Yale Settles Investigation of Credit Balances

Yale University announced today that it has entered into a settlement agreement with the United States Attorney for Connecticut and the Department of Health and Human Services Office of Inspector General that ends an investigation of the handling of credit balances resulting from medical services billings by the Yale School of Medicine. The investigation focused on unresolved balances that had accrued over two decades preceding the School's computer conversion in September 1995. Some of those balances were written off for accounting purposes at that time.

Yale University announced today that it has entered into a settlement agreement with the United States Attorney for Connecticut and the Department of Health and Human Services Office of Inspector General that ends an investigation of the handling of credit balances resulting from medical services billings by the Yale School of Medicine. The investigation focused on unresolved balances that had accrued over two decades preceding the School’s computer conversion in September 1995. Some of those balances were written off for accounting purposes at that time.

Under the settlement, Yale will refund $500,289 (which includes interest) to the federal government with respect to Medicare and other federal health care programs. Yale will make available approximately $1.8 million to designated health care carriers, and about $2.5 million to individuals and other entities. If valid claims to these sums are not established, these amounts will be turned over to the State Treasurer as unclaimed property. Yale will also make a settlement payment of $700,000 to the federal government in complete resolution of all claims. The settlement is not an admission of liability by the School of Medicine.

The credit balances include accounting entries for payments or portions of payments to the School of Medicine that the School has been unable to match against outstanding charges for patient care, in many cases because information is erroneous or incomplete, as well as excess amounts resulting from duplicate payments from multiple payors. The inability to resolve these payments resulted from faulty administrative and inadequate computer systems. Yale has voluntarily taken steps to upgrade its systems and their management, and is currently investing roughly $15 million in state of the art computer billing and information systems.

“As the government recognized in the settlement, the complexity of health insurance payment systems makes credit balances unavoidable. Nevertheless, in past years Yale failed to have adequate administrative and billing systems in place to process all payments properly,” said Irwin M. Birnbaum, the School of Medicine’s chief operating officer since July 1, 1997. “We now have invested more than $15 million in a new computer billing system that allows us to process credit balances in an appropriate time frame and prevents the problems that were encountered in the past.”

“Yale has fully cooperated with the government throughout this lengthy investigation and we are satisfied with the result,” said University Vice President and General Counsel Dorothy K. Robinson. “This settlement reflects Yale’s desire to ensure that it retains only those payments to which it is entitled. We have worked closely with the government to create in this settlement a workable mechanism for refunding the credit balances to the government, health insurance carriers and patients.”

In the current academic year, the School of Medicine anticipates $120 million in payments for patient care activities. Hence, the credit balances represent a very small fraction of the payments made to the School.

In a typical year, there are about 300,000 patient visits to the School’s clinics and practices. The patients are treated by more than 650 physicians on the faculty whose expertise encompasses more than 100 specialties and subspecialties. Many patients are indigent and are treated free of charge or are given substantial discounts through one or more programs.

“Patients come to the Yale Faculty Practice because they expect and receive care from doctors who are among the finest in the world with expertise in cutting-edge therapy,” said Dr. David Leffell, the medical director of the Faculty Practice. “The growing complexity of health insurance demands a billing and clinical administrative system as world-class as the quality of our patient care, and we have aggressively taken the necessary steps to put that system into place.”

Yale also agreed for four years to meet the requirements of a Corrective Action Plan that sets deadlines for the resolution of existing and future credit balances, and to maintain for that period the medical billing compliance that it voluntarily implemented in 1997.

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Media Contact

Tom Conroy: tom.conroy@yale.edu, 203-432-1345