Columbia/HCA problems should be a warning
September 1, 1997 5 minutes read
Columbia/HCA problems should be a warning
Take action now to avoid compliance problems
The problems faced by the Columbia/HCA health care organization are a warning to risk managers across the country, experts say. Columbia/HCA may be portrayed in the media as an exceptional example of how the government will target Medicare and other billing fraud, but the truth is that smaller health care organizations across the country can fall prey to exactly the same treatment.
"The experience at Columbia/HCA sends a clear message that people need to be prepared and start actively addressing issues in their own organization," says Maureen Archambault, RN, MBA, HRM, regional director and assistant vice president MMI Companies, a health care consulting firm in Irvine, CA. "Columbia/HCA is big and easy to start with, but there’s no reason to think it will stop there."
And Columbia/HCA’s woes are indeed gargantuan. The organization continues to suffer indignity after indignity in the ongoing investigation into its billing practices, with the company facing raids by agents of the Federal Bureau of Investigation, the resignation of its chairman, and indictments of three of its executives.
The FBI executed search warrants on 35 Columbia/HCA sites in six states on July 16, seeking documents related to hospital laboratory billing and home care. The raids took place in Florida, Texas, Tennessee, North Carolina, Utah, and Oklahoma. The raids were part of a continuing probe into the health care giant’s billing practices, which first became public in March when investigators raided Columbia/ HCA’s facility in El Paso, TX. The probe has addressed allegations that Columbia/HCA physicians violated anti-kickback laws, as well as other abuses related to Medicare. Much of the investigation concerns blood tests and billing procedures for them, with allegations that Columbia/HCA routinely obtained and billed Medicare for blood tests that were not needed and that physicians did not request.
While raiding the Columbia/HCA facilities in July, the FBI also executed search warrants at the Florida offices of Olsten Health Management, a company based in Melville, NY, that manages 150 health care agencies across the country for Columbia/HCA. Only a few days later, state attorneys general in Texas and Alabama announced that they are conducting a parallel investigation into possible malfeasance with Medicaid billing within Columbia/HCA. In Alabama, the investigation is concentrated on Columbia Northwest Medical Center in Russellville, where authorities suspect double-billing of Medicaid.
As a result of the July raids, Columbia/HCA’s stock fell 12% in one day, to $34.125 per share. The stock price rebounded later to pre-raid levels. At about the same time, a New York law firm announced that it was filing a shareholder lawsuit against some directors and officers of Columbia/HCA.
"The complaint alleges that defendants breached their fiduciary duties to the company and are liable to the company for, among other things, abuse of control, waste, and gross mismanagement," according to a statement issued by the law firm of Zwerling, Schacter & Zwerling. "It is also alleged that defendants have caused the company to violate numerous state and federal laws, including the anti-fraud and anti-kickback provisions of the Social Security Act, the False Claims Act, the Securities Exchange Act of 1934, the Sherman and Clayton Anti-Trust Act, the tax laws of the United States and the criminal laws of the United States, and the tax laws and criminal laws of the various states in which Columbia does business."
Columbia/HCA chairman Richard Scott was among those named in the lawsuit. He resigned in July amid accusations that some Columbia/ HCA directors benefitted financially by trading Columbia stock while in possession of nonpublic information. At about the same time, a federal grand jury indicted three executives who had been top officers in the company’s Florida operations, charging them with defrauding the government through Medicare fraud. All three were charged with a conspiracy to overstate the expenses of Fawcett Memorial Hospital in Port Charlotte, FL. They are Robert Whiteside, reimbursement director at Columbia’s headquarters in Nashville; Michael T. Neeb, chief financial officer of Columbia’s North Florida operations; and Jay A. Jarrell, chief executive officer of Columbia’s Southwest Florida operations. The indictments allege that the three executives filed annual cost reports with Medicare, claiming interest on the hospital’s long-term debt was completely related to capital expenditures, when 61% of the interest costs actually were related to administrative expenses. Medicare reimburses administrative expenses at a lower rate.
According to the indictment, the hospital mischaracterized the interest costs for several years and received overpayments from Medicare of $539,984 in 1992 and $1.2 million in 1993. If convicted, each executive faces up to 25 years of imprisonment and fines of up to $1.25 million.
While Columbia/HCA’s experience may seem especially harsh, Archambault notes that other institutions are being investigated just as aggressively, but without the same media attention. "Every day, investigators are going out to hospitals across the country and the same things are happening at those facilities," she says.
A similar warning comes from Jerry Nye, MHA, vice president of the Profile Group of MMI Companies, a consulting firm in St. Paul, MN. He says it would be a mistake to think Columbia/ HCA is just a very bad actor in Medicare fraud, and that is why the government is addressing the company so strongly. "You absolutely should fear falling under the same scrutiny," he says. "This emphasis on fraud is affecting both for-profits and nonprofits, and all sorts of health care organizations. The federal government is getting very aggressive in looking at providers for fraudulent and abusive billing practices."
And to make matters worse, Nye points out that the government no longer accepts the excuse that you just didn’t understand your billing was in error. Even though a good-faith effort that results in overbilling would be considered abusive billing instead of fraud, the government still will levy fines and consider harsh penalties such as disqualifying your organization from Medicare participation.
Nye also says that the recent rash of mergers and acquisitions in health care can increase the chance that your organization will be targeted for improper billing. When there were just three physicians in a group, for instance, the group’s Medicare billing errors may have been overlooked because the money amount was so small. But when there are 100 physicians in the group, those same errors suddenly add up to an amount that will get the attention of investigators.
Risk managers should not just sit back and watch Columbia/HCA suffer, hoping that the same thing won’t happen to them. Archambault and Nye suggest taking action immediately to see that your organization is in compliance with billing rules. In particular, they advise consulting with administration about compliance plans. In recent years, health care risk managers have taken a much more substantial role in developing and implementing compliance programs; Nye suggests this is when that responsibility comes into play.
"You need to be doing the assessments of your practices now and get whatever assistance you need," Archambault says. "You definitely need to keep the administration in the loop because administrators can be found personally responsible and liable. And you should be working very, very closely with your coding and billing people to ensure that they are following proper procedures, and know what can happen if they don’t."
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