A federal investigation into the medical school’s billing practices ended in September with a $5.6 million settlement over credit balances accrued during the last 20 years. The school has also agreed to abide by a four-year corrective action plan that includes annual audits, establishment of a credit balance department and biannual instruction programs for those involved in resolution of credit balances. The settlement includes no admission of liability on the part of the School of Medicine.

The U.S. Attorney’s office in New Haven had contended that the medical school improperly handled a significant number of credit balances, billing insurers and individuals more than once for the same procedure. “As the government recognized in the settlement, the complexity of health insurance payment systems makes credit balances unavoidable,” says Irwin M. Birnbaum, the medical school’s chief operating officer. “Nevertheless, in past years Yale failed to have adequate administrative and billing systems in place to process all payments properly.” The disputed credit balances accrued prior to the installation of a new computer billing system in 1995. They represent a small fraction of the payments for clinical services made to the school during the period in question. Payments are expected to reach $120 million in this academic year alone.

The $5.6 million settlement includes a $500,000 refund to the federal government for Medicare and other federal health programs. In addition, Yale will provide $1.8 million to certain health care carriers, $2.5 million to individuals and other entities, and $700,000 to the federal government to resolve all claims.

As part of an overall modernization of accounting and information systems, Yale has completed a $15 million upgrade of its systems and management, including major improvements to its computer billing and information systems.