COLUMBIA/HCA: Agrees to Pay Government $745M for Fraud
Columbia/HCA Healthcare Corp. tentatively agreed this week to a $745 million settlement with the federal government to partially resolve charges that the company "systematically defrauded" Medicare and other federal health programs (Brubaker, Washington Post, 5/19). If approved, the civil penalties would be "by far the largest health care fraud settlement ever obtained by the Justice Department" and would cover three areas, all "involv[ing] technical financial issues that the government contends resulted in overpayments to Columbia." According to government investigators, the company engaged in "upcoding," in which hospitals upgrade the seriousness of illnesses to receive larger Medicare payments, and improper bundling, in which Columbia's laboratories allegedly added "unnecessary diagnostic analysis onto simple blood tests." The government also accuses Columbia of reporting marketing expenses as community education, resulting in higher reimbursements. Further, Columbia allegedly "billed for services to patients who did not qualify" for home care. While the proposed agreement would settle these charges, criminal allegations that Columbia "hospitals fraudulently overstated their expenses to increase reimbursement from Medicare ... and engaged in illegal financial relationships with doctors" remain unsettled (Eichenwald, New York Times, 5/19). The company could face hundreds of millions of dollars in additional fines (Hiltzik/Rubin, Los Angeles Times, 5/19). Under the terms of the arrangement, Columbia would have until Dec. 31 to settle these criminal cases or the "government stands to lose hundreds of millions of dollars, while Columbia would return to square one in the negotiating process -- or be on its way to trial." Senior Columbia executive Victor Campbell said health system officials had hoped to "get a global settlement" on all charges, but he explained, "[W]e were at a point in time on three areas where we felt we could get a settlement and thought we should proceed with that" (New York Times, 5/19). He added, "We think this is a very significant step" (Lagnado, Wall Street Journal, 5/19).
Attorney Stephen Meagher, who represents several whistleblowers in the case, said the agreement is "an elegantly crafted settlement to put the arm on everybody to get the rest of the deal done" (New York Times, 5/19). Federation of American Health Systems President and CEO Tom Scully added that the deal is "good for Columbia because it clears the decks and lets them get back to running hospitals." But Rep. Pete Stark (D-Calif.), ranking minority member on the House Ways and Means health subcommittee, denounced the settlement as too "gentle." He said, "I absolutely feel somebody has to go to jail. There's no question there was wanton criminal activity at the highest level, and I see no reason they should continue to treat Medicare patients" (Los Angeles Times, 5/19).