LOS ANGELES COUNTY: Settles Medi-Cal Suit For $10.5 Million
Los Angeles County supervisors last week approved a settlement that will end a long-running suit involving disputed Medi-Cal billings, a deal that will secure a $10.5 million payment from the state (Contra Costa Times, 9/2). The dispute dates back to 1990 when the county installed a flawed computerized billing system called IBAX at Rancho Los Amigos Medical Center and High Desert Hospital. The Los Angeles Times reported that "IBAX nearly brought the hospital system to its knees, crashing often and spitting out gibberish instead of producing billing and patient information ... label[ing] unbilled Medi-Cal accounts as billed." County officials, who estimated that the county lost $26.6 million in Medi-Cal reimbursements between 1990 and 1993, discovered the errors too late to meet the state's submissions deadline. When the county sought reimbursement for the claims in 1994, the state rejected "all but $1.3 million of the county's late billings." That rejection prompted the Board of Supervisors to file a lawsuit in 1995. The suit charged that the state should pay "because providing health care to the poor is a state-mandated service," and the late filing was "beyond the county's control." In a confidential memo to the five supervisors, however, County Counsel Lloyd Pellman urged a settlement, arguing that "the county would have a hard time proving that the state was abusing its discretion in rejecting the claims." Based on this argument, Pellman said in the memo that "the proposed settlement is very favorable to the county."
A Disaster From The Start
The Los Angeles Times notes that its own 1995 investigation of IBAX "disclosed that the county Health Services Department was spending millions a year" on the billing program, "even though the system had never really worked." Overall, "documents and experts" cited by the newspaper showed that "IBAX had cost the county more than $74 million, although county officials conceded they had never tried to determine the total cost of buying, dismantling and replacing the system" (Meyer, 9/1).