A commentary by Loyd Welbern

Attorneys who handle private adoptions are taking advantage of hospitals, parents, and the Medicaid program-and here is how they are doing it.

As a business office director for the past 36 years at St. Edward Mercy Medical Center, Fort Smith, Ark., I have dealt with attorneys handling private adoptions my entire career.

In the past, the hospital business office manager would contact the attorney who was handling the private adoption and make arrangements with him or her to pay the mother's and baby's hospital charges through the attorney's escrow account. The business office manager would send itemized bills for the mother and baby to the attorney's office, and the attorney would send a check to the hospital to cover the mother's and baby's charges.

The way it happens now-and has for the past six or eight years-is the attorney is contacted by the business office manager to make arrangements for payment, and the attorney tells the hospital to file Medicaid for the mother's and baby's charges. If the mother is not currently on Medicaid, the attorney expects the hospital to help her enroll in Medicaid.

In the meantime, the attorney has collected a large sum of money from the adopting parents. In the past, the attorneys would pay the hospital for the mothers' and baby's charges out of this sum of money. Now, they pocket it all and have Medicaid pay the hospital out of Medicaid funds.

A Costly Scheme

Because the hospital has no legal recourse in these private adoption against anyone but the child's natural mother, the hospital is forced to take the Medicaid payment, which, on average, is around 20 percent of actual charges.

I believe this practice, when looked at from a national perspective, is costing the Medicaid program $100 million to $200 million annually. I came up with this estimate by multiplying what I knew St. Edward has lost per year from these private adoptions and multiplied that by the number of U.S. hospitals with obstetrics services.

Adopting parents are generally blind to this arrangement. I think that most adopting parents are led to believe from their attorneys that part of the large sum of money they are paying is going to pay the medical bills of the natural mother and baby.

How Is This OK?

Over the past four years, I have met with my hospital association, my state representative, my U.S. congressman and senator, and my state Department of Human Services representative to discuss how attorneys are handling private adoption. On one occasion, I had most of the people mentioned together in one room to discuss this problem. During our discussion, it was agreed upon that this practice was wrong and that something should be done to correct it-but no one knew how.

So after four years of informing everyone about what is going on with private adoptions, I am no closer to getting it corrected.

I have come to the conclusion that even though hospitals should be outraged at only getting 20 percent of their charges, the Medicaid program is paying out $100 million to $200 million unnecessarily, and attorneys are getting rich handling private adoptions, it's all OK.

It's no wonder our country is in the financial shape it's in when it allows practices like this to continue.

I would hope when CFOs and business office managers read this article, it will at least have them run reports on the private adoptions at their hospitals to see how they are being paid and how much money they are losing by accepting Medicaid for these births.

Loyd Welbern is the former business office director at St. Edward Mercy Medical Center, Ruby, Ark. (loyd@cwf-usa.com).

Discussion Starters

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Publication Date: Tuesday, October 25, 2011