Three Miami-area medical professionals were ordered to prison this week for their roles in a $23 million Medicare fraud scheme involving bogus billings for HIV infusion therapy, the U.S. Departments of Justice and Health and Human Services has announced.
Physician assistant Jose Diaz, 62, and medical assistants Lisandra Aguilera, 40, andEstrella Rodriguez, 43, received prison terms Monday of four-and-a-half years, five years, eight months, and four-years, eight months, respectively, after pleading guilty in U.S. District Court in Miami to one count of conspiracy to commit healthcare fraud, DOJ and HHS said in a media release.
The trio worked at Metro Med of Hialeah Corp., a purported HIV infusion clinic that paid kickbacks to Medicare beneficiaries in exchange for the use of their Medicare identification numbers. From April 2003 through October 2005, Metro Med submitted $23 million in false claims related to the bogus treatments, of which Medicare paid $11.7 million, DOJ and HHS said.
Diaz instructed Metro Med owner Damaris Oliva which medications and in what amounts to bill Medicare to ensure a maximum reimbursement. Diaz, Aguilera and Rodriguez falsified patient files to indicate that the treatments were medically necessary. Aguilera and Rodriguez signed medical records falsely indicating that treatments were provided. Aguilera and Rodriguez also fabricated medical records to show that Metro Med patients had received specific dosages of medications. Aguilera manipulated patient blood samples to make it appear that unnecessary injection and infusion treatments were medically necessary, federal prosecutors said.
The trio was aware that beneficiaries were getting cash kickbacks in exchange for allowing Metro Med to bill Medicare using their ID numbers, DOJ and HHS said.
All three were charged in a July 2010 indictment, along with Oliva and Rene De Los Rios, MD. All five defendants now have pleaded guilty or been convicted. Oliva was sentenced in December to six years, eight months in prison. De Los Rios was convicted on April 14 of five felony counts by a federal jury for his role in the scam and will be sentenced on June 27, DOJ and HHS said.
Cardinal Health Inc. will pay the federal government $8 million to resolve whistleblower claims that it paid kickbacks to pharmacy owners to induce referrals for the distributor's prescription drugs, the Department of Justice said.
The settlement with Dublin, OH-based Cardinal Health resolves a whistleblower False Claims Act lawsuit filed by former pharmacy owner R. Daniel Saleaumua and pharmacy consultant Kevin Rinne.
Saleaumua alleged that Cardinal paid him $440,000 in exchange for an agreement that he purchase from Cardinal prescription drugs for his pharmacies. Saleaumua and Rinne will receive a combined $760,000 as their share of the government's recovery.
"American taxpayers are the victims of illegal kickback schemes that result in Medicare and Medicaid paying millions of dollars more than they should for prescription drugs," said Beth Phillips, U.S. Attorney for the Western District of Missouri, whose office led the investigation. "Today's $8 million settlement underscores our commitment to combating healthcare fraud and protecting taxpayers."
Cardinal Health issued a statement acknowledging the settlement with the federal government, but denied any wrongdoing and referred to the alleged kickbacks as an "upfront discount."
"The transaction did not result in the Government paying more than it was obligated to pay for pharmaceuticals provided by the customer to federal health care program beneficiaries. Cardinal Health strongly believes that it acted appropriately and complied with all applicable laws and regulations," Cardinal Health said in a prepared statement. "In the settlement agreement, Cardinal Health explicitly denies the contentions of the Government and the Plaintiffs. In addition, Cardinal Health contends that the complaint by the plaintiffs contains numerous inaccuracies. While Cardinal Health believes it would have prevailed in litigation, the Company settled for the purpose of avoiding the time and expense of protracted litigation."
The Department of Justice has used the False Claims Act to recover more than $5.5 billion since January 2009 in cases involving fraud against federal healthcare programs.
Community Health Systems Inc. has confirmed that it is the subject of "overlapping claims" in several federal investigations that the for-profit hospital chain said could be related to claims that it overbilled Medicare.
In a filing Monday with the Securities and Exchange Commission, Franklin, TN-based CHS said it was told last Friday that the U.S. Justice Department would intervene in a whistleblower lawsuit filed in Fort Wayne, IN, against CHS and affiliate Lutheran Hospital.
