California Insurance Commissioner Dave Jones has intervened in a whistleblower lawsuit against Sutter Hospitals for alleged false billing of what Jones said could be "hundreds of millions of dollars" for anesthesia services, his office has announced.

"Sutter's alleged fraud comes at the expense of the private health insurance industry, which initially pays for the services, but, ultimately, this unjust burden falls on the shoulders of California's consumers, who must foot the bill for inflated health care premiums," Jones said in a media release.

"We believe the amount of the fraudulent charges is in the hundreds of millions of dollars, if not more. As Insurance Commissioner, I will use the full resources of this Department to root out insurance fraud in all forms and hold all those who engage in such fraud fully accountable."

Sutter Health posted a statement on its website denying the allegations. "Sutter Health believes this case is without merit and that our anesthesia charges are appropriately billed. We intend to vigorously defend this matter," the statement read in part.

In a 23-page complaint filed in California Superior Court in Sacramento, Jones' office alleges that Sutter falsely used an anesthesia billing code to charge for services and supplies that patients and insurers had already paid for, either through other charges on the hospital bill or through the anesthesiologist's bill.

In some instances, the complaint alleges, the billing code was charged even though no anesthesiologist was in the operating room and general anesthesia wasn't provided. Jones' office is seeking unspecified monetary penalties and damages, and injunctive relief.

The suit was originally filed by Rockville Recovery Associates Limited, a New York-based auditor hired by The Guardian Life Insurance Company of America to identify fraudulent claims filed from 2002-2008. Rockville allegedly discovered the fraud after reviewing bills submitted to Guardian by Sutter Hospitals, including at an onsite audit at one of Sutter's facilities, the complaint alleges.

The defendants are Sutter and New York-based Multiplan, Inc., an intermediary whose agreements with Sutter allegedly prevented insurers from meaningfully auditing Sutter's bills. As a result, health insurers paid inflated claims and passed on the costs to consumers in higher premiums, the complaint alleges.

Based in Sacramento, not-for-profit Sutter Health operates 24 hospitals in Northern California, and accounts for more than one-third of the hospital revenue generated in the region.

In the media release, Jones pointed to a recent Los Angeles Times report that hospitals in Northern California's six most populous counties collect 56% more revenue per patient per day than in Southern California's six most populous counties. The article cited Sutter as the "driving force" of those higher costs.

Sutter Health said it remains "committed to compliant billing and charging practices. Our charges are transparent and available to the public and our contracts with health insurance plans are thoroughly negotiated with these sophisticated companies. Since these rates are negotiated, they cannot be fairly characterized as false after the fact."

Sutter said it has asked Rockville Recovery Associates Ltd. to provide evidence to support the allegations. "To date, they have produced nothing to suggest that any bills submitted by any Sutter hospitals were false or fraudulent," the Sutter statement read. "Our negotiated prices reflect Sutter Health's significant financial commitments to comply with California's costly seismic regulations bring lifesaving technology to the bedside and take care of increasing numbers of patients who are unable to pay."

Healthcare CIOs remain optimistic about getting federal EHR stimulus funding, but a growing number acknowledge that federal reimbursement will come later than they'd originally predicted, a quarterly survey by the College of Health Information Management Executives shows.

One-third of the 200 CHIME members who responded to the March survey said they expect to qualify for stimulus funding under the HITECH portion of the American Recovery and Reinvestment Act within the first year of the program, which began on Sept. 30, 2010.

The survey, however, shows fewer CHIME members believe they will qualify for funding within the first six months of the federal program. Only 7.5% of respondents said they expected to qualify for funding by April 1, 2011, compared with 15% of respondents to the same question in November 2010, and 28% of CIOs who responded to the first CHIME survey in August 2010.

Pamela McNutt, senior vice president/CIO of Methodist Health System and chair of CHIME's Policy Steering Committee, told reporters in a conference call on Wednesday afternoon that the road to meaningful use is proving more arduous than many had thought, as CIOs run into a number of nettlesome problems from IT staff shortages to quality measure snafus.

"It's like anything else, the devil is in the details," says McNutt, pointing to a shift in "top concerns" among CIOs. "In December and last year people were concerned about certification and CPOE (computerized physician order entry). What we have seen now is that 26% of the participants in the survey are now concerned about capturing and submitting quality measures. The quality measures are becoming the sticky wicket for everyone."

For example, McNutt says hospitals are being challenged by new quality measures that must be created directly from EHR instead of through the current practice of having them abstracted and entered into the Centers for Medicare & Medicaid Services website.

The survey found that most CIOs said they expect to achieve meaningful use and incentive funding for Stage 1, and more than 90% believe their organizations will qualify for stimulus funding in federal fiscal years 2011 to 2013, the first years of the stimulus-funding program. Twenty-five percent of CIOs in the March poll said they expect to qualify for stimulus funding by Sept. 30, 2011, which marks the first full year of the program, and 58% expect to qualify during Stage 1, but possibly not until late in federal fiscal years 2012 or 2013.

