HHS, DoJ Study Medicare Billing at Lovelace System
The Department of Justice and HHS are investigating the Medicare cost reports of a New Mexico health care group owned by Cigna, the New York Times reports (Freudenheim, New York Times, 3/1). The investigation, which was revealed by Cigna in an annual Securities and Exchange Commission filing, focuses on the cost reports for services that Lovelace Health Systems, Inc., based in Albuquerque, N.M., said it provided to Medicare beneficiaries from 1990 to 1999. Such reports are the basis of Medicare payments to hospitals. Lovelace includes a hospital, physician network and health plan. The costs of the Medicare services being investigated make up 2% to 6% of Lovelace's annual revenue, Cigna said (Martinez, Wall Street Journal, 3/1). Lovelace serves about 250,000 people and brings in less than 1% of Cigna's overall revenue, Prudential Securities health care analyst David Shove said. Cigna bought Lovelace in 1990 from Equicor, a joint venture of the Hospital Corporation of America -- now called HCA -- and the Equitable Life Assurance Company of America. Lovelace "is not the first offshoot of HCA to have its Medicare reports scrutinized by government investigators," the Times reports (New York Times, 3/1). HCA paid $800 million to partially settle Medicare fraud charges with the government in 2000. Roberta Goodman, an analyst for Merrill Lynch, said, "The outcome and the financial impact of this [investigation] are uncertain," adding that the investigation is "obviously not a positive." Shares of Cigna fell $4.18, or 4.45%, after the disclosure, to close at $89.70 (New York Times, 3/1).