The Justice Department had previously declined to intervene. However, federal investigators said in a motion filed in U.S District Court in Fort Wayne that their investigations were being "consolidated" and centered around"allegations of improper billing for inpatient care at other hospitals associated with Community Health Systems, Inc...asserted in other qui tam complaints in other jurisdictions," CHS said in its SEC filing.
The federal motion said that investigating agencies that were "closely coordinating" a review of the "overlapping allegations" against CHS include the Civil Division of the Department of Justice, multiple United States Attorneys' offices, and the Office of Inspector General for the Department of Health and Human Services.
In addition, federal officials said in the motion that they are also working with the Texas Attorney General's Office, and with any state prosecutors who are examining CHS, the hospital chain said in its SEC filing.
The motion also states that the Office of Audit Services for the Office of Investigations for HHS will conduct a national audit of CHS' Medicare claims. The government told CHS it considers the allegations of Medicare overbilling made in a federal lawsuit by rival Tenet Healthcare Corp. "related" to similar allegations made in the Indiana whistleblower suit.
Tenet Healthcare Corp., filed a federal complaint alleging that CHS overbilled Medicare by as much as $377 million using medically unnecessary admissions that improved its bottom line and appeal to investors.
The allegations by Dallas-based Tenet are the latest chapter in a very public bare-knuckle brawl between the two for-profit hospital chains, who have exchanged charges and countercharges since November, when Tenet rejected what it said was CHS' "grossly undervalued" $6-a-share buyout offer.
CHS said in its SEC filing that it was cooperating with federal investigators.
We hear about voracious trial lawyers and defensive medicine, new-fangled "must have" medical technologies, ballooning executive salaries, institutionalized inefficiencies, and expensive and overused imaging. To say nothing of outright fraud and incompetence. There are scores of explanations, and no doubt they all contribute in some way to healthcare inflation, which always seems to be growing at least three times faster than overall inflation.
One obvious driver, however, that we don't talk about much is the more than 14 million people who work in healthcare. Healthcare is labor-intensive, and labor is the highest single budget item for most healthcare organizations, grabbing about 60% or more of the budget at hospitals. Compensating 14 million people doesn't come cheap.
Last week, Standard & Poor's Healthcare Economic Indices reported that the average per capita cost of healthcare services covered by commercial insurance and Medicare grew 6.19% over the 12 months ending in February. (The Consumer Price Index showed that overall inflation grew by 2.1% for the same period.) What's interesting is that the rate of growth in healthcare inflation has been steadily decelerating since it hit a high water mark of 8.74% for the 12-month period ending May 2010. Since then the rate of cost growth has declined by 2.5 percentage points.
"What appears to be moving the index? The answer appears to be employment," David M. Blitzer, chairman of the Index Committee at Standard Poor's, tells HealthLeaders Media."It is a reminder that this is a labor-intensive industry, which suggests that it is going to be very hard to tackle costs. Most labor-intensive industries tend to have prices that rise faster than the CPI. It is easier to get a faster computer to replace an older, slower one than it is to find a new doctor who is faster than the old one."
In his report last week, Blitzer noted that "while growth in hospital wages has remained relatively stable over the past year, in the range of 3% - 4%, hospital employment growth has slowed significantly. Between 2008 and early 2009, annual hospital employment growth rate was in the 2%- 3% range; however, since the middle of 2009, the rate has been consistently below 1%."
Blitzer explains that some of the slowing growth in healthcare costs reflects "a long-term undercurrent of trying to do more with less, and to push any particular task down to a less expensive and presumable less-skilled person."
"In some places this is very successful. Physician assistants (are) doing things that previously only doctors did. There are things that licensed practical nurses do compared with what registered nurses used to do as an effort to move tasks to less-expensive people," Blitzer says. "There are a lot of cases where this is perfectly fine. In fact you may have improvements because people are better utilized. The highly skilled surgeon just does the things that require his skill. One could argue that computerizing medical offices is a big step in that direction."
From a common sense perspective, Blitzer's points are valid.
There are some minor sticking points, however. For example, healthcare grew 280,000 new jobs over the 12-month period that ended in February, 2011, compared with 229,000 new healthcare jobs in the 12-month period that ended in February, 2010. How much will the addition of 50,000 healthcare jobs bend a curve in a $2.5 trillion industry? If you look at BLS data, the trending slower growth of healthcare costs that started last May does not necessarily match monthly trends in overall healthcare employment growth.
