The University of Kentucky has spent more than $5 million in the last year to fix federal billing issues involving a Hazard cardiology practice it acquired three years ago, but UK officials have declined to provide documents detailing problems that led to the payments.
In 2013, UK HealthCare spent $440,000 for the office equipment of Appalachian Heart Center and rented its clinic space in Hazard, Harlan and Hyden. The four physicians of the practice also became adjunct faculty at UK.
But in the past year, UK HealthCare and its billing arm, the Kentucky Medical Services Foundation, have paid $4.1 million to Medicaid and Medicare, and $1 million to David Douglass, a Washington, D.C. lawyer who specializes in federal health care issues, to resolve billing issues involving the Hazard cardiology practice.
The cardiologists at the Appalachian Heart Center have since separated themselves from UK and gone back into private practice. The clinic’s senior doctor, Vidya Yalamanchi, did not return calls seeking comment.
The UK Board of Trustees was not briefed on the acquisition in 2013, but they were told of its aftermath by Douglass, who presented a PowerPoint presentation at a dinner meeting of trustees early last month. A Herald-Leader reporter did not attend the May 2 meeting because the presentation by Douglass was not included on the meeting’s agenda.
The board generally holds a dinner meeting the night before their official business meeting. The gatherings are open to the public because a quorum of board members attend, but normally, official business is not conducted.
UK officials have since denied the Herald-Leader’s request for the presentation made by Douglass, saying it is exempt from disclosure under the state Open Records Act because of attorney-client privilege. No minutes of the dinner meeting were kept, UK has said.
Records about the issues involving this clinic should be public, as should the information presented and discussion that took place in an open meeting of the board of trustees
Herald-Leader Editor Peter Baniak
UK General Counsel William Thro said that because there were no members of the public or press present, the board did not vote to go behind closed doors to discuss legal issues involving the cardiology practice. One exemption in the state’s Open Meetings Act allows boards to discuss specific proposed or pending litigation behind closed doors. Thro said Thursday there is no pending litigation regarding the Hazard practice.
“There has to be a mechanism for the attorney to communicate with attorney-client privilege to the board leadership and to the entire board,” Thro said. “Otherwise a public body will always be acting with one hand behind their back because they don’t have all the information.”
UK also redacted all details of Douglass’ billing records, except the total prices, from copies provided to the Herald-Leader under the state’s Open Records Act. The university also denied a request for a routine audit that turned up the billing problems in Hazard as well as any audits or other documents that UK did of the clinic before the merger.
Thro said any audit was “preliminary,” and thus not yet required to be disclosed, even though UK officials also contend the billing problem has been resolved. They also said the documents were confidential because of attorney-client privilege.
On Thursday, UK spokesman Jay Blanton said the university would continue to conduct official business at dinner meetings without listing specific agenda items on meeting notices.
Board of Trustees Chairman Britt Brockman referred all questions to UK officials.
The newspaper plans to file an appeal with the Office of the Attorney General, which enforces the state’s Open Meeting Act and Open Records Act.
“We have strong concerns about the overall lack of transparency by the university in this case, which has so far involved millions of dollars in payments to the federal government, and a million dollars in legal costs,” said Herald-Leader Editor Peter Baniak. “Records about the issues involving this clinic should be public, as should the information presented and discussion that took place in an open meeting of the board of trustees.”
‘The documentation was wrong’
UK made Douglass available for an interview Thursday to talk about the Hazard deal, but continued to deny access to any written materials.
Douglass said the partnership between UK and the Appalachian Heart Center made perfect sense for both groups.
“UK has a mission to improve care in Eastern Kentucky,” Douglass said, an area with some of the worst health statistics in the nation. “This was an opportunity to work with very highly skilled physicians … who are very committed to improving care up there.”
UK HealthCare and KMSF bought new equipment and upgraded the practice’s computer systems to integrate with UK’s billing, but UK included one form for documenting patient visits that didn’t match what’s required in federal billing for Medicare and Medicaid, he said.
A routine audit in August 2014 by UK HealthCare’s compliance department caught the problem.
“If your documentation doesn’t match, you can’t bill for it,” Douglass said. “The documentation was wrong, so we refunded 100 percent of the claims.”
Most of the refunds were made last September. Some were made by UK HealthCare and some were made by KMSF. A month later, the doctors at the clinic decided they wanted to sever the partnership and bought back the equipment provided by UK, Douglass said. KMSF has paid all of Douglass’ fees.
Patient care was not affected by the issue, Douglass said.
“The care was appropriate,” he said. “The error was in the documentation.”
The simple fact is that the merger of cultures — between a small, but excellent, community practice and a large academic medical center — was never smooth and there were issues with integrating systems that resulted in the documentation challenges.
Mark D. Birdwhistell, UK HealthCare vice president for administration and external affairs
Michael Karpf, executive vice president for health affairs at UK, declined to comment. Instead, Mark D. Birdwhistell, UK HealthCare’s vice president for administration and external affairs, issued a statement in which UK took full responsibility.
“The simple fact is that the merger of cultures — between a small, but excellent, community practice and a large academic medical center — was never smooth and there were issues with integrating systems that resulted in the documentation challenges,” Birdwhistell said. “Our compliance system worked. We found errors in our processes and we fixed them, and out of an abundance of caution we paid back more than what was required.”
In addition, Marc Randall, the chairman of KMSF, sent an email to UK physicians Friday to warn them about the Herald-Leader’s article and KMSF’s inclusion in it.
“Despite our best efforts and desire to continue the partnership, our colleagues in Hazard decided that they wanted to return to their previous practice model,” Randall wrote. “We respect their wishes and continue to serve as a referral center for their patients.”
Douglass said the issue was “not a big deal.”
“Health care is one of the most regulated industries we have,” he said. In this case, UK’s compliance program found the error, investigated it, and fixed it. “This is pretty straightforward.”
‘We learned some lessons’
UK HealthCare has numerous affiliations with hospitals in the state, such as Appalachian Regional Health in Eastern Kentucky, but the joint venture with Appalachian Heart Center was the first “provider-based clinic” that UK purchased, Thro said.
UK might try it again, he said.
“If there was a right opportunity, I think the university would pursue it,” he said. “Certainly we learned some lessons about differences in culture, differences in style. I think we would take those into account in the future.”
Thro reiterated that all payments to resolve the issue were made by UK HealthCare and KMSF and did not impact the school’s general fund, which includes state appropriations and pays for the academic side of the university. (The UK College of Medicine was recently informed it will face $1 million in cuts as part of a budget reallocation.)
KMSF pays doctors’ salaries and gives money annually to the College of Medicine, but UK HealthCare and KMSF contend they are separate entities.
KMSF also contends it is not a public agency, although the Attorney General’s office issued an opinion last fall saying the foundation was public because it is led entirely by UK employees. KMSF appealed that decision to Fayette Circuit Court.
More recently, the Attorney General found UK in violation of the state’s open records law when it denied a request for minutes from a UK compensation committee that advises on doctors’ salaries.