University of Maryland St. Joseph Medical Center said Friday that it has received a new Medicare provider agreement, allowing it to again seek reimbursement for treating patients on the federal government's health program.
The Towson hospital has not billed Medicare patients since the University of Maryland Medical System voluntarily declined to keep St. Joseph's prior federal certification when it bought the hospital Dec. 1.
St. Joseph officials now hope to recoup some of those losses. But hospital officials are at odds with the Centers for Medicare & Medicaid Services, which oversees the health insurance program for the elderly, on whether it can seek back reimbursements.
St. Joseph believes it is responsible only for Medicare patients it treated during the first two weeks of December. Federal officials say the hospital isn't entitled to any reimbursement from the 12 weeks it wasn't part of the health program.
Millions of dollars are at stake. For every day the hospital treated Medicare patients without certification, it lost about $400,000, according to financial statements. St. Joseph believes it lost only $5.2 million for those two weeks, those statements say, but if it cannot get retroactive reimbursement, it could lose about $33 million.
The University of Maryland Medical System decided to apply for new Medicare certification when it bought St. Joseph from Denver-based Catholic Health Initiatives to separate itself from any liability the hospital had incurred under the previous owners.
But the hospital failed an early December recertification inspection by CMS. It quickly addressed the problems, but still couldn't participate in the Medicare program until a follow-up survey was conducted in February.
Federal officials had said St. Joseph wouldn't be able to bill until it met its requirements.
"The effective date of the hospital's approval is [Thursday,] Feb. 21, so claims can be submitted as of that date," a CMS spokeswoman said Friday.
However, CMS added, the hospital can ask for "reconsideration of the effective date."
St. Joseph officials plan to have further talks with CMS about the issue. They believe they are entitled to reimbursement as of Dec. 14, when they submitted a plan to federal officials correcting problems at the hospital.
The December survey holding up the certification cited several issues, among them surgical assistants in cardiology who were not properly supervised during procedures and pain medications that were not stored and disposed of properly. The survey also cited incomplete medical records, including one instance in which a patient's allergies weren't properly recorded, leaving her in danger of getting the wrong medication.
"We were committed to providing the community uninterrupted health care during this transition and have never wavered in that commitment," the hospital said in a statement. "We will be discussing with CMS how we address billing for services provided since December."
Every dollar lost puts more financial stress on St. Joseph as it seeks to rebuild. Medicare accounts for a significant portion of any hospital's revenue stream. At St. Joseph, it makes up 45 percent of patient services revenue, according to the financial statement.
The University of Maryland bought St. Joseph as the hospital struggled with troubles that started when star cardiologist Mark Midei was accused of putting unnecessary stents in heart patients. Midei has denied any wrongdoing, but his medical license was revoked.
The case tarnished the reputation of the hospital, which lost patients and doctors and reported steep revenue declines.
The medical system took out a $220 million short-term loan to acquire the hospital and make capital improvements. It is expected to take at least five years for St. Joseph to turn a profit again, analysts have said.
The Medicare issue, along with the cost of the acquisition, caused some concern among bond agencies over the short-term financial impact. Standard & Poor's downgraded the rating of the University of Maryland Medical System from A to A-. Moody's maintained its A2 rating, but lowered its outlook from stable to negative.
St. Joseph officials continued to work on improvements at the hospital as it sought Medicare certification, but now say they are ready to put the issue behind them.
"With this agreement in place, we are now ready for the task of moving the medical center forward," former state Sen. Francis X. Kelly, chair of St. Joseph's board of directors, said in a statement.
Said Maryland Health Secretary Joshua Sharfstein: "I am very pleased to see St. Joseph moving forward. I think this is a great step for the new leadership at the hospital."
In typical hospital acquisitions, Medicare certification is transferred to the new owners. In giving up certification, the University of Maryland was protecting itself from liability. The university is not responsible for any previous lawsuits under its agreement with Catholic Health, but it could have been responsible for previous Medicare fraud issues if it had kept the Medicare certification.
St. Joseph, when owned by Catholic Health, previously paid the federal government $22 million to settle allegations of a kickback scheme involving the cardiology practice where Midei once worked and to repay Medicare payments received for stents he implanted.
Catholic Health also agreed to pay the federal government $4.9 million for overbilling the Medicaid and Medicare systems for unnecessary hospital stays from 2007 to 2009.