However, it'd be a mistake to draw too fine a linkage between specific healthcare employment data on any given month and the relative growth of healthcare inflation. There is a lot of fluidity in the healthcare industry. What's important is that Blitzer appears to be right on a key point: healthcare employment growth is a driver in healthcare inflation.
For healthcare human resources executives, the challenges now will be to address staffing needs in an era of chronic workforce shortages, while simultaneously reconciling the impact of rising labor costs on shrinking budgets. Let me know how that works out for you.
The board of directors at Tenet Healthcare Corp. on Friday afternoon unanimously rejected a reconfigured $6-a-share, all-cash offer from rival Community Health Systems, Inc., saying the proposal valued at $3 billion "grossly undervalues the company and is not in the best interests of Tenet or its shareholders."
Tenet noted in a media release that the April 18 CHS offer was the same price that CHS had offered on November 12, 2010 in a deal that included $5-per-share cash and $1-per-share of CHS common stock. The Tenet board also unanimously rejected that offer.
In a letter Friday to CHS President/Chairman/CEO Wayne T. Smith, Tenet President/CEO Trevor Fetter and Board Chairman Edward A. Kangas said the latest CHS proposal "continues to undervalue Tenet. Since Community Health's original $6 per share proposal was made, Tenet has demonstrated improving business trends, including the best fourth quarter results in seven years. In addition, industry fundamentals are improving, and Tenet's Outlook for 2011 and longer-term financial performance reflects strong growth."
Dallas-based Tenet's public rejection of the latest CHS offer is the latest twist in a very public and very bitter battle between the rival for-profit hospital chains that started in November with the Tenet board's initial rejection of the CHS offer. Scorned, CHS went public with its offer in December, alleging that the Tenet board was keeping its shareholders in the dark about the deal. CHS announced plans in January to pack the Tenet board with its own proxy candidates, who would approve the acquisition.
Earlier this month, Tenet filed a federal complaint alleging that CHS overbilled Medicare by as much as $377 million using medically unnecessary admissions that improved its bottom line and appeal to investors.
Franklin, TN-based CHS fire back that: "Tenet's allegations are completely without merit and we intend to vigorously defend ourselves against these unfounded and irresponsible claims." Last week, CHS asked a federal judge in Dallas to throw out a "baseless lawsuit," saying it was "entirely without merit and contains a number of fatal flaws."
Also Friday, CHS issued a statement saying it was "disappointed that the Tenet Board of Directors rejected our all-cash offer and refuses to engage with us. Instead of focusing on creating shareholder value, the Tenet Board elected to bring an irresponsible lawsuit. Despite the Board's strategy of entrenchment, we remain ready to engage in constructive discussions to move this transaction forward. We would welcome the opportunity to review additional information Tenet can provide and are prepared to recognize any additional value it can demonstrate."
In their letter to Smith, Fetter and Kangas said the Tenet board "could not ignore the concerns regarding disclosure and regulatory compliance that we raised in the lawsuit Tenet filed against Community Health on April 11. Since filing that suit, a decision our Board did not take lightly, we have grown even more concerned. Although Community Health characterized our claims as "baseless" in its press release of April 11, Community Health subsequently disclosed that the Office of the Inspector General of the U.S. Department of Health and Human Services issued a subpoena in March 2011, and that this subpoena was similar in scope to one previously issued by the Attorney General of the State of Texas in November 2010."
Fetter and Kangas also reiterated what they called their "serious concerns about Community Health's ability to consummate the current proposal, let alone a proposal at a value our Board would consider as a basis for entering into discussions."
Health Management Associates, Inc.has entered into a joint venture partnership with the physician-owners of the 132-bed Tri-Lakes Medical Center in Batesville, MS, under which HMA will have a controlling interest and manage operations.
The deal, announced this week, is expected to be finalized by June 1. Financial terms were not disclosed.
When the deal is finalized, HMA will operate 60 hospitals, with approximately 9,000 licensed beds, in non-urban communities in 15 states.
"We are very pleased to have the opportunity to partner with the medical staff at Tri-Lakes Medical Center in serving the Batesville community, while broadening our Mississippi network of hospitals," Gary D. Newsome, president/CEO of Naples, FL-based HMA, said in a statement. "With our existing whole-hospital joint venture experience, our current presence in Mississippi and our operational expertise in managing non-urban medical centers, we believe we are uniquely situated to offer the processes, capital and expertise necessary to fulfill Tri-Lakes mission of delivering superior health care to the residents of Batesville and the greater Panola County area."
