An investigation is ongoing into Medicare billing practices at LMAS. Here are some highlights of the process over roughly the last year, according to documents obtained by The St. Ignace News:

LMAS Health Department was notified in August 2008 that it was selected for investigation because analysts detected a potential aberration in billing patterns for Medicare. The letter was from National Government Services, which analyzes records for the Centers for Medicare and Medicaid Services. The agency flagged the fact that 52.26% of home health care patients had a length of stay more than 120 days. The agency began a probe into health department records, looking at a sample of 40 cases.

State Report Says More Local

Funding Should Go Into

Department Meanwhile, the LMAS Board of Health, made up of two representatives of each participating county, and the health officer had turned to the Michigan Department of Community Health (MDCH) for technical financial assistance, asking it to evaluate the agency's fiscal status and recommend ways to strengthen it.

A resulting report made September 8 by MDCH consultant Jon Houserman showed the agency's cash flow problems were putting it into the red by $552,322. A lot of the fund balance was tied up in accounts that hadn't been paid yet, the report said, because the agency's large home health program and other services were structured so that fees and funding were paid after services were provided. The agency sometimes had to delay vendor payments and other disbursements, which Mr. Houserman's report called "a worsening situation." He made specific recommendations to rectify that.

As one reason for the projected $552,322 shortfall, the report said the home health program, which brought in more than half of the agency's revenue , was seeing a $465,000 decline in projected annual revenue.

The four counties that make up the health department were spending amounts well below average to provide health services, the report showed. The combined contributions from the four counties only totalled about $50,000 a year, or about $1.25 per capita, compared to the state average of $6 to $8 per capita.

The financial difficulties at the health department will not be fully resolved, Mr. Houserman wrote, until there is less need for home health program revenues to bolster other health department programs, and until counties provide stronger local support for public health programs that are essential.

Results of Probe Show 75% Error Rate

In March, results of the Medicare probe came in. The National Government Services probe found a 75.09% error rate for payment of the claims in the 40 sample cases it looked at. The health department was notified of these results March 11, 2009.

In 31 of the cases, the claims were denied because the skilled nursing care claimed was not reasonable or necessary for the medical case presented. In three cases, skilled therapy was not reasonable and necessary, the analysts said.

The analysts decided from those results to sample another 40 cases of LMAS patients, a review that is underway. The health department was also asked to submit a plan to correct the errors.

In April 2009, newly hired health officer Brian Schoenborn submitted a plan to correct the errors that included more staff training about Medicare requirements and the decision to discontinue home health services in four of the agency's six counties. At the time, the office was providing services in Delta and Menominee counties in addition to the four counties in the consortium.

The corrective plan was accepted by the analysts May 1.

Staff cut from 100 to 40 in July

The health department reduced its 100-person staff to 40 people and jettisoned two programs this summer in the face of decreased revenue. Home health and hospice services were discontinued Friday, July 31, and families using those services were covered by neighboring agencies.

The program cut meant the loss of 60 jobs in Luce, Mackinac, Alger, and Schoolcraft counties, including nursing, administrative, and clerical positions. Job terminations began in July and continued through September.

Mr. Schoenborn, himself, has been laid off and will leave the agency Friday, November 13, and his role as health officer will be assumed by Nick Derusha of Luce County, who will also continue to serve as the director of environmental health, Mr. Schoenborn told The St. Ignace News October 20.