Planned Parenthood Spokane Slapped with $700,000 Bill from Audit

This is an AIW Exclusive.

Planned Parenthood of Spokane (PPS) has been caught overbilling Medicaid for condoms, charging for contraceptives without a prescription, "unbundling" abortion claims, and claiming patients were having doctor visits when they were just picking up a prescription.

All of this is in an audit of the organization just completed by the Department of Social and Health Services (DSHS). And as a result, PPS has been ordered to reimburse the government $630,000 plus interest for the overpayments. The audit did not get into the question of whether the overbilling was part of a systematic fraud scheme, but it also was clear that if this practice continued PPS would lose its Medicaid billing priveleges.

The audit found 5 categories of overbilling:

1) Numerous examples of billing Medicaid for oral contraceptives either without any underlying prescription for the drugs, or where the prescription was completely invalid, e.g., "Continue with drug XYZ".

2) Many cases where male condoms were billed at some nicely rounded up price instead of the actual acquisition price, as has been required since 2003. For example, in some cases they billed Medicaid $3.00 where the invoices clearly showed that PPS paid $0.84. In other cases, they billed $2.00 where the invoice showed the acquisition price was $0.56.

3) Unbundling post-abortion antibiotics and billing them to Medicaid under Family Planning, which is strictly prohibited.

4) Billing office visits to pick up a prescription or get an injection as "Evaluation and Management" -- a sit-down consult with a doctor or ARNP, and which have a higher reimbursement rate, in some cases double.

5) Billing for pregnancy tests which were done when the client never even suspected she was pregnant, and without any indication of medical necessity.

The audit covered the three-year period from Spring 2004 through Spring 2007, and made a point that it didn't claim to have been exhaustive, meaning that PPS shouldn't assume that they are free and clear if they are guilty of additional overbilling from this period not discovered in the audit.

The audit didn't address the question of whether these practices were going on prior to 2004, or after 2007, including up to the present, or the question of whether it was systematic and intentional, thus rising to the level of fraud.

If it's any indication, though, PPS has lawyered up and hired a fancy Medicaid fraud expert from Seattle to defend itself. The audit was addressed to David B. Robbins, with Bennett Bigelow& Leedom. Mr. Robbins was "selected for inclusion in the 25th Anniversary Edition of The Best Lawyers in America 2008 Edition," according to his website. That can't be cheap.

The audit itself also didn't deal with the question of who is going to ensure that these overbillings are not going on right now.

There is also the question of whether these practices are common to the other Planned Parenthood affiliates in the state, including PP of the Great Northwest (formerly Western Washington), and PP of Central Washington, and whether this audit will trigger audits of the sister organizations.

The audit made it into the news back in June when it was reported in the Spokane Spokesman-Review. The organization's then president was removed, and the group is reportedly being run by Anna Franks, president of Planned Parenthood of Central Washington, which is right now trying to expand into Pasco. But there's nothing to indicate that her practices are any different from the Spokane-centered affiliates.

A $700,000 bill would be a bitter pill for most "non-profits", but with over $11 million the bank, PPS can easily afford it. How did a supposed not-for-profit get into such a comfortable financial situation? Some critics argue that this huge cash reserve has been generated through schemes uncovered in this audit, and that there is more to be discovered.

In 2005, for example, they reported $2 million in profits off of total revenue of $6 million. That's a 33% (net) profit margin for a non-profit.

Some might argue that Medicaid billing is complicated and errors are inevitable. But no organization on earth should have more expertise in how to bill Medicaid correctly for contraceptives than Planned Parenthood.

In the days ahead, this blog will be contacting representatives of Planned Parenthood for comment, as well as representatives of the government to get answers to some of these questions.

The audit didn't mention what prompted the government to initiate this investigation in the first place.

View the Audit Documents here.