Madison Parish Hospital could face a financial emergency if the Centers for Medicare and Medicaid Services require reimbursement of $2.5 million in overpayment ties to fraudulent billing by the hospital's former administrator.
Hospital CEO Scott Barrilleaux and Hospital Service District chairman Thomas Williams made the disclosure this past week to a state fiscal review committee overseeing the district's corrective action plan after years of fraud and misuse of public funds.
The committee includes the legislative auditor, state treasurer and attorney general.
Michael Cragin, senior adviser for the Louisiana legislative auditor, told The News-Star that the possible reimbursement demand is the biggest challenge facing the hospital.
The legislative auditor originally identified $5 million in possible fraudulent billing, but the total was later reduced to $2.5 million. Prosecutors charged the money was split by former hospital administrator Wendell Alford, Tech Solutions LLC agent Casey Hughes and insurance agent Russell Ham of Insurance World.
Alford was sentenced to 37 months in prison and three years of probation and is responsible for $1,383,874 in restitution.
Hughes was sentenced to spend 12 months in prison and ordered to pay $566,874 in restitution.
Ham will serve 14 months in prison and was ordered to pay $817,000 in restitution. Hughes and Ham will have three years of supervision after their release.
Despite the convictions, Craigin said it's uncertain whether the three will be able to pay restitution or fines imposed by the court.
Barrilleaux said the hospital could be expected to repay $2.5 million in June. Over the next several weeks, hospital and CMS officials will meet about the matter.
If the hospital does not make the repayment, CMS will stop Medicare and Medicaid reimbursements until it is paid.
The hospital has hired an outside CPA firm to manage finances as required by the corrective action plan.
"The hospital has never had a chief financial officer, which may explain some of the past problems. They now have this firm to give financial advice and prepare monthly financial statements until staff can be brought up to speed and manage the hospital's accounting department," Cragin said.
A December 2013 audit showed the Madison Parish Hospital Service District ran a $2.2 million deficit in its 2012 year. The audit also identified 36 accounting deficiencies for the period.