Not in compliance: Saint Louise could lose Medicare funding

Saint Louise Regional Hospital

In what could be a crippling blow to South County’s only hospital, federal Medicare funding could be cut off for Saint Louise Regional Hospital in less than three months.

A second report issued by the organization that oversees compliance with health and safety standards for patients, found deficiencies that “substantially limit the hospital’s capacity to render adequate care to patients or are of such character as to adversely affect patient health and safety.”

The notice, dated July 19, was sent to hospital CEO Joanne Allen from the California Department of Public Health, Centers for Medicare and Medicaid Services, a federally funded agency that provides oversight to hospitals and health care providers.

CMS warns Allen that the hospital is still “not in compliance” with the conditions of participation as a Medicare provider, and as a result, “we are taking steps to terminate the hospital’s Medicare provider agreement effective Oct. 19, 2012,” wrote Steven Chickering, associate regional administrator with CMS.

Allen assures this “absolutely” won’t happen, however.

“We will not lose our Medicare funding,” she maintained. “We’re working on an action plan…their job (CMS) is to do their full due diligence, and their findings are opportunities for us to improve.”

The hospital released a statement Tuesday by spokeswoman Jasmine Nguyen saying that Saint Louise began implementing its plans of correction “immediately” based on a preliminary verbal report received in June during the CMS survey. The plan will be fully implemented within the next 10 days, she wrote.

“We are fully collaborating with CMS in assuring that our status as a Medicare provider will not change,” she wrote.  “Our highest priority is the safe, quality care of our patients.”

If termination as a Medicare provider does occur, Saint Louise will not receive any payments for in-patient services rendered to Medicare beneficiaries admitted on, or to after the termination effective date, according to the letter from CMS.

Medicare funding accounts for 35 percent of the hospital’s total revenue, according to Allen.

Overall, federal funding constitutes a “big chunk” of hospitals’ income, according to Dan Hersh, who responds to Freedom of Information Act requests for the U.S. Department of Health and Human Services. Hersh defined “big chunk,” as anywhere from 40 to 70 percent.

Medicare funding “is a huge portion of our market so to speak,” said Saint Louise board member Allen Hayes. “It would be a real tragedy to lose it, so obviously we’re not going to let that happen.”

The June 14 re-survey rides the wake of “serious” and “critical” deficiencies identified by CMS, which launched a survey at Saint Louise from Dec. 22, 2011 to Jan. 18, 2012 in response to complaints that a contracted dialysis nurse was talking on a cell phone while caring for a patient.

During that first survey, the hospital was found to be “out of compliance” with a dozen Medicare regulations.

As a result, hospital CEO Joanne Allen was required to submit a plan of correction to CMS, which received the stamp of approval in April. The next step in the regular formal process was for CMS to conduct an unannounced follow-up survey within the year to ensure the hospital is meeting all conditions of participation as a Medicare provider.

During the June 14 re-survey, however, the California Department of Public Health “identified instead numerous serious instances of noncompliance including violations that posed immediate jeopardy to the health and safety of patients,” according to the letter sent to Allen from CMS.

A CMS complaint survey, such as the one conducted in December 2011, takes place unannounced and in-person by several or numerous CMS officials.

A full re-survey, such as that facilitated by CMS June 14, is essentially an open book inspection.

As for a complete explanation of the “noncompliance,” “violations” and patient “jeopardy” outlined in the July 19 letter to Allen, those details – which are chronicled in a full report sent to Allen from CMS – will not be available to the public for another week or so.

Per CMS protocol, “the report is not releasable until (Saint Louise) has had a reasonable opportunity to respond,” Hersh explained.

He said a plan of correction from Allen is due by Aug. 2.

Nguyen responded via email to requests for a copy of the full survey, which would include specifics regarding the deficiencies cited, writing, “Regrettably, as much as I would like to help you, I will not be able to meet your request at this time.”

The CMS letter did give an indication on what the issues at Saint Louise are. The hospital “continues to be in violation” of Medicare Conditions of Participation, in the areas of “governing body,” “nursing services” and “food and dietetic services” it reads.

The latter two violations are new. They did not appear in CMS’s December survey findings, which catalogued “serious deficiencies” at the hospital that included management oversight, contracted staff competency, medical staff responsibilities and problems with a dialysis provider.

The next steps are for Allen to submit “credible documentation evidencing correction of the cited deficiencies” to the CMS San Francisco office for review. But that will not necessarily assure continued Medicare funding.

“Please note that mere plans of future correction of evidence of progress toward correction will not be sufficient,” the letter states in bold print.

In any event, Saint Louise will again be scrutinized in an unannounced visit by CMS.

If the inspection confirms the hospital is meeting all conditions of participation as a Medicare provider, the hospital’s status as a provider “deemed” to meet Medicare Conditions of Participation will be reinstated, and Saint Louise will be able to avoid termination of its Medicare provider agreement.

Allen is positive this will be the case.

“We have a longstanding relationship with CMS,” she said. “I believe CMS will accept our action plan and we will continue to provide the safest patient care available to the community.”

About Saint Louise

Saint Louise has 96 licensed beds and saw 26,000 patients walk through its emergency room doors last year. Since 2011, Saint Louise has been under the umbrella of the Daughters of Charity Health System, a regional health system with 22 sites including six hospitals along the California coast. Per the DOCHS policy, no one is turned away because of inability to pay. After a patient is cared for, a financial adviser will work with that patient if he/she is uninsured.

The hospital is also in the thick of hammering out a memorandum of understanding Saint Louise signed in March to merge with Ascension Health Alliance, “the nation’s largest Catholic and nonprofit health system,” according to the organization’s website. The merger between DOCHS and Ascension Health could lead to a definitive agreement for the DOCHS to become part of Ascension Health.

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