U.S. Cuts Off Medicare Funds for Hillcrest Mental Hospital

The federal government has revoked the county’s right to receive Medicare funds for patients treated at the Hillcrest mental health hospital, county officials said Monday.

A review of the treatment of 21 patients at Hillcrest during an 18-month period revealed “serious violations” that held a “potential for patient harm,” according to a letter to county officials from the U.S. Department of Health and Human Services.

Among the violations was the premature release of one patient--an error that may have contributed to that patient’s suicide, the letter said.

As a result, beginning Feb. 17 and continuing for at least three years, all “items and services” ordered or furnished by Hillcrest will be excluded from reimbursement under the Medicare program, wrote James F. Patton, director of the health care division of the Department of Health and Human Services’ inspector general’s office. Medicare is a federally funded health program that reimburses private and public physicians and hospitals that care for the elderly.

Because Hillcrest is the first hospital in the nation to have its eligibility for Medicare funds revoked under new, stricter enforcement of federal regulations, it was unclear Monday what impact, if any, the action would have on the similar but separate state Medi-Cal funding and on Hillcrest’s sister facility at Loma Portal. Until those questions are answered, it will be impossible to tell whether the federal action will be an expensive and embarrassing signal to the county or a devastating blow to its programs.

In either case, care at Hillcrest and Loma Portal will not be affected immediately, said David Janssen, the county’s assistant chief administrative officer. He said the county will make up any loss of federal or state funds with other money to keep the hospitals running until long-term plans for them can be developed and put in place. No patients will be turned away, he said.

Janssen and County Supervisor Paul Eckert reacted to the decision Monday with shock and anger, alleging that the action “came out of the blue” and was based on a tiny and now outdated sample of the treatment available at the hospital, which has been under almost constant fire by various federal, state and local agencies for nearly a year. But an official with the agency that reviewed Hillcrest’s records told The Times that the government’s action was warranted because it is unacceptable that any number of patients be inadequately cared for.

Eckert, speaking as chairman of the Board of Supervisors, said the county will appeal the action administratively and at the same time will ask a federal court to order that the funds continue while the county’s appeal is pending.

“I think it’s unfounded,” Eckert said. “On the surface it appears there’s no touch with reality as it actually exists here today.”

Janssen labeled part of the report “garbage” and said he did not believe the federal regulators were familiar with the county’s operation. He said care at the hospital has been dramatically improved since June, 1985, when the review was conducted. The county’s poorest and most violent mentally ill patients are taken to Hillcrest, often by police, and sometimes they are physically restrained.

“You can’t tell on the basis of the review of records what the quality of care of the facility is,” Janssen said. “With a facility that’s been a part of Medicare for 20 years and has never been sanctioned and serves tens of thousands of people who are not going to be served somewhere else, I’d think you’d want to do a little more than take a look at 21 medical records.”

Eckert said he believed San Diego was being used as a “test case” by the federal government to see how the new enforcement process would work.

But Dr. John T. Kelly, assistant medical director for California Medical Review Inc., the organization that reviewed Hillcrest for the federal government, said the sanctions proposed by CMRI were based on evidence of inadequate care for Medicare beneficiaries.

“We don’t look at anything as--if you will--a test case,” Kelly said. “We look at each case on its merits.”

Kelly also disputed the county’s claim that his agency’s review was insufficient. He said that any evidence of substandard care is cause for concern, no matter how many cases may be in question.

“The requirement is that all patients cared for under the Medicare program are treated at a level of quality that meets professional standards,” he said.

“The issue is the quality of care provided to specific patients, and was it care that meets professional standards.”

CMRI is a San Francisco-based nonprofit corporation that has a $27 million federal contract to review the quality of care under the Medicare program in California. As the state’s “peer review organization,” it is responsible for uncovering patterns of substandard medical care and recommends sanctions to the Department of Health and Human Services.

In this case, CMRI recommended that Hillcrest be permanently barred from receiving funds from the Medicare program. CMRI’s recommendation was scaled back by Health and Human Services officials.

Patton, in his letter to the county, said he was aware of recent improvements at Hillcrest. But he said those changes appeared to address only “management controls” and “have not yet been translated into acceptable psychiatric care for the patients.” Patton said he had determined that Hillcrest had demonstrated “an unwillingness or lack of ability substantially to comply with these obligations.”

County officials received Patton’s letter Jan. 27, and the Board of Supervisors discussed it in closed session Wednesday, Janssen said. He said the county had hoped to resolve the issue confidentially to avoid further negative publicity about Hillcrest. But he said that hope dissolved when county officials realized the federal government would be buying advertisements in local newspapers to notify the public of its decision.

Janssen said he and other county officials still aren’t sure whether the action will affect only Medicare funds at Hillcrest or will also include or trigger a ban on Medi-Cal funds at Hillcrest and Loma Portal, where mentally ill children and elderly patients are treated. The state generally considers the two hospitals to be operated under a single license, but it is not clear whether the federal government also will.

If neither Medi-Cal funds nor Loma Portal are affected, the ban on Medicare money for Hillcrest would be a much lighter blow to the county. Those funds represent about $1 million a year, or 12% of Hillcrest’s annual budget, and state officials said even the loss of that money could be offset by other state health funds the county receives. On the other hand, a loss of Medi-Cal funds would be a crippling blow to the Loma Portal hospital, where the money accounts for more than 40% of the budget.

“We’re having a great deal of difficulty finding out who is doing what to whom and why,” Janssen said. He said the county also did not know what effect this action would have on an ongoing, parallel review of the facility by the federal Health Care Financing Administration, which is also part of the Department of Health and Human Services but played no role in this action.

The Health Care Financing Administration relies for its information on state health officials who visit Hillcrest regularly.

Patrick Weagraff, chief of clinical standards for the state Department of Mental Health, said he believed the federal government’s evaluation of Hillcrest is outdated.

“The finding that they made might have been accurate for that point in time, I can’t dispute that,” Weagraff said. “But in terms of being timely, I don’t think it was timely and I think it’s dated.”

Times staff writer David Smollar contributed to this story.