Eye Surgeon’s Tip Reveals Medi-Cal Glitch : Overpayments to Ophthalmologists Between $250,000 and $1 Million

A lone, publicity-shy Los Angeles eye surgeon provided the first warning that an embarrassing computer glitch had resulted in state Medi-Cal overpayments of up to $1 million to Southern California ophthalmologists.

The doctor said his records indicated that he had received about $15,000 in payments from Medi-Cal for outpatient cataract surgeries that had already been paid in full by Medicare. He asked that his name not be mentioned.

“I am just a good citizen,” he said.

John Rodriguez, state Department of Health Services Medi-Cal chief, said that while the overpayments were “significant,” they are a comparative drop in the bucket considering that the agency handles $4 billion annually. He said Medi-Cal has an exceptionally low overall error rate.

He estimated the total of overpayments due to the glitch at about $250,000.

However, another source familiar with the problem estimated that the total could be $1 million or more.

Whatever the amount, Rodriguez did not attempt to downplay the service the 36-year-old Los Angeles eye doctor had performed in catching the glitch.

“The man,” he said, “is a hero.”

And the glitch, Rodriguez admitted, is “an embarrassment” even though it was not made by his agency, but by a contractor for Medicare.

Rodriguez said the overpayments were made to an unknown number of the 800 ophthalmologists in the seven Southern California counties. The claims were for outpatient cataract surgery on so-called “cross-over” patients--those who are covered by both the federal Medicare program and the state Medi-Cal program. Almost all “cross-overs” are elderly and poor.

Up until 1983, the federal Medicare program paid only 80% of the fee for such eye surgeries, a spokesman said. Medi-Cal paid the remaining 20%. Then, Medicare started paying 100% of the usual $2,500 fee in Los Angeles.

In a Sept. 22 letter to Computer Science Corp., which handles Medi-Cal’s computerized payment system on contract with the state, the local ophthalmologist described the glitch this way:

“Initially, Medi-Cal apparently understood (that Medicare was paying 100% on such surgeries) and did not pay anything further on these accounts. For some reason, beginning (in April, 1985), something must have happened to the computer and now on almost every account . . . when a cross-over occurs on an outpatient cataract surgery, the computer shows that Medicare paid only 80%, when in fact they paid 100%, and Medi-Cal pays me an extra $500 or so.”

The doctor said he believed that the error “is probably costing the state millions of dollars annually if what is happening to my account is happening to all ophthalmologists in the state.”

With the letter, he enclosed a check for $6,883, the amount of overpayments he figured he had received between April and Sept. 22. He has since returned several more checks, for a total of about $15,000.

The doctor closed his letter with a plea for anonymity: “I am asking for the strictest (confidentiality) in this matter . . . because if this is happening to all ophthalmologists, a lot of people may owe a lot of money and they will not be very happy if they knew that I blew the whistle, so to speak.”

The Los Angeles whistle-blower need not have worried on that count, according to Dr. Sherwin H. Sloan, president of the California Assn. of Ophthalmology. Sloan said the surgeon acted exactly as he should have under the organization’s code of ethics.

“He’s done a good job,” Sloan said.

Sloan also said his organization is conducting its own investigation of the overpayment glitch, adding that a quick survey of 10 ophthalmologists in the Southland showed that six had received what they now believe were “questionable” payments. Two of them, he said, had written Medi-Cal and returned the overpayments they had received. Neither has been contacted by Medi-Cal, according to Sloan.

Automatic Extra 20%

Sloan said other ophthalmologists he surveyed believed that their questionable payments might have resulted from a change of policy on Medi-Cal payments. “There are frequent policy changes and constant confusion among doctors over Medi-Cal policies,” Sloan commented.

The glitch, according to both Computer Science Corp. and Medi-Cal, was not in their system, but in a computer tape sent to the computer firm by Transamerica Occidental Insurance Co. of Los Angeles, which handles federal Medicare payments in the seven Southern California counties.

A spokesman for Transamerica Occidental said an error was inserted into a computer tape containing information on claims by doctors for “cross-over” patient care, during an updating of the program last March.

When the updated tape was transferred to Computer Science Corp. in Sacramento, the computer there automatically began paying out an additional 20% for the outpatient cataract surgeries performed in Southern California.

The Transamerica Occidental spokesman also expressed embarrassment at the error, and likewise credited the whistle-blower physician with providing the first signal that something had gone awry.

Rodriguez said the glitch eventually would have been caught by his agency but he noted that without the Los Angeles eye doctor’s help, the overpayments might have gone on considerably longer.

As it stands, Rodriguez said, the glitch should be fixed this week, but the exact number of ophthalmologists who were overpaid, and the exact amount they received will not be known for about 60 days. The overpayments should be recovered by the state in about 90 days.

The Los Angeles doctor said a Computer Science Corp. official phoned him in September and said the error was being corrected. But, the physician said, overpayments were still being made to him as late as Jan. 9.