On February 23rd, with two members absent, the Mendocino Coast Health Care District (MCHCD) Board of Directors heard an emergency agenda item. The bottom line for this item was that the board treasurer, Jade Tippett, wanted approval to send $1,095,395 to the Department of Health Care Services (DHCS) as part of an intergovernmental transfer (IGT).
An intergovernmental transfer (IGT) is a method in which local governments and public hospitals can transfer money to help fund the Medicaid program. IGTs received are then used to draw down funds from the federal government as “match” funding to support the Medicaid program.
For all payments made through a Medicaid program, a certain percentage comes from the state and the remainder comes from the federal government. The amount collected in state funds (IGTs) is then matched by the federal funds. In past IGT transactions made by MCHCD the amount put into the IGT system has come back to the district several months later almost two fold.
Mr. Tippett, the MCHCD Board Treasurer was quite excited about this item in that the time for payments into the IGT system had supposedly passed, but he shared verbally that he had contacted someone at DHCS who would allow a slightly tardy transfer of funds if the board approved the action that night. After a brief discussion, motion and vote, the chair (Lee Finney), treasurer (Tippett), and secretary (Susan Savage) of the MCHCD Board voted to transfer $1,095,395 of public funds. According to bank statements acquired later, Tippett, the MCHCD treasurer, sent a wire transfer the next day, February 24th, to DHCS for the full amount requested, $1,095,395. Approximately 20% of that goes directly to DHCS and apparently stays there, so one can see why DHCS would be willing to give MCHCD a grace period beyond the February 17th deadline expressed in documents related to this case.
As noted above, the IGT system is essentially a way to get back some of the money hospitals lose through Medicaid. Hold onto your hats here, we need to quote from the document attached to the IGT transfer the three MCHCD Board members took action on. There's lots of healthcare financial jargon to wade through, but you are going to want to refer back to it later. Here goes:
“The funds transferred by the GOVERNMENTAL FUNDING ENTITY [In this case MCHCD, and,yes, it is in all caps in the official document.] pursuant to Section 1 and Exhibit I of this Agreement shall be used to fund the non-federal share of Medi-Cal Managed Care actuarially sound capitation rates described in section 14301.4(b)(4) of the Welfare and Institutions Code as reflected in the contribution PMPM and rate categories reflected in Exhibit 1. The funds transferred shall be paid, together with the related Federal Financial Participation, by DHCS to HEALTH PLAN(S) as part of HEALTH PLAN(S)' capitation rates for the service period of January 1, 2021through December 31, 2021, in accordance with section 14301.4 of the Welfare and Institutions Code.”
I know, your eyes may have glazed over somewhere around “actuarially sound capitation.” Let's simplify and get down to the important takeaways. First important point: “the service period of January 1, 2021 through December 31, 2021.”
Besides the date, the word with the most weight in there was “service.” To receive money back from the IGT system one had to provide Medicaid or Medi-Cal services during calendar year 2021.
Herein lies the problem. The Mendocino Coast Health Care District (MCHCD) ceased providing medical services on July 1, 2020 when it entered into a lease agreement in which an outside entity, Adventist Health, assumed the role of day to day healthcare provider. Thus, the healthcare district had/has no right to expect funds from the IGT system for calendar year 2021. That makes the transfer of $1,095,035 of public funds a very serious mistake on the part of the MCHCD Board Treasurer who urged the action and the two other board members (chair Finney and secretary Savage) who willingly went along. The board treasurer possessed the document quoted above. It was his responsibility, and that of the other two voting board members, to read the document. The notation about services provided between January 1, 2021 through December 31, 2021 appears near the top of page three of the document, with, as noted earlier, several phrases in all CAPS.
To not read even this one portion of the document carefully is a grave public disservice committed by the the treasurer, Tippett, in particular and the board chair, Finney, who was cc-ed on the emails between Tippett and DHCS, so one has every reason to believe Finney had as much knowledge as Tippett about what was involved in the IGT process, including the ability to read the places in which the service period being covered was calendar year 2021. The legal ramifications of their actions should be left to others, but this level of incompetence by board members elected to protect the public's financial interests is unacceptable. The MCHCD Board Chair and Treasurer need to resign.
