Healthcare corp. inks contract with off-island collection firm

The Commonwealth Healthcare Corp. has outsourced the hospital’s billing services to an Idaho-based company.

Saipan Tribune learned that the corporation’s chief executive officer, Juan N. Babauta, inked a sole-source six-year contract with International Consulting Services, LLC on Feb. 28.

Sources privy to the negotiation disclosed that the company will be paid for the first three years an 11 percent commission on the total amount it will collect per year. The fee will increase to 11.5 percent in the last three years of the contract.

For example, if the company successfully collects $20 million a year, it will be paid $2.2 million that will increase to $2.3 million per annum in the remaining three years of the contract.

The six-year contract may also be renewed for another year if both parties want to do so.

Prior to the corporation takeover in October 2011, Guam Marianas Collection Agency was handling the billing services of the Commonwealth Health Center. It was also being paid through percentage commission.

It was learned that the sole-source contract with International Consulting was executed before Gov. Benigno R. Fitial declared a state of emergency for the public hospital on March 6. It is only during emergency declarations that procurement regulations are suspended throughout the declaration period.

The signing of the contract was done when Babauta was officially off-island in Washington, D.C. for a conference.

Healthcare corporation board chair Jack Torres confirmed with Saipan Tribune that GMCA no longer serves the corporation and that it has been replaced by International Consulting.

Representatives of the new company, he said, were in fact at the hospital, setting up machines and equipment since last week. The contract was entered into on Feb. 24 but formally executed on Feb 28.

Torres said that prior to the contract approval, the board and Babauta did extensive research on the matter and both were impressed with the company’s success rate.

“If you look at the current trend in the U.S. mainland, hospitals are outsourcing these services to India [companies]. So when ICS presented in Guam, they extended it to the CNMI and, after reviewing their presentation and their profile, we made the decision to hire them,” Torres told Saipan Tribune last week, adding that they are confident in the capability of the company to turn around the collection and billing processes at CHC.

According to Torres, ICS also owns and operates some hospitals that were previously in state of bankruptcy.

Saipan Tribune learned that the ICS contract covers 18 specific services and includes timely charge processing and data entry; electronic submission of claims based on payor availability; payment posting and contractual adjustments per insurance contracts; balance daily work, prepare bank deposits; insurance resolution; timely credit balance resolution; and patient account resolution, among others.

It was learned that the contract includes a reimbursement clause that states: “ICS shall also be reimbursed 5 percent of billed charges for accounts that are deemed uncollectible because of inaccurate billing demographics, lack of documentation for services provided, or lack of medical necessity resulting in denial of payment.”

Saipan Tribune tried to obtain comments from Attorney General Edward Buckingham and NMI Procurement Office director Herman Sablan but both have yet to comment on the issue.

Press secretary Angel Demapan said yesterday that as a corporation within the government, CHC should abide by its procurement rules and regulations. “In the absence of such, the CNMI procurement regs should be observed. Once the administration has had a chance to conduct a thorough review of this contract, further comment shall be forthcoming,” added Demapan.