DHS To Audit Billing Practices of All 40 Tenet Facilities in the State

The Department of Health Services will audit billing practices at all 40 Tenet Healthcare-owned hospitals in the state after finding that Redding Medical Center overcharged state programs by nearly $12 million, the Los Angeles Times reports. A state review of the Tenet-owned Redding facility showed that during a two-year period ending May 31, 2001, Redding received $11.9 million in excess payments from the County Medical Services Program, which funds treatment for low-income rural residents, and Medi-Cal. According to the review, Redding billed the state programs for inappropriate codes and "costs that were either not allowable or could not be documented." The review also found that Redding's financial records revealed "numerous inaccuracies and questionable costs for which Medi-Cal and CMSP should not have paid, including: inflated billing charges; manipulated Medi-Cal billing codes; inappropriate recording of costs and charges; cost report errors consistently favorable to the hospital; undocumented depreciation expenses; unsubstantiated interest expense charges; [and] inflated workers' compensation costs." The Redding facility has repaid almost $8.9 million of the overpayments and has 60 days to repay an additional $3 million and appeal the decision, state officials said. Diana Ducay, DHS deputy director of audits and investigations, said the investigation will be expanded beyond Redding to "ensure that these inconsistencies are not widespread," adding that the health department will send its findings to the state Department of Justice, the FBI and CMS. Tenet Spokesperson Steven Campanini said, "We dispute the findings as presented in the California Department of Health Services news release, and we will appeal them."

The investigation is the "latest in a string of setbacks" for the company, according to the Times (White, Los Angeles Times, 11/4). In August, Tenet officials agreed to pay $54 million to settle allegations that two Redding-based physicians performed unnecessary heart surgeries and defrauded Medicare. Since October 2002, the Senate Finance Committee, the Securities and Exchange Commission, the HHS Office of Inspector General, the Justice Department and the Federal Trade Commission have launched separate investigations into Tenet related to alleged Medicare fraud and other issues. The company also faces an investigation by the Florida Medicaid Fraud Control Unit. Most recently, the U.S. attorney's office in Los Angeles has requested documents related to coronary procedures and billing practices at three Los Angeles-area hospitals (California Healthline, 11/3).

Meanwhile, Senate Finance Committee Chair Charles Grassley (R-Iowa) has sent a letter requesting that Blue Cross of California cooperate with the committee's probe into alleged unnecessary heart procedures at Tenet hospitals (Los Angeles Times, 11/4). On Friday, Dr. Woodrow Myers, chief medical officer for Blue Cross, said an independent review of 52 bypass operations performed at Redding and Modesto-based Doctors Medical Center showed that 85% of those performed at Redding and 59% of those performed at Doctors were inappropriate. Myers said that as of the first week in October, Blue Cross will no longer authorize elective bypass operations at the two facilities. Steve Newman, chief executive of Tenet's California operations, said in a statement Friday that Blue Cross "made serious allegations based upon a very small sample of cases." He added that Tenet has proposed further patient safeguards at Redding and Doctors while the company reviews the cases (California Healthline, 11/3).

In other news, Tenet officials on Monday announced the sale of six hospitals in four states for a total of $565 million, the AP/San Francisco Chronicle reports. Tenet has closed deals with Health Management Associates on the purchase of Florida-based Seven Rivers Community Hospital; Missouri-based Three Rivers Healthcare System and Twin Rivers Regional Medical Center; and Tennessee-based Harton Regional Medical Center and University Medical Center. Tenet also has sold Pennsylvania-based Elkins Park Hospital to Albert Einstein Healthcare Network. The sales are part of an ongoing plan to sell 14 facilities to cut costs, according to the AP/Chronicle. Tenet now owns and operates 106 acute care hospitals with 26,216 beds and employs about 109,500 people in 16 states (AP/San Francisco Chronicle, 11/3).