Record Medicare Fraud Settlement Announced

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Record Medicare Fraud Settlement Announced

HCA Inc., the nation’s largest for-profit hospital chain, recently reached an agreement to settle claims in the government’s longest-running Medicare fraud investigation. Combined with previous settlements, HCA has agreed to pay a record $1.7 billion in civil and criminal penalties.

The company was charged with systematically overbilling Medicare as well as using illegal kickbacks to induce doctors to refer patients. According to “The New York Times,” among the most egregious billing abuses was a second set of cost reports maintained by HCA, Inc. The reports contained significantly lower expenses than those submitted to the government.

But even as the Justice Department settled their investigation of HCA, Inc., federal law enforcement officials raided the offices of two top executives of Tenet Healthcare, the nation’s second largest for-profit hospital. Tenet’s problems are mounting and include:

A government investigation into whether Tenet overcharged Medicare. Under Medicare, hospitals are paid a fixed amount for specific diseases, but they also qualify for special reimbursement if the cost for complicated conditions exceeds a certain amount. Tenet insists that it has broken no rules, but recently announced a billing policy change that will reduce reimbursements from $65 million per month to approximately $8 million per month. The Justice Department has filed suit.
Government investigators are also looking into whether two Tenet doctors performed hundreds of unnecessary heart surgeries and whether doctors at a hospital in San Diego may have been paid to refer patients.
Congress for California Seniors, a group representing more than 650,000 seniors, filed a lawsuit contending that Tenet engaged in a wide variety of illegal actions, including adding exorbitant mark-ups to prescription drugs and other hospitalization charges, as well as conducting unnecessary medical procedures. According to the complaint, Tenet set prices more than 1,000% above actual drug costs in California and twice the drug mark-ups by other hospitals. The suit asks for a return of all illegal profits received by Tenet. (For more information: Congress of California Seniors, 1228 N Street, #29, Sacramento, CA 95814, (916) 442-4474, (800) 543-3352, or online at http://www.seniors.org.)

Sources: “HCA Said to Reach Deal on Settlement of Fraud Case,” Kurt Eichenwald, “The New York Times,” December 18, 2002. “New Scrutiny for Another Tenet Hospital,” Reed Abelson and Andrew Pollack, “The New York Times,” December 20, 2002. “Tenet Unveils Pricing Changes, Slashes Annual Profit Forecasts,” Rhonda Rundle, “The Wall Street Journal,” December 4, 2002. “Seniors File Suit Against Tenet Healthcare for Price Gouging,” Congress of California Seniors, December 19, 2002.

To learn how you can protect yourself from common hospital overcharges, see “Hospital Overcharges May Cost You” at http://www.tscl.org/NewContent/101809.asp.

For a related story, see “Government Wasted $19 Billion in 2001” at http://www.tscl.org/NewContent/101724.asp.

April 2003