DOF: Some Medicare funds missing

The Department of Finance has warned that some Medicare funds the Commonwealth Healthcare Corp. has received since its transition on Oct. 1 are unaccounted for or may have been stolen, prompting it to call for CHC to immediately review its financial records even as Medicare is already threatening to remove CHC’s Medicare certification.

Finance Secretary Larrisa Larson told CHC chief executive officer Juan N. Babauta that DOF has not seen a penny of Medicare funds CHC has been receiving since it became a corporation.

Larson asked Babauta to immediately initiate an internal review of CHC financial records in light of Finance’s discovery that CHC underreported by $60,000 the Medicare funds it has received since at least November 2011.

Larson was responding to Babauta’s letter requesting Finance to account for $906,976.63 in Medicare funds received from November 2011 to March 2012. Upon review of such records, Finance found out that the total Medicare funds that came in during the period was actually $966,976.64.

“Your staff made several errors on the list provided to us for verification and underreported the amount in question,” Larson told Babauta.

For example, CHC reported that Medicare funds amounting to $9,688.54 were issued on Feb. 6, 2012. Finance’s review showed that the amount received was actually $39,688.54, which is $30,000 more than CHC reported.

In another instance, CHC reported Medicare funds of $1,292.20 but Finance’s review determined that the amount received was way more than that—totaling $11,292.20 or $10,000 more than what CHC had reported.

There were two other instances wherein CHC underreported Medicare funds received. CHC records showed that Medicare funds of $6,119.47 and $1,361.36 were received but Finance review showed that that the amounts were actually $16,119.47 and $11,361.36, respectively.

Larson said that if CHC cannot account for these funds in its bank accounts, she “strongly recommend(s) an internal review of your records and immediate reconciliation of all CHC bank accounts.”

She said this reconciliation “should be initiated as soon as possible as it is important that you locate these funds and determine that theft has not occurred.”

Since CHC controls these bank accounts, Larson said she’s limited in her abilities to assist with this matter and can only make recommendations to assist Babauta.

“I further suggest that you report your findings to all individuals included on your original letter as CHC is in a severe financial crisis and it is critical that CHC is able to account for all of its revenue from all sources to the individuals included on your letter,” Larson told Babauta.

Copies of Larson’s letter were also sent to Gov. Benigno R. Fitial, Lt. Gov. Eloy S. Inos, the U.S. Centers for Medicare and Medicaid Services, the Legislature, the Office of the Public Auditor, the Office of the Attorney General, and CHC board members.

CHC board member Anthony Aguon said the board is concerned. “We’re going to discuss this in our next meeting,” he told Saipan Tribune.

Babauta, in his May 8 letter to Larson that Saipan Tribune reported on May 11, asked Finance to prepare an accounting for “when and how these payments were received and processed” by Finance’s Treasury Division “and provide the specific dates and voucher numbers under which these funds were transferred to CHCC’s account.”

Larson, in a May 15 response letter, said there are limits to the amount of assistance Finance can provide regarding the request “as the funds in question were never received and/or recorded by the Department of Finance during the period in question.”

There have been allegations from within CHC that the Fitial administration has been commingling Medicare funds with the general fund—an allegation that the Finance secretary belied in her response to Babauta’s letter.

Prior to its transition to a corporation, CHC received these Medicare funds directly in the form of checks and deposited them at Finance as part of its daily collections. However, upon transitioning to a corporation effective Oct. 1, the process of depositing collections at Finance stopped.

“At no point during the period in question did DOF see these funds. The fact that you are unaware of the location of these funds and requested an accounting for these funds is alarming and must be addressed by CHC immediately,” Larson told Babauta.

Larson later told Saipan Tribune that this is one of the issues upsetting CHC staff and need to be clarified. She said Finance is making every effort to get as much money to CHC as possible.

If CHC is unaware that it has been receiving Medicare and is making allegations that could jeopardize future Medicare funding, then it has to seriously review its own financial records, Larson said.

She said Medicare is already threatening to take away CHC’s Medicare certification.

In essence Babauta’s letter tells Medicare that CHC’s CEO doesn’t know where almost $1 million in Medicare funding went. Babauta did not return calls for comment on this particular matter.

Medicare, administered by the U.S. federal government, provides access to health insurance for Americans ages 65 and older and younger people with disabilities as well as people with end stage renal disease.

Larson hopes that the matter about Medicare funding is just a misunderstanding on the part of whoever provided Babauta with the report and made the allegation.

“If that is the case, it is apparent that this issue could have been avoided if you and your staff understood how these funds are received and recorded by CHC,” she added.

Sen. Ralph Torres (R-Saipan), chairman of the Senate Committee on Health, and Rep. Sylvester Iguel (Cov-Saipan), chairman of the House Committee on Health, separately said they are keeping a close look at CHC matters but said they are not about to call for a oversight hearing on CHC issues just yet.

Lt. Gov. Eloy S. Inos, meanwhile, told reporters last week that the Fitial administration is still reviewing at least two bills related to CHC—a Senate bill that changes the CHC board from an advisory to a governing one, and a House bill that authorizes the Marianas Public Land Trust to provide an additional $7 million in revolving line of credit to CHC.