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1. Hospital pays $6.2 million over cost reports
2. IG Rehnquist resigns amidst controversy
3. Pay-per-view article: Tips for auditing same-day readmissions
4. Comptroller analysis shows Texas Medicaid overbilling
5. Tip: Gainsharing agreement building blocks

Compliance Monitor, March 13, 2003

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1. Hospital pays $6.2 million over cost reports

A California hospital will pay $6.2 million to settle allegations that it misrepresented costs relating to organ transplants, according to U.S. Attorney Carol Lamb.

Sharp Memorial Hospital in San Diego admits no wrongdoing in settling the case.

Judith King, a heart transplant coordinator at the hospital, introduced the case to government officials when she filed a whistleblower lawsuit in 2000. The suit alleged that Sharp listed employee salaries, medical director fees, lab costs, and square footage in cost reports for its organ transplant program, when the costs were unrelated to organ transplants, according to Lamb. King will receive $1.2 million in the settlement.

The hospital will also enter into a five-year corporate integrity agreement with the Office of Inspector General that includes compliance training and education, and independent reviews of its billing, coding, and cost reporting processes.

Janet Rehnquist announced her resignation as Inspector General of the Department of Health and Human Services on March 4. She will leave the post on June 1, according to her letter to President George Bush.

Rehnquist made no mention of the controversies that have surrounded her office in recent months, including allegations that she improperly delayed an audit of Florida's state employee pension fund, and kept an unauthorized handgun in her desk. The letter cited the OIG's successes over the past year, and indicated that Rehnquist was leaving her post to spend more time with her daughters.

According to the New York Times, Montana Senator Max Baucus, the ranking member of the Senate Finance Committee, was planning to call for Rehnquist's resignation on March 6. Iowa Senator Chuck Grassley, the chairman of the committee and one of Rehnquist's critics, did not have plans to call for her resignation, but did call her resignation the "right step."

Tips for auditing same-day readmissions

Your hospital may try to do its best to treat and discharge patients efficiently. But if you routinely discharge patients too soon, then readmit them later the same day, your policy may not pass muster with the Office of Inspector General and the Centers for Medicare & Medicaid Services . . .

Go to "Tips for auditing same-day readmissions" for the rest of this article. The cost is $10. Subscribers to the online version of Briefings on Coding Compliance Strategies have free access to this article. Subscribers to the print edition can find this article in their March issues.

A $30 steal!

You can read this article—and much more—in the entire March issue of Briefings on Coding Compliance Strategies. Your cost: Six stories for only $30! You'll find tips on testing your HIPAA electronic transactions. You'll also learn about modifiers for aborted and unsuccessful procedures. Choose between a PDF or an HTML version for just $30. Online subscribers have free access to this issue; print newsletter subscribers can find it in their mailboxes.

An analysis of Texas's health care systems shows that the state could be overbilling Medicaid by as much as $732 million, according to a March 7 announcement from Comptroller Carole Keeton Strayhorn.

Strayhorn's office analyzed Texas's Medicaid fee-for-service programs, state employees workers compensation, and the Medicaid Vendor Drug Program. She reported some instances of fraud, including a case manager who had billed Medicaid for 20 hours of work per day. However, most of the overpayments in the fee-for-service program were the result of incomplete documentation, coding errors, and clerical problems.

According to Strayhorn, the state can fix the problem by

• using professional nurse reviewers to study Medicaid claims
• conducting regular audits of the drug program
• working with physician medical advisors to identify services that are not medically necessary
• increasing the number of Medicaid investigators

The state comptroller's office performed the analysis by statutory requirement.

Can a hospital share a percentage of its cost savings with a surgical group, if the savings arise from the changes in the surgical groups' clinical practices? The Office of Inspector General (OIG) addressed the legality of one hospital's arrangement in an Advisory Opinion released in 2001 on gainsharing. In gainsharing arrangements, participating physicians are typically paid a share of a hospital's cost savings, resulting from changes that physicians make in their clinical practices at the hospital.

In the advisory opinion, the OIG proposed the following features of gainsharing arrangements. When used in combination, these provide sufficient safeguards for structuring gainsharing business agreements:

• Specific cost-saving actions and the resulting savings are clearly and separately identified.
• The physicians have provided credible medical support that implementing the cost-saving recommendations will not adversely affect clinical care.
• The payments are based on all services, regardless of the patient's insurance, and they are not disproportionately performed on Federal program patients. The savings are not calculated on the hospital's accounting convention, but on the actual out-of-pocket acquisition costs.
• Objective historical and clinical measures are used to establish baselines, below which no savings accrue to the physician group.
• The hospital and physicians will disclose their involvement in the arrangement to patients whose care is affected by it, and allow patients to review the cost savings prior to admittance.
• The financial incentives under the agreement are reasonably limited in duration and amount.
• The physician group profits should be distributed to the group on a per capita basis to mitigate any incentive for one physician to generate disproportionate cost savings.

Click here to read the entire advisory opinion.

This column was written by Hank Vanderbeek, MPA, CIA, CFE. IRP, Inc.

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