http://www.globe.com/dailyglobe2/026/nation/Hospitals_say_HMO_could_owe_300m+.shtml

Hospitals say HMO could owe $300m

Regulators call figure too high

By Liz Kowalczyk, Globe Staff, 1/26/2000

tate hospital officials said yesterday that Harvard Pilgrim Health Care owes their institutions millions of dollars more than Harvard Pilgrim estimates, and they fear a state-sanctioned rescue plan for the HMO could leave them holding stacks of unpaid bills.

While regulators announced that Harvard's finances have stabilized and that at least 13 health care companies are interested in buying or investing in the troubled HMO, the Massachusetts Hospital Association said unpaid claims to the hospitals could reach $300 million, compared with the $170 million Harvard says it now owes.

Regulators disputed the hospital association's numbers but conceded they still don't have an accurate accounting of the company's total liabilities.

Attorney General Thomas F. Reilly and Insurance Commissioner Linda Ruthardt, who is the court-appointed receiver for Harvard Pilgrim, said during a press conference yesterday that they believe the association's estimate is ''not right,'' but that they don't know by how much.

First Attorney General Dean Richlin said $300 million is too high. ''We want to make sure Harvard only pays what it owes,'' he said. ''We want to get to the real number but we don't know what it is yet.''

The current dispute includes:

One hospital that says it's owed an extra $1.2 million because it didn't know it was required to add two letters to a seven-number computer code when charging for certain physician services.

Hospitals that say claims were inappropriately denied by Harvard - sometimes because they failed to include a patient's middle initial - and wiped off the insurer's systems before the appeal period was completed.

Hospitals that say Harvard is not counting charges for services performed, but not billed for, before the state took over the HMO on Jan. 4. Bruce Bullen, Harvard's chief operating officer, however, said this amount is included in Harvard's estimates.

Disagreement between hospitals and insurers over billing practices is nothing new, nor is it confined to Massachusetts hospitals and Harvard Pilgrim. The two sides last year began discussing ways to simplify billing.

But the Harvard Pilgrim crisis is bringing into the open the complexity - and some say near impossibility - of accurately tracking charges for 1.1 million Harvard patients who fall under about 200 different hospital and physician contracts.

Getting an accurate picture of Harvard's debt is crucial not only because it determines payments for struggling hospitals, but because potential buyers need to know the insurer's liabilities and costs.

''The bottom line is how big a problem does Harvard have?'' said one top hospital executive.

Many hospital officials said they did not want to be identified because they feared they would anger Harvard or the attorney general's office.

Richlin said state officials are not sure why the numbers are so different. But he said it could be that the hospitals and Harvard ''count things differently.

''There's real complexity here and we just don't have a simple answer,'' he said.

Bullen said hospitals often bill what they believe a service should cost, or their actual charges - not the discounted rate negotiated with Harvard for sending a large volume of patients to the hospital.

''We believe we are making an accurate estimate of what our obligations are; we've done a very thorough job,'' he said. ''Hospitals are always interested in obtaining as much revenue as they can.''

Jack Reichman, an analyst for Standard & Poor's, said Massachusetts hospitals have been slow to build computer systems that communicate with those at HMOs.

''Overall managed care has not penetrated into the hospital systems as it has in other major urban areas,'' he said. ''In areas where hospitals have embraced managed care they put systems in place where they can submit claims electronically - and submit the same numbers agreed upon in the contracts. But the hospitals in Boston have a lot of clout.''

The hospital association is not wavering from its estimates.

''No system is perfect,'' said Andrew Dreyfus, executive vice president at the Massachusetts Hospital Association. ''But our experience over the last few years is that health plans try to deny claims or make slow payments to claims. That's one reason we're in the situation we're in today. We have to be sure we don't resolve Harvard Pilgrim's problems and leave a huge outstanding liability to the hospitals.''

-- Hokie (Hokie_@hotmail.com), January 26, 2000

Answers

Looks like one big healthcare domino is teetering there in Mass.

-- Hokie (Hokie_@hotmail.com), January 26, 2000.

Richlin said state officials are not sure why the numbers are so different. But he said it could be that the hospitals and Harvard "count things differently..." Could be.

Hospital counting: 1 chemotherapy treatment + 1 gall bladder operation + 1 reconstructive surgery = 3

HMO counting: 1 vacation in Majorca (claim denied) + 1 new Beemer (claim denied) + 1 set of new golf clubs (claim denied) = 0

(I once worked at a software company, doing modifications on their claims processing system -- a real gawdawful monster, inherited from Blue Cross / Blue Shield. I mentioned to one of their employees that they could speed up processing if they just took out all the verbiage in the program (that seemed to eventually route almost everything to "denied" anyway) and replaced it with code that would just randomly pay every 50th claim. They didn't see the humor in that statement at all...)

-- I'm Here, I'm There (I'm Everywhere@so.beware), January 26, 2000.

OH, would that be LRSP or PIC?????

Chuck

-- Chuck, a night driver (rienzoo@en.com), January 26, 2000.

this is a really huge problem, if the payments are defaulted hospitals could be in default of their bonds/loans, the could be placed into bankruptcy, closed or sold off to satisfy debt just like any business.

look at Allegheny general hospital in pittsburgh pa. what a mess, hundreds of people layed off, their suppliers would not make a delivery without payment up front, no food, no drugs, no surgical supplies, no hospital supplies. this was one of the shining stars in the Pa. health care arena, now forced into a merger with west penn hospital and blue cross what a diseaster.

you can joke about golf clubs and trips to majorca, when you show up to the emergency room with crushing chest pain and the doors are locked because of a default by a major insurance carrier bankrupted the hospital it may not be so funny.

al

-- al (alco@pathway.net), January 26, 2000.

God's Truth, 98, and diagnosed with liver cancer, hasn't smoked or had liquor for 60 years. He lives there. Love you Grandpa (relative, by infusion).

-- Better Not Screw (withGrandpa@98yearsold.com), January 26, 2000.