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Niagara Falls hospital’s psychiatric units face closure

End of child, adult care at Falls Memorial would result in loss of 175 jobs

NIAGARA FALLS — Niagara Falls Memorial Medical Center announced Thursday that it has filed the paperwork to close its 12-bed children’s psychiatric unit and will begin the process of closing the 54- bed adult unit by the end of the month.

The moves would shut Niagara County’s only inpatient psychiatric units and put 175 people out of work.

However, hospital President Joseph A. Ruffolo said he met later in the day with a member of Gov. Eliot L. Spitzer’s staff to talk about a state bailout for the units, which serve about 350 children and 2,000 adults per year.

Meanwhile, Ruffolo and Niagara County officials engaged in a war of words over whose fault it is that Memorial’s Medicaid revenues have fallen to the point that the closings were planned. County Manager Gregory D. Lewis pointed to a current Medicaid fraud investigation as a possible part of the explanation.

County Social Services Commissioner Anthony J. Restaino said one of his employees, who was stationed full time at Memorial to handle Medicaid applications from patients there, was placed on unpaid administrative leave Nov. 6 and is a target of the fraud probe being carried out by the state attorney general’s office.

Joel L. Daniels, a Buffalo defense attorney, said he has been retained by the worker suspended in the investigation but otherwise declined to comment.

Lewis said financial figures from the medical center show that its Medicaid reimbursements began to decline in 2005, which is when he said an audit first uncovered potential fraud.

“The causal relationship is subject to the Medicaid fraud investigation,” Lewis said, adding that he and County Attorney Claude A. Joerg met Monday with four attorneys from the attorney general’s Medicaid Fraud Control Unit.

“During the pendency of this matter, we will have no comment,” said John Milgrim, a spokesman for Attorney General Andrew M. Cuomo.

“A [county] worker assigned to Niagara Falls Memorial Medical Center had been inappropriately providing Medicaid coverage to patients of the hospital without following eligibility procedures or obtaining required eligibility documents,” Lewis wrote in a news release.

In an interview, Lewis said the suspended employee “was more than timely. He was like a machine. Put the paper in, get money.”

Lewis also asserted that the probe involves “a contractor . . . who was hired by the hospital to assist in the Medicaid application process.”

That would be Hospital Intervention Specialists, a Buffalo company that works with Medicaid applicants at several area hospitals. Its attorney, Lisa McDougall of the Buffalo firm Phillips Lytle, said she had no knowledge of the investigation or whether the company was part of it.

Ruffolo said he had been assured by the attorney general’s office that the medical center is not a target of the probe.

“Our Medicaid reimbursement has fallen because there are more and more people that we’re caring for who are eligible for Medicaid, and they’re not getting it,” he said.

Ruffolo blames that on the county for what he described as overly strict enforcement of federal guidelines governing Medicaid applications.

Restaino said the medical center and the clients themselves are too slow to comply with federal rules. This, he said, prevents the county from approving applications before the deadlines for reimbursement pass.

Regardless of who is right or whether fraud was a factor, Niagara County’s only inpatient psychiatric units are in serious jeopardy.

“We’re running out of cash,” Ruffolo said in a news conference Thursday. “If we don’t get immediate financial help, we will be forced to take these drastic steps.”

The hospital loses $2.4 million a year on uncompensated care for patients who are denied Medicaid.

Restaino said the county has 45 days after it receives a valid Medicaid application to approve or deny it. The county is allowed to approve payment for care given as far back as 90 days before the application was received.

But the key word is “valid.” Restaino said federal regulations require paperwork that sometimes can be difficult to complete by poor and transient people, especially the mentally ill.

Until they do so, Restaino said, the county has to reject applications and insist on the filing of updated ones. Meanwhile, the clock runs, with more and more care slipping out of the 90-day zone for reimbursement to the hospital.

The 2006 Deficit Reduction Act requires a Medicaid applicant to produce a photo ID and an original birth certificate. The 1997 welfare reform law mandates that Medicaid clients must undergo drug and alcohol screening before they can be approved for benefits.

Ruffolo said a meeting Tuesday among county, state and medical center officials suggested some streamlining. Restaino said it appears that the state may allow the county to accept photocopies of birth certificates, for example — but only from patients at Niagara Falls Memorial. He said he and Lewis did not attend the meeting and are waiting for the proposals in writing.

Claire Pospisil, a state Health Department spokeswoman, said that a state review last year confirmed that Niagara County was processing Medicaid applications in a timely way.

Ruffolo said the county should assign more staff to work at Memorial on Medicaid patients and on helping people find the necessary documents and obtain the substance-abuse screenings. But Restaino said his figures show an average of only six Medicaid applications per week at Memorial between September 2006 and October 2007.

“Based on the numbers, [more staff] doesn’t seem warranted,” he said, adding that 75 percent of Medicaid applications filed at Memorial in the last two years were accepted by the county, which is higher than the countywide average of 73 percent.

Ruffolo said he wants the state to order a retroactive Medicaid rate adjustment and “immediate financial relief from the state for people who should have gotten Medicaid.”

Sheila K. Kee, associate commissioner of the western regional office of the state Department of Health, said that it would be up to the state and county health departments and the state Office of Mental Health to find psychiatric care alternatives for the adolescent patients who will be displaced by Niagara Falls Memorial.

With psychiatric units at Buffalo General Hospital and Erie County Medical Center filled to overflowing, many of the Niagara Falls patients may have to be moved as far away as Rochester, health officials said.

tprohaska@buffnews.com and bmichemore@buffnews. com