New Pilot Program to Audit Hospital Bills

Medicare Program Promotes Bounty-Hunter Zeitgeist” Mentality

[By Dr. David Edward Marcinko; MBA]

Publisher-in-Chief dem2

According to a recent report in the Wall Street Journal, hospital groups have launched a vigorous campaign against expanding a pilot program to audit Medicare claims. And, it seems the most onerous aspect of the program is a contingency fee-schedule that encourages auditors to be aggressive.

Evolving Program Details

The program initially launched in California, Florida and New York and soon to be expanded nationwide, recouped $247.4 million in overpayments in fiscal year 2007 alone. It relies on private-sector auditing firms to examine claims filed by hospitals and other medical providers and then pays them contingency fees based on how much the government saves. 


As an example of its success, the WSJ reported that in FY 2007, auditors identified $357 million in overpayments [$17.8 million or 7.1% of which were overturned on appeal], according to the Centers for Medicare and Medicaid Services [CMS]. Payments for contingency fees and other administrative expenses totaled $77.7 million. Auditors also found $14.3 million in Medicare underpayments.

Support versus Criticism

While supporters of the program say the contingency fees serve as an incentive, critics say it encourages auditors to rely on a “‘bounty hunter’ payment mechanism.”  

Same old Economic Song

Of course, most long-time observes of the compliance and audit scene realize that this zealous zeitgeist mentality is not new.

For example, under the Health Insurance Portability Accountability Act [HIPAA], the Department of Health and Human Service [HHS] started an “Incentive Program for Fraud and Abuse Information” [IPFAI] almost a decade ago. 

In that January 1999 pilot program – which continues in modified form – HHS paid fees ranging from $100-1,000 to Medicare recipients who reported abuse. To assist patients in spotting fraud, HHS even published examples of physician potential fraud, which include: 

  • Medical services not provided
  • Duplicate services or procedures
  • More expenses services or procedures than provided (upcoding / billing)
  • Misused Medicare cards and numbers
  • Medical telemarketing scams
  • Non-medical necessity, etc. 

To discourage flagrant allegations regulations require that reported information needed to directly contribute to monetary recovery for activities not already under investigation. 


Nevertheless, expect a further erosion of patient confidence, as CMS continues to view all healthcare providers – and now hospitals and related healthcare organizations – in the same light as “bounty- hunters”. 

Ironically, this precise same phenomenon was reported in both the first and second editions of the book “The Business of Medical Practice”. 

And so, please remember all medical colleagues – forewarned is forearmed. 

More information: 

Speaker: If you need a moderator or a speaker for an upcoming event, Dr. David Edward Marcinko; MBA is available for speaking engagements. Contact him at:


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Inheritance “Disclaimer”

What all Physicians Should Know

By Lawrence E. Howes; CFP™

By Joel B. Javer; CFP™fp-book1 

In some situations, an inheritance might complicate an estate and add to the estate tax burden.  If there are sufficient assets and income to accomplish financial goals, more assets are not needed. A disclaimer may be useful to such physicians.

A Simple Definition

A disclaimer is an unqualified refusal to accept a gift or inheritance, that is, when you “just say no”.  You have decided not to accept a sizable gift made under a will, trust or other document.

Formal Disclaimer Requirements

When you disclaim the property, certain requirements must be met: 

  • The disclaimer must be irrevocable;
  • The refusal must be in writing;
  • The refusal must be received within nine months from the date-of-death;
  • You must not have accepted any interest in the property; and
  • As a result of the refusal, the property will pass to someone else.

Intent and Results 

The disclaimed property passes under the terms of the decedents will, as if you had predeceased the decedent. If the filer of the disclaimer has control, the property will be included in the disclaimant’s estate and can only be passed to another as a gift for as an inheritance. The intent of the disclaimer is to renounce and never take control of the property. 


The use of disclaimers became a more important tool in estate planning under the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA). 

Many estate plans that were designed and drafted prior to EGTRRA, had unintended consequences when governed by the new law.  Hence, disclaimers may have been the only way to allocate estate assets according to personal desires versus legal design.

Nevertheless, current political machinations and the impending tax and estate planning “sunset-provisions” are sure to add to the confusion. 


What is your experience with “disclaimers”; if any? 

More information:

Related info:

Physicians Expanding HIT Expenditures for 2008

A New Study from the Gantry Group

Staff Reporters


According to a new study from the Gantry Group, physicians and medical providers will be spending more money on health information technology tools and applications this year. And, their statistics suggest that healthcare providers are allocating forty percent or more of their current technology budget to clinical technology, in 2008.

This includes health information technology [HIT] expenditures for digital medical imaging, medication management, e-prescribing, RFID solutions, electronic medical records, patient care planning tools, patient documentation and various mobile applications.

Generally speaking doctors, physician-executives, CTOs, CIOs and most all organizational CXOs are moving away from custom, in-house created applications and looking for commercial packages that suit their needs.

By the end of 2008, over 80 percent of facilities will have invested in key clinical technologies, the Gantry Group predicted. The costliest items on provider budgets were digital medical imaging and electronic medical records, which in combination, ate up 64 percent of medical providers’ clinical technology budgets. 


And so, what does your HIT budget look like for 2008; is it fixed, flexible, hybrid, zero-based or some other type? 

More information: 

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