Feds accused UW doctors of overbilling $100 million
The attorneys collected the information in their five-year investigation of the UW medical school, then presented it in May 2003 to a federal magistrate and university attorneys during confidential talks to resolve the billing case.
The talks led to a settlement in April in which two billing groups for UW doctors agreed to pay $35 million for overbilling Medicare, the federal health-care program for senior citizens, and Medicaid, the federal-state program for the poor.
Disclosure of the slide show provides the most detailed account to date of the government's evidence, which has never been fully revealed because of the settlement and plea deals with two prominent UW doctors charged in a related criminal investigation.
If the government's calculation of $100 million in overcharges is correct, that means the UW was not required to refund $65 million that went to UW doctors and the medical school.
During the settlement negotiations, the UW contended the government's calculation was wrong, saying the figure was based on deeply flawed methodology and disputed by the university's own expert. The actual overbilling was no more than $3.5 million and may have been closer to zero, based on the effect of underbillings, according to the UW's own slide shows presented to the federal magistrate and provided to The Seattle Times last night.
However, U.S. Attorney John McKay in Seattle said at the time of the April settlement that the government could have sought far more money, but he would not disclose the sum. The payment was reduced to reflect the importance of the UW to the regional medical system, he said.
In a related development yesterday, U.S. District Judge Barbara Jacobs Rothstein ordered the unsealing of five years of court records in a whistle-blower lawsuit that triggered the billing investigation. The suit was filed in August 1999 by Mark Erickson, a former UW billing employee.
Those records show that UW lawyers and government attorneys repeatedly sought to shield the suit from public view, even after the criminal probe was completed, to enhance the chances of reaching a settlement.
Apparent contradictions
The copy of the government's PowerPoint slide show was provided to The Seattle Times by a person familiar with the billing case.
The government slide show, which details multiple examples of improper billing found in the UW's own internal audits, appears to contradict statements by UW medical school Dean Paul Ramsey in June that the overbilling stemmed from "unintentional" errors.
In the slide show, the Justice Department's civil division said a billing compliance program put in place by the UW in 1996 was "effectively eviscerated through the actions of management" and UW physicians.
Although the UW has long maintained that the billing rules were complex and confusing, the slide show listed a litany of manuals, memos, newsletters and other guidelines that had been provided to the university about proper billing procedures.
"There is an abundance of evidence showing University's knowledge of the appropriate standards for billing Medicare and other federal payors," according to the presentation.
The presentation quotes a June 17, 1996, memo by the president and executive director of University of Washington Physicians (UWP) that specifically outlined new billing rules.
"Failure to follow these regulations by any physician would subject UWP and/or the individual physician personally to the risk of civil penalties or criminal prosecution," the memo warned.
Many internal audits conducted by UWP and Children's University Medical Group (CUMG), the billing organization for UW doctors practicing at Children's Hospital & Regional Medical Center, clearly spelled out billing requirements, according to the PowerPoint document.
"In sum, we believe there was ample guidance provided" to both billing groups, and "ample evidence that both ... were aware of the rules for correctly billing services provided by teaching physicians and coding," according to a statement in the slide show.
The UW, in its slide shows in June and October of last year, asserted that internal UW audits the government used to calculate overbilling don't form a reliable basis for estimating overpayments.
The government's calculation defied generally accepted statistics principles, according to the UW's slide show, as well as government auditing standards and Medicare's own rules for determining overpayments.
In its slide shows, the UW maintained its audits were performed to educate its physicians, not to determine overpayments.
Random records
According to the government slide show, the billing groups began conducting internal audits in 1996. Auditors randomly pulled between five and 10 medical records from each physician and compared bills that had been sent to the government.
The goal was to determine whether the university was accurately charging for services doctors had performed, and whether the services were being performed or supervised by a teaching physician. Services performed by residents without a teaching physician's presence are not billable.
Investigators found refunds were never made for billing errors uncovered in some internal audits, according to the slide show.
Justice Department attorneys examined more than 150 internal audits the university had conducted, according to the presentation. The audits involved more than 750 doctors and 6,200 cases.
They discovered that in almost half of the audited cases — 44.6 percent — the university overcharged the government.
More than 900 cases showed that the UW had charged Medicare for services that were more expensive than the service actually performed, according to the presentation. Investigators found that in more than 500 cases, there were no records to show that the service had been performed. The auditors couldn't find patient records for 200 bills.
The presentation cited more than 400 cases that showed no evidence that any teaching physician was present for a billed treatment as required. In other instances, services were dated incorrectly or lacked the notes to prove the service had been performed. The doctor didn't sign the patient's medical record in 79 instances.
"It is clear that the UWP and CUMG knowingly submitted thousands of false claims for reimbursement to Medicare and other government programs," the government alleged in one slide.
Under the federal False Claims Act, the university was potentially liable for three times the amount of damages and at least $5,000 per false claim.
Investigators reviewed each of the cases in the internal audits and calculated the difference between how much the UW had charged and the amount the government should have been charged.
Internal audits
In sum, the federal attorneys calculated, the university had overcharged the government by 30.3 percent based on the small sample the internal audits represented, according to the presentation.
Using that percentage, investigators estimated the UW had overbilled the government by about $100 million, based on the total of $333 million the government had paid the university between 1990 and 2001.
In a statement, UW Medicine spokeswoman Tina Mankowski said last night that the university has taken dramatic steps to improve its billing compliance programs, including the recent completion of a corporate integrity agreement with the federal government that was required under the $35 million settlement. She also noted that the UW Medicine Board is conducting an internal review of the billing matter to determine "lessons learned."
Steve Miletich: 206-464-3302 or smiletich@seattletimes.com
Sharon Pian Chan: 206-464-2958 or schan@seattletimes.com
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