The University of Medicine and Dentistry of New Jersey faces new allegations of inflating medical costs by at least $21 million a year and increasing federal reimbursements for the hospital, according to a weekend report in the Newark Star-Ledger.

The allegations come as the school prepares to borrow up to $575 million through the New Jersey Higher Educational Facilities Authority to refinance prior debt. The authority approved the bond transaction last week and officials expect to issue the debt in December or January. The NJHEFA declined to comment on the allegations.

In response to the article, Sen. Paul Sarlo, D-Bergen, Essex, who heads the Senate Legislative Oversight Committee, said that he would begin next month holding multiple public hearings regarding the new UMDNJ allegations.

The alleged overbilling occurred even after a federal monitor began overseeing UMDNJ's operations due to improper Medicaid reimbursements, according to the Star-Ledger. The two-year federal oversight, which ended on Dec. 31, found $400 million of fraudulent and abusive practices, according to the monitor's final report.

Among the new allegations reported Sunday, the Star Ledger reported that UMDNJ expense reports and documents it obtained indicated that the university boosted rates paid to private physicians on the school faculty and passed those costs onto the federal government for reimbursement. Other allegations include double-billing for emergency room services, paying nurses from the privately-operated Robert Wood Johnson University Hospital in New Brunswick, a UMDNJ teaching affiliate, from UMDNJ's payroll, and providing the nurses with state benefits.

The university declined to comment on the new allegations.

Meanwhile, Morgan Stanley is senior manager on the forthcoming refinancing deal. Gibbons PC is bond counsel and Acacia Financial Group Inc. is the financial adviser. Standard & Poor's and Moody's Investors Service rate the university BBB and Baa2, respectively, both with negative outlooks. The school has roughly $648 million of outstanding debt.

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