King Hospital Billing Foul-Ups Reportedly Cost Millions

Times Staff Writer

Los Angeles County has recently lost millions of dollars in health care revenue, due to billing foul-ups by county hospital officials, according to audits, reports and the recent deposition testimony of a key fiscal officer at Martin Luther King Jr. / Drew Medical Center.

King, a 480-bed county hospital in Watts, has been repeatedly criticized for severe weaknesses in the its revenue office, which is responsible for trying to collect more than $150 million annually for patient services.

In several reports to the Board of Supervisors during the last four years, county auditors have concluded that serious billing deficiencies at King jeopardized the collection of millions of dollars. And this summer, a private health care consultant authored a confidential report concluding that poor fiscal controls and lax computer security at King have cost the county “unknown mega bucks.”

Now, Diane Weissburg, a self-described whistle-blower who is director of patient accounts at King, says she repeatedly warned hospital officials about waste and mismanagement in the hospital’s billing office that cost the county about $22 million during the 1985-86 fiscal year alone, she estimates.


Among the detailed memos Weissburg provided to The Times is one dated Sept. 7, 1987, to King’s administrator, William Delgardo, requesting an investigation of what appeared to be phony billing documentation being prepared by hospital staff to reduce a mounting backlog of Medi-Cal claims.

Weissburg says the problems in the hospital’s revenue office occurred at a time when the county had hired a subsidiary of a large private health care company, National Medical Enterprises Inc., to assume leadership of the hospital’s billing operation. The company was paid $1.6 million for a three-year contract to improve King’s fiscal operations, and recently won a one-year extension.

“I’ve been reporting waste and mismanagement for three years and it didn’t do any good,” Weissburg said in a recent interview. “What they did is they went deliberately after me for whistle-blowing.”

Last week, she received a lay-off notice from the county, effective Friday.


Weissburg, an expert on the Medi-Cal program, was recruited by the county from a job at a private hospital in 1983. The next year she was assigned to work at King, where Medi-Cal claims account for half of the total bills.

But soon after National Medical was hired in August of 1985, Weissburg contends that she and other qualified personnel were removed from their posts in the hospital’s revenue office.

In a lawsuit filed against the county and National Medical, Weissburg and another King fiscal officer, Katherine Jackson, contend that they were effectively demoted because National Medical officials “would not allow such close scrutiny . . . and would not tolerate any independent inspection . . . by persons knowledgeable in the field.”

A third fiscal officer, Sheri Howard, has filed a claim with the county stating that she was placed under undue stress by an order from National Medical to shred “a significant amount of data relative to the patient financial services operations without consideration of future impact and with complete disregard for the county’s policy for the retention of records.”

National Medical officials could not be reached for comment. Their attorney, Ann Holiday, said only that Weissburg’s charges were “unfounded.”

During the first year National Medical was in charge of revenue collections, Weissburg contends that the county suffered a loss of about $22 million. She cited hospital fiscal reports for 1985-86 showing increased write-offs and decreased collections.

A year later, Weissburg and Jackson notified Delgardo that clerks were preparing phony billing documentation to reduce a mounting backlog of Medi-Cal claims. They sent six examples of what they claimed were several hundred cases of “dummy” billings.

As Weissburg explained it, this was a “a quick way to reduce the hospital’s ‘accounts receivable’ and to make it look like you’re collecting money when you’re not. It makes you look, on paper, like you’re caught up and you’re doing your job.”


The net result, according to Weissburg, is that the county, in effect lost millions of dollars to support public health care services at King.

Delgardo said that he could not remember the memorandum detailing this problem. “I get a lot of correspondence. I probably did get that, but I don’t remember it off-hand.”

Top finance officials at the health department downtown said they have no record that they were ever notified of such a problem.

The health department’s assistant finance director Irving Cohen acknowledged there have been some problems with King’s revenue operation since National Medical was hired. “Initially, they took a step backward,” Cohen said. But overall, he added, “they stabilized the system.”

Deputy finance director Gary Wells has characterized National Medical’s performance as “less than dramatic . . . in comparison with the performance of the department’s other two large acute hospitals.

The company’s contract was renewed for a year to allow King sufficient time to recruit its own financial personnel, Cohen added.

In a separate look at King’s revenue operation, county auditors uncovered inappropriate billing practices similar to those cited by Weissburg.

In a 1986 audit, they found a “huge backlog” of Medi-Cal bills, lack of trained staff, inadequate monitoring of claims and revenue losses.


The next year, auditors found that 1,200 claims worth $7.2 million were incorrectly written off by the hospital and that another $1 million worth of Medi-Cal appeal claims were incorrectly deleted from the system. They found, too, that the hospital had lost accountability for more than 2,399 claims worth $7.4 million which were transferred to the control of a private contractor for collection.

King officials responded to the audit by preparing a plan of correction. But county audit chief J. Tyler McCauley said: “They’re still struggling. We’re still talking millions of bucks lost.” Compared to other public hospitals, he said, King’s revenue operations “is on the bottom.”

This summer, a private consulting firm, Financial Health Care Services, examined King’s revenue operations and concluded that lax controls have cost the county unspecified “mega dollars.”

The report cited a backlog of Medi-Cal claims worth about $11.8 million that had languished for more than six months, seriously jeopardizing their chances for collection. In some cases, the report said, claims were missing or had been written off as unrecoverable debt without proper authorization.

“It’s strange that your computer system will allow a balance change with no audit trail,” the report said. “This means anybody can change any balance on the system anytime, not to mention changing a patient’s name and address. This is poor security.”

The report also pointed out a serious shortage of trained staff and capable leadership.

“In summary staff is working on a crisis basis,” the report said, pointing out that there were only two people to follow up on 484 files totaling $16 million.