Medicine: Dean Kelley's Statement on a $30 Million Settlement in Medicare Costs

The following statement was issued Tuesday afternoon, December 12, 1995, by the Department of Public Affairs of the University of Pennsylvania Health System (Contact: Lori Doyle, Chief Public Affairs Officer, [215] 662-2560]. This statement responds to an announcement Tuesday afternoon by the U.S. Department of Justice, U.S. Attorney, Eastern District of Pennsylvania ([215] 451-5282]). For local news coverage of this story, see The Philadelphia Inquirer of December 13, 1995:


The Clinical Practices of the University of Pennsylvania, the physician faculty practice component of the University of Pennsylvania Health System, has agreed to pay the federal government $10 million to resolve alleged errors in bills submitted to the government, plus a treble damage penalty of $20 million. This $30 million settlement resolves complex billing issues raised in an audit of Medicare Part B professional fee payments.

The government audit reviewed a random sample of 100 medical records from 1993, and extrapolated the findings over a six-year time period from 1989 through 1994. The $10 million payment represents an average of about $1.7 million per year.

Known as CPUP, the Clinical Practices is made up of 19 different medical practices totaling some 600 physicians. CPUP's finances and operations are distinct and separate from the Hospital of the University of Pennsylvania and other units of the Health System and University.

"We deeply regret any billing errors that may have occurred," said William N. Kelley, M.D., CEO of the University of Pennsylvania Medical Center and Health System and Dean of the School of Medicine. "Even before the audit began, we had started an intensive program to enhance the reliability of CPUP's billing systems to ensure compliance with billing requirements. Among other important steps, we are instituting one centralized billing system for all 19 CPUP practices, instead of 19 separate ones, as formerly existed."

"We are committed to expanding our compliance program and to taking corrective action. Our goal is to make our billing systems function without error, " said Dr. Kelley. As the agreement indicates, CPUP denies any wrongdoing. However, the settlement agreement allows CPUP to avoid long and costly litigation and to focus on its primary mission of education, research and patient care.

Working cooperatively with the government, CPUP will continue to expand existing billing compliance measures including training for physicians and staff responsible for processing Part B Medicare claims, and strengthen its monitoring systems to identify billing issues that may arise.

"We provide the highest quality patient care, and that was never questioned," said Dr. Kelley. "Our billing procedures must also be the best, and we will see to it that they are."