As the federal government's healthcare fraud-fighting juggernaut attacks new areas of suspected Medicare abuse, chief financial officers mustn't forget Uncle Sam's ongoing audit activities.
One such endeavor is the nationwide probe of hospitals' outpatient diagnostic billing practices. Under Medicare rules, tests performed within 72 hours of a hospital admission are considered part of the inpatient stay and are reimbursed as part of the DRG payment. But many providers have been caught running afoul of the "72-hour window."
Audits by HHS' inspector general's office found the Medicare program may have overpaid as many as 4,600 hospitals by a total of $50 million. But under settlements being reached with hospitals, federal prosecutors expect to recover $120 million, or as much as 21/2 times actual overpayments.
Providers vehemently protest the government's contention that such billing represents fraud. Rather, they say Medicare's own ambiguous rules have led to the billing slip-ups.
Nevertheless, federal prosecutors have settled with 1,500 hospitals across the country so far, netting $48.5 million for the Medicare trust fund as of July 31, said David Barasch, U.S. attorney for the middle district of Pennsylvania in Harrisburg.
Audits by his office have targeted hospitals in some 13 states. In addition, several states are pursuing recoveries on their own, and some are working in conjunction with the Harrisburg office.
Hospitals that forgo a settlement may be charged with violations under the federal False Claims Act. Violators of that Civil War-era legislation could pay damages of up to three times the amount of the false claim plus fines of $5,000 to $10,000 per claim. That's why, by and large, most hospitals are choosing to settle.
Although hospitals these days are being hit with other types of federal audits, the 72-hour-window issue is no less important, says Dan Rode, director of the Healthcare Financial Management Association's Knowledge Network. "It tends to be an issue when it's a state that's being hit with it," he says.
But even in states that haven't been targeted, CFOs are taking pre-emptive action by making sure the appropriate admitting procedures are in place and setting up billing procedures that will capture the problem.
Proclaiming the initiative a success, Barasch dismisses provider complaints that the government's approach has become more vicious as honest billing errors are attacked as evidence of fraud. "I think it means we're doing a better job of rooting out the healthcare fraud that's out there," he says.