The prestigious University of Chicago Hospitals has become the latest teaching organization targeted in a federal probe of fraudulent billing.
The probe stems from a qui tam, or whistleblower, lawsuit filed in December 1996 by Al Reppine, an oncology nurse at the University of Chicago Hospitals. The lawsuit charges that the system routinely upcoded Medicare and Medicaid billing and billed government payers for the services of attending physicians when resident physicians had performed them.
The latter charge would seem to fall under the umbrella of the ongoing nationwide Physicians at Teaching Hospitals, or PATH, investigation by HHS' inspector general's office. But in an unusual turn, the federal government and the Illinois Department of Public Aid have decided to pursue only the upcoding charges, not the PATH charges, said Linda Wawzenski, assistant U.S. attorney for the Northeastern District of Illinois.
The government's December 1998 amended complaint alleges the 514-bed, four-hospital system regularly upcoded billing for certain Medicare and Medicaid outpatient visits. Between 1991 and 1997, the system often charged for complex or comprehensive exams regardless of the exams performed, unjustly reaping higher reimbursements, the government charges.
"During this time period and based on statistically valid random sampling, we allege that up to 40% of these outpatient bills were upcoded," Wawzenski said.
Government officials declined to quantify the allegedly fraudulent billings or the damages sought, saying that the information had not been unsealed.
The government charged the university system in a civil lawsuit under the False Claims Act, which allows triple damages and a maximum penalty of $10,000 per alleged instance of fraud.
The government lawsuit also alleges that in at least two hospital departments doctors were given only the option of using the two highest codes for billing Medicare outpatient services.
The PATH investigation has reaped more than $68 million in settlements since it was launched in 1995.
Reppine said the Chicago system allowed attending physicians to bill for exams performed by residents or other attending physicians. "(It) billed the U.S. government for millions and millions of dollars in overpayments for phantom examinations for at least the period of December 1990 through December 1996," he said in the suit.
Reppine charged that after a similar investigation at the University of Pennsylvania Medical Center became public in 1996, an assistant director of oncology at University of Chicago Hospitals allegedly directed faculty physicians to "burn their appointment books, thereby making it harder to compare examination records with attending physician schedules." UPMC later paid $30 million to settle its case.
The University of Chicago Hospitals and the government said they are prepared for trial, which is tentatively slated for November before U.S. District Judge Blanche Manning in Chicago.
Susan Scher, vice president and general counsel for the system, denied all the allegations. "(Government investigators) have found no evidence of fraud. They, with our complete cooperation, have been looking at our files for two years," she said. "And in the vast majority of cases they found our records were accurate."
She said the government is trying to apply Medicare billing regulations that were not in effect or had not been clarified at the time.
Scher described Reppine's lawsuit as a PATH audit. And she vehemently denied Reppine's charge that hospital department heads directed physicians to burn their appointment books, exposing doctors to charges of obstructing justice. "That's an outrageous statement, and it is not true," she said.
The system is no stranger to fraud investigations or settlements.
A system facility, Weiss Memorial Hospital, paid $3.4 million in November 1998 to settle charges that it had billed Medicare for improperly upcoded pneumonia diagnoses. The university hospitals allegedly billed for more-severe bacterial pneumonia diagnoses than were warranted to get higher reimbursement.
The system also paid $1 million in 1996 for alleged Medicaid overbillings to the state department of public aid. And, along with a former University of Chicago physician, the system paid $250,000 in fines for allegedly misusing a federal research grant.