COLUMBIA: Affidavit Details Extensive Fraud
The federal government yesterday "for the first time ... publicly disclosed the full range of ... inquiries" into Columbia/HCA Healthcare Corp.'s alleged scheme of Medicare fraud. The New York Times reports that the investigations are "focusing on whether the company cheated federal health programs, lied to a hospital accreditation program and offered illegal compensation for doctors' referrals of patients (Eichenwald, 2/11). In addition, "newly released portions of an affidavit" show that the health care giant bilked Medicare out of "tens of millions of dollars through its extensive home-health operations." The Wall Street Journal reports that the affidavit, used by the Federal Bureau of Investigation to raid a Columbia facility in Florida last summer, "paints Columbia as a company on a mission to expand its home-health operations, even if it meant bending or breaking federal Medicare rules." It said the company "improperly shifted some expenses onto taxpayers through the Medicare system" and claims that Columbia employees have been "predators" in seeking out patients to refer to their own home-health operations (Rodriguez, 2/11). The affidavit also alleges that Columbia "improperly portrayed nonreimbursable costs for marketing and sales as 'community education,' which are reimbursable," according to the Times (2/11).
Leaving A Trail
The Bloomberg News/Washington Times reports that the government investigation extends to Columbia hospitals in El Paso, Texas, Salt Lake City and Florida, according to the affidavit (Heldman, 2/11). In El Paso, federal investigators are determining "whether Columbia falsified records submitted to the national hospital accrediting agency, the Joint Commission on Accreditation of Health Care Organizations." According to the St. Petersburg Times, officials are suspicious that "Columbia illegally rewarded doctors for patient referrals in El Paso" (Hundley, 2/11). The affidavit contends that in Salt Lake City, "one of several cities where FBI agents staged raids to seize documents, agents 'uncovered a billing- fraud scheme involving Columbia hospitals operating throughout the United States." The Reuters/Philadelphia Inquirer reports that federal investigators in Salt Lake City "are centered on alleged Medicare overcharging involving billing for routine lab tests" (Drawbaugh, 2/11). In the Tampa market, the affidavit claims that Columbia "was especially aggressive" in training employees to sell a number of services and that its "misuse of home care coordinators was particularly flagrant." The St. Petersburg Times reports that compensating employees who were actually salespersons added "$30 million to $40 million annually to Columbia's Medicare reimbursements," while home care coordinators were used to "[funnel] discharged patients into Columbia's home-health program" (2/11).
The affidavit also questions Columbia's "transactions" with Olsten Health Management, a subsidiary of NY-based Olsten Corp. It reveals that Columbia would "[low-ball] the purchase price" of Olsten's home-health facilities and set up a "lucrative management agreement," which would allow it to benefit from Medicare's reimbursement of management fees (Wall Street Journal, 2/11). Under these management agreements, Olsten would "bill between $9.95 and $10.50" per patient visit, allowing Columbia "to shift acquisition costs that are not reimbursable by the government into administrative costs that are." According to the New York Times, Columbia then duplicated Olsten-rendered services in paying three dollars to a management agency, therefore charging Medicare $13 a visit "of which three dollars is the true cost of services" (2/11). The Denver Post reports that in Denver, where Columbia acquired an Olsten-owned facility, Columbia company officials said "they don't believe the alleged [Medicare] overbilling occurred" in the city's market. "Our information is that this (affidavit) has zero to do with Colorado," said Maureen Tarrant, a spokesperson for the Columbia-HealthONE hospital system in Denver.
The Bloomberg News/Washington Times reports that yesterday's disclosure "left Columbia shares, down more than 40% since the investigation was revealed in March, unchanged at $25.75 because they confirm what most investors already were assuming," according to ABN Amro analyst Peter Costa (2/11). Vic Campbell, Columbia's senior vice president, said the affidavit did not reveal anything new. "We will continue to work toward a resolution of all outstanding issues with the appropriate government authorities," he said (St. Petersburg Times, 2/11).