11/15/09 — Audit: Hospital overcharged State Health Plan

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Audit: Hospital overcharged State Health Plan

By Phyllis Moore
Published in News on November 15, 2009 1:50 AM

Wayne Memorial Hospital officials responded Satur-day to reports that the hospital was one of six in North Carolina cited in an ongoing audit of payments made to the State Health Insurance Plan.

The six hospitals allegedly owe the state more than $2.5 million for overcharges to the health plan for claims filed by teachers and other state employees. Of those on the list, Wayne Memorial was reported to owe the most, at $1 million.

Health plan officials said the audit findings released Friday are preliminary, and 55 hospitals remain under review. So far, the inquiry has identified 30 hospitals that incorrectly charged the health plan, which covers more than 661,000 state employees, teachers and retirees. The audit is also looking at billings from Cherry Hospital and other psychiatric hospitals across the state.

The health plan began the review in March. Officials said hospitals did not properly notify them of rate increases for outpatient care, which they said might be a violation of the terms of their agreements with the state health plan.

The state attorney general's office sent letters to the six hospitals seeking refunds.

Becky Craig, vice president of finance and CFO of Wayne Memorial, said she was notified Friday, adding that the discrepancies stem from rate changes dating back to 2003.

"We're contesting it," she said. "We have not actually met face to face with (anyone). We will meet with them and try to see if we can come to some resolution."

Bob Wilson, the hospital's attorney, is also involved, she said.

"We're contesting it, but we don't think we owe it," Mrs. Craig said.

Amy Cain, director of public relations, said this is not the first time a story about concerns about the health plan's finances has surfaced.

"It's ongoing," she said. "Several months ago, there were lots of stories about the state health plan struggling financially. That's kind of what spawned this. We knew that the state health plan was reviewing all of its records."

It is important to realize, she pointed out, that the situation did not erupt overnight, or even in one month or six months, but rather over the course of several years.

"The difficulty is, for us as a hospital, trying to make people understand it was not an intentional thing," she said. "It was the whole health insurance thing, which is extremely complicated and companies have different rate plans and different agreements and so forth. It was clearly an oversight on the part of the hospitals, but it's interesting to me that so many hospitals had that same oversight."

There are so many layers to the health insurance industry, Ms. Cain added, and many players, making finding errors years after the initial oversight difficult.

"When I'm trying to explain this to an employee, I say, 'Imagine going to McDonald's and buying a Happy Meal and you give them 20 bucks. Six days later, you realize you gave them 20 bucks (and didn't get change) and it's hard for McDonald's six days later to know what happened,'" she said. "That's really oversimplifying things but that's kind of what happened.

"The thing is, Wayne Memorial and everybody else will do whatever it takes to make it right so that everyone is happy."

Whether the hospital was in error remains to be seen as the audit process continues to unfold. But certainly, Ms. Cain said, there's no intent to deceive on the part of any of the hospitals.

"There's definitely transparency and wanting to do the right thing," she said.

One reason the local hospital's figure might be markedly higher than others on the list, she said, can be attributed to the number of state employees and retirees in Wayne County -- including teachers, Cherry Hospital, O'Berry Center, plus correctional facilities.

"We have a lot more state employees than your typical county," she said. "At one point, Cherry used to have 1,500 employees and so did O'Berry. Once upon a time we used to have 6,000 to 8,000 state employees, not counting teachers."

--The Associated Press contributed to this story.