The “improper payments” that are bleeding an estimated $23 billion a year from Medicare don’t go just to crooks perpetrating fraud, but to legitimate businesses like hospitals and clinics that are breaking the rules.
One investigation found that a stunning 89 percent of hospitals nationwide were double-billing for inpatient care. The practice doesn’t involve criminal fraud, but gaming of the system by respected institutions, government officials say.
Industry critics say pressure for profits is driving providers over the line.
“Pushing the envelope to maximize reimbursement and financial gain is a much bigger problem than outright scams, hoaxes and gimmicks,” said Arthur Caplan, a medical ethicist at the University of Pennsylvania. “Medical ethics are slowly being undercut by business ethics, and in business, pushing to the limit of profits is not considered a sin; it’s considered a virtue.”
But what the government calls abuse, the hospitals say is understandable error due to complex rules. Indeed, hospitals are complaining because the government is using the Justice Department to collect overpayments and fines.
Called “The 72-Hour-Window Project,” the investigation targets double-billing for diagnostic tests that occur during the 72 hours before a patient’s hospitalization. It is a small slice of Medicare’s problems, which include such common practices as inflating prices and billing for unnecessary services. But it is a telling example of how hard it can be to stop what the government calls “improper payments” due to fraud, abuse, waste or error.
The project had its origins in an audit of hospitals nine years ago by the inspector general’s office of the Department of Health and Human Services, which is Medicare’s parent agency.
A total of 5,233 hospitals - including almost every community hospital in the country - participate in Medicare’s fixed-payment plan for inpatient care. That payment varies according to the illness or type of surgery, but the rules require the fixed price to include any diagnostic tests in the 72 hours before hospitalization.
If a patient is admitted for a hip replacement, for example, Medicare’s fixed price is supposed to cover any blood tests, X-rays or imaging scans in the previous 72 hours.
However, the audit found that the overwhelming majority of hospitals were billing separately for pre-admission tests, while also collecting the fixed payment for inpatient procedures.
The inspector general eventually identified 4,660 hospitals - 89 percent of the total - that had submitted separate bills.