Southern Maryland Hospital Center, which calls itself the "Big Daddy" of hospitals in southern Prince George's County, has overcharged patients at least $1.8 million since opening its doors last November, according to auditors for Maryland's health services regulatory commission.
The auditors found that the 300-bed facility in Clinton has been billing surgical patients for an extra hour of surgery, marking up supplies sold to patients by 240 percent, overcharging by 30 percent for some laboratory tests, and charging for services the hospital was not authorized to provide.
Southern Maryland's lawyer, Gary Alexander, disputed many of the auditors findings and said the hospital was undercharging for several services. Nevertheless, he added, the facility has altered many of the billing procedures critized by the auditors, at least until a public hearing can be held.
"It is important to point out it's a new hospital," Alexander said. "This is sort of a shakedown cruise. There have been many people (hospital employes) who led us to believe they knew what they were doing and, in fact, they really didn't know how to comply with these regulations."
The commission, which sets rates for every hospitals in the states, directed its staff to investigate Southern Maryland's charges last month after discovering that the hospital had failed to submit quarterly financial reports. These are required by the regulators to determine whether the facility's rates are correct.
In the investigation, auditors found:
The hospital had been billing surgical patients an extra $276 for an hour of preparation, even though the over-all operating room rates set by the commission cover such services. The auditors estimated that the hospital overcharged surgery patients $1.3 million.
Two services provided by Southern Maryland-renal dialysis and a nursery intensive care unit-never received approved rates from the commission. Moreover, the hospital never received approval from another state agency to provide a nursery intensive care unit.
The hospital charged nearly 30 percent more for electrocardiograms ($16 instead of $11.44) than permitted by the commission. Patients also were charged as much as 20 times more than they should have been for nuclear medicine testing.
Medical and surgical supplies were marked up 240 percent instead of the 120 percent allowed by the commission.Auditors estimated overall extra charges at $200,000, althoughthey were handicapped because they said the hospital lacked good patients record.
Emergency room patients were billed for a "flat charge" ranging from $5 to $7.50 in violation of Medicare regulations forbidding charges for nonspecific services. The hospital also billed them for physician fees, even though under commission rules, doctors are expected to send out individual bills.
It is illegal in Maryland for any hospital to charge rates other than those set by the state commission. The commission, which has been regulating hospitals since July 1975, has the power to penalize wayward hospitals by lowering their rates.
Southern Maryland lawyer Alexander said the hospital has "in good faith" stopped charging for the extra hour for surgical patients, reduced the electrocardiogram rates to the commission level, temporarily discontinued renal dialysis and lowered the rates for nursery intensive care.
Nevertheless, he said, the hospital does not agree with many of the reports findings. The $1.3 million in overcharges actributed to the extra hour of surgery billing, he said was too high because Southern Maryland began levying it in May of this year, not last November.
Alexander said the commission has never set a clear ceiling on the amount Southern Maryland is allowed to mark up medical and surgical supplies so that is not fair to criticize the facility for failing to comply with a requirement it never understood it was supposed to meet.
Emergency room patients, the lawyer continued, are no longer charged a flat fee for services. The hospital has never levied a separate $20 charge for physician fees in emergency room cases, he added, claiming the auditor's finding in that area was "simply not true."
Most of the hospital's problem, according to Alexander, can be attributed to its newness. It has been difficult to find qualified personnel to run the facility. The hospital is trying to correct that by hiring management consultants, he said.
When the commission listens to Southern Maryland's side of the story, he said, it could discover that any overcharges "offset the large number of undercharges in many other areas of the hospital.
Many patients are paying too little for what they're getting."
The commission's investigators said they ere handicapped in their review by poor record keeping at Southern Maryland. There is no "functional" general ledger listing income and expenses, the report said, and the hospital does not keep good patient records.
"There are very few controls built into the system to ensure that all department charges generated in a department actuallymake it to the billing department," according to the report. The hospital's statistical collection system is "very weak," it added.
Another problem cited by auditors was the hospital's "very weak" control over supplies. One physician was observed coming out of the central supply office "very quietly with a large handful of supplies." Hospital purchasing is not centralized and accurate inventories of hospital goods were not available, auditors found.
The investigators made two recommendations to the commission, which will meet today. They proposed the hiring of a certified public accountant to make a thorough review of the hospital's statistic records and billing procedures and submit a formal report to the commission. The auditors also recommended that a public hearing be called to determine the exact amount of overcharges by the hospital.