COUNTY TRIES TO RECOUP PAYMENTS.

Byline: David Greenberg Daily News Staff Writer

Having spent $114,000 on legal and consulting fees in a failed attempt to create a human services conglomerate, the county stands to spend thousands more trying to recoup eight months of Medicare and Medi-Cal payments.

County officials and outside lawyers will be in San Francisco Wednesday trying to persuade federal health officials to reimburse the county as much as $8 million in Medi-Cal bills that the county was warned it might lose when it first merged Behavioral Health and Public Social Services agencies.

``The reality is there is a risk of losing a significant amount of money,'' said Larry Morris, a county budget analyst. ``It's impossible to determine what HCFA (Health Care Financing Administration) will decide. We're hoping to work with HCFA to avoid the loss of any funding.''

He said the county could lose as much as $2 million in Medicare and $6 million in Medi-Cal for the 259 days the merger of the Human Services Agency and the Behavioral Health Department existed.

``The potential loss for Medi-Cal could be significantly greater than lost Medicare revenue,'' Morris said. ``Our Medi-Cal bills could be three times as high as Medicare.''

The loss in revenue would either force county officials to divert money from other departments or from its general fund reserves of $23.5 million, county officials said.

The result would be either a reduction in services or a lower bond rating from Wall Street, which has in past years warned the county of higher interest rates if reserve accounts were not replenished, said auditor Thomas Mahon.

``If all of a sudden we were to lose (reimbursements) and reach into the reserves account, that would have an adverse impact on our financial ratings,'' he said. ``That would jeopardize our ability to borrow money at a low interest rate. We would have major problems.''

Supervisor Frank Schillo, who opposed the merger from the start, said that the human services office - formerly known as the Public Social Services Agency - and the behavioral health office should foot the bill for any lost Medi-Cal reimbursements and expenses.

``It really does upset me because the unfairness is the county hospital is footing the bill for straightening out this failed merger,'' Schillo said. ``It could mean a reduction in services to patients. The wrong department's paying for it. This should be cleaned up by PSSA and Behavioral Health. If we had true accountability, it would be taken out of those two budgets.''

He added that nearly all of the reserve funds are earmarked for specific departments and their programs.

The Board of Supervisors on Dec. 22, 1998, voted to dissolve the superagency after HCFA ruled the $171-million organization violated regulations.

The $114,000 already spent includes:

$44,000 to Sacramento-based Deloitte & Touche Consulting Group, whose study concluded the county was in risk of losing as much as $15 million a year in Medicare and Medi-Cal payments if the merger were approved.

$20,000 paid by the human services office to Ventura consultant Leslie Hammett and Associates.

$50,000 to Los Angeles-based Hooper, Lundy and Bookman for legal advice.

Several lawyers from that firm are expected to accompany Chief Administrative Officer Lin Koester and two supervisors - likely John Flynn and Kathy Long - to San Francisco.

``If there continues to be a need for the private attorney firm's assistance in this matter, the county would incur thousands of dollars at least in additional legal expenses,'' Morris said.

County officials could not offer a more concrete estimate of how much more the county will spend.

James McBride, county counsel, downplayed the expenses surrounding the merger, claiming they are the cost of running government.

``Had the merger been delayed, there would have been costs involved,'' he said. ``There was a job to do, and we set out to try to do the job. We're continuing to try to work on the issues and solve all the problems, and there is going to be (more) money involved.''