The State’s Health Care Trainwreck: Comptroller Reportedly Withholding $72 million in Payments Owed To Providers

May 7th, 2008 at 02:30am Aaron Chambers

Gov. Rod Blagojevich’s determination to unilaterally expand state-subsidized health care, despite the fact that lawmakers repeatedly rejected his plan and refused to provide funding for it, has prompted quite the debacle.

His administration claims it can’t easily differentiate between costs associated with his unilateral expansion of FamilyCare — a move recently blocked by Cook County Judge James Epstein — and those costs associated with the state’s previously existing, core health care programs including Medicaid.

And because the administration cannot distinguish between legitimate and illegitimate payments, state Comptroller Dan Hynes is withholding payments for legitimate health care expenses as well as payments associated with the governor’s blocked expansion, according to Larry Blust, an attorney for the administration.

Hynes did “not receive from (the administration) any information from which (he) could independently determine which invoice vouchers relate to services provided under the old eligibility guidelines and which vouchers relate to services provided under the new guidelines at issue in this case,” Hynes’ attorneys said recently in a court brief.

Hynes therefore “would be unable to determine on a day-to-day basis whether (his office) was or was not complying with any (temporary restraining order) or preliminary injunction that might be entered by this court,” they said.

If Hynes withheld health care payments across the board for fear of violating the judge’s order by inadvertently making payments associated with the governor’s now-blocked health care expansion, then doctors and health care providers who provided services under the state’s legitimate health care program are not getting paid.

According to Blust, Hynes withheld at least $72 million in payments. Hynes spokeswoman Carol Knowles declined to answer questions concerning the comptroller’s policy on these payments, instead referring me to the Illinois Department of Healthcare and Family Services, which administers the state’s health care programs.

The Department’s Response

I approached the agency with a series of questions by phone and e-mail on Friday. Agency spokeswoman Annie Thompson finally responded by e-mail Tuesday night, and here is her entire statement:

We have halted enrollment for the Family Care expansion while issues are worked out in court. The approximately 30,000 existing enrollees are still covered under the permanent rule. While those who intervened in the lawsuit - Mr. Gidwitz, Mr. Baise, and the Attorney General - are aiming to take coverage away from working parents in the expansion group, we have not removed anyone from the program.

My questions on Friday were aimed at gaining a response for a news story and related column I authored for Saturday’s Register Star. The news story concerned the agency’s decision to cease enrollment in the governor’s expansion. The column concerned a group of 25,000 people who belonged to FamilyCare before the governor’s expansion, and whose health care now appears to be at risk.

In her Tuesday night response to my Friday questions, it’s worth noting that Thompson did not provide a more detailed response to our Saturday coverage.

It’s also worth noting that Thompson did make a point of attacking individuals who joined Richard Caro’s lawsuit against the governor’s health care expansion.

Also, when she referred to “30,000 existing enrollees,” I presume she was referring to the class of individuals previously enrolled in FamilyCare; my sources told me there were 25,000 people in this class. But when she said they are “still covered under the permanent rule,” I have no idea what she was referring to. The Joint Committee on Administrative Rules, a special panel of lawmakers that reviews the administration’s rules, rejected both an emergency and permanent rule that her agency filed to implement the governor’s expansion. The judge’s order blocking the governor’s program backed JCAR’s decisions.

As I reported in the Saturday column, the agency used those same rules to advance a rule change necessary to continue providing coverage to this class of 25,000/30,000 people. Again, the rules were rejected both by JCAR and Judge Epstein. The state now appears to have no authority, under it rules, to cover the cost of health care for these people and to call on the federal government to reimburse at least half of that cost. So, like I said, I have no idea what Thompson is talking about.

The Comptroller’s Role

The comptroller is responsible for paying the state’s bills. He acts in response to vouchers — requests for payment — presented to him by the administration. His attorneys argue it’s not up to his staff to sort through thousands of vouchers to determine which ones ought to be paid versus those that should not be paid.

“Even if the Comptroller’s Office received data from which it might conceivably be able to distinguish between vouchers for services provided under the expanded guidelines as opposed to the services provided under the old guidelines, the sheer volume of vouchers processed by the Office would make it a practical impossibility for the Office to exercise any role in preventing payment of services that would qualify under the new eligibility guidelines,” Hynes’ attorneys said.

