Grady to Repay Medicaid Overpayments

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Grady Health System CEO Michael Young on Tuesday said the facility must pay Georgia $20 million in Medicaid overpayments made to the system in 2004 and 2005, The Atlanta-Journal Constitution reports.

From The AJC report:

Grady CEO Michael Young said the hospital is paying for desperate decisions made by his predecessors. He said Grady officials in 2004 and 2005 aggressively maximized the amount of Medicaid they received, leaving the current regime to pay back the extra millions.

“They were kind of robbing Peter to pay Paul,” Young said. “They took their money when they could … and now it’s become someone else’s challenge.

“This is a real body blow to us,” he added.

Young said he understands those Grady officials were scrambling to keep the hospital alive. They did not break the law since the system allowed for such Medicaid overpayments, so long as the money was eventually paid back, state officials said.

“Was it short-sighted? Yes. Was it necessary? Yes,” said Grady chief financial officer Michael Ayres, who was not at the hospital at the time. “Did they do us a disservice by making us pay it later? Yes.”

Grady owed the state $13 million in 2004, and $7 million in 2005, Grady officials said. The figures include the Grady Health System and Hughes Spalding Children’s Hospital, which is owned by Grady.

By 2006, the hospital owed $900,000, which Grady officials said was more in tune with the moderate overpayment figures they have generated since.

Pam Stephenson, chair of the Fulton-DeKalb Hospital Authority (FDHA), which ran the system until last year, raised objections at the time, calling the idea “risky,” according to the AJC.

Since the Grady Memorial Hospital Corporation (GMHC) took over day-to-day operations of the health system last May and CEO Young came aboard last September, Grady is in better financial shape than in previous years. 

But the AJC notes Grady still faces a $37 million operating budget shortfall. Again from the report:

Grady is the state’s largest charity hospital and the facility depends on Medicaid for much [of] its revenue. Medicaid is a joint federal-state program that provides health insurance for low-income people.

Each year, Grady and other hospitals send a Medicaid financial statement to the state Department of Community Health, outlining their estimate on how much Medicaid they should receive. The state then performs its own calculations and determines whether it has overpaid or underpaid the hospitals.

Essentially, the hospital raised its charges for medicaid procedures and services in 2004 and 2005, without notifying the state to adjust the hospital’s rate of Medicaid reimbursement, said Ayres, the hospitals chief financial officer.

That allowed Grady to receive more Medicaid money than it should have obtained, he said.

“It’s the story of Grady,” he said. “Do what you have to do today to survive.”

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