As hospital industry insiders know, Medicare audits aren't pretty. What makes them even less so is that the people doing the audits are often private contractors who are paid a percentage of any bills they find which are allegedly improper. The kicker: even if the hospitals can later prove they've billed correctly, the private auditors still get to keep their government fee. It's a pretty business.
Given the way their incentives work, it's no surprise that the auditors are aggressive. The financial meltdown suffered in 2007 by Boca Raton, FL-based Boca Raton Community Hospital is a particularly striking case in point. Last year, the hospital lost $28 million, about half of which comes from a $13.6 million sum it set aside to pay for potential Medicare repayments targeted by federally-contracted auditors. The hospital plans to appeal the auditors' decision, but that could take up to two years.
Since the Medicare overbilling concerns surfaced, the hospital has replaced its CEO and postponed plans to build a $600 million academic medical center at nearby Florida Atlantic University.
To learn more about Boca Community's troubles (and Medicare audits):
- read this Palm Beach Post piece
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