Dust-Up Over Disbursement of QCCT Funding to University Hospital

There was a little excitement this week in the Louisville Metro Council over whether or not to continue the next installment of the $7 million indigent care payments to University of Louisville Hospital from the QCCT funds. The City of Louisville and Kentucky provide many millions of dollars annually against which University Hospital can bill for eligible indigent patients.

There were a number of issues that caused the Budget Committee to put the brakes on the city’s payments as of January 1. One was that that in the post-Passport scandal era the Hospital had not provided the requested and expected accountability. It is puzzling to me that the Council expressed the same transparency concerns last July but had still not been satisfied. Is the council giving too much deference to the university?  The procedural move also signaled that there are deep concerns about the proposed acquisition of University of Louisville Hospital by the hospital chain Catholic Health Initiatives out of Denver. Would the same services be provided, and would it even be legal to give public funds to a private religious organization.

Two days later the Council as a whole voted to release additional installments of the remaining $4.8 million funding until March, pending the apparently delinquent reports by the Hospital. Councilman Downard said that, “the hammer is still there” concerning their demands for information, but I thought the hammer had already been cocked! So much for transparency from this self-declared private institution. Amendments were offered to make the continuation dependent on providing the same range of services after as before any take-over but they were defeated. The protest of the committee hold was overridden, but its point was made. The University of Louisville made some of its documents available publicly the very next day. The University seems to realize that it has lost its public relations war against the citizens of Louisville. I sent the Council an open letter the day of their main meeting. It gives additional details and outlines my thoughts about whether the QCCT mechanism is still an appropriate way to fund indigent care in our city, or whether it has had unexpected and undesirable consequences. What do you think?

Re: QCCT Hearing for December 15, 2011
December 15, 2011
Dear Metro Council Members,

I understand you will meet today to consider a further appropriation for the Quality Care Charitable Trust for indigent care services at the University of Louisville Hospital. I cannot attend, but wish to offer these comments.

It is regrettable that the process of reauthorization of this program had to hit this bump in the road, but surely the University of Louisville and its Hospital should have anticipated that their new claim to be a private hospital, and their plans to affiliate with a religious health care system would necessarily have required additional review to determine if further QCCT payments were still legal and appropriate. Refusal to disclose meaningful records of their plans triggered a justifiable demand for such review.

The QCCT fund made good sense when it was begun nearly 30 years ago, but it may no longer be the most appropriate way for the City to fund the indigent care of its community. In the past, the finances of the Trust relied on Intergovernmental Transfer mechanisms (some would say scams) to leverage even more Federal Medicaid money that was not always used for required health care purposes. I do not know if this is still the case, but the fact that the University of Louisville returns over $2 million of the City’s $9.6 M contribution makes me think it is.

Additionally it has been my understanding that University of Louisville Hospital captures its money by billing the Trust for its full charges to eligible patients. This has, in my opinion, led to undesirable inflation in charges, or at the very least a removal of incentives to keep charges as low as possible. What this means is that all other patients, including the indigent, uninsured, or those on sliding scale fee schedules are asked to pay more than they should. All three of my earlier studies of hospital charges in Louisville over the last 15 years place University hospital as one of the more expensive hospitals in the city and state in this regard.

The QCCT had its origin in Humana’s promise that if the city and state made a contribution to indigent care, that Humana would make up the difference in the hospital they managed at that time. The plan was focused on the hospital, not the needs of the indigent of Louisville. For example, Norton Hospital, and Jewish & St. Mary’s Hospital both provide large amounts of indigent care, placing them in the top 20% of such providers nationally. Why should they not receive city and state assistance in that work? I recommend that it is time to take a fresh look at both the need and the mechanism of local and state support for medical care of indigent and underserved Louisvillians. If you wish to evaluate the program further, the Kentucky Health Policy Institute and I are willing to help. My 30-year involvement with many aspects of the healthcare systems of Louisville and the nation has given me the credentials to do so.

Should you decide that it is not appropriate to extend the City’s appropriation without the review and accountability that I understand you want, University Hospital has some resources that it can use. For example, why is the Hospital transferring millions of dollars yearly to the Medical School for its commercial research operation? Should not that money be going towards medical care and capital development in the first place? Perhaps some of the Hospital’s obviously large advertising budget can be used. There should be $2 million “returnable” dollars in limbo somewhere. Unless you gave other assurances, surely University Hospital must have anticipated that this problem might arise and might appropriately have budgeted for it.

You have been placed in an unfortunate and undesirable situation. Perhaps you also now have an opportunity to consider whether the QCCT program still makes sense, or whether there is a better way to provide for the safety of our citizens.

Peter Hasselbacher, MD

PDF Version of Letter Here.