The average per capita cost of healthcare services covered by commercial insurance and Medicare grew 6.19% over the 12 months ending in February 2011, but those rates of growth continue to decelerate, Standard & Poor's Healthcare Economic Indices show.
February's results reflect a deceleration in healthcare cost growth from the 6.31% increase in annual growth rate posted in January 2011 for this index, S&P said.
Even with the deceleration, healthcare costs grew by more than triple the 2.1% growth in overall inflation as measured by the Consumer Price Index for the same 12-month period, Bureau of Labor Statistics data show.
In its six-year history, the highest annual growth rate for the S&P Composite index was during the 12-months ending May 2010, when it posted +8.74%. With February's report of +6.19%, claims costs growth rates have decelerated 2.5 percentage points in nine months, S&P said.
A further breakdown shows that, over the 12 months ending February, healthcare costs covered by commercial insurance rose by 7.97%, as measured by the S&P Healthcare Economic Commercial Index. Medicare claim costs rose at an annual rate of 3.22%, as measured by the S&P Healthcare Economic Medicare Index. This is the lowest annual rate of growth posted for the Medicare Index in its six-year history, S&P said.
"The slowdown in Medicare claim costs may be having some impact on other factors in the healthcare industry," said David M. Blitzer, chairman of the Index Committee at Standard Poor's, in a media release.
Blitzer said S&P observed some interesting trends in hospital and physician wages and employment that reflect the changes in claims costs. "While growth in hospital wages has remained relatively stable over the past year, in the range of 3% - 4%, hospital employment growth has slowed down significantly," he said. "Between 2008 and early 2009, annual hospital employment growth rate was in the 2%- 3% range; however, since the middle of 2009, the rate has been consistently below 1%."
Blitzer said that physicians, who may have more flexibility in their choice of insurance contracts, have not been impacted as severely. "Physician wages were growing by about 5.4% as of February 2011, almost double their pace of 12-months ago; employment has seen a slowdown, but still registered an annual growth rate around 2.5% as of February," he said. "If the growth in insurance claims costs continue to slow down, whether due to contract negotiations for commercial insurance, or Medicare regulations or both, we will likely see an impact on employment, wages and benefits in the healthcare industry."
The S&P Healthcare Economic Indices estimate the per capita change in revenues accrued each month by hospital and professional services facilities for services provided to patients covered under traditional Medicare and commercial health insurance programs. The annual growth rates are determined by calculating a percent change of the 12-month moving averages of the monthly index levels versus the same month of the prior year, S&P said.
On-call compensation for physicians is growing, a Medical Group Management Association survey shows.
MGMA's Medical Directorship and On-Call Compensation Survey: 2011 Report Based on 2010 Data shows that more providers who said they get on-call compensation were more likely to be compensated either daily or annually than in years past.
Thirty-five percent of providers reported receiving on-call compensation daily for the days they were on call and 21% reported receiving an annual payment for on-call coverage in 2010. Invasive cardiologists reported the highest median daily rate of on-call compensation at $1,600 per day on call. General surgeons earned a median of $1,150 per day and urologists earned $520 per day for on-call coverage, the survey showed.
Practice type can affect a physician's on-call compensation. OB/GYN physicians in single-specialty practices received median compensation that was twice that received by their peers in multispecialty practices ($500 versus $250, respectively). Invasive cardiologists reported a 33% difference in median on-call compensation between single-specialty ($1,000 per day) and multispecialty groups ($750 per day), the survey showed.
Practice size also influenced compensation for on-call coverage. Anesthesiologists made $450 per day in groups with 25 or fewer full-time-equivalent doctors, compared to $660 per day in groups with 26-75 FTE doctors. General surgeons in medical groups with 25 or fewer FTE doctors earned a median of $1,000 per day, and those in groups with 26-75 FTE physicians earned $1,475 per day, the survey showed.
"Despite the variability of on-call compensation based on location, specialty, group size, and other factors, physicians now are more likely to be compensated for on-call coverage than in the past, and the amount is increasing year to year," Jeffrey B. Milburn, with MGMA Health Care Consulting Group, said in a media release. "Physicians realize the value of their time and services and are negotiating compensation for on-call coverage."
