Mental Health Licensing and Supervision Requirements – Why They are so Critical to Compliance

Mental health clinics rely on a variety of licensed and qualified personnel to provide and bill for appropriate services to an often-vulnerable patient population. Some of these professionals include psychiatrists, psychologists, counselors, and social workers. Additionally, many mental health clinics are designed to be overseen by a director-level professional, such as a psychiatrist, who may supervise multiple counselors, psychologists and/or social workers who engage in the majority of the direct patient care. Making sure all professionals involved in care have the correct licensure and required supervision is an important tenet of appropriate reimbursement. In other words, even if the medical documentation may support a reported CPT^® code, if the underlying licensure and supervision rules are not met, reimbursement should not be sought or retained.

South Bay Mental Health Center: One of the Largest Publicly Disclosed Government Healthcare Fraud Settlements Ever

Licensure and supervision requirements often vary by state and even by specific payor requirements. These issues can be compounded when the provider is backed by private equity firms. In Massachusetts in late 2021, a private equity firm and the former executives of South Bay Mental Health Center, Inc. (South Bay) agreed to pay $25 million for allegedly causing fraudulent claims to be submitted to the state’s Medicaid Program, known as MassHealth, for mental health care services provided to patients by unlicensed, unqualified, and improperly supervised staff members at clinics across the state. Under the settlement, the private equity firm will pay $19.95 million, while two of the executives involved will pay the remaining $5.05 million.

According to the Massachusetts Office of Attorney General, this settlement is the largest publicly disclosed government health care fraud settlement in the nation involving private equity oversight of health care providers, as well as the largest amount a private equity company itself has agreed to pay to resolve fraud allegations involving health care portfolio companies. It is also the biggest Massachusetts-only Medicaid Fraud settlement.

Regarding this settlement, the Attorney General’s office stated, “We took action against these defendants for leaving thousands of MassHealth patients with unlicensed and unsupervised care, while MassHealth paid millions of dollars for fraudulent services. We will go after bad actors who jeopardize people’s health and well-being to make a profit.”

The Allegations Against South Bay

The allegations were brought to light by a qui tam relator (aka whistleblower). She was a licensed mental health counselor who was employed as a Job Coach at South Bay and later, in a role as Coordinator of Staff Development and Training. Part of her responsibilities included training South Bay clinicians in documentation and billing, providing clinical training to new clinicians, supervisors, directors, and regional directors, and examining the qualifications of new South Bay clinicians and supervisors. According to the amended complaint, she was terminated from employment after she raised concerns regarding regulatory violations.

Some of the licensing and supervision requirements mentioned in the complaint included Massachusetts regulations that:

• Each mental health center must “have a balanced interdisciplinary staffing plan that includes three or more core professional staff members who meet the qualifications outlined in 130 C.M.R. § 429.424 for their respective professions. Of these, one must be a psychiatrist, and two must be from separate nonphysician core disciplines, including psychology, social work, or psychiatric nursing.”
• Each parent center and each autonomous satellite program “must employ the equivalent of at least three full-time professional staff members, two of whom must be core team members who meet qualifications outlined in 130 C.M.R. § 429.423 for their respective disciplines” and must meet the managerial staff composition requirements contained in 130 C.M.R. §§ 429.422-23. Id. § 429.422(C).
• In order to bill MassHealth, the professionals diagnosing and treating MassHealth members must hold a degree or license as a psychiatrist, psychologist, social worker, psychiatric nurse, psychiatric clinical nurse specialist, counselor, or occupational therapist. See id. §429.424.
• Each of these respective professions has specific criteria regarding the professional staff members’ credentials that must be met so that they may provide services to MassHealth members. See id. § 429.424(A)-(G).

For example, § 429.424(C) and (F) provide the requisite criteria for social workers and counselors:

Social Workers: At least one staff social worker must have a master’s degree in social work from an accredited educational institution with at least two years of full-time supervised clinical experience subsequent to obtaining a master’s degree and must also be licensed or have applied for and have a license pending as an independent clinical social worker by the Massachusetts Board of Registration of Social Workers. Id. § 429.424(C)(l).

Any additional social workers who are not licensed independent social workers must provide services under the direct and continuous supervision of an independent clinical social worker. These social workers must be licensed or applying for licensure as certified social workers by the Massachusetts Board of Registration of Social Workers and have received a master’s degree in social work and completed two years of full-time supervised clinical work in an organized graduate internship program. Id. § 429.424(C)(2).

All unlicensed counselors must be under the direct and continuous supervision of a fully qualified professional staff member trained in one of the core disciplines of psychiatry, psychology, social work, and psychiatric nursing. 130 C.M.R. § 429.424(F)(1).6 All counselors must also hold a master’s degree in counseling education, counseling psychology, or rehabilitation counseling from an accredited educational institution and must have had two years of full-time supervised clinical experience in a multidisciplinary mental health setting subsequent to obtaining the master’s degree. Id. § 429.424(F)(1).

Essentially, to bill MassHealth for treating and diagnosing patients, an individual must be licensed by the appropriate Board or eligible to apply for licensure with the appropriate Board, or he or she must be directly and continuously supervised by one who is. The difference between the supervision requirements at dependent satellite programs versus autonomous satellite programs is that the direct and continuous supervision in an autonomous program must take place within that autonomous center, whereas the supervision in a dependent satellite program may come from the parent center.

Employee Testimony About Compliance Practices

In this case, it was alleged South Bay did not meet the licensure and/or supervisory requirements that form the basis of seeking reimbursement in the first place. Testimony from deposed employees as a result of a Civil Investigative Demand uncovered some interesting statements for compliance professionals to consider. The Director of Utilization Management and Compliance Officer testified company executives were most responsible for ensuring that South Bay was complying with MassHealth regulations. According to her testimony, although South Bay had a “Compliance Committee” during her tenure, it was a compliance committee “theoretically” and “in name only.” She testified that, throughout her tenure as South Bay’s Compliance Officer, the CEO never once asked her to ensure South Bay was compliant with supervision regulations.

A different employee testified the President and CEO of South Bay was responsible for ensuring South Bay was in compliance with state and federal regulations. She stated she was not trained to interpret regulations or ensure compliance with regulations, so she could not have been the “go to” person at South Bay for guidance on what South Bay needed to do to comply with regulations. When asked who was responsible for ensuring that South Bay was satisfying payers’ performance specifications, she responded the CEO would always say, he was the one that reads the regulations and he said he knew what the regulations were.

According to the amended complaint, this CEO confirmed in deposition testimony that he personally reviewed regulations promulgated by MassHealth during his tenure as President of South Bay.

Conclusion

Mental health providers often serve a vulnerable population that is likely to include a state’s Medicaid population. There are a variety of professionals involved in mental health care. Licensure and supervision requirements vary by state, payor policy, and provider type. From a compliance perspective, it is essential to understand the foundational requirements for licensure and supervision before providing and seeking reimbursement for mental health care services.

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