Feds on the trail of megabuck Medicare overpayments

Business & Health,  August, 1997  

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The ongoing federal probe of whether Columbia/HCA fraudulently inflated its Medicare bills got bigger and hotter--and the company's chairman resigned--just as the government released a major report on billions of dollars in overbilling throughout the Medicare system.

The first comprehensive audit of Medicare, released by Health and Human Services in July, reveals $23 billion--14 percent of program costs for 1996--in overpayments. The biggest chunk--35 percent--went to hospitals and clinics. Most of the remainder was paid to doctors, home health agencies, nursing homes and medical laboratories.

HHS Inspector General June Gibbs Brown said it was impossible to determine how much of the tab is linked to fraud because HCFA's records and those of many Medicare contractors are in disarray. But an exhaustive review of more than 5,000 claims by Brown's office found that 30 percent did not comply with Medicare regulations.

Meanwhile, the FBI executed search warrants on Columbia/HCA facilities in seven states Florida, Georgia, North Carolina, Oklahoma, Tennessee, Texas and Utah--and on the Florida offices of Olsten Health Management, which manages about 150 home health agencies for the chain. At least four Columbia/HCA employees in Florida have been subpoenaed to testify before a grand jury.

Columbia spokesperson Eva Hutcherson told B&H, "It is the company's understanding that the warrants requested various records and documents primarily in two separate areas: hospital laboratory billing and home care operations. We're continuing to try and get information," she added, noting that the affidavits authorizing the warrants are sealed.

It's unclear what impact all this may have on rumored merger talks between Columbia and Tenet Health Corp., the nation's second-biggest publicly traded hospital company.

Tenet itself weathered a federal investigation several years ago under the name of National Medical Enterprises. Although the government collected $380 million in fines and penalties, there were no criminal prosecutions. Sources close to the Columbia investigation say the feds intend to send a much stronger message this time around, according to The Wall Street Journal.

The message to the stock market is already disturbing. As Columbia's share price bounced around, investors filed suit in late July, alleging that some of its top officers--including founder and chairman Richard Scott--caused the company to violate state and federal antifraud and antikickback provisions. Finally, the Columbia board--some of whom had suffered multimillion dollar paper losses from the stock gyrations--got Scott's resignation.

Should all this talk of overbilling to a government program worry private employers? You bet!

"The aberrant billing patterns affecting Medicare are affecting the private side," says Joyce Hansen of Integrity Plus Services, a fraud prevention service offered by Northwestern National Life. "We have a lot of hospitals on our watch list," she says, careful not to name names.

Hansen's organization looked at 1994-95 billing records totaling $40 million and found that 4 percent of providers had submitted questionable claims for more than 10 percent of the total dollars paid out.

Managed care is not immune, warns Hansen, noting that 30 percent of those questionable claims came from managed care providers. Her advice to employers:

* Learn all you can about health care fraud.

* Ask your claims payer how it fights fraud and what it saves as a result.

* Educate employees about fraud and abuse. Urge workers to study the EOBs (explanation of benefits) they receive and to bring any discrepancies to the attention of health plan representatives.

COPYRIGHT 1997 A Thomson Healthcare Company
COPYRIGHT 2004 Gale Group