Feds review Nueces County health care payments

Oct. 08--CORPUS CHRISTI -- Questions about the public-private partnership between the Nueces County Hospital District and the Christus Spohn Health System -- and similar agreements throughout Texas -- recently prompted the federal government to withhold a nearly $75 million payment to the Texas Health and Human Services Commission.

What, exactly, prompted the federal scrutiny remained unknown Tuesday.

The federal Centers for Medicare and Medicaid Services contacted the state Health and Human Services Commission about the delayed payment Sept. 30. Representatives with the Texas Hospital Association and Health and Human Services Commission did not know whether individual agreements or a broader problem with public-private partnerships under the Texas Healthcare Transformation and Quality Improvement Program triggered the inquiry.

In the Sept. 30 letter , though, the Centers for Medicare and Medicaid Services flagged so-called "uncompensated care" payments from local governments to hospital systems in Dallas County, Tarrant County and Nueces County.

"This letter has generated quite a bit of concern across the state," said Hospital District CEO Jonny Hipp.

Any inquiry involving Nueces County would revolve around a complex agreement between the Hospital District and Christus Spohn.

Under the agreement, Christus Spohn makes regular payments to the Hospital District, which puts that money and county tax dollars toward the federal Texas Healthcare Transformation and Quality Improvement Program. Sometimes called the 1115 Waiver Program, the arrangement allows local governments to supply what's essentially a state match for federal funding.

Christus Spohn makes the payments to the Hospital District in exchange for using county-owned Memorial hospital, several community clinics and medical office buildings without paying rent.

Every upfront dollar provided by the Hospital District boosts federal payments to local hospitals. That money covers costs associated with providing medical care to Medicaid-eligible patients and people without health insurance.

The uncompensated care payments primarily benefit Christus Spohn, which provides health care to the poorest Nueces County residents under an agreement with the Hospital District -- the same agreement that boosts federal funding to cover the costs involved.

Christus Spohn and the Hospital District inked the agreement in 2012.

Thanks to the federal government, the nonprofit health system and other local hospitals received additional money to cover uncompensated medical care. The federal funding also allowed Nueces County to gradually reduce the burden on local taxpayers, who partially foot the bill for uncompensated care through property taxes.

Both Christus Spohn and the Hospital District worked with the Health and Human Services Commission on the agreement. Attorneys with the state agency vetted the agreement and then-Executive Commissioner Thomas M. Suehs heralded the deal.

"I am also pleased that the agreement represents a truly public-private partnership that ensures not only continuity of critical care for the community, but also the public funding of payments under the waiver, and it does so in a transparent and accountable way," according to an Aug. 31, 2012, letter from Suehs to Christus Spohn, the Hospital District and County Judge Loyd Neal. "I hope that this can become a model for other communities to emulate."

Questions about the agreement, which forms the framework for uncompensated care payments in Nueces County, apparently stemmed from a May letter sent to state Medicaid Director Kay Ghahremani. The letter provided additional guidance on "the allowable and unallowable use of provider-related donations."

In June, a federal financial management review team started analyzing public-private partnerships in Texas and flagged the Nueces County agreement, among others, for further investigation.

"We're a little bit baffled and perplexed about why it may be considered later to be impermissible," Hipp said.

Asked about the federal scrutiny, Christus Spohn released a statement.

"Because there is such a high level of uncompensated care provided in the state of Texas and in Nueces County, this is an important issue for everyone. To our knowledge, every Texas region that CMS reviewed was included in the deferral, and other regions may receive similar treatment after their reviews are concluded," according to the statement released by health system Spokeswoman Katy Kiser. "We are closely monitoring this issue and are working with Nueces County officials and the state to learn more about CMS' reasons for deferring programs, which at this point have not been disclosed."

Texas hospitals spend about $5.5 billion annually on uncompensated care and about 25 percent of residents don't have health insurance, said Lance Lunsford, a spokesman for the Texas Hospital Association.

After a Monday afternoon conference call, the federal Centers for Medicare and Medicaid Services agreed to send the Health and Human Services

Commission documents that prompted the Sept. 30 letter, said Stephanie Goodman, a spokeswoman for the state agency.

The delayed payment will not have any short-term impact on local hospitals or medical care, but how the federal government and Texas resolve questions about the program could prompt long-term changes.

It'll probably take several months for the Centers for Medicare and Medicaid Services to acquire and review additional records from local governments, Goodman said. Meanwhile the Health and Human Services Commission will have to sort through information that prompted the federal government to withhold the nearly $75 million payment for uncompensated care.

"It's hugely complicated," said attorney Van Huseman, who heads the Hospital District board. "That much is not in dispute."

Twitter: @CallerDaveH

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