BORREGO HEALTH PAYMENTS SUSPENDED
Nonprofit organization notes suspension of money from Medi-Cal
State officials have suspended Medi-Cal payments to the Borrego Community Health Foundation as a result of the criminal federal investigation into the nonprofit health care provider’s billing practices, the company said in an open letter.
The California Department of Health Care Services recently took the action after FBI and state Department of Justice agents executed four search warrants in October at Borrego Health offices and one of its main contractors, Premier Healthcare Management of El Cajon, the announcement said.
“Our entire executive team alongside our appointed legal counsel and elected officials are working diligently to appeal this decision,” states the company’s letter, which is undated but was circulated just before the Thanksgiving holiday.
“At this time, we are working on scheduling a meeting with DCHS to discuss our case and our hope is that we get this on the calendar as early as next week.”
The single-page notice says Borrego Health is working with various health plans to continue providing medical, dental and other services to thousands of patients, though officials are not certain they will succeed.
It is signed by Edgar Bulloch, the interim chief executive officer and chief medical officer who took over for former CEO Mikia
Wallis after she separated from the organization in October.
A spokesman for Borrego Health, one of the largest providers of Medi-Cal services in the country, issued a statement Monday in response to questions about the letter.
“Borrego Health continues to fully cooperate with the government’s investigation,” spokesman Dan Kramer said by email.
“Borrego Health wants every member of the community, including our patients, providers and employees, to know that our
clinics remain open and available to provide health care services,” he added. “Our top priority continues to be providing quality, reliable care for the communities we serve.”
FBI officials in Los Angeles, who are overseeing the case, confirmed the criminal investigation to The San Diego Union-Tribune in October but declined to comment further.
The four search warrants were executed after months of reporting by The Borrego Sun weekly newspaper, which raised questions about excessive salaries, widespread nepotism, and a lack of disclosure of critical contract arrangements to the full board of directors.
The undated letter obtained by the Union-Tribune was addressed to the “Borrego Health Family.” It was not clear if the recipients were intended to be employees, patients, health providers, vendors or some combination thereof.
“The goal is to have DHCS lift the current suspension of payment until the Department of Justice has made a final decision on next steps,” the announcement adds.
Borrego Health also sought to assuage any concerns by employees that they may lose their jobs as a result of the state action.
“We understand that timing of this information given the upcoming holidays may be of great concern however, we assure you that Borrego Health is currently in a financial position to sustain payroll expenses and continue to operate business as usual for the foreseeable future,” the letter says.
In a statement issued shortly after the FBI raids, Borrego Health officials also said they were cooperating with investigators to resolve any concerns related to its operating practices.
“Borrego Health remains
committed to its goal of improving the health of underserved populations in our service areas by delivering high quality and compassionate care,” the statement said.
Most of Borrego Health’s annual revenue comes in the form of state reimbursements for medical and dental services provided to patients under Medi-Cal, the California program that administers the federal government’s Medicaid program for low-income people.
Officials from the California Department of Health Care Services, the state agency that approves and audits Medi-Cal reimbursements, did not respond to questions Monday about the letter announcing the suspension of payments.
But a San Diego County public health official said he expected that state authorities would be working with other health plans to treat patients affected by any interruption in Borrego Health services due to the ongoing investigation.
“The county is not directly involved, but our understanding is the state is working with the Medi-Cal health plans to get other clinics in San Diego, San Bernardino and Riverside County to pick up those patients, and the plans will coordinate directly with patients,” county spokesman Craig Sturak said by email.
The first tiny Borrego Medical Clinic was opened in the 1980s as a satellite of Scripps Health to serve the northeast San Diego County community, which has about 4,000 year-round residents and a winter population that swells to 10,000 or more.
In the early 1990s, the clinic was taken over by the Borrego Community Health Foundation, a newly formed public-benefit corporation.
By the mid-2000s a new executive director worked to expand the organization, and today Borrego Health operates three dozen or more facilities across Riverside, San Bernardino and San Diego counties.
It is one of the largest Federally Qualified Health Centers in the country, a U.S. Government designation that allows it to recover higher Medi-Cal reimbursements than other healthcare providers.
According to internal records obtained by The San Diego Union-Tribune in October, some Borrego Health clinics were seeing hundreds of thousands of patients per year. A dental clinic in Desert Hot Springs, for example, reported more than 445,000 visits in one year.
The nonprofit reported almost $340 million in revenue for the fiscal year ending June 30, 2019 — the most recent year for which tax records were available.
Its original clinic in Borrego Hot Springs was searched by FBI and state agents in October, when investigators executed warrants signed by a Riverside County judge for the medical center as well as administrative offices nearby and in the Kearny Mesa neighborhood of San Diego.
Dozens of agents seized computers, billing records and other materials.
State and federal agents on the same day seized computers, records and other materials from the El Cajon offices of Premier Healthcare Management, a medical billing company owned by businessman Daryl Priest that collected tens of millions of dollars a year through its service contract with Borrego Health.
Priest also owns a construction company that developed Borrego Health offices in San Bernardino and San Diego counties and collected hundreds of thousands of dollars a month in rent from the healthcare provider, Borrego Health records showed.
Premier Healthcare Management chief executive Nicholas Priest, Daryl Priest’s son, said the company is cooperating with investigators and believes the probe is limited to a single dental provider.
Most of Borrego Health’s medical clinics are located in Riverside and San Bernardino counties, but the charity also operates facilities in El Cajon, Escondido, Julian, La Mesa and Santee.