Clinics’ Billing Jeopardizes Medicare Reimbursement

Ventura County’s 43 public health clinics do not meet federal Medicare billing guidelines, putting the county at risk of losing millions of dollars in reimbursement money, officials said Monday.

County health administrators have a June 30 deadline to bring the clinics into compliance or face a possible reduction in funding, said Emery G. Lee, a billing specialist for the U.S. Health Care Financing Administration in San Francisco.

The county will not face any retroactive penalties or be forced to repay Medicare payments made before next month’s deadline, Lee said.

An April letter from Wayne Moon, the federal agency’s director of Hospital and Community Care Operations, said the agency had concluded that 22 county medical and 21 mental health clinics do not comply with billing guidelines revised three years ago.

The dispute centers on the county’s contention that the clinics are outpatient satellites of the Ventura County Medical Center--a designation that entitles the county to higher Medicare payments.

But federal officials say that many of the clinics operate independently from the medical center and should not be billing Medicare at the higher rate. The April 13 letter cites the mental health clinics as ineligible because they are a part of the Behavioral Health Department, which the federal agency contends is separate from the hospital.

Another 12 primary care and specialty clinics do not qualify, Moon states, because their record system is not integrated with the hospital’s, and contractual agreements with the physicians who run them show little involvement by the hospital. Other facilities were found ineligible for reasons ranging from offices too far from the hospital to accreditation problems.

“They must reorganize in some way so the clinics come under the hospital’s direct line of authority,” Lee said. “Not just on paper, but in practice as well.”

County Counsel James McBride declined to provide details of the county’s strategy for responding to the federal agency’s demands. But McBride said he thinks the county will be able to show federal officials that the clinics are operating within guidelines.

The Los Angeles law firm of Hooper, Lundy & Bookman is assisting the county in its response, McBride said.

“Everything is perspective,” he said. “We’re confident that whatever issues they have found with the clinics can be corrected.”

Mike Powers, deputy director of the county Health Care Agency, said the county will clarify organizational charts and job descriptions to demonstrate that all its clinics are part of the medical center.

“We want to make it very clear that there is one administrator and that all departments of the hospital report to that administrator,” Powers said.

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Federal review of the clinic network resulted from last year’s failed attempt to merge the county’s mental health and social services departments. A majority of the county supervisors initially approved the creation of the massive Human Services Agency, but rescinded their action in December after federal health care officials said it violated Medicare billing rules.

The Health Care Financing Administration’s initial focus was on billings generated in the county hospital’s psychiatric wing. But the agency earlier this year expanded its review to include the entire public clinic system.

“People say there is no fallout from the merger,” said Supervisor Frank Schillo, who, with Supervisor Judy Mikels, voted against the merger. “Well, this is fallout from the merger. We are going to be making changes and hopefully not suffering too badly from this spotlight on the medical center.”

While officials are reluctant to speculate what will happen if the federal agency rejects the reorganized clinics, Schillo said it is possible that some clinics would be forced to convert to independent facilities. Although Medicare makes up just 5% of clinic revenues, any reduction in funding could have a significant effect, Schillo said.

“The doctors we have contracted with are expecting a certain amount of income,” he said. “If we don’t get the [full] funding, we will have to change those contracts.”

Under an independent system, clinics would be required to be separately licensed and to bill Medicare directly at a lower rate.

Ventura County’s medical clinics have been cited as a statewide model for expanding health care to the poor while cutting costs to local taxpayers. Created over the past decade by Pierre Durand, head of the county Health Care Agency, the network uses private-sector incentives to boost each clinic’s performance.

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Private physicians now run the clinics on a contract basis, earning more if they are able to reduce costs. But doctors are required to take all patients who come through the door. Most of the clinics are in poor neighborhoods, where the vast majority of patients are on Medi-Cal and Medicare.

The county’s 21 mental health clinics have been praised for providing efficient, broad-based services to its patients. But the mental health clinics have recently come under fire by psychiatrists and advocates for the mentally ill, who contend that they rely too much on social services and not enough on medical solutions.