Cut in U.S. Funds Not as Damaging as Feared for Hillcrest

The federal government’s decision to halt Medicare funds for the county’s Hillcrest mental hospital will not extend to the separate Medi-Cal program or affect Hillcrest’s sister hospital in Loma Portal, county and federal officials said Wednesday.

That means the action by the U.S. Department of Health and Human Services will amount to a 12.3% cut in Hillcrest’s $8.1-million annual budget--a serious but far less damaging blow than county officials had feared their programs might sustain.

“A cut in Medi-Cal at Loma Portal would have been devastating,” said David Janssen, the county’s assistant chief administrative officer.

Hillcrest, the county hospital that receives the patients who are the most violent and difficult to control, has been the subject of criticism from local, state and federal overseers for nearly a year because of lapses in patient care and management.

Monday, the county announced that those problems had prompted the federal government to stop reimbursing the county, effective Feb. 17, for services to patients in the Medicare program, a federal subsidy for the elderly and disabled.

But county officials weren’t sure Monday whether the cut would extend to Medi-Cal--a state and federal subsidy for poor people--or affect Loma Portal, a smaller hospital that treats only young and elderly mentally ill patients. More than 40% of Loma Portal’s budget comes from Medi-Cal funds.

The state generally considers the two hospitals to be under the same administration, and thus state or federal sanctions against one would normally affect the other.

In this case, however, different rules apply because the sanctions are being meted out after a special investigation by the inspector general’s office of the Department of Health and Human Services.

“We have found that this particular hospital (Hillcrest) made some quality-of-care errors that concern Medicare beneficiaries,” said Susan Bibisi, a spokeswoman for the inspector general’s office. “This has nothing to do with Loma Portal.”

Bibisi added that in criminal cases, a cut in Medicare would automatically lead to a cut in Medicaid, which is known as Medi-Cal in California. But the same rule does not apply in administrative cases such as this, she said.

Jack Toney, a deputy director of the state Department of Health Services, said he had been given “verbal assurances” by federal health officials in San Francisco that the action would not affect Medi-Cal.

Still, county officials fully intend to fight the federal action against Hillcrest, the first hospital in the nation to have its funds cut off since the government began a new and stricter enforcement of its regulations last year.

Patient care at the hospital will not be immediately affected, because the county intends to replace any federal funds for several months before deciding whether to curtail care at Hillcrest or close the hospital.

First, though, the county will appeal the sanction on two fronts: legally and administratively. Janssen said county attorneys expect to seek a federal court order Monday that would keep the Medicare funds flowing while the county fights the sanction through administrative channels. The regulations call for the money to be cut off Feb. 17 and allow for the county to be repaid retroactively if it wins an appeal.

The appeal process began when the county requested a hearing before an administrative law judge. That hearing, federal officials said Wednesday, is expected to be held in San Diego within the next 90 days. It is not known whether the hearing will be public.

At the hearing, the county will be free to discuss any issues involving the review of Hillcrest, said William Libercci, deputy director of the inspector general’s division of health care administration and sanctions.

“All the issues--whether they provided quality care, whether their medical records were complete, whether the analysis of those records was faulty, whether they’re capable of doing better--all those things are subject to the administrative law judge process,” Libercci said.

Janssen has said the county intends to show that the records reviewed for the government by the nonprofit California Medical Review Inc. were not sufficient to provide a fair evaluation of the hospital’s performance. Janssen also argues that the reviewers failed to understand the county’s policies and procedures because they were used to dealing with private, not public, hospitals.