Special Notice / Hearing: None__
Vote Required: Majority
To: Honorable Board of Supervisors
From: Colleen Chawla, Chief, San Mateo County Health
Chester J. Kunnappilly, MD, Chief Executive Officer, San Mateo Medical Center
Subject: Agreement with Healthcare Cost Solutions, LLC to Provide Hospital and Professional Coding Audits
RECOMMENDATION:
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Adopt a resolution authorizing an agreement with Healthcare Cost Solutions, LLC to provide hospital and professional coding audits, for the term of April 1, 2026 through March 31, 2031, in an amount not to exceed $2,000,000.
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BACKGROUND:
Accurate coding is essential for proper billing compliance and revenue capture, in addition to building a comprehensive health database that accurately identifies the acuity of patient care and an accurate case mix index. In order to ensure the accuracy of its coding by employee coders and providers, San Mateo Medical Center (SMMC) has an ongoing need for compliance coding audits. Coding audits are essential to ensure compliance with federal and state healthcare program billing rules.
DISCUSSION:
The proposed agreement was competitively procured following publication of a Request for Proposals in October 2025. Healthcare Cost Solutions, LLC (HCS) was elevated as the top choice by the evaluating panel due to their ability to provide the required services and guidance to the staff coders during exit audits or outside of scheduled audit reviews. In addition, the vendor offers free continuing education units to our employed coders that allow them to maintain their mandatory certifications. HCS also provides both value and a history of quality service.
The County Attorney has reviewed and approved the resolution and agreement as to form.
The resolution contains the County’s standard provisions allowing amendment of the County fiscal obligations by a maximum of $25,000 (in aggregate).
The Technology Services Department has reviewed and approved the IT component of this agreement.
It is anticipated that the audit accuracy for coding compliance will be 95%.
PERFORMANCE MEASURE:
|
Measure |
FY 2025-26 Estimated |
FY 2026-27 Projected |
|
Percentage of audit accuracy for coding compliance |
95% |
95% |
COMMUNITY IMPACT:
SMMC has to maintain coding compliance in order to continue to provide services to patients who receive publicly funded care. SMMC’s patients span a wide spectrum of races, ethnicities, gender, and gender-identities. Since November 1, 2024 half of SMMC’s patients have been female and half were male. The largest ethnic cohorts of specialty care patients at SMMC were Hispanic or Latino (58%), and primarily Spanish-speaking (48%).
FISCAL IMPACT:
The term of the agreement is April 1, 2026 through March 31, 2031. The amount of the agreement is not to exceed $2,000,000 for the five-year term. Funds in the amount of $100,000 are included in the SMMC FY 2025-26 Adopted Budget. Funds in the amount of $400,000 will be included in the SMMC FY 2026-27 Recommended Budget.
The payment provisions and levels of services in this contract differ from those of the previous contract due to an increase in services and the number of audits to be made by the vendor. The total value of the new contract represents an 11% increase compared to that of the previous contract.
Expenses at SMMC are covered by fees for services or third-party payors whenever possible. The portion of expenses for services provided to the medically indigent or to those covered by programs that do not meet the full costs of care is covered by the County’s General Fund contribution to SMMC and is within the existing annual appropriation.
ATTACHMENT:
RFP Matrix