H&HS helps Pataki campaign and sticks it to Kaleida Health

In an announcement almost certainly timed to Tuesday's election, the Department of Health and Human Services turned down Kaleida Health's $30.8 million Medicare claim for losses incurred because of the acquisition of Children's Hospital when Kaleida was formed in 1997.

Although several elected and appointed public officials had been working to get H&HS to pay up (see, for example, Hillary Clinton's letter below), George Pataki made it the cornerstone of his "I've saved Children's Hospital" visit to Buffalo several months back. All the money he promised to deliver was in that H&HS claim.

He frequently does that—calls press conferences in which he takes credit for money provided by federal or other officials—but time he took credit for money that wasn't even there.

And H&HS waited to inform New Yorkers that the claim had been denied and that Pataki's promise was just empty campaign rhetoric until the morning after the polls closed and Pataki had been safely reelected. No one I've talked with believes that it is mere coincidence that the H&HS announcement came out after the polls closed—any more than anyone believes that embattled SEC chief Harvey L. Pitt waited until the polls were closed Tuesday night to decide he was going to tender his resignation.

That post-election H&HS announcement, along with Gale Norton's sidestepping the gambling compact issue (see John LaFalce's letter to the Department of Interior Inspector General) makes for two major Federal agencies that worked in the service of Pataki's reelection campaign. Are there more?

Pataki ran a solid on-message campaign against McCall's dull and unfocussed Democratic campaign and Golisano's shrill vanity spendathon. He didn't need the loaded-dice from the big guys in Washington. His didn't need to cheat. But some folks just can't pass up a good opportunity.

—B.J.

Here's the letter Senator Hillary Clinton wrote H&HS Secretary Tommy Thompson about the payment in early October:

October 8, 2002

The Honorable Tommy Thompson
Secretary, Department of Health & Human Services
200 Independence Ave., SW
Washington, DC 20201

Dear Secretary Thompson:

I am writing to express my concern regarding the delay in resolving a dispute between the Center for Medicare and Medicaid Services (CMS) and the Kaleida Health System of Buffalo, New York. This delay threatens the financial viability of the entire Kaleida Health System and in particular the Children's Hospital of Buffalo (CHOB) which provides much needed care to the children of Western New York. I ask for your assistance in resolving this matter as quickly as possible given its implications for the stability of the health care system of Western New York.

Medicare reimburses for loss-on-sale claims resulting from mergers prior December 1, 1997. The Kaleida acquisition in question closed in escrow, with the sale occurring on November 24, 1997, as recognized and confirmed by New York law. This is prior to the December 1, 1997 federal deadline for reimbursements related to such acquisitions.

Unfortunately, Kaleida's loss-on-sale claim was initially denied due to confusion about the timing of the merger. This is a limited, straightforward issue, that I believe can and must be resolved quickly. Yet this issue languishes in the Provider Reimbursement Review Board (PRRB), awaiting action. According to CMS, the initial request for appeal was made on Sept 21, 2001 and there has been no resolution of this matter to date. Based on discussions our office has had with CMS, a decision in the near future does not appear likely either.

As Secretary, you have the authority to look into this matter and expedite its settlement, either through the PRRB or unilaterally. It appears that the only issue in dispute is the date of the merger. Since this has been clarified by the New York State Government under Section 56, Chapter 82 of the Laws of 2002, I believe resolution of this dispute should be a straightforward affair. I ask that you review and decide on this issue as soon as possible as CHOB is facing severe financial hardship which will only worsen without a prompt adjudication of their claim. In this instance, delay and uncertainty can have the same effect as wrongful denial. Any further postponement may force CHOB and other area hospitals to curtail services which are critically needed in Western New York. If you require any further information in this regard, please let me know. I look forward to working with you to resolve this matter in as quick and equitable manner as possible.

Sincerely yours,

Hillary Rodham Clinton