Published in the Wall Street Journal, Friday, May 30, 1997, page A6.

Like students with their report cards, Columbia/HCA Healthcare Corp.'s hospitals get regular score cards from headquarters showing how they did. Hospital admissions, earnings, supply costs and several other financial categories are tracked each month.

And score cards show one more-questionable : the severity of the procedures the hospital billed to Medicare, and thus the reimbursement level. The line measures the hospital's "Case Mix Index Improvement."

For Northlake Regional in Atlanta, the July 1966 score card listed the mix index as 1.01 and noted that the "budgeted" index was 1.15. If Northlake coded its procedures to indicate additional medical problems, enough to meet the budgeted index, it would collect much more from Medicare.

"It makes me shudder," says Robert Sloane, former chief executive of City of Hope hospital in Los Angeles, when shown a copy of a Columbia score card. One focus of the current federal investigation of Columbia is believed to be the possibility of illegal "upcoding" of Medicare cases.

Columbia denies upcoding and denies that the case-mix index puts pressure on hospital managers. The index "doesn't really give a goal, it's a parameter," says Rosalyn Elton, a vice president.

But some former Columbia managers say hospitals do indeed face such pressure. They say Columbia sometimes even sets goals for what portion of Medicare cases should carry medical "complications" that result in higher reimbursement.

Outside Columbia, an estimate of how many cases normally would involve complications comes from Harry Feder of Island Peer Review Organization, or IPRO, which analyzes Medicare billing at New York hospitals. He says 40% to 60% of a community hospital's cases typically show complications, while big teaching hospitals with sicker patients might hit complication rates of 80%.

But at Columbia, the former CEO of a Kentucky hospital says he was told to try to ensure that 100% of his medicare patients were coded as having complications."I thought, 'This is impossible, this is insane,' " the executive says.

At another Kentucky hospital, Lake Cumberland, former Chief Financial Officer Marvin Mayfield said Columbia's Medicare complications goal was "97% or 98%." A few days later, Columbia produced other executives who denied the company set any goals for Medicare complications.

Columbia's Southwest hospital in Louisville tracked, each month, what percentage of its Medicare cases had complications. In February and April of 1996, Southwest scored a perfect 100%; in other months it managed to claim complications in 95% to 98% of Medicare cases.

Mr. Feder of IPRO, when told of the emphasis on complication rates at Columbia, says, "This is unbelievable." John Rodat, a New York health-care consultant, adds, "My first question to Columbia is: Are you asking for trouble? This is a red flag. It is saying, "Here I am, come look at my records.' "

Columbia has just announced a new hospital score card. It eliminates the line for improvement in the case-mix index.

-Lucette Lagnado