Ohio hospitals planned to file a lawsuit this week to challenge enforcement of what they called "phantom" Medicare billing regulations.
The Ohio Hospital Association and the American Hospital Association will sue HHS Secretary Donna Shalala in U.S. District Court in Cleveland to halt the crackdown.
At least 150 of the state's 185 acute-care hospitals have been notified that they will be subject to outpatient laboratory billing probes, according to the OHA.
At least nine Ohio hospitals have settled, generally paying double the amount of the alleged overpayments, the OHA said. The settlements total about $4 million (July 8, p. 22).
Hospitals want a court order to stop the department from retroactively applying billing policies they say were not properly established or communicated until June 1994.
They also want federal prosecutors to stop using the False Claims Act to enforce the policies. The act allows the government to seek triple damages and fines of $10,000 per claim.
The associations believe similar investigations are starting in other states including Illinois, Massachusetts, Mississippi and Virginia.
"If the government's heavy-handed tactics in Ohio are not halted, we fear these tactics will be used against hospitals in other states," AHA President Richard Davidson said.
Mary Yost, senior director of public affairs for the OHA, called use of the False Claims Act in these cases "extreme." She said the government could be following administrative procedures to recoup overpayments without subjecting hospitals to fines, penalties and high legal bills.
She said the OHA is working with Ohio congressional delegates on legislative relief such as increasing the standard of proof under the False Claims Act.
"We think it's inappropriate to be waging this war against hospitals," Yost said. "We're not talking about services that were not provided."
Officials of HHS and the U.S. attorney's office in Cleveland, which has conducted many of the probes, could not be reached for comment late last week.
The hospitals are challenging billing policies for six categories of lab tests, which constitute a significant portion of the crackdown, Yost said.
Prosecutors contend hospitals unbundled charges for certain tests against Medicare policies. Hospitals maintain they were never instructed to bundle claims for urinalysis, hematology and organ/disease panel tests and that instructions to bundle three categories of other chemical tests were not distributed before June 1994.
Representing the hospitals is Bricker & Eckler, a Columbus, Ohio-based firm.