Thomas Jefferson University's medical faculty practice in Philadelphia will pay the government $12 million for improper Medicare billings between 1990 and 1994 under terms of a civil settlement with HHS' inspector general's office. The settlement is the first under an HHS initiative that encourages physician groups to examine their own Medicare billing practices. HHS is trying to tighten billing by teaching physicians for procedures and services delivered by medical residents. Payment for residents' services is provided by a graduate medical education component of Medicare fees, so additional payment for those services constitutes fraudulent double billing, HHS said. Under the initiative, the inspector general's office permitted the Jefferson Faculty Foundation to fund an independent audit of 100 Medicare admissions in 1994. The audit found that faculty physicians billed for services performed by residents and used billing codes that were higher than records indicated they should have been. The settlement is twice the damages estimated by the audit for the years 1990 through 1994. Federal law allows for triple damages and penalties in false claims cases, but the Jefferson faculty practice's were set at double the damages because it cooperated with HHS. The practice also will continue a compliance plan that includes education for physicians and billing officials and audits of billing practices.
Moving ahead with plans to make HMOs available to its members, the American Association of Retired Persons has invited HMOs in 23 markets to bid for lucrative AARP endorsement. It will mark the first time the organization makes HMOs available to its membership, opening a vast new market for the chosen plans. The AARP, which represents those age 50 and older, will endorse HMOs for Medicare beneficiaries and members under 65. The AARP did not identify the HMOs it has asked to submit bids nor did it say when it plans to make its endorsements. Last November, the AARP notified Prudential Insurance Co. it would terminate its contract-which runs through 1997-to provide Medicare supplemental and hospital indemnity coverage to more than 6 million AARP members. Prudential was invited, along with other insurers, to bid on those programs and on long-term health insurance coverage for AARP members.
Humana Group Health Plan has signed a nonbinding letter of intent to sell its Washington-based network and facilities to the Kaiser Permanente Mid-Atlantic States Region. The deal, which is subject to regulatory approval as well as negotiations between the companies, would add Humana's 117,000 enrollees in Maryland, Virginia and the District of Columbia to Kaiser Mid-Atlantic's 397,000 enrollees in the Baltimore and Washington areas. Possible terms of a sale were not disclosed. Humana has suffered about $30 million in losses this year in the competitive Washington-area healthcare market.
As it prepares to acquire FHP International for $2.1 billion, Cypress, Calif.-based PacifiCare Health Systems said it is exploring the sale of its struggling Florida operations. PacifiCare of Florida, with 51,000 enrollees, was established in 1994 through the acquisition of two health plans and serves small group, individual and Medicaid enrollees. In March, PacifiCare said it planned to exit the Medicaid market in Florida and California (March 25, p. 14). PacifiCare, the largest Medicare risk provider, said it will concentrate on new opportunities in the West and Southwest as a result of the merger with FHP, also a major Medicare risk player. A company spokesman said the Florida operations were unprofitable and weren't expected to break even until 1998.
A second class-action lawsuit was filed against Marshfield (Wis.) Clinic alleging the 450-physician group overcharged consumers in north central Wisconsin. The suit was filed late last week in U.S. District Court in Madison, Wis. The plaintiffs are a Minocqua, Wis., sporting goods store, the Town of Mercer (Wis.) Sanitary District and three individuals. A Marshfield couple filed the first class action in July (See story, p. 19). The latest suit adds as defendants North Central Health Protection Plan, an HMO, and Rhinelander (Wis.) Medical Center, a multispecialty clinic, which are alleged to have conspired with Marshfield.
Michigan Attorney General Frank Kelley has asked a court to appoint an independent expert witness to evaluate a joint venture between Lansing-based Michigan Capital Healthcare and Columbia/HCA Healthcare Corp. The motion asserts that Dean Witter Reynolds, which issued a fairness opinion in the deal, lacks independence. It cites the investment firm's participation in the sale of $618 billion in Columbia securities from May 1994 to July 1996 and its "buy" recommendations on Columbia stock. Dennis Litos, Michigan Capital's president and chief executive officer, said the Michigan Capital board was satisfied with Dean Witter's opinion and that obtaining a second opinion would delay the deal and cost the organization hundreds of thousands of dollars. Kelley filed suit to block the deal in June.