- The Washington Times - Saturday, May 17, 2003

RICHMOND (AP) — Federal officials say Virginia’s two largest teaching hospitals overbilled the government for more than $10 million and should be made to pay it back.

The U.S. Department of Health and Human Services’ Inspector General’s Office released reports on Virginia Commonwealth University’s Medical College of Virginia Hospitals and the University of Virginia Medical Center that charge the hospitals with overcharging the federal Medicaid program for treating indigent patients.

The reports contend that the MCV owes the government $6.3 million and the University of Virginia $4.8 million for the overbilling, which was paid in the 1997 fiscal year.

The reports said the two hospitals improperly included payments to doctors in their cost of caring for indigent or uninsured patients.

However, officials for both hospitals and Virginia’s Medicaid program told the Richmond Times-Dispatch that the report’s conclusions are wrong and, if carried out, would jeopardize the hospitals’ ability to provide medical care for people without insurance or other ways to pay.

“I don’t know how you can continue to deliver the care” without accounting for the doctors’ costs, said Dr. Sheldon M. Retchin, senior executive vice president and chief operating officer of the VCU Health System, which operates MCV Hospitals.

The inspector general found that MCV physicians were paid $12.3 million in fiscal 1997, with the federal and state governments each paying about half the bill. At the University of Virginia, the inspector general found that the hospital had billed the government for doctors’ fees of $2.8 million that year.

Federal law says the Medicaid payments in question can be made to only hospitals for hospital expenses, not to doctors, according to the reports.

The inspector general also found that the MCV had claimed indigent-care costs of $80.8 million in 1997 and $71.6 million in 1998, even though many of the patients involved had health insurance. The hospital also claimed bad debts on accounts that had health-insurance coverage.

VCU officials said they billed the government only after determining whether the patient had the ability to pay all or part of the debt. Making that determination can take years, officials said.

The officials also said they eliminated the cost of caring for patients who had insurance. In fact, their analysis found that the hospital understated its costs, based on the inspector general’s approach.

University of Virginia officials not only objected to the study’s conclusions, they also said the inspector general did not have the authority to investigate.

VCU officials did not question the propriety of the audit, which was part of a national investigation of teaching hospitals to determine how they spend federal money for indigent care. But VCU officials do not accept the inspector general’s conclusion that paying physicians for their professional services violates the program rules.

Neither do state Medicaid officials, who say both hospitals comply with the state’s Medicaid plan.

“Philosophically and conceptually, it’s just really unreasonable,” said Manju S. Ganeriwala, deputy director of administration and finance at the Virginia Department of Medical Assistance Services.

The universities objected strongly to draft reports issued by the inspector general late last year. They will have another chance to make their case to the Centers for Medicare and Medicaid Services, which administers the Medicaid program. The agency will decide whether to accept the inspector general’s recommendations.

State and university officials say there is no other choice for reimbursing physicians for indigent care. Indigent patients have no insurance, including Medicare or Medicaid.

“There’s one funding source,” said Stan Fields, director of program integrity at the state Medicaid office. He said it does not make sense to pay for medical care without including the cost of the doctor. “You can’t put a patient in a hospital without a physician.”

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