The pressure on federal regulators to back off widespread audits to find Medicare billing fraud was ratcheted up a notch last week when the American Hospital Association called for a moratorium on new investigations.
"While we acknowledge that there are and have been clear instances of wrongdoing, fraudulent activity is the exception and not the rule," AHA President Richard Davidson said in a letter to U.S. Attorney General Janet Reno, HHS Secretary Donna Shalala and HHS Inspector General June Gibbs Brown.
The AHA is the latest group to question the fairness of the government's zealous fraud investigative efforts. The Association of American Medical Colleges, for example, is pressuring key lawmakers to put the brakes on the government's ongoing investigation of the billing practices of teaching hospitals and their faculty practice plans.
The AAMA found a sympathetic ear with Rep. Nancy Johnson (R-Conn.), who last month wrote a letter to Shalala asking her to reconsider her agency's actions.
"I urge you in the strongest terms possible to get involved immediately in a review of the assumptions and structure of the PATH project and of the performance of those carrying it out," Johnson wrote.
PATH is the Physicians at Teaching Hospitals initiative, the formal name of the teaching-hospital billing probe.
In its plea, the AHA asked that federal regulators put a six-month moratorium on investigations that open up new categories of inquiry under the federal False Claims Act, Davidson said in an interview.
The False Claims Act applies to any government contractor that submits bills to the federal government for payment. Penalties for violations can be severe, including substantial fines and possible imprisonment.
Because of the severity of the penalties, those accused of violations often settle rather than risk losing their case in federal court. Many private healthcare attorneys have accused the government of using the False Claims Act to extort settlements from hospitals.
In addition to its investigation of teaching hospitals and faculty practice plans, the government's major billing investigations of hospitals focus on laboratory claims and claims for diagnostic tests, or the "72-hour window" investigation.
The lab probe involves allegations of hospitals billing Medicare separately for laboratory tests that should have been billed collectively. The other investigation involves hospitals billing Medicare for diagnostic tests performed within 72 hours of admission that should have been covered by the hospitals' DRG payment.
The AHA has filed a lawsuit in federal court against HHS to stop the lab investigation. The case is pending.
"Right now, they are treating all billing errors as though they're fraud," Davidson said. "The man on the moon knows that 4,700 hospitals aren't setting up to defraud the government." He said the integrity of hospitals and healthcare professionals is being impugned.
Federal regulators had no interest in the AHA's call for a moratorium.
"We certainly cannot suspend our efforts," said Ben St. John, a spokesman for HHS' inspector general's office, which is coordinating the probes with the U.S. Justice Department.
The reaction was the same from Shalala's office. Spokeswoman Laurie Boeder said, "We just cannot do that."
St. John said the 72-hour window investigations have recovered about $45 million since 1994. He said the inspector general's office has been working with the hospital community to develop model compliance plans, and a draft of one was recently released to hospitals.
To help hospitals, the AHA is putting together a billing compliance kit, complete with videos and other educational materials.