Some of the country's most prominent hospitals made headlines last week when the U.S. attorney's office in Boston released a list of 83 Massachusetts hospitals that settled charges of submitting false Medicare claims.
Topping the government's list with the highest fine was Massachusetts General Hospital in Boston, which agreed to pay a $418,094 civil monetary penalty to absolve one of the country's best-known hospitals of any fraudulent billing charges.
In total, the hospitals paid more than $3.4 million in fines, with nine settlements exceeding $100,000 (See chart).
The Massachusetts settlements are part of the government's ongoing investigation of hospitals' Medicare outpatient billing practices. The investigation began in Pennsylvania in December 1994 and has been rolled out in a number of states since then.
What makes the Massachusetts settlements noteworthy is that the U.S. attorney's office published the names of the settling hospitals and their respective fines in a May 22 press release. The policy of the U.S. attorney's office in Harrisburg, Pa., which is coordinating the probe nationwide, had been to make the settlements available only through the federal Freedom of Information Act.
In March, MODERN HEALTHCARE*obtained copies of the first 64 settlements stemming from the probe through such a FOIA request (March 4, p. 74).
A source involved in the investigation said the Justice Department and the hospital industry, led by the American Hospital Association, had a "gentlemen's agreement" not to publicize hospital settlement information. The source, who requested anonymity, said the deal was designed to not embarrass hospitals yet make the settlement information public through routine channels.
Mary Catherine Frye, chief of the civil division of the U.S. attorney's office in Harrisburg, wouldn't comment on the alleged gentlemen's agreement between the Justice Department and the hospital industry.
However, Frye said it was the policy of her office to make the billing settlements available through FOIA only. She said the U.S. attorney's office in Boston conducted its own billing investigation and made its decision to release the names of the settling hospitals independently.
A spokeswoman for the U.S. attorney's office in Boston said it's standard procedure for that office to make all settlements public immediately.
Peter Markell, acting chief financial officer at Massachusetts General, said the hospital was aware that the U.S. attorney's office in Boston might seek publicity for the settlements.
"If the government felt it needed to do this to rattle a few cages, so be it," he said. "We didn't get too excited about it because we're comfortable with our effort to comply with billing regulations."
Markell said the hospital's billing problems were inadvertent. He said the disputed claims totaled just $181,000 over a five-year period out of about $218 million in outpatient Medicare claims.
Meanwhile, Frye said the investigation and settlement negotiations are all but completed in Pennsylvania and Florida; are under way in Illinois, Indiana, Louisiana, Mississippi and Missouri; and are starting in New York.
The focus of the billing probe is how hospitals bill Medicare for outpatient diagnostic tests performed shortly before patients are admitted to the hospital. Under Medicare billing rules, tests taken within 72 hours of admission are considered part of the inpatient stay and are reimbursed as part of the DRG payment. The government contends many hospitals have billed and continue to bill separately for the tests, which results in double payments for the same procedures.
Audits by HHS' inspector general's office indicated that Medicare may have overpaid as many as 4,600 hospitals nationwide by as much as $141.6 million from 1983 through 1993.
In late 1994, the Justice Department began notifying hospitals that they had violated the federal False Claims Act and soliciting monetary settlements lest the government take them to court (Jan. 2, 1995, p. 3). After a model settlement was drafted based on its work in Pennsylvania, the government began rolling out the investigation and settlement process in other states.
None of the hospitals that settle admit to any violation of federal law, but each agrees to implement an internal Medicare billing compliance program to avoid similar problems in the future.