Medicare charges are settled by O.C.

Orange County paid the federal government $7 million Thursday to settle allegations that its Health Care Agency overbilled Medicare by at least that amount in the 1990s.

“This was a mistake,” Board of Supervisors Chairman Chris Norby said of the false reimbursement claims that led to the settlement. “The mistake was rectified a long time ago, and we felt that we wanted to put it to bed.”

In a statement released by her office, Health Care Agency Director Julie Poulson agreed, saying that paying the settlement “is the right thing to do.”

The U.S. attorney’s office said the overbilling occurred between 1990 and 1999 when the health agency’s Behavioral Health Services Division was paid for psychiatric and evaluative interviews not performed by physicians or by clinical psychologists and licensed social workers under a physician’s supervision. Only interviews performed under those circumstances, government regulations say, are eligible for reimbursement.

The government also alleged that the county had improperly billed and was paid for dispensing self-administered methadone to drug-addicted patients, which is not covered by Medicare, and charged brief office visits to monitor drug prescriptions as more intensive visits requiring greater compensation.

“It’s not an insignificant amount of money,” said Thom Mrozek, a spokesman for the U.S. attorney’s office. “We settled it prior to any case being filed.”

According to Norby, the errors were made by county employees who mistakenly billed according to the wrong set of standards. “It was an administrative error that ended up costing the federal government quite a lot of money,” he said.

The government had initially asked for $14 million, Norby said, but county negotiators eventually were able to cut it in half. Norby said he didn’t know how the errors were discovered or why negotiations took so long.

“It was pretty much an internal error,” he said. “The county didn’t really lose any money, since we got money we weren’t entitled to to begin with.”

According to the Health Care Agency’s statement, the problem was corrected in 2000 when the agency “fully redesigned its clinical documentation and billing processes to ensure that all services provided are properly documented and that billing is submitted in an accurate manner.”

david.haldane@latimes.com