Cook County’s public health system late Wednesday released its long-awaited response to an inspector general’s report that was highly critical of the way it runs its Medicaid business, called CountyCare.

It represents the latest skirmish in the ongoing battle between Cook County’s government-run health system, Cook County Health, and the county’s watchdog, Patrick Blanchard. He released a scathing report in June that raised questions about the financial practices and fiscal health of the health system’s CountyCare Medicaid program.

Following backlash from Blanchard’s June report, Cook County Health released its own response Wednesday, as well as one from Deloitte, a global audit and advisory firm the health system hired to review Blanchard’s findings and recommendations.

The bottom line: CountyCare does generate enough money to operate, Cook County government is partly to blame for late payments to doctors and hospitals, and there’s plenty of transparency when it comes to CountyCare’s finances. Deloitte mostly vindicated Cook County Health.

In a statement, the health system called it “unfortunate” that Blanchard did not give the health system an opportunity to see the report before he released it to the public nearly three months ago — “something that would have avoided the reputational harm done to the health system and the health plan,” the statement reads.

Blanchard did not provide an immediate comment late Wednesday. But in previous interviews, he has defended his findings.

Blanchard’s explosive report alleged CountyCare owed doctors, hospitals and other vendors $701 million in 2018, and that the health plan was so behind in payments there was a shortage of pacemakers, and anesthesia for surgeries. He also found that Cook County Health and CountyCare shifted financial losses around without fully disclosing it to their board and to county government leaders.

Since then Cook County Health has disputed some of the findings and defended its reputation to angry Cook County government leaders who demanded answers and accountability. Ultimately, the health system hired Deloitte to review Blanchard’s findings.

Commissioners were upset not just because they felt Cook County Health leaders left them in the dark about their finances, but because the health system’s financial stability — and that of CountyCare — is crucial to the county’s bottom line. CountyCare has become a main money-maker for Cook County government. The health system’s budget makes up nearly half of the county’s overall $6 billion budget.

Late Wednesday, the health system released two reports: One is a formal response to Blanchard’s investigation, and the second is a report from Deloitte. Both refute much of Blanchard’s findings.

Here are six things we learned after combing through both reports. 

1. It was county government’s cash flow issues — not necessarily problems with the health system — that delayed payments to doctors, hospitals and other CountyCare vendors. The delays were worse when the Illinois Medicaid program, which reimburses the county for medical care, paid late. In 2018, the state was typically behind by at least two months on payments, totaling more than $200 million before it caught up.
2. Among Blanchard’s findings was that doctors and other providers delayed or refused to provide care because CountyCare didn’t pay on time. Deloitte found that wasn’t due to late payments. It was because of a contracting issue, like an invoice that didn’t match a purchase order at the health system.
3. Blanchard questioned why CountyCare cut the reimbursement rate from 75% to 26% in 2017 for Cook County Health’s own providers, including flagship John H. Stroger, Jr. Hospital. He alleged this negatively impacted Stroger and made CountyCare appear more profitable than it would have been without the reimbursement change. But apparently it’s more complicated than that. The state reduced how much it would pay CountyCare, clawing back about $85 million. That prompted CountyCare to pay Cook County Health less.
4. CountyCare was actually overpaying providers at Cook County Health compared to other doctors and hospitals before cutting the health system’s reimbursement rates. Those rates later increased.
5. In the previous three fiscal years, the growth in expenses to pay claims filed by doctors, hospitals and other providers for treating CountyCare enrollees has been on pace with the growth in revenue coming in. That’s even though Blanchard found that CountyCare does not generate enough money every year to pay its bills and would need a big infusion of money to cover expenses at some point.
6. CountyCare does have enough money to cover its bills. But to make sure that’s still the case in years to come, Cook County Health wants to establish a cash reserve account “as a prudent long-term strategy.”

The Cook County Board plans to hold a hearing later this month to discuss the health system’s response and Deloitte’s findings.

The volley between Blanchard and Cook County Health leaders comes as the county government is putting together its 2020 budget of nearly $6 billion for the fiscal year that begins Dec. 1. Last week, Cook County Health said its own proposed 2020 budget was bleak, driven largely by a swelling tab of so-called uncompensated care that’s expected to hit $590 million next year.

Uncompensated care is a mix of two buckets. The first is treatment that doctors provide without getting paid for people who are typically uninsured, known as charity care. The second is debt that accrues from patients who don’t pay their bills, and from insurance companies that won’t reimburse the health system.

Cook County Health is one of the largest public health systems in the nation. It’s a medical safety net considered to be the last resort for poor and uninsured patients in Cook County. The system has two hospitals — Stroger on the Near West Side and smaller Provident Hospital on the South Side — and a network of urban and suburban clinics.

Read the reports here:

Kristen Schorsch covers Cook County politics for WBEZ. Follow her @kschorsch.