Health & Medicine

Audit reveals problems at health clinic

Auditors told the Urban County Council on Tuesday that records of the Family Care Center's health clinic were in disarray, making a financial audit impossible.

Dale Skaggs of Blue & Co. certified public accountants told the council's planning committee: "We determined fairly early on we could not issue a clean audit."

The firm said it could not get a complete picture of clinic revenues and expenses because records were either incomplete, did not exist or had too many inconsistencies.

However, the Blue firm did evaluate clinic financial practices between July 2003 and June 2008. It reviewed nine areas of operation and rated them best practice, satisfactory or below standard. The clinic was below standard in six areas.

For example, it purported to be self-sustaining, but not all the expenses were paid for by the clinic, Skaggs said.

Certain expenses — such as utilities, cleaning and some salaries — were paid by the city out of its general fund. Those expenses amounted to between $300,000 and $400,000 a year, he said.

Also, the clinic at times could not be reimbursed by Medicaid or a third-party payer because of poor documentation: a Social Security number was wrong on the patient's records or a birthday was incorrect.

"So Medicaid would deny the claim, and it was up to us to fix the problem and bill it again," said Marlene Helm, commissioner of the Department of Social Services, in an interview after the meeting.

Helm said she does not believe "anyone did anything intentionally wrong. But there was not a lot of attention paid to financial side of running the clinic as opposed to giving good patient care."

"When you are using funds that are not your own, you have to be a good steward and make sure you're doing both — looking at services and looking at bookkeeping," she said.

The clinic at 1135 Red Mile Place opened in 1990 to serve low-income mothers with children. It went from 135 visits that first year to more than 12,000 in 2008.

As the clinic grew, several individuals who worked in the clinic had been hired as city employees but without experience to work in a health clinic, Helm said.

"The next thing you know, they are responsible for scheduling patients for the doctor, accepting payments and billing health providers," Helm said.

An audit of the strengths and weaknesses of the clinic was performed last year by Medical Management Solutions. "We asked them to look at staffing and billing and whether we were following best practices," Helm said.

Based on those recommendations, starting July 1, 2008, the city hired MD Billing to do all the clinic's billing.

In the first nine months of its contract, MD Billing found $170,000 in bills submitted to Medicaid that were denied because of a variety of documentation errors.

"We're pretty comfortable since 2008 we've taken steps to fix many problems by hiring a billing company, having the University of Kentucky train our folks in billing," she said. "We've really undergone quite a bit of change this year since it came to our attention we were not following best practices."

But bigger changes are coming.

Representatives from the city and UK are working on an agreement in which UK will assume responsibility for every component of the health clinic, including staffing, providing services, paying the bills and collecting payments.

"It will be their clinic, just operating in an LFUCG building," Helm said.