The Chicago Department of Public Health lost more than $1 million in state funding by failing to fix computer problems with its billing system, public records show, sparking a funding crisis and the scheduled closure of four South Side mental health centers today.
City officials have previously blamed the closures in large part on state budget cutbacks.
But a trail of official paperwork, obtained by the Daily News through the Freedom of Information Act, shows that the department’s new computerized billing system was so flawed that patient bills weren’t submitted to the state for six months in 2008.
Billing the state was crucial to getting funds because of the way the state allocates dollars for mental health services.
The city's current-year state payments are based on monthly reimbursements for service. When the state received no bills from the city for the last four months of the previous fiscal year, it amended the contract it had with the city to reflect the city's apparent lesser need for funds.
The city's public health chief, Terry Mason, declined to answer questions for this article. Carlo Govia, CDPH’s chief financial officer did not respond to a request to be interviewed. Nor did Cerner Corp., the Kansas City, Mo.-based company that developed the city's software.
The centers, which serve about 2,000 people, are scheduled to close today. The move has angered mental health advocates, who believe service to patients will be hurt and that some patients may not continue to seek treatment.
“These people are telling us in here that it don’t matter if we live or die,” says Helen Morley, a patient at the Beverly-Morgan Park facility.
Concern from state
The city first notified the Illinois Department of Human Services officials about the plan to switch from a state billing system to the Cerner system on Feb. 11, 2008 -- just over two weeks before the new system would be turned on.
Shortly thereafter, the state warned that problems could arise if the city's system was unable to communicate with the state's computers.
“March 1st is right around the corner, and if the software is not programmed to work correctly with Springfield’s system, claims and service reporting will not be accepted,” says a Feb. 22 letter from Peggy Peterson, the chief DHS liaison to the city's public health department.
But the city began using the new system. Problems ensued.
On April 29, Peterson warned, “I can not stress enough the importance of continued and timely submission to DMH of all FY08 service reporting and billing via whatever software is functional.”
In the same email, she noted that the state began reducing monthly allocations based on billing in January, docking 10 percent of CDPH’s monthly service stipend, and would continue doing so if billing did not reach 100 percent. The city, she said, could risk more than $334,000 if it did not resolve its billing issues
In June, Peterson wrote that the state had received no billing since mid-March, shortly after the city began using the new system. A city official replied that the Department of Public Health and Cerner were working to fix the problems.
On June 9, Peterson again recommended that the city return to billing with the state system. She noted that the state had already docked the city $334,059 since February.
The next day, Mason wrote to DHS officials saying the transition to the Cerner system “to date, has been unsuccessful.” He said the city could not use the state system or manually submit bills because all of the city’s patient information resided in the new computer system.
In August, the state wrote the city to say that it would withhold payment of $1.2 million that had been budgeted for Chicago mental health services. The funds were placed into a reserve fund, with no assurance the city would ever receive them.
A subsequent state letter advised the city that $99,000 of that cut was due to overall budget shortages affecting all mental health operators. The letter said $1,163,514 was due to the city's failure to submit bills to the state.
On Sept. 16, Peterson wrote a top city official to express “grave” concern about the city's inability to submit billing records since discontinuing its use of the state software in March.
Around the same time, records show that of the 14,261 claims submitted to the state, 95 percent were rejected for missing data.
Mason appealed the decision in late September, acknowledging in a letter to the state that billing had been a problem: "... Service reporting data and billing information has not been submitted for a period of six months."
He chalked the failure to file billing records up to the transition to the new computer system.
Mason's letter also said the state's decision to withhold money would "place the City of Chicago in an unfair position and result in the closure of multiple mental health facilities.”
Also in September, the city began using the state's billing system again. It was eventually able to submit records for about 90 percent of its outstanding bills from fiscal year 2008, but by that time the state had already decided not to allocate the money to the city.
On Oct. 31 the state wrote to say that the city's funding would not be restored.
DHS spokesman Tom Green says the decision to cut funding was based solely on the city's inability to provide billing data.
“The City did not provide adequate billing information to justify continuing to pay them the full amount," he says. "The Division of Mental Health chose not to allocate funding where it was not being spent effectively."
In December, reports of the health department’s plans to close the four centers leaked to the public. Initial plans called for the closure of five centers, including the North River facility.
But final plans eliminated four South Side centers in Back-of-the-Yards, Greater Grand/Mid-South, Beverly-Morgan Park and Woodlawn.
Opponents have pushed hard to keep the centers open, holding protests and town hall meetings, pleading with Mason and aldermen to save the centers. Yesterday they staged a sit-in at Daley’s office.
City officials have acknowledged they had difficulty with their new billing system. But they have placed blame for the closures squarely on the state.
"It was the State of Illinois that didn't fund us ... They have cut state mental health facilities all over the state," Mayor Richard M. Daley was quoted as saying in a Tribune report in January.
Alderman Ed Smith (D-28), chairman of the health committee, says he had heard mention of the billing fiasco, but the committee has no oversight of CDPH financial data, nor of its information systems. He says the city has dealt with mental health closures before, but whittling Chicago’s mental health services will have lasting impact.
“The legacy is going to be that people are going to be hurt," he says. "They’re going to feel the adversity.”
Daily News Staff Writer Alex Parker covers public health. He can be reached at 773.362.5002, ext. 17, or alex [at] chitowndailynews [dot] org.