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May 28, 1998

Trustees OK agreement to have practice plans pay $17 million to settle charges of overbilling

The Pitt Board of Trustees executive committee on May 15 unanimously ratified an agreement through which School of Medicine clinical practice plans will pay $17 million to the U.S. Department of Justice to settle charges that University physicians overbilled Medicare and Medicaid between 1990 and 1996.

UPMC Health System has pledged to reimburse the practice plans for the $17 million, as part of funding the planned University of Pittsburgh Physicians (UPP) unified practice plan.

UPP will draw together the 18 currently independent plans affiliated with Pitt's medical school.

'Even though the University is not contributing any money to the settlement, Pitt is a party to this agreement because, during the time of the disputed billing procedures, there was a contract between Pitt and the practice plans. Also, Pitt faculty were involved as members of the practice plans," Assistant Chancellor Jerome Cochran said following the 10-minute public meeting of the trustees' executive committee.

"The government required the boards of all of the parties to the agreement – the University, the UPMC Health System and the 18 practice plans – to ratify [the settlement agreement]," Cochran said.

Pitt's board was the last to ratify the settlement, which was announced in March.

The independent audit that led to the settlement showed no evidence of fraud or inadequate care of patients, according to the government and Pitt.

Pitt commissioned the audit in response to an investigation that the U.S. Department of Health and Human Services began in June 1996 to determine whether physicians at academic medical centers were following Medicare's rules for billing for patient care services, and whether those services were documented properly.

So far, 49 of the country's academic medical centers are in various stages of such audits.

According to Pitt and UPMC administrators, government regulations for patient billing at academic medical centers were ambiguous and unclear prior to a 1996 revision.

As part of the ongoing negotiations to form UPP, officials from Pitt, the University-affiliated practice plans and UPMC Health System are working out details of a new financial relationship through which UPMC will absorb UPP.

Medical professors opposed to the UPMC takeover have suggested that the health system's reimbursement of UPP for the $17 million settlement is part of a scheme to buy approval of the takeover from Pitt and practice plan leaders. Cochran denied that charge.

"There is absolutely no connection between this [settlement] agreement and the creation of UPP," he said.

Thomas Detre, senior vice chancellor for Health Sciences, argued that the government's charges of overbilling help to show why UPP is needed.

"In its investigation of Medicare overbilling, the federal government zeroed in on institutions like Pitt and the University of Pennsylvania where there are a number of independent practice plans rather than a unified plan – one reason being, it is more likely that you will find billing errors when you have various entities billing patients for care," Detre said.

"Under our current system, it is rare that a patient at one of our [UPMC-affiliated] hospitals will receive treatment from just one practice plan," he said. "The anesthesiologist's practice plan will send you a bill, the internal medicine specialist's plan will send you a bill, and so on. But under a unified plan, you receive just one bill."

ã Bruce Steele

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