FOCUS: Healthy Choice

History and Structure The system, designed in 1993, grew out of the University's medical center, which is comprised of the School of Medicine and the Hospital of the University of Pennsylvania. According to Clinical Care Associates Senior Medical Director Paul Rogers, the center has a "long history of distinguished academic enterprise." But before 1993, the hospital and the academic medical community were separate divisions of the University. In 1993, Medical School Dean William Kelley engineered a task force to project the needs of health care service for the next 10 years. The study concluded that managed care networking would continue and showed a definite need for a primary care network -- the base of the managed care system -- at the University. Out of this projection, the idea for the University of Pennsylvania Health System was born. The Health System is comprised of the medical center, Clinical Practices of the University of Pennsylvania -- the unit known as CPUP that is made up of the medical center's physicians, Clinical Care Associates -- a primary care provider network known as CCA, the Presbyterian Medical Center, four affiliated community hospitals and other non-University research facilities. According to Rogers, the theory behind the primary care networking was "that a region-wide group of [more than 300] doctors would be enough to take care of a large group of patients -- about 600,000, in fact." Rogers explained that the networking system provides the University with a large patient capacity that encourages the idea of "community teaching," allowing students to get experience in offices to "learn about everyday medical care." The larger capacity also allows the system to care for10 percent of the greater Philadelphia area and promises that most patients will be able to find a University doctor in their local community. The new system offers a large site of closely affiliated doctors who can provide for health system research. "Usually research which requires a large number of patients is done by several different groups," Rogers said. "But now we can do research with our affiliates and we can determine the value of health care, conduct clinical research and other sorts of things. The research payback to the University is a hidden value." Rogers explained the networking of the system is one of "vertical integration." "It's a pyramid of sorts," he said. "We have a broad base of primary care, followed by the secondary and tertiary care units." The primary care unit is comprised of general practitioners and other physicians in CCA and CPUP. HUP serves as the University's secondary care unit, which is comprised of the basic hospital functions performed there -- including treatment of pneumonia, routine operations and obstetrics. Some of the secondary care for the community also takes place at community hospitals, depending on a patient's preference. Tertiary care also takes place at HUP, but involves a network of specialists and more sophisticated hospital care, such as open heart surgery and other complicated procedures. Procedural Difficulties Senior Vice President for Hospital Operation Bill Foley noted that the system has had some problems with the integration of its various sections, but added that "these are problems any organization that is growing and integrating would have." "When it grows so big so fast, there is always a challenge with management," he explained. Foley said relaying information about new plans for the system was one of the organization's main problems. He added that making choices that affect the entire system can sometimes create difficulties as well. And since many hospitals want to be affiliated with the system, a great deal of discipline is involved in deciding "who our counterparts are," Foley explained. Rogers said there were a number of challenges involved in converting 45 different offices into a common business system. "Practice management systems were different for every group," he explained. "We had to convert them all to the same sort of system to keep everything straight and equal." However, Rogers said he does not feel the changes have hurt any of the individual practices. "We've been very careful to not let anything traumatize the practices. That was one of out main goals," he said. "Mainly, we've just had challenges in communication." Problems at CPUP Last December, the Hospital of the University of Pennsylvania agreed to pay the United States Department of Health and Human Services $30 million in order to settle claims filed against HUP that alleged that certain Medical Center physicians overbilled Medicare for patient treatment. The settlement came as part of an extensive audit of HUP and the CPUP that spanned the years 1989 to 1994. In addition to the $30 million payment, the University promised to implement a corrective action plan designed to prevent the recurrence of such incidents. CPUP physicians allegedly violated the Medicare billing code in a number of ways. The audit discovered that doctors not only overbilled Medicare, but provided inadequate documentation of their services. The audit also found that the physicians had submitted bills for work done by residents. Medicare, a government program that pays for some public medical care, does not allow billing for residents' work, since their salaries are already subsidized by the federal government. In January, Kelley, who now serves as the Health System's chief executive officer, denied any wrongdoing on the part