A new report reveals that the more than 100 hospitals to be spun off by Columbia/HCA Healthcare Corp. in the chain's restructuring experienced a huge jump in serious pneumonia cases billed to Medicare while seeing a sharp drop in less severe cases.
Medicare reimburses hospitals more for the more severe cases of pneumonia, and the government is conducting an investigation of hospitals nationwide to determine whether they inappropriately switched billing codes on pneumonia cases to increase their Medicare payments.
Federal investigators have subpoenaed billing records of pneumonia patients at some Columbia hospitals as part of the government's ongoing fraud investigation of the Nashville-based chain and its executives.
It's unclear whether there's a connection between what hospitals Columbia is spinning off and the fraud investigation of the company.
Columbia executives have not reviewed the new report and declined comment on its findings.
Data Advantage Corp., a Louisville, Ky.-based research company, prepared the report, which includes a detailed financial and utilization profile of 103 of the 108 hospitals to be spun off by the chain as part of its restructuring plan announced last month (Nov. 24, p. 2).
According to the report, the number of complex pneumonia cases billed to Medicare by the spinoff hospitals rose nearly 32% to 9,508 last year from 7,212 in 1994.
Over the same period, the number of simple pneumonia cases billed to Medicare by the same hospitals dropped 28% to 5,074 last year from 7,055 in 1994.
Specifically, simple, or viral, pneumonia is billed to Medicare as DRG 89, with an average payment of $4,535 per case in 1995. Complex, or bacterial, pneumonia is billed to Medicare as DRG 79, with an average payment of $7,210 per case, according to government figures.
Nationally, the respiratory caseload trend followed Columbia's lead but far less dramatically.
According to HCFA, the number of higher-paying bacterial pneumonia cases billed to Medicare under DRG 79 went up 18% to 240,803 in 1996 from 203,478 in 1994. Meanwhile, the number of lower-paying viral pneumonia cases billed to Medicare over the same period dropped 4.5% to 432,939 from 453,621.
Data Advantage didn't review the Medicare billing records of the 232 hospitals that Columbia intends to keep in the restructuring.