In July of 2020 the Wisconsin Supreme Court issued an opinion addressing the scope of the Wisconsin Department of Health Services authority to recoup payments to Medicaid service providers. Plaintiffs Kathleen Papa and Professional Homecare Providers (PHP) challenged WDHS’s recordkeeping policies, which included identifying things such as paperwork mistakes, that resulted in significant overpayment obligations from the state’s independent private duty nurses. In seeking an overpayment WDHS didn’t challenge whether the nurses provided a Medicaid patient with a covered service or that the payment for the claim was inappropriate or inaccurate, but instead based its right to seek recoupment of Medicaid funds because of inadequate documentation. The policy at issue covering the documentation requirements was affectionately identified by the Court as the “Perfection Policy.”

While the Court reviewed several issues on appeal, some of them procedural, the substantive issue decided in PHP’s favor was whether the Perfection Policy exceeds WDHS’s recoupment authority. In one of its previous filings in a lower court PHP provided an affidavit from one of the nurses that characterizes the scrutiny of the Perfection Policy reiterated by the Court in its opinion, stating that WDHS’s Office of Inspector General’s recoupment efforts were based on “noncorrelation between the medication record, the record of treatment and the nurse’s clinical notes.” The Court acknowledged that WDHS has the authority, and indeed an obligation, to collect improper or erroneous Medicaid payments and overpayments; however, the Court emphasized that it is not a discretionary case by case review by WDHS that determines what makes a payment erroneous or improper, but instead it is the statutes and rules.

The Wisconsin statute at issue allowed WDHS to require service providers to maintain records for the services provided and allowed WDHS to audit the records to ensure the services are provided, and that the claims for services are appropriate and accurate. In its analysis of the statute, the Court determined that it does not explicitly permit or require WDHS to enforce a Perfection Policy. In looking at the WDHS rules to implement its recoupment authority, the Court noted that the rule does not state that mere record imperfections may be grounds for recoupment, but instead that the failure to prepare and maintain records, or permit access to records, constitutes grounds for recoupment. Based on the analysis of the statutes and rules, the Court concluded that a record imperfection alone is not an independent basis for recouping payments and that the Perfection Policy exceeds WDHS’s recoupment authority.

While the decision by the Court is limited in scope to the Wisconsin Medicaid assistance program, it does provide a pathway for challenging arbitrary reasoning and rationale applied by auditors to deny a provider payment for services rendered. The adage that a long note is better than a short memory is still relevant when providing and documenting services, and providers should make every attempt to ensure their records are compliant with the record keeping requirements of their payers. However; the reasoning by the Court in the PHP matter that an imperfect record is a complete bar to payment for services rendered should certainly be taken into consideration by both federal and state policy makers, as well as insurers in the private market.