Santa Barbara County’s debt from a faulty practice of overbilling Medi-Cal to provide services to mental-health clients has swollen to $17 million from the previously reported $10 million, and may be as high as $31.5 million.

The matter is being investigated by the county’s elected auditor-controller, Bob Geis, who says it could be the most serious budget issue he has dealt with in his 18 years on the job — especially if the debt turns out to be $31.5 million.

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Santa Barbara County Auditor-Controller Bob Geis

The bungle comes at an inauspicious time for the county, which is on high alert for more stormy financial weather from the state. It also comes at a time when the county is trying to clean up its own financially troubled department of Alcohol, Drug and Mental Health Services.

Asked whether the county’s Medi-Cal billing mess is the result of dishonesty, Geis hesitated, but he said nobody has profited personally.

“What people are attempting to do is deliver more services to the community,” he said. “Now, is being zealous in delivering services to the community and trying to aggressively bill the feds and state to support that — is that right or wrong? I look at some of these issues and go, ‘I can’t believe they did that.’”

Medi-Cal is essentially state-funded insurance for poor people with severe disabilities, mental or otherwise. The idea is to be able to provide services to, say, homeless people with bipolar disorder, and charge Medi-Cal for the bill.

The matter is highly complex, but in general boils down to a few systemic malfunctions that had been taking place from 2002 to June of this year. Geis was careful to note that the bad practices have been corrected.

In many cases, county mental-health providers — and nonprofit providers who contracted with the county — were servicing clients and then sending the bill to Medi-Cal, only to later learn that the clients did not qualify for Medi-Cal coverage, Geis said. He added that the number of clients served hit a peak in the 2005-06 fiscal year. That phenomenon accounted for at least $6.6 million worth of the debt.

The county also had been double-billing Medi-Cal for a 15 percent administrative fee, Geis said. That, he said, was related to the county’s complex relationship with its nonprofit providers of mental health services. 

“It was almost like we charged the same cost twice,” he said.

The double-billing snafu accounts for nearly $3.3 million worth of the debt.

Some of the oversights were more technical. For instance, in many cases, the county mental health department was supposed to send a bill to Medi-Cal only after first trying to bill Medicare, a federal social insurance program that covers not only seniors but also some people with disabilities. That did not happen, and the county owes the state $3 million as a result.

Monetarily, the $31.5 million in question falls into three general categories: the $10 million that was reported back in April, the additional $7 million — reported to the County Board of Supervisors last week — that the county does not dispute, and $14.4 million more that it does dispute.

The $10 million, Geis said, was reported to the state by the county itself, sometime after January 2007, when Doug Barton began serving as the interim director of the county mental health department, taking over for the retiring James Broderick. (Barton, he added, was assisted by Assistant Director Marianne Garrity.) In October 2007, Barton was replaced by the department’s current leader, Ann Detrick.

As for the $14.4 million, the county is more or less on trial to keep the money. On Oct. 28, county officials went to Los Angeles to plead their case. The issue involves providing mental health services to children by other departments, such as probation and social services, partly in an effort to screen for early signs of mental illness.

There was a time when the county was able to draw money from a federal grant for this purpose, but the grant dried up in the mid-1990s. After that, the county probation and social services departments continued the program by billing Medi-Cal.

Geis said the county stands by this decision, and is trying to work with the state to get the matter cleared up. He said it will take at least 90 days to get a final answer. 

In the meantime, it isn’t clear when the $17 million needs to be paid. Geis said it’s possible the county will embark on a payment plan, chipping away at the debt over five or more years.

Geis said he believes that this kind of thing has happened in other counties, but said he doesn’t know of any others currently experiencing the problem.

William Boyer, communications director for Santa Barbara County, said no one has been fired over the matter “at this point.” Asked whether that may happen, he said he didn’t know.

“Actually, employees internally to the county were the ones that spotted some of these irregularities, and brought it to the attention of the appropriate folks within the county,” he said. “The county then self-reported those problems to the state.”

Geis said it is only fair to put the $17 million in context. The county ADMHS budget amounts to $80 million annually. The $17 million debt was accrued over a six-year period, meaning it accumulated as the county went through about $480 million worth of business.

“When you take the other amounts, it’s kind of miniscule,” he said. “It’s the cumulative effects that make it look so big.”

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— Noozhawk staff writer Rob Kuznia can be reached at