In preparing this article, this writer and a small number of others, who grew suspicious of the IGT transfer after gaining access to the documents Tippett and Finney possessed at the time they voted to transfer $1,095,395 of public funds, speculated on who these two public servants would attempt to throw under the bus once the jig was up. That answer coming up, but first research shows that at some point in relatively late May (three months after the $1,095,395 was transferred out of a Mendocino Coast Health Care District bank account), Tippett contacted an official within the Capitated Rates Development Division of the California Department of Health Care Services (DHCS). He asked when MCHCD might receive the expected near doubling of $912,733 (DHCS would keep 20% off the top of the $1,095,395 Tippett, Finney, and Savage voted to transfer on February 23rd). This shows that MCHCD Treasurer Tippett did not know how the IGT process works. Seemingly, Tippett was then informed that any payment back to MCHCD would be handled by Partnership HealthPlan (“Partnership” for fans of abbreviated titles). Your average taxpaying citizen might justifiably question how Tippett, as MCHCD Treasurer, could transfer over a million dollars of public funds without knowing precisely who would be paying it back.
On May 24th, Tippett emailed the Deputy Chief Financial Officer at Partnership. In the email Tippett stated, “I’m following up on the Intergovernmental Transfer the Mendocino Coast Health Care District made through DHCS on February 24, 2023, of $1,095,395.
“Preparing the District Budget for FYE2024, it would be helpful to know when the return would happen and an estimate of the total amount of the return.
“If you could give me some idea of an amount and a date, I would greatly appreciate it.”
Three months after wiring $1.095,395 of public funds, Tippett had not read or understood the section of the DHCS document that included, “the service period of January 1, 2021 through December 31, 2021” when the district was no longer providing medical services.
But members of the public had. At least one contacted both DHCS and Partnership in an effort to ascertain if these entities were aware of the situation. Either they were aware or had been made aware. On June 6th, the Deputy Chief Financial Officer at Partnership emailed Tippett, “Based upon our review of our contract with your organization for this program and on the basis that Mendocino Coast Healthcare District did not provide Medi-Cal services during the CY 2021 period we do not believe we have a mechanism to issue payment for the CY 2021 range period. Our contract requires Medi-Cal services for Partnership’s Medi-Cal members to have been rendered during the calendar year 2021 period.”
So now the MCHCD board meeting agenda for June 29th contains a possible resolution aimed at recouping the $1,095,395. The resolution does not make clear the amounts to be recovered from Partnership HealthPlan as opposed to an amount to be retrieved from DHCS. This proposed resolution also attempts to throw the prior board's treasurer under the bus, “WHEREAS this AGREEMENT was memorialized in DHCS CONTRACT # 21-10228, signed on October 6, 2023, by then Treasurer John Redding on behalf of the District and Rafael Davtian, Division Chief, Capitated Rates Development Division, on December 11, 2022, on behalf of DHCS.”
While paperwork signed by former MCHCD Treasurer Redding, on October 6, 2022, does exist, Redding never took the document to the 2022 MCHCD Board for approval. The other four board members did not place any IGT items on their agendas in the entire second half of 2022. In short, this IGT never traveled beyond Redding's desk. Did Tippett or Chair Finney stop to think, 'Hey, the previous board didn't act on this.' Apparently, Tippett and Finney did not stop to wonder why. They rushed it through as an emergency board action item. The two members of the board who were absent at that point didn't get to see it.
MCHCD may or may not retrieve all or part of the $1,095,395 of public funds dispersed, but the level of fiduciary irresponsibility demonstrated by Tippett and Finney, who possessed the documents necessary to tell them to hold off on the transfer, is mind boggling.
This is the same duo who adamantly supported their handpicked interim counsel when he vehemently declared that members of the prior board would have no reason to have HIPAA (Health Insurance Portability and Accountability Act) related documents in their email accounts. This in the face of what is obvious to any semi-regular observer of the prior board, that two of them are long time medical providers with the potential for numerous examples of confidential patient information within their emails.
It took board discussion, public input, a motion, second, and vote on a resolution to name Finney the administrator of the district's email accounts. A month or two later it came to light that somehow Tippett was also an administrator of the email accounts, without any board discussion or resolution.
In addition, in a narrative written by Tippett, and approved by Finney, Tippett made the direct accusation that the former MCHCD Board chair gave administrator privileges for the district's email accounts to the one carryover member from the prior board to the present one. The problem with that is it didn't happen. Tippett fabricated the lie and Finney approved sending it out to the public.
In other words this duo of Tippett and Finney are not only clueless when it comes to transferring more than a million dollars of public funds, without knowing whether it was a legitimate transfer or who would pay it back, but they are also sneaky as all get out. Not suitable traits for elected officials.
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