“Each year the Office processes approximately 16 million voucher transactions, or more than 300,000 every week. Any injunction requiring the agency heads to provide additional information to the Comptroller’s office so that the Office could make an independent determination as to whether payments were being made according to the old guidelines or the new guidelines would require a complete overhaul of the SAMS computer system and would likely require that the Office hire significantly more auditors.”

For more background on the comptroller’s view of the conundrum the administration placed him in, see this brief that his attorneys filed in support of his motion to get out from under the judge’s injunction.

Deflecting Blame

Following are remarks made by attorneys for the administration and the comptroller in a hearing before Judge Epstein on April 23, according to a transcript of the hearing provided by Richard Caro, a west suburban attorney who filed the lawsuit against the governor’s expansion. At issue in the hearing is Epstein’s decision to stay his preliminary injunction as it pertains to Hynes but to leave the injunction intact as it pertains to the administration.

The administration sought during the hearing to also get out from under the injunction, though the judge refused.

(It’s not clear why Blust refers to Medicare in the transcript. Medicare is a federal program that is not at issue in the case. Medicaid, the state’s core program, is at issue in the case. Blust may have mistakenly referred to Medicare, or the court reporter may have mistakenly reported that he said Medicare when he said Medicaid.

A “stay” is a suspension of the judge’s order blocking the administration from carrying out, or making payments for, the governor’s expansion. The administration is appealing the judge’s order.)

We begin with Blust explaining the administration’s pickle in complying with the injunction. This gets to the heart of health care providers not getting paid:

MR. BLUST: We intend to comply with
the order unless the relief is granted on stay. We
did ask Your Honor in another motion we did file
today for a stay.

The main reason for that is because of
the stranded provider problem. Neither we nor the
controller — and I’ve tried to say this a couple
times, and I know Your Honor doesn’t like to hear it
– neither we nor the controller have the full
information apart from each other to do what’s
necessary in regard to providers if they’re not going
to be paid.

We have spent what I would call almost
an inordinate amount of time trying to figure out
what it would take to go in and find out who the
payors out there are who gave services during the
emergency rule and who haven’t been paid yet.

First of all, we don’t know who the
controller has and hasn’t paid.

Second, they don’t know — as Your
Honor may remember, the budget line here is by
service. Most of the people in FamilyCare also have
family members in other programs. So they have one
provider number, one authorization number.

So someone has to go in manually and
determine who has to be dealt with there and who
doesn’t, what the services are that were rendered
that can’t be paid if Your Honor is correct, which we
obviously don’t think you are or we wouldn’t have
appealed it, but who, in fact, has to do this.

What we’re proposing to stay, I think,
would — well, it would allow — that payment would
ameliorate the situation for people who acted in good
faith and rendered services based on provider
numbers.

Now, as I understand it, there’s like
$72 million worth of Medicare payments being withheld
at the controller’s office, not because there’s 72-
under this program. There’s probably a million at
most under this program, if that. But because, in
fact, they don’t know whether paying those would
violate Your Honor’s orders, we can’t authorize
vouchers from people either under Your Honor’s court
order.

Our agency approves the services. The
people who do that do not know whether that service
was rendered under Family Care, All Kids, some other
Medicaid/Medicare program.

So the first thing that has to happen,
I believe, after spending a lot of last week
investigating this, and we really need to do some
more, is we would have to write a program to separate
all of that out.

This is like — Medicaid is kind of
like a unitary batch processing program. A little
like the controller described; the same is happening
on our side.

We have two computer programs –

Epstein at this point interrupted Blust, noting the administration created this problem for itself:

THE COURT: The difference is, it was
created by your side, this issue –

MR. BLUST: And I’m not –

THE COURT: — and not by the
controller.

MR. BLUST: I’m not asking him for
sympathy for our creation. I’m just simply saying,
we have an issue here where we need — I don’t
believe it’s possible to say the controller has no
part –

THE COURT: Let me just stop you for a
second, Mr. Blust.

I take it the controller’s office has
no problem cooperating with the executive branch
other defendants in giving any information that is
within the power of the controller to give that would
allow them to comply with my order.

