Medical Center reaches settlement

Staff Report

The University Medical Center and the Health Services Foundation,
the physician group practice that handles billing for U.Va. doctors, has reached a $3 million settlement with the federal Justice and Health and Human Services departments and Virginia’s Department of Medical Assistance Services. The settlement, announced Nov. 8, is the result of past billing errors made by the Medical Center and HSF for federal reimbursements for facility costs — rent, electricity, supplies and salaries for nurses and support staff — at U.Va. outpatient clinics.

Prior to the government’s clarification of the rules for payment of these costs, facility fees were billed by HSF in some instances and by the Medical Center in others. In a small percentage of cases, fees were billed inadvertently by both the Medical Center and HSF. Effective Dec. 1, 1999, the Medical Center agreed to be the sole agency to bill for facility fees at most outpatient clinics.

Although the Medical Center and HSF will pay $3 million in settlement for incorrectly billed facility fees, the Medical Center now is eligible to resubmit corrected billings for these fees and is expected to recover a like amount.

“The problem resulted from a lack of billing coordination between the two systems,” said Leonard W. Sandridge, U.Va.’s executive vice president and chief operating officer. “As a result, both the Medical Center and HSF have made significant changes, including a more sophisticated computer system that links data from the two organizations and aggressive training programs for administrators and billing staff.”

The settlement ends a review process begun in August 1999 at the request of the Justice Department, and covers more than 71û2 years of billings, from July 1, 1992, through Dec. 31, 1999. During that period, total Medical Center billings for Medicare and Medicaid outpatient visits were approximately $831 million; the $3 million settlement represents less than 1 percent of total outpatient billings.

As part of the settlement agreement, the Medical Center has entered into a three-year corporate compliance agreement with the government. Under the agreement, the Medical Center will increase the scope and frequency of its education for employees on compliance requirements, especially those who process claims for federal health care programs. To date, more than 4,000 Medical Center employees and doctors have completed compliance training.

The Medical Center’s compliance program complements the existing compliance office at HSF, which has a staff of seven full-time employees.