The largest single-hospital Medicaid fraud settlement to date, signed last week between a New York City hospital and New York Attorney General Eliot Spitzer, isn't likely to help hospitals lobbying to trim the Bush administration's planned Medicaid cuts, health lawyers and consultants said.
Under the 26-page civil settlement announced May 18, 686-bed Staten Island University Hospital and its Community Health Assistance Program Services, or CHAPS, subsidiary will pay $76.5 million in annual installments through 2017, the second time in six years the hospital has resolved Medicaid billing fraud charges with the state.
Michael Spivey, a partner in the consulting firm Spivey Harris Health Policy Group, said that any time there's a large fraud settlement policymakers grumble that there's too much money in the healthcare system and providers are getting too fat. "It doesn't help the cause," Spivey said.
The president of a whistle-blower support organization, Taxpayers Against Fraud Education Fund, said providers have historically disrespected taxpayers. "The cheating of Medicaid has grown so ubiquitous that it's reached a crisis stage," James Moorman said.
Spitzer accused the hospital of "defrauding New York state of millions of dollars through a sophisticated overcharging scheme" and of "taking advantage of a Medicaid program designed to encourage medical care in underserved, usually poor neighborhoods."
New York Medicaid pays a higher premium to satellite clinics in medically underserved and poor areas to encourage providers to practice there. Physicians at those clinics, also known as "part-time clinics" because they are limited to operating 60 hours per month, can receive up to eight times what other doctors are paid for similar services elsewhere. Spitzer charged that the Staten Island hospital and CHAPS abused that, by plotting to unlawfully bill on behalf of 21 of those clinics at the higher rate, even though they knew the clinics operated more than 60 hours per month.
In 1999, the hospital paid $45 million to resolve separate Medicaid overbilling allegations. In its recent settlement, the facility agreed to strict governance and compliance standards and internal audits and maintain the same level of community health services.
"We deeply regret the misconduct carried out by former executives ... that led to this settlement," the hospital said in a news release. "We pledge to adhere to business reforms and practices that will be a national model for compliance and business ethics in the healthcare field."