of CPUP physicians. Kelley added that the ongoing reform within the University Medical Center was not spurred by Medicare's claims. "Even before the audit began, we had an intensive program to enhance the reliability of CPUP's billing systems to ensure compliance with billing requirements," Kelley said in a statement released by the Department of News and Public Affairs at the time. Health System spokesperson Lori Doyle emphasized that making the $30 million payment "doesn't mean that we are guilty." CPUP paid the $30 million in early January. Implementation of the corrective action plan began soon afterwards. The plan consists of four parts: the centralization of billing operations; mandatory annual financial audits; intensive training of physicians and billing personnel on the correct Medicare procedures and the establishment of two telephone hotlines devoted to billing problems. Although it is too soon to tell if the plan has had any effect on CPUP's system, Doyle said implementation is moving along as planned. "We haven't encountered any problems and we're very pleased with the progression so far," she said. Former Chief of General Internal Medicine John Eisenberg said the overbilling was not an organized attempt to wrestle more money from unsuspecting patients and insurance companies. He speculated that the errors were due to a misinterpretation of the Medicare billing code. "The real irony of the situation is that the Medical commission came out with a new set of rules a week before the Penn investigation," he said. Eisenberg added that ambiguity and confusion on the part of health care providers has allowed billing personnel to create their own rules when dealing with Medicare claims. A new audit by Pennsylvania Blue Shield followed Medicare's claims. It addressed the same problem, but the company is conducting its audit privately. According to Blue Shield Vice President for Corporate Affairs Douglas Smith, the insurance company played a role in the first audit because, as a federal Medicare carrier, the company serves as a "contractor" to the federal government. Smith explained that Blue Shield's audit will only involve those claims relevant to the private insurance company, while the previous one dealt with Medicare claims only. Smith also said the Blue Shield audit was not spurred by the federal investigation. "Basically, Blue Shield was aware of the potential for problems but was also aware of the federal audits going on, so we stepped back until they were finished," he said. Smith said Blue Shield received a tip from an anonymous source confirming suspicions of existing problems. He added that this is often the reason the company begins reviews. "Frequently, someone will look at their statement and see something and say 'Hmmm, that doesn't look right,' and they'll send it to us," he explained. Such discrepancies can range from a slight overbilling to a charge from a doctor the patient had never visited. Smith said that when Blue Shield receives a tip from a source, officials can instantly check their databases and attempt to reconcile the discrepancies. If this does not work, the company will decide whether or not to probe further into the situation. "Some things are obviously worth looking into," he said. "You can only have your appendix out once." The Health System has not yet been informed of the pending audit. However, Blue Shield spokesperson Brian Herrmann confirmed last week that the audit is currently underway. "Results should be published about six weeks from now," he said. Doyle said image research conducted by the Health System's Marketing Department showed that the settlement agreement had no impact on public perception of the system. "This is not to say that we are not taking the settlement seriously," Doyle said. "We took it very seriously, but it didn't have any impact on the system's image." She said admissions to HUP and applications to the Medical School are at an all-time high right now. Doyle added that incidents similar to the CPUP situation have happened in almost every other teaching hospital in the nation. She said Penn's system is now regarded as a model for other organizations looking to improve their present systems and hoping to learn how to better interpret the federal government's regulations. "Our goal is to be in perfect compliance [with federal regulations]," she said. Future Growth Foley said he foresees extensive expansion in Health System's future. "If we're successful -- and I think we will be -- we should see a lot of expansion taking place," he said. The system has already expanded quite a bit since its initial implementation, with last year's acquisition of Presbyterian Medical Center and the four affiliated community hospitals. Doyle also said that ground-breaking is scheduled for next week on the second Biomedical Research Building on campus. And she added that the University's Health System is the fifth largest academic medical center in the nation, "based on National Institutes of Health research funding." Foley said he expects the future system to consist mainly of a large primary care base spread throughout greater Philadelphia. The system will continue to have HUP and Presbyterian as clinical and specialty facilities. Foley also predicts that six or more hospitals will become affiliated with the clinical and educational plans of the University system in the near future. "We'll also probably see four to six ambulatory care services like the one currently being built in Radnor, Pa.," he added.