Red tape creates red ink
Bungled paperwork has cost the Health Department millions of dollars

By A.C. Thompson

The experiences of Dr. Teresa Palmer seem to be symptomatic of the financial malaise plaguing San Francisco's 6,000-employee Department of Public Health, a web of neighborhood clinics and hospitals that cares for some 121,000 people annually.

Early this year Palmer, a staffer at Laguna Honda Hospital, got a note from Medicare, the federal insurance program for poor seniors. For her entire 14-year career, Palmer had been seeing patients covered by Medicare; she tended to their ailments, and the hospital sent a bill to the federal government. Or so she thought.

The letter informed Palmer that administrators at Laguna Honda, a 1,065-bed facility for infirm seniors and those suffering from debilitating long-term illnesses, had inexplicably failed to bill Medicare for her services for two years. Palmer, a straight-talking doc who treats patients afflicted with horrendous diseases – such as uncontrolled diabetes, late-stage Alzheimer's, and multiple sclerosis – figures the paperwork slipup cost the city "around $100,000 a year" in her case and says the hospital similarly screwed up the billing for at least four other physicians.

"My question," Palmer said, "is what else are they forgetting to bill for?"

Short answer: plenty. Operating on a roughly $1 billion annual budget and headed by Mitch Katz, the department has long blamed its fiscal woes – it's currently looking at chopping $40 million and 400 employees from the budget – on diminishing payments from the state and the feds. But judging from interviews with doctors, internal health system documents, and a recent audit, department execs are partially responsible for the cash crunch, thanks to sloppy bookkeeping.

In late March, Harvey Rose, the budget analyst for the San Francisco Board of Supervisors, released an audit of San Francisco General Hospital, the 550-bed cornerstone of the Health Department. Rose and his team identified a host of multimillion-dollar problems. Foremost among them, the hospital was waiting for $11.5 million in payments from Medi-Cal and other insurers, a backlog that "resulted substantially from Hospital employees' failure to enter patient information into the system on a timely basis and failure to provide the needed supporting documentation for bills."

According to Rose, General may also be stuck with an additional $10.8 million because of "data input errors by Hospital employees" and other clerical bungling.

One Health Department staffer says the records division is seriously short staffed, adding to the billing dysfunction. The long-underfunded public health apparatus, this insider told us, "is reduced to scrambling from day to day, and there are a lot of inefficiencies in that."

Those inefficiencies apparently extend to the private sector. Rose's study notes that Health Advocates, an outside collection agency hired to go after outstanding bills, is recovering less than half of the $7 million annually the department expected.

"Yes, in the past there were bills we have not collected on, but we've put procedures in place [to rectify that]," General Hospital's chief financial officer Valerie Inouye said. "A lot of the recommendations in the audit we fully support and fully agree with."

However, Inouye described the backlog in billing as a minor "timing issue" and said "most of the time we end up finding the documentation and finally sending out the bill." Most bills, she stressed, will be paid – despite delays.

Inouye told us she's formed a task force that meets twice a month to sort out paperwork snafus related to Medicare and has made "significant progress." As for Health Advocates, she said the company is now pulling in $550,000 a month and will soon be meeting the $7 million target.

Speaking to the Bay Guardian, one doc who works at a community clinic noted several other issues. For starters, physicians are often baffled by the mountains of paperwork and byzantine rules of the health care bureaucracy and are unclear about exactly what treatments can be reimbursed by the state and feds.

"To my knowledge, no one in our system really gets decent training in Medi-Cal billing," the doctor said. "We had a meeting with [the] billing [department] three or four months ago. We were dying to know what we can do to improve billing. The main question people were asking was, 'What can we bill for?' We couldn't get a straight answer; we ended up more confused."

According to this doctor, the city could use more help simply signing up people for state or federal insurance programs – something that could save the system big money over time. "We've identified 5,000 to 7,000 patients in the community mental health system who have diagnoses of bipolar disorder or schizophrenia. It's presumed that some number of those patients will be eligible for [federally subsidized] disability [insurance] and none of them currently is on disability and none has Medi-Cal currently," the doc told us.

For the doctors and nurses facing layoffs as the department scales back its payroll and jettisons services for the city's neediest people, the financial disarray and shrinking budget are more than minor annoyances. "Most of us," Palmer said wearily one night last week, "are working 20 hours of unpaid overtime a week."

Meanwhile, an April 27 memo sent to docs by primary care director David Ofman, a midlevel manager, suggests the department still isn't getting money out of Medicare for the work of some physicians. Under the heading "Revenue Enhancement," Ofman writes of plans to obtain "Medicare ID numbers" – a prerequisite for invoicing the feds – for all doctors.