Kentucky State Auditor’s Report Critical of UofL Management of QCCT Fund for Indigent Care.

University of Louisville tried to pretend they liked this report!
I could weep.

Two days ago, Kentucky’s Auditor of State Accounts Adam Edelen released a long-awaited audit of the University of Louisville’s handling of the QCCT fund. The Quality Community and Charitable Trust is funded by both state and local governments and is used by University Hospital to provide medical care to people who do not have any form of health insurance or the resources to pay out-of-pocket. The report was highly critical of the University and the QCCT Board that is controlled by the University. Despite a valiant effort by University officials to put a positive spin on the audit, every news outlet I have seen that reported on the matter emphasized the negative aspects of the report. In my opinion, the University did not help its own case in this regard.

Also two days ago, the University’s own consultants gave their final report on the hospital’s performance, and yesterday Louisville’s Mayor Fisher released his FY 2013 Budget including city funding for the QCCT fund. It has been a lot to digest all at once. Yesterday I finally had a chance to read the full text of the audit and I was stunned. The press release describing it was bad enough. The report itself is a devastating indictment of the failure of University responsibility for these public monies. Read the full report for yourself and form your own opinions. I could not believe what I was reading and that this behavior could have been allowed to go on so long. There is much accountability blame to go around.

The press release contained a line that said the auditors “found no evidence that taxpayer dollars were abused.” I respectfully disagree with the Auditor’s office on this point. There is no such exonerating language or even supportive evidence in the body of the report. In fact the audit makes it clear that it was not a financial audit of the QCCT, but rather more of an organizational and management analysis. The report’s own language makes it clear that it was not possible to determine how the public’s money was actually used. I had been preparing a more lengthy analysis of the Audit but it is at 17 pages and growing: too long to buff up and publish here in a timely way. If there is a request, or if this generates some pubic discussion anywhere, I will attach it.  To give you a flavor of what the Audit actually said as opposed to how the University wanted to spin it, look at some of the language used by the auditors.

Quotations from the State Auditor’s Report:

• The QCCT board met on December 5, 2007 and did not meet again until February 13, 2012.

• “Indigents and individuals who have the means but fail to pay should not be lumped in the same category as it relates to the QCCT fund”

• “UMC did not require indigents to verify their income, making
it difficult to ensure that QCCT funds were not being applied to non-indigents’ accounts”

• The QCCT Board “extends its management function rather than providing accountability. Therefore accountability is weak.”

• “UMC cannot identify which indigent patients received QCCT funding within its accounting system.”

• “Since UMC has the ability to define its own charity care policies, and no universally accepted definition of either indigent or medically needy exists, the examination also considered potential conflicts between UMC’s practices and the intent of the QCCT agreement.”

• “UMC personnel are not aware of the scoring methods used by the collection agency, so there is no evidence to determine that the patient did not have the means to pay or otherwise meet the definitions of indigent or medically needy as defined in the QCCT agreement.”

• “auditors noted 33 of 50 patient files reviewed, or 66%, did not complete an application for income verification to determine that the patient was eligible for QCCT funding.”

• “this process gives the appearance that QCCT funds are used to cover bad debt.”

• Non-Kentucky patients were ultimately “written off as QCCT after collection attempts failed, and the patient was deemed medically needy.” It appears to me that the University allows a collection agency to do its QCCT eligibility assessments for it. This opens the door wide for financial conflicts of interest. I hope I am incorrect.]

• “The Indigent Care Log did not agree to UMC’s indigent care reports. … because the indigent care reports were based on estimated data.”

• “QCCT funding did not receive the attention it deserved due to a board structure that was not suited for proper oversight, an outdated agreement, and administrative processes that failed to provide sufficient details for determining compliance with the agreement or for assessing whether the intended objectives were met.”

• “In the absence of clear direction, it appears UMC applied QCCT funding to its total unfunded costs of providing hospital care…”

• “Although UMC did provide estimated data to illustrate its assertion that total indigent care costs exceeded QCCT funding, it did not have sufficient recordkeeping to support that those costs are derived from patients that met pre-defined criteria for indigent or medically needy.” [These are the data that are being hidden by the University from the public!]

• “Overall the agreement was not administered in a way that promoted accountability and transparency. QCCT serves a population that is the neediest in the Louisville Metro area, therefore it is important to have strong accountability to ensure this population receives the benefits of QCCT funding.”

Selected Findings from Appendices:
Precious little actual financial data was available in four single-page appendices. [Did the University stonewall the Auditor too?] Here are some items I sumarize.

Appendix A & D:   No accepted definition of Indigent Care.
The most common definition of “Charity Care” is that which is provided for which no payment is expected and no bill will be submitted. It is quite clear that the University of Louisville has a very different definition. If the public does not know what we are buying with our dollars, it is impossible to know if the money is well spent.

Unless we all use the same definitions of words like, Charity, Indigent, Medically Needy, Uncompensated, Bad Debt, Discount, Write-Off, Community Benefit and the like, we can never know if our community non-profit hospitals are doing their fair share to deserve their tax-exempt status. Neither will be able to truly know if University Hospitals is being asked to do too much. We as a community are essentially telling our poor people to go to University Hospital, and only University Hospital.  Even if we accept this as an ethical posture [and we cannot], the money should be sufficient and follow the patients– be that QCCT, other public money, or tax-exempt hospital profit.

Appendix B:    Inflated Charges. Plenty of Money?
For the two years before 2011, University Hospital was collecting more money from the QCCT fund and Medicaid Disproportional (DSH) payments for the uninsured than it needed to cover its costs of treating those patients. This does not even take into account Medicare DSH and other payments for the uninsured! What is the basis for the claim that the University is not getting enough public money? Someone ‘splain it to me so I can understand.

I have long written that University of Louisville Hospital charges more for its services than almost any other hospital in Kentucky. Appendix B tells me that even I have understated this terrible distortion. For last year’s inpatients, UofL charged three times what it cost to provide those services to charity care patients. Even at the modest discount the Hospital pays itself from QCCT, it appears to be making a huge profit. Is this where the $millions the University gifts itself for research come from? The shameful tragedy here is that these hyper-inflated charges are what every patient using UofL Hospital facilities gets charged. This is the amount the bill collector comes after you for. [What if the bill collector also had access to the QCCT cookie jar? Surely that is not the case.]  Why is this not gouging? Why do we complain about gasoline prices and not this? Was the Auditor given incorrect financial data? Should the Auditor now go back and do the full financial audit of the University that I and others think is long overdue? I vote yes.

Concluding comment:
Given all the above and much more, I must again respectfully disagree with the unsupported statement in the press release that there is “no evidence that taxpayer dollars were abused.” Would you want your tax dollars to go into the slush fund described in this Audit? I for one do not. I say, no more games. I say, no more secrecy. I say, use hospital profits to support the hospital, not commercial research, economic development, or unaccountable salaries. I say no to the separate and unequal system that this rendition of the well-intentioned QCCT program has helped prop up. I say yes to a well-funded, just, and equitable program of providing quality medical services to our community. Who is willing to say differently?

Peter Hasselbacher, MD
Emeritus Professor of Medicine, UofL
President, KHPI
May 25, 2012