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$3.2B Lawsuit Targets Medicare Underpayments

Cheryl Clark, for HealthLeaders Media, February 24, 2011

The money that would have gone to these underpaid physicians instead is used "to fund windfall overpayments to physicians and practitioners in other counties in those same states." An estimated $620 million was overcharged to beneficiaries, who have to pay 20% of the total charge.

The GPCI boundaries for those fee schedules were first defined in 1966, and have not been updated since, "despite significant changes in demographics (and) despite numerous requests from suppliers and state medical associations for restructuring," De Ghetaldi says. 

The plaintiffs include the counties of Santa Cruz, Sonoma, San Diego, Marin, Santa Barbara, San Luis Obispo, Monterey; a physician, Theodore Mazer, MD; and Wolbers and Poree, a medical corporation.

Of the 38 states, the lawsuit says, California is the hardest hit, with more than $508 million in underpayments to doctors in 10 counties over 10 years. 

But the disparity affects other states as well. For example, doctors in Cuyahoga County, where Cleveland is located, have underpayments of $240 million and is said to be the hardest hit. San Diego County in California is second hardest hit, with underpayments of $225 million.

According to Exhibit 4 of the lawsuit, several states have lost more than $100 million over the last 10 years in addition to California. They are Colorado, $111.8 million; Florida, $271.2 million; Massachusetts, $134.6 million; Minnesota, $205.5 million; North Carolina, $218.5 million; Ohio, $231.6 million; Texas, $195.2 million; Virginia, $185.4 million and Wisconsin, $102.9 million.

The lawsuit points out that federal agencies have issued several reports pointing to the problem. For example, in 2007 the General Accountability Office send a report to the chairman of the Subcommittee on Health of the House Committee on Ways and Means saying that 447 counties, more than 14% of those in the U.S., received payments that were either over or under what they should have been.

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