University of Pennsylvania Health System last week became the first hospital system to settle federal charges that it falsely billed Medicare for a specific form of psychiatric treatment.
It wasn't the first time the four-hospital, 1,457-bed Philadelphia-based system had broken undesirable legal ground. In 1995, UPHS paid $30 million as the first system to settle charges that it improperly billed Medicare for the work of faculty physicians under the government's national Physicians at Teaching Hospitals probe.
Three years later, UPHS' 325-bed Presbyterian Medical Center in Philadelphia became the fourth hospital to settle allegations that it overbilled Medicare for pneumonia patients as part of the fed's national pneumonia upcoding investigation; the hospital paid $535,000.
In spite of the investigations, UPHS spokeswoman Rebecca Harmon said the system does not feel unfairly singled out by the government.
"There are any number of other providers reaching settlements with the government," Harmon said. "We don't believe anyone is receiving special attention."
Nevertheless, the health system might have fared better had it not been in the Eastern District of Pennsylvania, where Assistant U.S. Attorney James Sheehan, who heads the civil division, has pioneered some of the nation's biggest national healthcare fraud investigations (April 3, p. 36).
Last week's settlement will cost the system another $12 million.
In a written statement, UPHS denied the allegations and said most of the patients in question enrolled before it acquired Presbyterian in July 1995 from the Presbyterian Medical Center Foundation. Once UPHS learned of the problem, it suspended billing and told the government.
As in the previous PATH and pneumonia upcoding settlements, UPHS admitted no wrongdoing.
HHS' inspector general's office accused UPHS' Presbyterian of overbilling Medicare for the partial hospitalization of beneficiaries who needed mental health treatment.
Medicare pays providers for partial hospitalization for the intensive day treatment of mentally ill patients who require more than occasional conventional outpatient therapy but not inpatient hospitalization. Patients are treated for up to eight hours per day and then released.
Peg Hutchinson, assistant U.S. attorney for Philadelphia, said the government's concern generally and with Presbyterian specifically is the ineligibility of Medicare beneficiaries for the services being provided.
A 1998 inspector general's report said more than 90% of $229 million in Medicare claims paid to community health centers for partial hospitalization were improper (Oct. 12, 1998, p. 26).
In March a second report said 60% of $224 million in acute-care hospital claims for outpatient psychiatric services were faulty (April 3, p. 28).
HHS' inspector general's office since 1998 has been investigating an undisclosed number of hospitals nationwide.
The specific allegations against Presbyterian stemmed from a civil whistleblower fraud lawsuit that John Saunders, a former mental health counselor at the facility, filed against the hospital in U.S. District Court in Philadelphia.
Saunders alleged that Presbyterian violated Medicare rules by recruiting patients from at least 10 local nursing homes for the program, overenrolling patients in group therapy sessions and including ineligible patients who were unable to understand or even sign their own treatment plans. The hospital allegedly billed as group therapy the time patients spent watching television and attending birthday parties.
"It was adult babysitting, which is a fine thing, but not something that should have been paid for by Medicare," said attorney Marc Raspanti, who represented Saunders.
The U.S. Justice Department joined the suit in 1999. The settlement resolves Saunders' lawsuit.
Of the $12 million civil monetary penalty announced last week by HHS' inspector general's office and the U.S. attorney's office in Philadelphia, $3 million is for repaying Medicare overpayments and $9 million is for penalties.