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Oklahoma U.S. Rep. Dan Boren calls for federal investigation of hospital auditors

Accusing auditors of using overzealous and predatory tactics that are threatening rural hospitals with financial ruin, U.S. Rep. Dan Boren, D-Muskogee, is calling for a federal investigation of Connolly Inc. and other companies that audit hospitals' Medicare and Medicaid billing.
by Randy Ellis Published: August 20, 2012

Accusing auditors of using overzealous and predatory tactics that are threatening rural hospitals with financial ruin, U.S. Rep. Dan Boren is calling for a federal investigation of Atlanta-based Connolly Inc. and other companies that audit hospitals' Medicare billing.

“While I fully support the need to protect taxpayer money and prevent wasteful government spending, I disagree with the extreme practices under which Connolly Inc. operates and the exorbitant fees it is permitted to collect,” said Boren, D-Muskogee. “Connolly Inc. has engaged in what can only be described as overzealous predatory tactics against several of my constituent hospitals with their aggressive, overly critical approach.”

Connolly Inc. officials did not respond to telephone and email requests for comment.

Extreme practices

Mark Rogers, chief executive officer of Pushmataha County Hospital in Antlers, said rural hospitals in Oklahoma and elsewhere will start failing and falling like dominoes in 12 to 18 months if something isn't done to bring extreme auditing practices under control.

“In three to five years we'll either have to throw out or totally redo our state's trauma system because there won't be any rural hospitals left if this program is not stopped,” Rogers said. “This is wrong. It's immoral and the bureaucrats who allowed this and sold this to Congress ought to be ashamed of themselves.”

Rogers said he believes the program targeted large, urban $100 million hospital systems.

“We're collateral damage,” he said.

“No hospital really likes this program,” said Rick Snyder, vice president of finance and information services for the Oklahoma Hospital Association. “All encounter varying degrees of problems with it.”

The Recovery Audit program that is generating the controversy is part of an effort to reduce unnecessary and improper Medicare costs.

The program was authorized by the Tax Relief and Health Care Act of 2006.

To carry out the program, the United States was divided into four regions and a large auditing firm was selected to conduct hospital Medicare cost recovery audits in each region. Connolly Inc. was selected to conduct the audits in the region that includes Oklahoma and 14 other southeastern states.

Rogers and Snyder said the big problem with the Recovery Audit program is that it was set up on a contingency fee basis that allows the auditing firms to keep up to a third of the amount they collect through challenged billings.

The huge financial incentive has prompted auditors to repeatedly question the medical necessity of doctors admitting patients who show up at hospitals with a variety of ailments that are often not easy to diagnose, Snyder said.

Findings overturned

“It's easy to be a Monday morning quarterback and decide later it should not have happened like that,” he said.

Rogers and Snyder cite appeal statistics that show a huge percentage of challenged audit findings are being overturned as proof that the auditors are being overly aggressive.

The American Hospital Association reported a survey of more than 1,800 hospitals revealed that 85 percent of the contested audit findings that made it all the way through the appeals process in the fourth quarter of 2010 were overturned in favor of the provider. Rogers cited data from another source that indicated nearly 75 percent of contested audit findings were overturned in favor of hospitals in the first quarter of 2012.

“Unfortunately, forcing hospitals to resort to the appeals process to right the wrongs of the recovery audit contractors only adds to the bill of the recovery audit contractor program for the hospital,” The American Hospital Association said. “The average cost per appeal is $2,000 and it takes an average of 18 to 24 months to complete the appeals process. Many hospitals choose not to bother with the appeals process as the cost of the appeals process outweighs the benefit of recouping the money originally lost by the recovery audit contractor's determination.”

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by Randy Ellis
Investigative Reporter
For the past 30 years, staff writer Randy Ellis has exposed public corruption and government mismanagement in news articles. Ellis has investigated problems in Oklahoma's higher education institutions and wrote stories that ultimately led to two...
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