Auditors for the D.C. Department of Human Services, looking for additional revenues for the cash-strapped city government, have found indications that 11 area hospitals received $15.5 million in excess Medicaid reimbursements during the last seven years, according to a preliminary report.
However, spokesmen for some of the hospitals mentioned said they have not been notified of the city's claims, and a representative of one facility said the city appeared to be altering its payment guidelines retroactively.
The largest amount in dispute is $6 million in Medicaid reimbursements claimed since 1974 by Children's Hospital. DHS auditors contend that billings from Children's exceeded federal limits for daily patient costs.
The auditors also have challenged $2.9 million in reimbursements made to D.C. General Hospital, $2 million to Howard University Hospital and $706,000 to Washington Hospital Center.
DHS Comptroller James R. Boyle, who released a summary of the audit to The Washington Post yesterday, emphasized that the findings were preliminary and subject to appeal. The hospitals may negotiate with the DHS to reduce their liability or appeal the audit's findings to the federal government, Boyle said.
Nevertheless, Harold Kranz, a spokesman for Children's, complained late yesterday that the city had disclosed the audit without providing his hospital with a copy of it.
Moreover, Kranz said, the city seemingly was trying to change its reimbursement rules retroactively by insisting for the first time that hospitals adhere to the federal standard for daily cost of Medicaid patient cared.
"During this past six-year period, the D.C. government has never applied nor expected us to follow this federal principle," Kranz said. "Because we are a specialty, pediatrics teaching-research hospital in a major urban center, we would have filed for an exception or an exemption to such a regulation, as has been the case in many states across the country."
"If the D.C. government had meant for us to follow the routine service cost limit principle, why did they continue to review our cost reports and their forms which we filed, and why did they continue to pay us?" Kranz said.
Boyle acknowledged in an interview that part of the confusion over reimbursements for Medicaid, which pays medical bills for the poor, stemmed from the fact that over the years, DHS had been lax in auditing hospital reimbursement claims. That allowed the unjustifiable claims and calculating errors to snowball, he said.
Last spring a task force of about 24 DHS employes and consultants from American Management Systems Inc. was deployed to audit 74 separate Medicaid cost reports submitted by 14 area hospitals, including some reports dating back to 1974.
The D.C. government, which pays 50 percent of the Medicaid costs, would be entitled to half of whatever money was refunded by the hospitals as a result of the audit. The federal government would get the other half.
Boyle said that the Medicaid audit was part of his department's "revenue maximization" policy to bolster the city's coffers.
Should the 11 hospitals eventually repay the entire $15.5 million that the auditors claim they owe, the District's revenues for fiscal 1981, which ended Sept. 30, would be increased by nearly $7.8 million. That is about $2.5 million more than DHS officials had counted on a month ago in proclaiming that they had ended the year in the black.
Moreover, Boyle said, as a result of the task force audit, the city is retroactively billing the federal government for $10 million in welfare payments for children the city had placed in foster care -- about $6 million more than city officials had counted on last month.
All told, the city stands to gain $17.75 million in previously unanticipated revenues. But Boyle and D.C. budget officials cautioned late yesterday that those funds might not necessarily result in an increase in the projected $7 million overall city budget surplus for fiscal 1981.
Last year's Medicaid costs to the city may exceed earlier forecasts, according to Jeffrey Goldman, the city's deputy budget director.
"DHS had some bills presented at the end of September that they had not counted on," Goldman said. "This will balance DHS's budget. It won't give them any huge surplus."
Apart from the DHS's dispute with hospitals over maximum daily charges for services, auditors also challenged some of the nonprofit hospitals' claims for long-term capital or building costs. Under federal guidelines, only for-profit hospitals may make the so-called "return on equity" payment claims as part of their Medicaid reimbursements, according to Boyle.
The other area hospitals cited in the audit for having received more reimbursements than permitted include Columbia Hospital for Women, Doctors Hospital, Capitol Hill Hospital, George Washington University Hospital, Greater Southeast Community Hospital, Hadley Memorial Hospital and Providence Hospital.
The three other hospitals audited -- Georgetown University Hospital, Sibley Memorial Hospital and the Hospital for Sick Children -- either owed nothing or were entitled to additional reimbursements.