Med Center settles claims with $30 mil. payment

The University has agreed to pay the federal government $30 million to settle claims that Medical School faculty members overbilled patients at the Hospital of the University of Pennsylvania over the last six years. A recent federal audit estimated that faculty members who provide care at HUP submitted more than $10 million in false Medicare claims. "Hopefully, this agreement will serve notice on other institutions to closely audit and monitor their Medicare billings," said U.S. Attorney Michael Stiles after announcing the agreement on Tuesday. A U.S. Department of Health and Human Services audit found that members of the Clinical Practices of the University of Pennsylvania, a group of 600 faculty doctors in 19 HUP departments, violated several Medicare regulations. The audit revealed that doctors billed patients for care provided by resident physicians. In some cases, faculty doctors signed medical charts saying they provided services that were actually performed by the residents, according to the U.S. attorney's office. Under Medicare, residents are not allowed to charge for care they give because the federal government already subsidizes their training and salaries. Doctors also allegedly billed in-patient consultations at the highest level of the billing code without specifying what special services they provided, the U.S. attorney's office said. And the audit also found cases where doctors provided "inadequate documentation" for a variety of Medicare bills they submitted. Yesteday William Kelley, chief executive officer of the University's Medical Center and Health System, responded to allegations raised by the audit in a letter to the University community. "CPUP denies any wrongdoing," Kelley said. "The settlement agreement, however, allows [the University] to avoid long and costly litigation and to focus on its primary mission of education, research and patient care." Kelley said the recent audit and negotiations were "a difficult time for us" and that the agreement was a "painful" one. But he also stressed that the $30 million payment will not "threaten the financial security of our organization or our ability to continue to provide the highest quality care to our patients." In addition to the one-time payment, CPUP agreed to implement a four-part plan to increase its compliance with Medicare regulations over the next five years. "The Health System is taking the necessary steps, as I believe it must take, to make sure that this situation is never repeated," University President Judith Rodin said yesterday. Under the terms of the agreement, the clinical care group will centralize its billing operations by sending all coding of in-patient services to a central office. The organization will also subject itself to both internal and external audits. And CPUP will hire an independent auditing firm to review its billing on a yearly basis. The University will give the Department of Health and Human Services the 1995 and 1999 audits and will provide the 1996-1998 audits to the regional Medicare carrier. In addition to the external audits, CPUP will establish an Office of Billing Compliance to monitor the effectiveness of its compliance policies and recommend changes as necessary. This office will also oversee professional services coding until a centralized system is developed. In the third area of the compliance plan, CPUP agreed to continue training its physicians and billing personnel on correct Medicare procedures for the next five years. Finally, CPUP agreed to set up two telephone billing hotlines -- one for doctors and staff members to ask questions about proper billing procedures, and another for them to confidentially report suspect billing practices. The $30 million settlement was the largest ever for this type of violation, according to Assistant U.S. Attorney Margaret Hutchinson, who handled the case. Auditors examined 100 medical charts prepared by CPUP doctors in 1993 to determine if reimbursement requests were "reasonable, allowable and documented in accordance with Medicare regulations," according to the agreement. Health and Human Services extrapolated the audit's findings over a six-year period between 1989 and 1994 to arrive at the $10 million figure. In determining the settlement, the U.S. Attorney's office followed federal law, which allows for triple damages in false claims cases, guaranteeing that the University will pay $30 million for an alleged $10 million in improper Medicare billings. Daily Pennsylvanian reporter Mike Madden contributed to this story.