Peter Koch, an assistant attorney general representing Comptroller Hynes, at this point joined the conversation. Koch indicated it’s not clear to Hynes what the administration wanted from Hynes in order to fix its mess:

MR. KOCH: Of course, Your Honor. We
don’t have — they have not identified anything from
us, but there’s no reason why we wouldn’t cooperate.

THE COURT: That’s fine. I’m not
going to stay my order. It’s going to stay in full
force and effect.

And take the steps that are necessary
to promptly comply with the order.

MR. BLUST: Again, Your Honor, as we
said, unless we get a stay from the appeals court or
you, that’s what we’re doing.

THE COURT: Well, it’s down to the
appeals court at this point.

Blust at this point tried to persuade Epstein to stay the injunction as it pertained to the administration, just as the judge stayed the order as it pertains to Hynes, but Epstein wouldn’t do it.

It’s not entirely clear to me why the administration wanted the judge to stay his order as it pertains to the administration, but I suppose the administration would rather not deal with the trouble of separating the legitimate health care bills from the illegitimate ones. If the judge stayed his order as it pertains to the administration, then perhaps the administration believes that it won’t have to bother with this troublesome task.

Judge Epstein alluded to the administration’s demand for information from Hynes:

MR. BLUST: Well, we have to ask you
for a stay, too. I believe you do have the authority
to grant a stay.

THE COURT: And I’m respectfully
denying that.

And I would ask the controller’s
office to please comply with the best — within the
best of your ability to give them the information
which they claim they need to be able to undo that
which they have done.

MR. KOCH: Your Honor, we have no
objection to that. I did file separately today a
motion to modify the –

THE COURT: Which I think I’m barred
from doing –

Koch asked the judge to continue the stay relative to Hynes:

MR. KOCH: Yes, Your Honor.

Previously, last time we were here,
you did grant a stay of the injunction as to the
controller for seven days, and it was the
understanding, I think of all the parties here, that
we try to work something out.

I’d ask that the Court continue that
stay, at least as to the controller.

Epstein agreed to do just that:

THE COURT: I will as to the
controller, with the understanding that I am asking
the controller to please cooperate within the best of
his ability with the other executive branch
defendants to give them the information which they
claim they need to be able to comply with my order.

MR. KOCH: Any letter from Mr. Blust
I’ll forward on to the controller.

THE COURT: But it should be done with
all speed, because I think the longer this goes on,
if I am correct, the more money that would be spent
in violation of the order.

MR. KOCH: We will await questions
from Mr. Blust.

MR. BLUST: We’ve tried to do this
directly with the agencies. I suppose we can do
this through — it’s really hard to encourage the
people in the controller’s office and the department
to work together on this and not have to –

THE COURT: I don’t know that this has
to go through you. You can talk to your respective
clients on that. I don’t suppose I have to encourage
these people or, for that matter, any litigators to
paper what you’re doing so that it can be
demonstrated who, if anyone, is dragging their feet,
because should this be affirmed and should there be a
failure to comply with the order, there will be
sanctions, and that’s all I need to really say on
that.

Let’s recap: The governor’s administration claimed it couldn’t distinguish between legitimate and illegitimate health care bills, and it’s unclear how or when it might sort this out. Meanwhile, the comptroller is withholding payment on both fronts, and is looking to the Illinois Department of Healthcare and Family Services to sort it all out. The judge, for his part, is concerned about the state making payments in violation of his order.

A Big, Big Mess

Late Tuesday, Caro added this in an e-mail:

Blust meant all Medicaid payments have been held up
until HFS can determine which ones have been enjoined
from being paid. Under State law it is a serious crime
for HFS to certify to the Comptroller a bill as
lawfully payable. Apparently on April 15 after
issuance of the preliminary injunction HFS sent over a
computer tape asking the Comptroller to pay $72
million in Medicaid charges, which included charges
that were enjoined from being paid. The injunction
effectively voided any prior certification. So now HFS
has to figure out what bills can’t be paid and that is
a tough, tough job, and requires a manual review of
each and every charge. There may be hundreds of
thousands of submissions to review. May 15th is coming
soon and the same problem exists for those payments.
How long will it take HFS to sort what can and can not
be paid, no one knows. The Judge’s position was that
HFS created the problem and it’s up to them to do
whatever it takes to comply asap.

What a mess.

The lawyers are back in court this week Monday.

Entry Filed under: DanHynes, Health Care, Rod Blagojevich