$800,000 Released To Cover CNMI Hospital’s ‘Payless Payday’

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Collection and billing issues plague cash-strapped CHC

By Haidee V. Eugenio

SAIPAN, CNMI (Saipan Tribune, Aug. 15, 2012) –The central government of the Commonwealth of the Northern Mariana Islands – through the Department of Finance – averted another crisis at the Commonwealth Healthcare Corp. (CHC) by transferring yesterday afternoon some $800,000 to CHC to cover its payroll due last Friday, Finance Secretary Larrisa Larson and CHC chief executive officer Juan N. Babauta said.

But with some $800,000 for payroll coming from the central government, CHC was asked, "Where does your collection go? Don't you collect any dollar at all?"

Babauta said CHC will make sure there won't be another payless payday. He said payroll that's due last Friday will be made today.

The CHC official said he hopes doctors and staff will not walk out of their jobs, and that clinics won't have to be closed.

[PIR editor’s note: CHC out-patient clinics were closed after physicians held an emergency meeting and pooled resources to cover emergency services at the hospital. No word has been given as to when the outpatient clinics will be reopened.]

Larson and Babauta were among those in a closed-door meeting with acting governor Eloy S. Inos up to almost 5pm yesterday on Capital Hill.

Larson said Finance gave them the balance of the $5 million seed money for fiscal year 2012, which is $481,000.

To cover the entire $800,000 needed for payroll, Finance also had to reprogram more than $300,000.

Larson said Finance is still doing some reconciliation, so there might still be some balance for CHC.

"The longer-term solution for CHC is collections and billing. They need to work on strengthening their collection and billing process. And that's one of the topics being discussed today," Larson told reporters after meeting with Inos, CHC and Marianas Public Land Trust officials.

The Finance secretary said CHC also has to increase the frequency of their Medicaid draw downs.

The $5 million seed money was converted to Medicaid matching funds, to allow CHC to draw down more than $6 million in federal funds.

"To date, we've done about $2 million for them. So there's a remaining balance of about $4 million. We can pull down from just the seed money alone. We've been asking for their weekly draw downs from CHC and when we get those drawdown requests we can provide the funds in less than 24 hours," she added.

Larson said CHC should increase the frequency of its Medicaid drawdowns instead of waiting until there's a sizeable amount.

The Finance secretary also said had CHC provided the documents requested of it, they would have been able to draw down from the $7 million line of credit.

"What we're asking for is accountability, a business plan, financial statements, things like that. Since the law was passed, CHC has not provided the information that's needed. If CHC had provided what was asked, they would have had the money by now. They need to prove that they can pay back the loan, they also need to say where the money is going to go, because this is just not government money; this is trust money, so they need to be accountable for what they do with the money," she said.

Larson also said CHC can't keep coming back to the central government to ask for money every payroll.

"The other good news, we are going to work on the billing and the processing of Medicaid draws so that we don't have to constantly go into this crisis mode," she said.

Babauta, for his part, said there is a long-term plan for CHC to avoid this payroll crisis. He said the Centers for Medicare and Medicaid Services is now going through the final phase of approving CHC's Certified Public Expense methodology, "for which we charge them at cost. It's not a billing process."

"We don't send individual billings to Medicaid. They would basically make upfront payment to us at cost. At cost, meaning the cost is calculated for the entire year of all the services that we provided, which include other factors other than actual services." he said.

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