McNutt says CIOs are confronting two challenges. "One is diving into the actual regulation and also diving into what they are specifically needing to do in their organizations," she said. "They are finding there are a lot of details they need to attend to. While they may have been doing some of the things that are in the measures already, like collecting vital signs, they may not have been collecting them in the right place for them to be reported properly. As people start to find these details out their confidence in obtaining meaningful use very quickly is beginning to wane."

Compounding the angst, McNutt says, is a Catch-22 snag that requires hospitals in Stage 1 to report some quality measures using automated physicians' notes generated in their EHRs. "Automated physician notes are not required until Proposed Stage 2," McNutt says. "You don't have your physicians reporting some of the data you need in a granular fashion, so how are you going to record some of these items that are being currently captured by abstraction? That is difficult. We don't have our physicians on electronic documentation yet in most cases."

A majority of respondents said their organizations had not registered for the federal program, the first step in declaring readiness for the incentive program and demonstrating meaningful use of EHR. A total of 19.5% of CIOs at standalone hospitals have already registered for the program, while 29.5% of CIOs at multi-hospital systems have registered all their hospitals for the program.

Responses from community hospital CIOs suggest that their organizations will need more time to qualify for stimulus funding. A total of 26% of CIO respondents from community hospitals expect to qualify for stimulus funding during the first year of the program, ending on Sept. 30, with 66% seeking to qualify in late FY2012 or FY2013.

The March poll shows that more CIOs are accelerating plans to implement EHRs, with 40.5% in March versus 35.6% in November 2010. Those who believe their current IT strategy and existing applications would help them meet meaningful use slipped to 39.5% in March, compared with 41.9% in November.

• Nearly 90% of respondents still have concerns related to meeting meaningful use requirements.
• Capturing and submitting data for quality measures has become the most frequently cited concern of CIOs responding to the survey.
• Nearly 75% of responding CIOs say they are concerned about legislative proposals to repeal incentive funding, including the EHR Medicare and Medicaid Incentive Program.
• 55% of CIO respondents say they still have lingering questions about the program, nearly six months after the Oct. 1, 2010, start of the stimulus funding program.

Cogent Healthcare and Hospitalists Management Group are merging to form the largest private hospitalist company in the nation, the companies declared in a joint statement Wednesday.

The new company -- to be called Cogent-HMG -- will be headquartered in Nashville, TN, and will have nearly 1,000 affiliated hospitalists and extenders practicing at more than 100 healthcare facilities in 27 states, the two companies announced.

Financial terms were not disclosed.

"This combination is a direct result of our strategic outlook for the future of healthcare in the U.S.," Stephen Houff, MD, founder/CEO of Canton, OH-based HMG, said in the joint statement.
Houff, who will become CEO of the combined company, said the merger will create "a stronger platform to help hospitals meet healthcare reform demands mandating greater transparency, quality and cost efficiency."

"The combined company will focus on creating closer alignment between hospitals and physicians, which will be necessary in light of reimbursement changes and ultimately accountable care. Our scale will allow for the significant investment in clinical support, physician recruiting and technology to position us to better help our clients adapt to evolving market needs," Houff said.

HMG partners with small- to medium-sized hospitals in suburban and rural markets, while Cogent, based in Nashville, TN, partners with medium- to large-sized hospitals. 

"This is a natural and complementary partnership that will enable our two similarly-sized companies to benefit from each other's expertise and success," said Gene Fleming, president/CEO of Cogent, who will be executive chairman of the new company.

"Both Cogent and HMG have adopted a strategy of partnering with hospitals to build and manage high-performing, on-site programs," Fleming said in the joint release. "We have historically focused on different segments of the hospital market and each of us has a proven ability to deliver value for our clients in hospital medicine and beyond. The merger will allow the combined company to better serve the full spectrum of hospitals and healthcare systems across the U.S."

While Cogent-HMG will be headquartered in Nashville, it will maintain offices in Canton.  The leadership teams of the two companies will be combined, and specific assignments will be announced in the future. The merger is expected to be finalized this spring.

See Also:
Hospitalist Outsourcing Gaining Favor Among Hospital Chiefs
Getting Hospitalist Compensation Right
A Better Way to Pay Hospitalists
6 Tips for Measuring Hospitalist Program Performance

Chronically ill Medicare patients spent fewer days in the hospital and received more hospice care in 2007 than they did in 2003. Patients who were hospitalized, however, got more aggressive, intensive, and costly care, according to a new Dartmouth Atlas Project report on end-of-life care.

The study -- Trends and Variation in End-of-Life Care for Medicare Beneficiaries with Severe Chronic Illness – was released Tuesday and found that Medicare patients diagnosed with severe chronic illness were less likely to die in a hospital and more likely to receive hospice care. They also had many more visits from physicians, particularly medical specialists, and spent more days in ICUs.

"In addition to its effects on patients' quality of life, unnecessarily aggressive care carries a high

financial cost. About one-fourth of all Medicare spending goes to pay for the care of patients in their last year of life, and much of the growth in Medicare spending is the result of the high cost of treating chronic disease," said David C. Goodman, MD, lead author of the report, in a media release.

