Husband's investments
entangle Feinstein
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LATEST FLAP OVER MEDICARE
PAYMENT DENIALS
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By David WhitneyMcClatchy
NewspapersSan Jose Mercury News
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Article Launched:05/19/2007
01:36:54 AM PDT
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WASHINGTON - California lawmakers are questioning whether an auditing
company in which San Francisco investor Richard Blum, the husband of Sen.
Dianne Feinstein, has a major financial stake is rejecting Medicare claims at
California rehabilitation hospitals in order to reap millions of dollars in
profits at the expense of patient care.
The company, PRG-Schultz
International, has a contract with the Centers for Medicare and Medicaid
Services, the overseer of the Medicare program, to check payments in
California for mistakes. Its only pay is a bounty of up to 30 percent on the
"overcharges" it identifies.
The California Hospital
Association first 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 PRG-Schultz has reviewed
thousands of cases dating as far back as 2002 and has rejected nearly all as
medically unnecessary. Melinda
Staveley, president of the 38-bed Rehabilitation Institute at Santa Barbara,
said more than 100 such cases from her non-profit institution had been
rejected. The facility could face having to repay more than $2 million.
Elderly patients
As difficult as that would
be financially for a small hospital with a $12 million annual budget, she
said the bigger concern is future patient care. The frail and elderly surgery
patients with compound medical problems no longer will have access to rehabilitation
hospitals and will have to rely on home or outpatient services.
"This is
devastating," Staveley said of the audits.
Her husband's business
interests in PRG-Schultz have proved awkward for Feinstein, the state's
Democratic senior senator, as the hospital association turns to Congress for
relief.
This is not the first time
Blum's business interests have collided with his wife's job. Blum Capital
Partners is a major investor in Northwest Airlines, which in 1995 won the
first contract by an American air carrier to fly to Beijing. Feinstein had
been friends with a former Chinese political leader since she was mayor of
San Francisco.
More recently, concerns have
been raised in Republican circles about some of Blum's investments benefiting
from defense contracts at a time when the senator was serving on the Senate
military construction appropriations committee.
Feinstein's press aide,
Scott Gerber, said the senator played no role in the legislation creating the
auditing program and did not intervene with program administrators to help
PRG-Schultz get the three-year contract in 2005.
Serious concerns
“FEINSTEIN SENT A LETTER
EXPRESSING HER CONCERNS....”
THIS IS TYPICAL WHORE FEINSTEIN.
SHE LIES THROUGH BOTH SIDES OF HER MOUTH AND STILL COUNTS HER DIRTY MONEY.
THE OLD WHORE HAS BEEN SENDING
OUT THE SAME OLD FORM LETTER FOR A DECADES EXPRESSING HER “CONCERN” OVER THE
INVASION BY MEXICO. ALL THE WHILE SHE’S IN THE BACK ROOM WORKING OUT NEW BIT
BY BIT AMNESTY WITH HER LA RAZA WHORES, PELOSI. BOXER, WAXMAN, ESHOO,
LOFGREN, HARMAN, FARR, SANCHEZ, ET AL.
THE OLD WHORE HAS PUBLICALLY MADE
COMMENTS ABOUT EVIL WAR PROFITEERS AND THEN WENT TO TOWN SERVICING BUSH WITH
HER !NO! IMPEACHMENT, FOR WAR PROFITS. ENOUGH TO BUY HERSELF ANOTHER MANSION,
THE 17 MILLION SAN FRANCISCO PLACE.IT’S TIME FEINSTEIN WENT TO PRISON!
On Thursday, after questions
from McClatchy Newspapers, Feinstein sent a letter to the Centers for
Medicare and Medicaid Services that called the hospital association's
concerns "potentially serious." She asked program administrators to
investigate, saying the concerns are spreading beyond its determinations on
rehabilitation hospitals to other aspects of Medicare-financed
hospitalizations for the elderly, including short-stay hospital admissions.
Feinstein made no mention of
her husband's interest in PRG-Schultz, which she lists in her annual
financial disclosure reports. According to PRG-Schultz, Blum's investment
companies own 10.5 percent of its outstanding common stock, 53 percent of its
outstanding preferred stock and 28 percent of its notes and securities.
California House members
soon will follow with a joint letter of their own asking for an
investigation.
Rep. Lois Capps, D-Santa
Barbara, is taking the lead among Democrats. Her press aide, Emily Kryder,
said 15 members - more than a quarter of the state's congressional delegation
- have agreed to sign the letter so far.
"The review and
collection practices of PRG-Schultz threaten access to rehabilitation
services in California," the letter said. "We urge you to examine
the actions taken by PRG-Schultz International, Inc."
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,
and Medicare administrators believe it has been the most controversial
because it alone has been zeroing in on rehabilitation hospitals.
Highly lucrative
On the brink of financial
collapse when it won the contract two years ago, PRG-Schultz has found the
job to be enormously lucrative. Government figures indicate that it had
rejected $105 million in California Medicare overcharges as of Sept. 30, the
end of the 2006 fiscal year.
Medicare managers said they
could not release figures for how much PRG-Schultz was claiming as
commissions for finding the alleged overcharges, saying the information was
proprietary. But based on bounties of 28 percent that were used in
establishing the program, PRG-Schultz's entitlement could be as much as $29
million.
The California Hospital
Association said in a letter to Medicare administrators in November that
PRG-Schultz should be suspended for improperly applying Medicare rules and
using unqualified personnel.
PRG-Schultz declined to
comment. But officials of the Centers for Medicare and Medicaid Services
steadfastly defended PRG-Schultz, saying it's applying rules on medically
necessary admissions that probably have been ignored in California for years.
PRG-Schultz "coming to
town is probably the first real look at these hospitals in many, many
years," said Melanie Combs, senior technical adviser for the federal
program.
"These rules have been
on the books since 1985," Combs said. "Maybe it's possible some
have been overlooking them. Maybe there have been consultants out there
helping hospitals to, quote, maximize reimbursements. And maybe perhaps some
of that has entailed looking the other way."
A call to Blum Capital
Partners - of which Blum is board chairman - asking for comment was not
returned.
PRG-Schultz reported a
first-quarter profit this year of $1.5 million, compared to a $10 million
loss for the same period in 2006.
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