Just days after learning that Christus St. Vincent Regional Medical Center may have to return more than $23 million in Medicaid funds, Santa Fe County is poised to enter into another questionable agreement to obtain money for the hospital.

According to a draft audit released March 29 by the federal Centers for Medicare & Medicaid Services (CMS), Christus made improper "donations" to Santa Fe County in fiscal year 2009 in order to maximize its federal funding.

In order to receive federal funding, Christus must also receive a matching donation from Santa Fe County. However, in 2009, the hospital covered the county's donation itself—which is not allowed under federal regulations.

As a result, the audit finds Christus liable for $23.7 million in Medicaid funds that it received by paying the contribution intended to come from the county.

The audit was triggered by a 2005 federal lawsuit—still pending—that alleges that three New Mexico hospitals bilked the federal government out of Medicaid dollars using similar illegal donations.

Christus was not named in that suit, but was identified in the recent audit.

When contacted about the audit findings, hospital spokesman Arturo Delgado responded via email to say that Christus "has always worked closely with legal counsel to review expenditures and ensure all arrangements with Santa Fe County were compliant, properly executed, and fulfilled the purpose of reimbursing the hospital for care provided to the uninsured and underinsured."

The hospital is required to respond this month to the audit's findings.

At the same time, Santa Fe County commissioners have until June to decide whether to approve a similar funding arrangement.

At issue for this deal is $5.6 million in federal funding for indigent health care. Again, according to federal regulations, Christus can only receive that funding if Santa Fe County contributes a portion of the total.

But when the federal funds became available last September, the county couldn't afford its $1.1 million contribution.

In that regard, it joined 13 other counties that couldn't afford their contributions to other New Mexico hospitals needed to draw down federal funds.

The state Human Services Department attempted to address the counties' budget woes with an unconventional funding agreement of its own.

Under the state agreement, the University of New Mexico Hospital agreed to contribute the $2.3 million needed by all the counties, including Santa Fe's $1.1 million portion.

UNMH would be reimbursed, under the agreement, after the federal funding came through.

In the meantime, the state advanced the nearly $12 million needed by the hospitals, including $5.6 million to Christus.

Now, Santa Fe County commissioners must sign off on the agreement in order for the entire agreement to be finalized.

If Santa Fe County commissioners approve the deal, Christus will be able to keep the money—but the county could be laying itself open to a federal lawsuit.

That has at least two county commissioners concerned.

"I have to wonder about the wheeling and dealing that's going on," Santa Fe County Commissioner Liz Stefanics says. "We've already discovered there are problems with things we did in the past. My position is, we shouldn't be continuing the wheel of wrongdoing here."

If the county commission does not approve the deal, Christus will have to return the $5.6 million—money intended to provide health care for low-income county residents.

County commissioners didn't have the chance to weigh in on this legal quagmire when HSD hatched the UNMH plan last September. Commissioner Kathy Holian says they should have been consulted.

"I personally am a little concerned about why the money is being funneled through all these different entities," Holian says. "The County Commission is really responsible for all decisions that are made by the county—we sign off on them, in essence. It just seems reasonable that anything like this that comes up should be presented to us and explained."

As for whether the agreement would also spark federal concern, the question has yet to be asked, let alone answered.

In fact, according to two attendees of a March 24 conference call with representatives of several counties and the New Mexico Hospital Association, HSD Acting General Counsel Mark Reynolds said he didn't plan to pursue a written confirmation from the federal government of the arrangement's legality.

San Miguel County Attorney Jesus Lopez, whose county hospital, Alta Vista Regional, is named in the audit and embroiled in the federal lawsuit, says he was appalled by Reynolds' statement.

"You've got tens of millions, if not hundreds of millions of funds involved and, if any agency should be brought into the loop, it's CMS," Lopez says.

Stefanics echoes these concerns.

"If I had somebody who is a [federal] government authority who is accepting this money put in writing, 'this is legal,' I'll accept that," she says. "But until they do that, I have big questions in my mind."

In an email to SFR, HSD spokeswoman Betina McCracken quotes Reynolds saying HSD "is not against submitting the question to CMS," though "a CMS inquiry doesn't appear to be necessary." Reynolds also defends the legality of the proposed agreement.

"This is a very different situation than the findings in the draft audit," Reynolds says in the statement provided by McCracken. "UNMH is a public entity providing public funds that are appropriate for federal match to other public entities, in this case for counties. This is allowed under federal regulations."

Under the federal statute that the audit accuses hospitals of violating, however, no exception is made for public versus private health care providers.

The agreement also contains what some say is a problematic perk for UNMH: a patient-transfer agreement that requires smaller hospitals to take costly critical patients off of UNMH's hands.

Right now, patients who require specialized care are often transferred from hospitals such as Christus to UNMH, which is the only Level 1 trauma center in the state. Any hospital entering into the proposed agreement would have to start taking patients back from UNMH once they are stabilized, "irrespective of patients' ability to pay," UNM spokesman Billy Sparks tells SFR.

In other words, UNMH's financial assistance "to the counties is not a pure, unconstrained gift," Patrick Burns, a lawyer at the Washington DC-based Taxpayers Against Fraud Education Fund says. "It is a conditional gift, and the condition is that the counties sign a memorandum of understanding in which they will be paid, so long as they agree to play with UNM Hospital."

Burns also says that because UNMH is a state entity, it can't be sued like the private hospitals in the pending federal lawsuit. Instead, any federal litigation alleging false claims for Medicaid money would land on the counties.
But Sparks says UNMH agreed to the plan out of concern that hospitals would otherwise have to turn away indigent patients.

"If you eliminate the ability of local hospitals to take indigent patients, that becomes a threat to the whole system," Sparks says.