The California Hospital Association raised concerns in November that PRG-Schultz was targeting rehabilitation hospitals that cared for Medicare patients after knee or hip replacement surgery. The hospital association said that PRG-Schultz had reviewed thousands of cases dating to 2002 and had rejected nearly all as medically unnecessary.

Melinda Staveley, president of the 38-bed Rehabilitation Institute in Santa Barbara, Calif., said that more than 100 such cases from her nonprofit institution had been rejected. The facility could face repayment of more than $2 million.

California’s U.S. House members will soon follow with a joint letter of their own asking for an investigation.

The auditing program was set up as a demonstration project initially focusing on the three highest-cost Medicare states: California, New York and Florida. Separate contractors are used for each state. PRG-Schultz is the only for-profit contractor among them.

Source: | 05/18/2007 | Medicare audits raise questions


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