Monday, November 10, 2008

Yet More Investigations of UMDNJ

We have frequently discussed the plight of the University of Medicine and Dentistry of New Jersey (UMDNJ), the largest health care university in the US. Facing indictment for federal crimes, the university operated under a deferred prosecution agreement and the supervision of a federal monitor from 2005 to 2007. We most recently blogged about UMDNJ here, and see links backward.

UMDNJ may no longer be under the monitor's supervision, ostensibly because of internal reforms of its management, but a recent story on from the Newark Star-Ledger questioned the success of these reforms.

The state's medical university was overcharging the federal government by millions of dollars, even while under federal oversight for similar violations of the law, according to internal reports.

Those documents show administrators at the University of Medicine and Dentistry of New Jersey inflated medical expenditures by at least $21 million a year -- boosting Medicaid and Medicare reimbursement rates. The abuses were allowed to continue even after a consultant repeatedly warned them about the problem.

It is unclear how long the overbillings took place, but reports obtained by The Star-Ledger show they occurred as recently as last year, despite the fact the school was undergoing an administrative shake-up following earlier reports of widespread financial abuse. Those earlier abuses included the university's deliberate $4.5 million overbilling of Medicare, which was the spark that led to a 2005 federal investigation and the appointment of a federal monitor.

The new allegations raise questions about the impact and pace of reforms at UMDNJ and its University Hospital in Newark nearly a year after they emerged from the monitor's oversight.

U.S. Attorney Christopher Christie said he was troubled by the revelations. He said part of the reason his office agreed to end the federal oversight last year was the assurance by both the state and the university that there would be continuing efforts to resolve UMDNJ's long-standing internal problems.

As to the specific problems uncovered,

At issue were inflated rates paid to physicians on the UMDNJ faculty, as well as free support services -- such as office space and clerical help -- that the hospital provided to doctors in private medical practices. Those costs were submitted to federal officials to generate higher reimbursement levels than were warranted, according to the documents. The extra money was used to plug holes in the medical school's budget.

In addition, the final report by the federal monitor raised a series of issues:

Questions about the validity of the university's Medicare cost reports and possible violations of federal law -- as well as other allegations of financial abuses lodged by former medical school officials -- were also underscored by the federal monitor in a final report issued to UMDNJ administrators in December.

That confidential document, reviewed by the newspaper, raised red flags over charges of legal and ethical breaches that were to have been addressed by the university. The monitor, former federal judge Herbert J. Stern, said in the report that outside auditors were pressured to 'gloss over' findings that physicians were being paid more than market rates would dictate. As a result, the final report 'substantially understated problems which continue to exist.'

Among the monitor's other findings:

--Nurses working at the privately operated Robert Wood Johnson University Hospital in New Brunswick, another UMDNJ teaching affiliate, were on the university payroll -- and getting state benefits -- despite having no teaching responsibilities.

--On cost reports submitted to federal officials, UMDNJ improperly included the services of nurse practitioners and physician assistants who were employed in private practices.

--University Hospital was allegedly double billing for emergency room services when patients were waiting in the ER for an available hospital bed.

--UMDNJ retained and paid for legal representation of faculty members and other employees in disputes "tangentially related" to the university and "outside the scope of employment."

The allegations in the Star-Ledger article lead to announcements that a NJ State Senate Committee will investigate the university (see article here), and the US attorney opened a new inquiry, involving subpoenas served on the institution, and for its president and executive vice president to appear before a grand jury (see article here).

Of course, these latest reports involve allegations, not facts proven in a court of law. Nonetheless, they do suggest that the management of the country's largest health care university has not been reformed all that much. A corporate culture of deception and sleaze still seems to envelop the institution's executive suites. One wonders whether contributing to its entrenchment are 1) the "anechoic effect," which still has confined discussion of UMDNJ's woes to the local media and a few blogs; and 2) the lack of negative consequences so far suffered by any individual UMDNJ managers. Although UMDNJ as an institution was "punished" by a deferred prosecution agreement, individual managers, not the institution as a whole, were responsible for any misbehavior. While individual managers escape punishment, I doubt that the many honest people who work at UMDNJ can escape demoralization, and that ultimately it is the students and patients who will suffer.


Bluenewark said...

As one of the demoralized faculty members you predict exist at UMDNJ, I appreciate your recognition of our plight. I am continually amazed at the determination of our faculty, staff and students to continue to work hard and be honest, in the face what I think is the major problem: the lack of transparency at the top of each sector.

Anonymous said...

While we would al like to think of universities as places held to a higher standard it has become obvious they are no better, and possibly worse, than the corporate world in their ethical and business practices. The Nov. 8th Akron Beacon Journal reprinted a story by Encamacion Pyle from the Columbus Dispatch regarding the new pay package for The Ohio State University's president Gordon Gee.

The short version is he will receive a salary, with bonuses, of $2M per year if he meets certain goals. One of the major goals is raising $2.5B in new endowments. This package will make Gee the highest paid leader of a public school in the country and among the top three among private universities. Previous stories have highlighted how he has almost doubled the cost of his staff due to a number of positions paying $300K. Part of Gee's compensation package will be paid from specifically donated private funds.

One has to wonder what message this sends to the university staff and to students who have faced ever increasing tuition over the last several years. This university is the home to a number of medical schools teaching in a number of disciplines and one cannot escape the concept that the focus on money is transmitted to the students.

I had the opportunity to speak with a laid off drug rep over the weekend and while our conversation was wide ranging I had to agree with most of his points. He felt medical ethics were a thing of the past and that money was the driver in all decisions. My business model calls for 30 patients a day, he flatly stated most of the doctors he called on were at 40+, scheduling at 10 minute intervals, all with the claim of financial need.

Doctors are faced with tremendous financial pressures today and often see other opportunities producing better financial results. I cannot blame them for choosing other fields or business to lessen their personal stress or to produce a better income.

I do have to question university leadership that makes financial gain their primary driver. This concept has to be transmitted to the staff and students with the predictable end results of sleazy business practices and in some cases out right fraud.

Steve Lucas