Centers for Medicare and Medicaid Services (CMS), the federal agency that administers Medicare and Medicaid, released a report stating CHRISTUS St. Vincent Regional Medical Center owes $23 million dollars it received in federal funding, alleging CSVRMC made “impermissible cash donations” to Santa Fe County.

CSVRMC is one of eight hospitals statewide facing such allegations, due to widespread practices deemed “inappropriate” in a draft audit report obtained by SFR.

Medicare and Medicaid provides federal money to New Mexico counties each year after the counties provide a “match” of their own dollars from each county “Indigent Fund.”  According to the draft report, counties are supposed to impose a specific health care gross receipts tax or derive the money from another authorized county revenue source. Instead, during the period covered by the audit (Oct. 1, 2008-Sept. 30, 2009), Santa Fe County allegedly received funding from CSVRMC, which it put up in order to get the federal Medicare and Medicaid funds.

Santa Fe County Health and Human Services Department Director Steve Shepherd tells SFR that CMS is alleging CSVRMC “recycled” Medicare and Medicaid money back into the county match, to the tune of $9,768,626. The $23,777,481 in federal match money that CMS says CSVRMC should pay back is more than any other hospital statewide allegedly owes.

In addition, payments Santa Fe County and the other counties make to these hospitals, described as “supplemental payments,”  made the contributions the hospitals were making back to the counties "impermissible," the report states. Federal Medicare and Medicaid regulations state that “donations” made by a provider, such as CSVRMC, to a local government, should not be related to Medicaid or Medicare payments (ie, should not be recycled Medicaid or Medicare payments) and should not be partially paid back in payments from that government body to the provider, as alleged in this report.

“I’ve got a feeling this thing will go on for probably years,” Shepherd says. “I’ve been here about 10 years and I haven’t seen anything like this.”

Shepherd tells SFR that Santa Fe County terminated this arrangement with CSVRMC in Fiscal Year 2010 because of concerns of impropriety.

“We were worried that something like this might happen,” Shepherd says. “We disagreed necessarily that it was an ineligible thing to do, but we were worried that something just like this might happen.”

Shepherd says he’s also unclear on why the report was made available today, with a cover letter dated March 15, 2011, when the draft report itself is labeled as issued Feb. 10, 2010. McCracken and CMS spokesman Bob Moos say that's a typo, and should read as Feb. 10, 2011.

Betina McCracken, spokeswoman for the state Health and Human Services Department, which contacted Santa Fe County about the audit results, tells SFR that the draft audit report was “sent to counties and county hospitals so they can help in responding to CMS, so that their input is included in the final report.” According to the letter attached to the report, hospitals need to respond by April 15.

“We typically don’t discuss pending issues we have with states until final decisions have been made and final reports have been issued,” Moos writes SFR in an email. “So for the moment we can only say that, based upon preliminary information received during a recent financial management review of the New Mexico Sole Community Hospital Supplemental Payment program, it appears that some of the funding of the non-federal share comes from provider-related donations that are not in accordance with federal regulations.”

Other counties and hospitals named in the report:

San Miguel / Alta Vista

Luna / Mimbres

Mckinley / Rehoboth

Lea / Lea Regional

Eddy / Carlsbad

Otero / Gerald Champion

Chavez / Eastern New Mexico

Update, 3:09 p.m.:

CSVRMC spokesman Arturo Delgado tells SFR that the draft audit report is "a normal part of the regulatory process requesting the state justify the use of monies provided are in compliance with the federal program," despite Shepherd's indication to SFR that he has not seen anything like this in his 10 years with the county. Advised of Shepherd's comment and asked whether CSVRMC is contending the audit is a routine, yearly report, Delgado says

the audit is "not necessarily yearly, but part of the regulatory process that can come in different forms."

Delgado also tells SFR that CSVRMC worked with legal counsel to "ensure all arrangements with Santa Fe County were compliant" and properly executed.