, which affirmed. The provider now appeals.

Payment retraction

The Department did not err in finding that it was entitled to retract Medicaid payments, without a showing of material breach of the provider agreement.

Here, the provider agreement contains essentially the same language as the agreement in Culpeper Reg’l Hosp. v. Jones, 64 Va. App. 207 (2015), wherein the provider agreed to comply with all applicable state and federal laws, as well as administrative policies and procedures. The Department’s manual requires a provider to refund Medicaid payments if they are found to have billed contrary to law or regulation, failed to maintain documentation to support their claims, or billed for medically unnecessary services. As in Culpeper, the provider agreement controls, displacing the general default rule of material breach. Under the agreement, the remedy for failing to maintain supporting documentation is retraction of Medicaid payments.

Exclusion of exhibits

Because Community Alternatives has not demonstrated that the Department’s exclusion of its exhibits at the administrative hearing stage had any influence on the outcome of the final decision, any alleged error was harmless, at most.

On final review, the Director decided that three binders of exhibits that Community Alternatives submitted to the Department but not the hearing officer should not have been entered into evidence. However, the Director stated that “even if the documents were considered in this appeal, the results of this decision would not be changed.” The decision proceeded to cite to facts contained in the exhibits, noting that all of the provider’s documents were considered.

Substantial evidence

Substantial evidence supports the Department’s retractions of Medicaid payments under each assigned error code.

Error Code 916 was applied to claims when the hours billed didn’t match the documentation in the recipient record. Community Alternatives acknowledged that, in some instances, the organization submitted claims that utilized the same date in both the “from” and “thru” columns, even though the claims represented an entire month’s worth of services. Based on this admission, substantial evidence supported retractions under this error code.

Error Code 1104 was applied to claims when the documentation submitted didn’t contain the required quarterly review of the Individual Service Plan. Community Alternatives acknowledged that, in some cases, the organization could not locate a quarterly review. On appeal, the Department overturned retractions where an annual review was provided in lieu of a quarterly review. Community Alternatives has not directed this court to any part of the record showing that it performed quarterly reviews for the approximately 70 claims still lacking review documentation. Substantial evidence supported these retractions.

Error Code 1107 was applied to claims when the number of units billed for specialized supervision was not supported by documentation. Community Alternatives acknowledged that some of the forms it provided to support billing for night supervision had no year listed and/or did not give a number of hours supervision was provided. Because the organization was unable to document that the claimed supervision was actually provided, substantial evidence supports these retractions.

Error Code 1108 was applied to claims when the required copy of the most current form 225 was not submitted. Community Alternatives conceded it did not have current forms for any of the recipients at issue, although it knew the form was required. Substantial evidence supports these retractions.

Error Code 1114 was applied to claims when the documentation did not contain the required Individual Service Authorization Request. Community Alternatives has not submitted evidence demonstrating that it completed and submitted ISARs for the recipients at issue. In the absence of such evidence, substantial evidence supported these retractions.

Error Code 1127 was applied to claims when the documentation didn’t contain the required notes/checklists for the dates of service billed. The Department accepts this information in the form chosen by the claimant, so long as it contains the required information. Here, there were many claims for which Community Alternatives submitted neither a progress note nor a checklist, and for which the documentation submitted did not contain the necessary information. Substantial evidence supports these retractions.

Error Code 1141 was applied to claims when the Plan for Supports was incomplete or missing required elements. Community Alternatives acknowledged that some such documents were not signed by the organization, though all included the required clinical information. Without evidence in the record that the Department issued retractions where documents had been signed by a caregiver, the circuit court did not err in affirming these retractions.

Error Code 1144 was applied to claims where the Individual Service Plan lacked documentation of a schedule of tasks to be performed. Most of the recipients’ Plans for Support were missing the required timetable, and Community Alternatives admitted that some of its documentation was not included in its hearing exhibits. Without evidence that it provided sufficient documentation for the timetable requirement, the organization cannot meet its burden that these retractions were erroneous.

Error code 1145 was applied to claims for which the documentation submitted didn’t contain an attendance log or similar documentation to support the date, type of services rendered, and number of hours and units billed for day support service. Community Alternatives conceded that the census sheets it developed to track attendance were not made part of the record in its form appeal. With this evidence not in the record, the court cannot rely on it to say that these retractions were in error.


Cmty. Alternatives Va. v. Jones, Record No. 1882-17-4, Aug. 7, 2018. CAV (Malveaux), from Winchester Cir. Ct. (Athey). James P. Holloway for Appellant; Abrar Azamuddin for Appellee. VLW No. 018-7-203, 22 pp.

VLW 018-7-203