State Human Services Department General Counsel Mark Reynolds said during a conference call March 25 that HSD won't check with the federal agency that administers Medicare and Medicaid to ensure that its pending plan for drawing down additional federal money is legal, according to Santa Fe County Health and Human Services Director Steve Shepherd and San Miguel County Attorney Jesus Lopez.

"The acting general counsel for Human Services stated he thought the arrangement was legal, but Human Services Department will not pursue a written confirmation from [Centers for Medicare and Medicaid Services]," Shepherd told a meeting of the Santa Fe County Indigent Hospital and Health Care Board this morning.

"The arrangement" was a plan to draw down what is referred to as "Sole Community Provider Super Supplemental" funds from Centers for Medicare and Medicaid Services (CMS). Sole Community Provider funds are Medicaid and Medicare money given to hospitals by the federal government and local governments. When local governments aren't experiencing a budget crisis, there is unspent SCP money remaining at the end of the year, which is used as a state match to draw down additional federal money. This year Santa Fe County and other state counties didn't have the money to put up, so a plan was devised to have the University of New Mexico front the money to apply for the federal funds. The federal funds would then go to HSD, HSD would disburse the money to the hospitals, and the hospitals would give the owed portion back to UNM.

"[Lopez] says [to Reynolds,] 'Why don't you ask the Center for Medicaid Services if this is legal?' Shepherd says of the conference call. "'Just get them to give us a short memo saying, 'This is ok, go ahead and do it.' And [HSD's] reasoning that they gave us is that it would take too long, because it takes these guys forever to do anything. I think they just don't want to ask them, but I don't know."

Lopez says he is particularly concerned because of the results of an audit that CMS just provided alleging wrongdoing on the part of CHRISTUS St Vincent Regional Medical Center and seven other state hospitals in their procurement of CMS money. The UNM arrangement, Shepherd agrees, seems similar.

"It kind of looks like what CMS is objecting to [in the audit], but I don't know," Shepherd says.

Lopez says between the results of the audit and a pending federal case from 2009 against three state hospitals and Community Health Systems, Inc., alleging they presented false claims to get Medicaid funds, HSD has every reason to be cautious.

"In light of all those circumstances, I think the one entity that should be advised of this whole process is CMS," Lopez says. "I think it's a no-brainer and I think we should get their approval before the counties enter into an [Memorandum of Agreement]...I think we should exercise an abundance of caution with this, because there's so much going on with these monies. Why not use an abundance of caution and invite CMS to participate in this process?"

According to Lopez, HSD has already disbursed money to the counties in anticipation of getting paid back through federal funds. CSVRMC stands to lose the most if the MOA doesn't go through —it would have to return 4.5 million to HSD.

"I think, Madame Chair, that this is rather significant," County Commissioner Liz Stefanics spoke out at this morning's meeting, after Shepherd explained the situation. "My first red flag was with this statement that they thought the arrangement was legal, but they were not going to pursue written confirmation from CMS."