The CMS is cutting off Medicare payments to a rural Tennessee hospital that has racked up more than $4 million in unpaid bills and failed to deposit employees’ Social Security withholdings.
In a letter to Jamestown Regional Medical Center’s interim CEO provided to Modern Healthcare, an agency official wrote the termination is based on the hospital’s failure to comply with Medicare conditions of participation. A separate inspection report showed money withdrawn from employees’ paychecks didn’t go to the stated purpose, the hospital’s unpaid bills are growing and it lacks key supplies.
Interviews with multiple hospital employees conducted during a May 14 inspection of the hospital found that no Social Security payments had been made on their behalf since June 2018, the same month West Palm Beach, Fla.-based Rennova Health bought the hospital. That’s despite the fact that money purportedly going to Social Security had been withdrawn from each paycheck.
The latest inspection also found the hospital now owes $4.1 million to 216 vendors—up more than $1 million since the last inspection on Feb. 5.
The hospital’s pharmacy director told CMS inspectors that pharmacy vendors, Cardinal Health and Baxter, had not delivered drugs or IV fluids for the past 19 days due to lack of payment. Siemens is no longer delivering laboratory supplies to the hospital due to lack of payment, the inspection found. The hospital’s blood bank vendor, Blood Assurance, now requires payment at each weekly delivery. It had not delivered in the week before the inspection.
The CMS’ termination takes effect June 12, which means the Medicare program will not pay for services provided on or after that day. For patients admitted before June 12, payment may continue for up to 30 days of inpatient services, according to the agency’s letter, from Linda Smith, associate regional administrator of the CMS’ division of survey and certification.
Hospital leaders told CMS inspectors in earlier visits that the problems were due to a computer system switch that had delayed payments, but the problems apparently run much deeper. The latest inspection found the facility still lacks an annual operating budget and a governing body.
In the latest visit, the CMS learned the hospital owes Community Health Systems Professional Ser- vices Corp., a unit of its former owner, about $450,000 for 2018 billing services, and owes its contracted emergency department physicians’ vendor, EmCare, almost $400,000. It also owes a contracted wound-care and hyperbaric treatment center about $400,000.
The hospital has racked up bills to several vendors, including $241,300 to its accounts receivable billing vendor, $181,000 to Cardinal Health and $84,000 to Siemens. It owes its blood bank vendor about $15,600 and its skin graft vendor $25,500. It owes its primary medical supply provider, Owens and Minor, about $26,600 and smaller amounts to an electrical utility, a postage meter vendor and an IV fluid vendor. Electricity to the hospital was shut off between April 30 and May 2.
The facility’s leadership established a payment plan with the Internal Revenue Service for unpaid income taxes, according to the report.
The hospital also set up payment plans with six vendors and took out a $500,000 bridge loan, according to the inspection report. It has applied for another $30 million loan that is still in underwriting.
During the May 14 interview with CMS inspectors, the hospital’s CEO said Rennova had not sent any payments to the hospital. An interview with the program director for the hospital’s wound-care and hyperbaric center determined the program had not been paid since Rennova assumed ownership. That individual said repeated calls, letters and emails to Rennova’s corporate offices were not returned.
A physician who had practiced at the hospital for many years told CMS inspectors May 14 he had stopped sending patients there because he felt the conditions were unsafe.
Rennova CEO Seamus Lagan wrote in an email that he intends to appeal any termination of Medicare payment. He said Rennova just hired a new CEO for the hospital who is scheduled to start June 10. A call to the hospital seeking comment was not returned.