A government crackdown on hospital outpatient laboratory Medicare billing, which already has reaped $6.5 million in fines from Ohio hospitals, has spread to Illinois.
The Illinois Hospital and HealthSystems Association said about 10 Illinois hospitals have received letters stating they might have billed Medicare improperly for certain outpatient lab tests. The letters, from the U.S. attorney for the Northern District of Illinois, offer them lower penalties if they audit their own records and voluntarily settle.
The Illinois U.S. attorney might be testing the strategy with a few hospitals before more extensive efforts, IHHA General Counsel Mark Deaton said. That was the case in Ohio, where 150 of the state's 185 hospitals eventually received similar letters. So far, 17 have settled.
The Illinois letters were received late last October. Deaton declined to identify the hospitals involved.
The news appears to confirm initial fears that the Ohio investigation would become an example of "case franchising." In the tactic, a U.S. attorney in one state, working with HHS, develops the framework for an investigation and shares it nationally.
"I don't know whether this outpatient lab billing investigation will spread to other states, but I have no doubt that this concept of franchising will become more popular. It's very efficient," Deaton said.
The Ohio and Illinois hospital associations and the American Hospital Association said they weren't aware of similar investigations in other states, though AHA officials have said they fear that will happen.
Last year, the AHA and the Ohio Hospital Association sued to halt the crackdown. They charged that the government's actions amount to extortion and that it didn't adequately instruct hospitals on how to bill Medicare for the lab tests. The case is still pending.
According to the government, Medicare paid the hospitals for individual tests when the tests should have been billed for and paid for collectively.