U., feds settle allegations of Medicare fraud

According to federal prosecutors, Penn's Prebyterian Medical Center submitted incorrect Medicare claims. Penn's Presbyterian Medical Center will pay the federal government $535,448 to settle allegations that it defrauded Medicare, officials announced this week. According to federal prosecutors, from 1992 to 1997, Presbyterian officials regularly submitted Medicare claims with a diagnosis code for a more-complex form of pneumonia than what the patient had -- which resulted in more reimbursement money from the government's health-insurance program for the elderly. Penn will pay the amount without admitting any wrongdoing. Penn will cover the entire settlement, even though most of the fraud allegedly occurred before the Health System acquired the hospital at 39th and Market streets in 1995. Assistant U.S. Attorney Susan Diem Bricklin, who worked on the case, said Medicare reimburses medical providers about $4,500 for treating the illness in its more complex variety, about $2,000 more than the reimbursement for the simple form. Under the terms of the agreement, the hospital will pay two to three times more than it allegedly overcharged the government, she said. Bricklin said she hopes the settlement will serve as a deterrent to other hospitals. The improper-billing allegations are based on a joint review of medical records by auditors from Presbyterian and the federal government, which found 77 coding or billing errors out of some 23,000 Medicare patient discharges. "We worked cooperatively with the government to identify these billing errors and are confident that our billing systems are now in complete compliance with the government's standards," said John Wynne, the Penn Health System's chief financial officer. Medicare payments to a hospital are usually based on a doctor's diagnosis of the patient's ailments, as described in a claim the hospital submits to Medicare. Due to the number of claims it receives, Medicare relies on hospitals to properly use standardized codes to indicate the main diagnosis. As for the $2 billion Health System's bottom line, spokesperson Lori Doyle said the system takes matters of billing compliance seriously. She said that "while $535,000 is a substantial amount of money by any measure, this settlement doesn't threaten the financial viability of Presbyterian or the Penn Health System." The Presbyterian settlement was one of three agreements announced Wednesday with respect to improper Medicare claims for pneumonia treatment. Federal prosecutors in Philadelphia also settled a case with Easton Hospital in Northampton County, Pa., for $1.12 million, and the U.S. Attorney's Office in Chicago announced a $3.35 million settlement with Weiss Memorial Hospital. Federal investigations into many hospitals' Medicare-billing practices began in 1995, when Penn agreed to pay the government $30 million to settle claims that Medical School physicians overbilled patients at the Hospital of the University of Pennsylvania.