U.S. Challenges Medicare Reimbursements to Humana

The Humana hospital chain included a $20,000 contribution to a dinner for President Bush, a $15,000 donation to the Republican National Committee and $278.87 for racquetball glasses as items eligible for partial reimbursement by the federal Medicare program in 1990, according to a federal report.

The questionable charges were uncovered in a review of 1990 home office expenses at the hospital system, which is based in Louisville, Ky., by the inspector general of the Department of Health and Human Services. A copy of the report was provided to The Times.

Humana sought reimbursement under federal rules that allow hospitals to claim a fraction of their overhead costs in connection with Medicare patient care. Investigators, however, determined that $20.7 million of Humana’s expenses were not eligible for reimbursement. The chain was reimbursed $900,000 under federal funding formulas.

The government also challenged reimbursement for a portion of $32,903 in Humana expenses for the 1990 Kentucky Derby, including $14,600 to provide $100 bills to each of 146 spouses attending the race and $324 for racing forms.

Tom Noland, vice president for communications at Humana, acknowledged Thursday that the for-profit corporation had mistakenly sought reimbursement in connection with $8.3 million of costs. But he said that many charges cited by the inspector general were withdrawn by Humana and that other expenses will be defended by the company in an appeal process, arguing that they are justifiably related to the company’s role as a corporate citizen.

The inspector general reviewed Humana’s administrative expenses at the request of the House Energy and Commerce Committee’s subcommittee on oversight and investigations, which is examining costs of the nation’s health care system.

The findings were similar to other investigations begun by the powerful subcommittee into spending by defense contractors and last year’s inquiry into expenses charged to the government as research costs by dozens of the nation’s most prestigious universities.