DHMC settles billing errors suit from 2007

by Sam Rauschenfels | 4/27/11 10:00pm

by Aki Onda and Akikazu Onda / The Dartmouth

The state of New Hampshire will receive $61,541, the state of Vermont will receive $80,396 and federal health programs will receive $1.5 million, according to the Department of Justice press release.

Former DHMC physician Thomas Prendergast, who initially suspected that DHMC had improperly billed federal health care programs, will receive $334,440 out of the federal health program's portion of the settlement money, according to the Department of Justice release. Under the terms of a qui tam complaint, which allowed Prendergast to "file a civil complaint on behalf of the United States," the "whistle blower" is entitled to a portion of the settlement received by the government, according to the Department of Justice press release.

Prendergast did not respond to requests for comment by press time.

DHMC began a rigorous internal investigation in 2007 after Prendergast made a number of "observations and allegations" concerning DHMC billing practices and filed a formal complaint, David Evancich, vice president of public affairs, marketing and planning at DHMC, said in an interview with The Dartmouth.

After senior administrators at DHMC learned of the reported issues and discussed with Prendergast the problems he had observed, DHMC internally audited bills, conducted employee interviews and compared "care process" bills with their equivalent "clinical process" bills, Evancich said. The subsequent investigation mirrored that of a government investigation, according to Evancich.

The investigation revealed inconsistencies in "coding and billing" across DHMC departments, Evancich said. The majority of the complaint addressed the allegation that DHMC violated federal regulations by allowing billing for procedures performed by residents without proper supervision by physicians. Residents are unable to bill for procedures without the presence of attending physicians who must sign off on the bill, Evancich said.

"We learned enough through that internal investigation that we should report to the government what we learned," he said.

The government then launched its own investigation, with which DHMC cooperated fully. DHMC even received federal recognition for its "cooperation and corporate citizenship," the DHMC release said.

Following the investigation, DHMC began a "broad and deep education process" to inform employees of proper procedure, Evancich said. This process included a mandatory online "e-learning module," training for all employees involved with billing or coding and a realignment of some billing and coding responsibilities, he said.

"We tightened everything up and made sure everyone got the education they needed," he said.

The $2.2 million settlement came from a general reserve fund "established as an accounting liability" and was maintained regularly to cover unanticipated third-party bills, Evancich said. The reimbursement covers overpayments made to DHMC and associated penalty fees, according to Evancich.

Since the payment money will be deducted from a reserve fund, the settlement will not have a "direct impact" on DHMC's future budget, Evancich said.

Although DHMC agreed upon the settlement in part to ensure it paid the proper restitution, the issues raised will negatively impact DHMC's reputation, Evancich said. Administrators held a meeting last week to address the billing errors and reiterate their commitment to avoiding such mistakes in the future, he said.

"People need to trust that we'll provide good care and that their bill will be accurate," Evancich said.

Despite initial allegations of fraud on the part of DHMC, no evidence supporting those claims was ever found during the investigation, Evancich said.

"It was demonstrated that [the issue] was improper billing," he said. "[DHMC's] commitment to make sure that nothing like this ever happens again is very strong."

DHMC administrators are eager to move past the matter, Evancich said.

"It's been a long, draining experience," he said.

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