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County's Fiscal Woes Increasing, Report Says

Budget: An internal memo now estimates the cost of the failed mental health merger and Medicare billing fiasco at $25.5 million.


The combined cost for Ventura County's failed mental health merger and years of improper Medicare billing continues to rise, now approaching $25.5 million, according to a county report.

A detailed breakdown of the county's cumulative costs were outlined in an interoffice report sent last week by Health Care Agency Director Pierre Durand to Chief Administrative Officer Harry Hufford. Most of these costs comprise $15.3 million in federal fines levied against the county for improper billing and payments to a battery of health care consultants and attorneys.

An analysis by the county's budget office also revealed for the first time that the cost of the botched 1998 merger of the county's mental health and social service agencies--originally estimated at $300,000--has increased to $1.3 million.

And the county's costs continue to mount. Of the total amount, an estimated $1.48 million is for ongoing fees to lawyers and consultants hired to ensure that the county is complying with all state and federal billing regulations.

The county also has spent $100,000 for lawyers in connection with an ongoing FBI criminal investigation over the county's past Medicare billing practices, the report shows. Federal investigators are trying to determine whether county officials deliberately defrauded the federal government by billing at higher physician rates in cases in which the patients were actually seen by social workers, nurses and psychologists.

Durand's report does not include estimates for potential future losses of health care reimbursements, loss of interest income or travel costs for meetings with federal officials.

County supervisors said they were not surprised by the new figures but believe the county now has a handle on the costs.

"The impact is a lot greater than it was first thought it would be," Supervisor Judy Mikels said of the rising tab. "My real honest gut reaction is that the worst is over. We may still see some [minor] compliance costs, but I personally believe all of the big costs are out there."

Supervisor Kathy Long said she wants to contest the loss of $1 million in Medicare reimbursement money that resulted from the failed merger. The money was withheld because the county's administrative structure was out of compliance with federal guidelines from April 7, 1998, when the merger was approved, through May 19, 1998, when the problem was corrected.

Long said the county should not be penalized for this, because it continued to provide patient services during this time.

Durand's report gives Hufford and the Board of Supervisors up-to-date figures that could be helpful in planning for the new fiscal year. Budget hearings begin in June.

But it also may fuel a local private hospital's push to strip the county of its share of the state's tobacco settlement--more than $225 million over 25 years--and give the money to private health-care providers.

Michael Bakst, executive director of Community Memorial Hospital, hopes to convince voters to support such an initiative on the November ballot. He argues that as long as the county faces hard financial times, leaders will be tempted to spend tobacco settlement money on a government bailout rather than on health care programs.

County supervisors have already voted to use $3.1 million in tobacco money to pay the first installment of its settlement with the federal government. The rest of the $15.3 million settlement will be paid out over the next five years.

Supervisor Frank Schillo, who voted against the failed mental health merger, said the county would not use more tobacco money for a bailout. Paying the tab is "going to have to come from reductions in other departments," he said.

Mikels, who also voted against the merger, agreed. "We'll just tighten the belt and we will move on."

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