San Mateo County to pay feds $11.4M

Between Jan. 1, 2013, and Feb. 28, 2017, the county is accused of admitting patients for care when not medically reasonable for necessary, including patients who were admitted for nonmedical reasons such as social issues or lack of alternative available spaces, according to a press release from the U.S. Department of Justice. 

SMMC is further accused of billing Medicare for the allegedly unnecessary treatment despite knowing the costs for admitting the patients were not reimbursable by the agency. 

In a statement, Dr. Chester Kunnappilly, CEO of SMMC, stood by the medical center’s practices for admitting patients who cannot be safely discharged. While patients may be elderly or have other disabilities, he said one’s ability to care for themselves does not necessarily meet the medical necessity standards for billing, given that care can be provided in alternative settings.  

The center was appropriate in admitting the patients, Kunnappilly said, but conceded that a four-year investigation into the hospital’s billing practices revealed its systems failed to ensure appropriate billing was done consistently. Once made aware of the error, the department made numerous attempts to respond to the issue, he said in the statement.

“San Mateo Medical Center has a duty both to our patients and to the fiscal practices that support their care. The safety of our patients will always be our top priority, and we will not discharge patients to unsafe circumstances or to the streets. As we care for these patients, we will continue to ensure that bills for hospital stays comply with federal standards,” the statement read. 

Despite agreeing to the “appropriate” settlement amount at the advice of county counsel and leadership, Kunnappilly said the investigation also showed the medical center “made a good faith effort” to properly bill hospital visits. 

As part of the settlement, the county entered into a five-year Corporate Integrity Agreement with the U.S. Department of Health and Human Services Office of Inspector General. The agreement requires SMMC to undergo annual third-party reviews of inpatient admissions billed to federal health care programs. 

The county also agreed to waive payments for any of the health care billings included in the agreement and will not seek payment from “any health care beneficiaries or their parents, sponsors, legally responsible individuals or third party payers,” according to the settlement agreement.

A former employee of the San Mateo Medical Center, Felix Levy, is credited with bringing forward the complaint under the qui tam or whistleblower provisions of the False Claims Act. The provisions allow for private parties to receive a portion of any recovery after filing claims on behalf of the United States.

“The financial viability of our Medicare program must be protected for current and future generations,” said Acting U.S. Attorney Stephanie M. Hinds for the Northern District of California. “Medical providers, such as SMMC, who seek to pass on the financial burden of their medically unnecessary hospital admissions to the federal government will be pursued, as today’s settlement reflects.”

The financial hit comes as County Health continues its work to address a roughly $23 million budget gap. Previously faced with a $57 million deficit, the department reduced its burden through staff reductions, reassigning contracts, modifying services and acquiring new revenue streams. 

Officials are expected to return to the Board of Supervisors with additional solutions for resolving the budget gap in the next fiscal year. 

sierra@smdailyjournal.com

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