"It may be possible to reduce spending, while also improving the quality of care, by ensuring that patient preferences are more closely followed," said Goodman, a co-principal investigator for the Dartmouth Atlas Project, and director of the Center for Health Policy Research at the Dartmouth Institute for Health Policy and Clinical Practice.

The report documents trends from 2003 to 2007 in the use of medical resources to treat Medicare patients at the end of life at hospital referral regions and at 94 academic medical centers.

Geography continues to play a huge role, the report found, noting that care patients received in the months before they died depended largely on where they lived, and widespread variations persist. Even at academic medical centers, patients' end-of-life experiences differ greatly. Most academic medical centers substantially changed the intensity of the end-of-life care they provided from 2003 to 2007, but not in the same direction. Some provided more. Some provided less.

• From 2003 to 2007, the percentage of chronically ill patients dying in hospitals and the average number of days they spent in the hospital before their deaths declined in most parts of the country and at most academic medical centers. In 2003, 32.2% of patients died in a hospital; by 2007, the rate had dropped to 28.1%. In 2007, the highest rates of hospital deaths were in and around New York City, including Manhattan (45.8%), East Long Island (41.9%) and the Bronx (39.9%). Chronically ill patients were far less likely to die in a hospital in Minot, ND (12%), Fort Lauderdale, FL (19%) and Portland, OR (19.6%).
• For patients using academic medical centers for most of their care, rates of hospital deaths also dropped. Several hospitals that had among the lowest rates in 2003 saw substantial decreases over the five-year period; one example is University of Utah Health Care in Salt Lake City, where the rate dropped from 31.5% to 21.3%. In comparison, in 2003, UCLA Medical Center and the Medical College of Georgia in Augusta had very similar rates, at 39.1% and 39.7%, respectively. Over five years, their rates moved in opposite directions. UCLA joined medical centers with the highest rates at 45.5%, while the rate at the Medical College of Georgia dropped to 28.7%.
• Overall, the average patient spent slightly fewer days in the hospital during the last six months of life in 2007 than in 2003. The national rate dropped from 11.3 to 10.9 hospital days per patient. In 2007, chronically-ill patients in Manhattan spent, on average, 20.6 days in the hospital during their last six months of life, almost four times more than patients in Ogden, UT, where the average was 5.2 days.
• Those academic medical centers where patients spent less time in the hospital in 2007 than in 2003 included the University of Texas Medical Branch Hospitals in Galveston (-5.0 days), the University of Iowa Hospitals and Clinics in Iowa City (-5.0 days) and Tufts-New England Medical Center in Boston (-4.6 days). Ten academic medical centers had increases of at least two days, including Hahnemann University Hospital in Philadelphia (+6.8 days).
• Chronically ill patients were significantly more likely to be treated by 10 or more doctors in the last six months of life in 2007 than they were in 2003, as the national rate increased from 30.8% to 36.1%. In 2007, patients in Royal Oak, MI received the most intensive care by this measure, with 58.1% of patients seeing 10 or more doctors in the last six months of life. Other regions with high rates included Ridgewood, NJ (57.6%) and Philadelphia (57.2%). Regions with low rates included Boise, ID (14.2%), Salt Lake City (15.0%) and Medford, OR (16.4%).
• From 2003 to 2007, among the 35 academic medical centers for which data are available, 22 had increases in the percentage of patients seeing 10 or more doctors in the last six months of life. Emory University Hospital saw the largest growth in this rate, from 40.4% to 63.2%, while the University of North Carolina Hospitals in Chapel Hill had the largest decrease, from 45% to 35.2%. In 2003, the likelihood that a patient at Emory University Hospital would see 10 or more doctors was similar to that for a patient at the University of North Carolina Hospitals. Over the next five years, the percentage of patients seeing 10 or more doctors increased 22.8 percentage points at Emory, while the percentage dropped 9.8 percentage points at UNC Hospitals.

"The differences observed across regions and academic medical centers in the approach to caring for patients with chronic illness underscore important opportunities to learn how to improve end-of-life care," said Elliott S. Fisher, MD, report author and co-principal investigator of the Dartmouth Atlas Project, in a media release. "While current trends demonstrate that change is occurring in many regions and at many institutions, it is not always in the direction that patients may prefer."

Fisher, who is also the director of the Center for Population Health at the Dartmouth Institute for Health Care Policy and Clinical Practice, said more work needs to be done "to ensure that future variation in care reflects the well-informed preferences of patients."

The researchers said variations in the treatment of chronically-ill Medicare patients depend largely on the systems of care within different regions and hospitals. For example, declines in the rates of death in a hospital and of death associated with admission to intensive care may also be evidence of attempts to provide care that aligns more closely with many patients' preferences. But not all hospitals changed at the same pace.

Furthermore, the number of ICU days in the last six months of life increased both nationally and in most hospitals and regions; so, too, did the amount of physician labor used.

The full report may be viewed here.