Holiday and weekend on-call rates also varied by specialty. Almost all reporting physician specialties received higher holiday rates than weekend rates. Radiologists received $700 more for a holiday rate than a weekend rate. Orthopedists earned a median compensation of $1,025 for holidays. OB/GYN physicians reported a median on-call holiday rate of $125, the survey showed.
MGMA said its survey contains data on 3,084 on-call providers in 264 medical organizations and 1,529 medical directorships in 255 medical organizations.
The Federal Trade Commission and the Georgia Attorney General's Office jointly announced Wednesday that they are challenging as anticompetitive Phoebe Putney Health System, Inc.'s proposed $195 million acquisition of rival Palmyra Park Hospital, in Albany, GA from HCA.
In a complaint filed this week in U.S. District Court in Albany, the FTC and the Georgia AG also allege that Phoebe Putney constructed an elaborate scheme that used the Hospital Authority of Albany-Dougherty County, GA as a "straw man" to "cloak private, anticompetitive activity in governmental guise in the hopes that it would exempt the acquisition from federal antitrust law."
The Georgia AG and the FTC want a federal judge to delay the acquisition until the conclusion of the FTC's administrative proceeding and any subsequent appeals, the FTC and the Georgia Attorney General's Office said in a joint statement.
"We have challenged this transaction for one very simple reason," said Richard Feinstein, Director of the FTC's Bureau of Competition, in a media release. "By eliminating vigorous competition between Phoebe and Palmyra, this merger to monopoly will cause consumers and employers in the Albany region to pay dramatically higher rates for vital healthcare services, and will likely reduce the quality and choice of services available in the community as well."
Besides Phoebe and Palmyra, there is one other independently owned hospital within the six-county area around Albany. The merger would give Phoebe more than 85% of the market. By eliminating the direct and substantial competition between Phoebe and Palmyra, the transaction would give Phoebe the ability and incentive to increase reimbursement rates charged to commercial health plans and their members, leading to higher healthcare costs, the complaint said.
In addition, the complaint claimed that the deal will adversely impact the quality and breadth of services available in the Albany area. Phoebe and Palmyra have competed for patients in the general acute-care hospital services market. That competition has spurred each to increase the quality of its patient care; this "non-price" competition would be eliminated by the acquisition, the complaint said.
Phoebe's board approved a recommendation from its management that it make a formal offer to HCA for Palmyra on Oct. 7, 2010. However, instead of directly approaching HCA with its offer, Phoebe developed a plan under which the Authority would acquire Palmyra and then lease it to a non-profit corporation controlled by Phoebe.
The FTC contends this structure was arranged by Phoebe to avoid federal antitrust scrutiny. On Nov. 16, Phoebe made a formal offer to HCA for Palmyra, an offer that was not reviewed by the Authority. On Dec. 2, 2010, Phoebe's board approved the final terms of the deal, but the transaction still had not been presented to the Authority. The deal was presented to the Authority for the first time at a special meeting held on Dec. 21, 2010. At that meeting, the Authority approved the deal that would give Phoebe control over Palmyra immediately after the deal was closed, the complaint states.
Federal and state officials said they expect Phoebe, the Authority, and HCA to argue that the transaction is exempt from federal antitrust liability under the "state action" doctrine – which provides an exception for anticompetitive conduct if it is an act of government. In this case, the complaint alleges, the transaction was motivated and planned exclusively by Phoebe, acting in its own private interests.
And, rather than acting in the State of Georgia's interests, the complaint alleges that the Authority was a "straw man" used to shield an "overtly anticompetitive transaction from antitrust scrutiny." Even though it had no independent analysis of the deal, the Authority committed $195 million to the purchase without considering the adverse effects the deal would have on healthcare prices in the area, and played no supervisory role in connection with the transaction, the complaint states. The complaint states that since at least 1990, the Authority has not actively supervised Phoebe in any way, and has made no effort to review any of the hospital's recent price increases. Thus the "state action" doctrine cannot be used as a defense, the complaint alleges.
The FTC voted 5-0 to issue the administrative complaint and authorize staff to file a complaint for preliminary injunction in federal district court. The evidentiary hearing is scheduled before an administrative law judge at the FTC on Sept. 19.
In a statement issued late Wednesday, an HCA / Palmyra Medical Center spokesman said, "We are aware of the filing, and are awaiting judge’s decision."
Joel Wernick, President and CEO of Phoebe Putney Health System said in a statement, "In response to the FTC filing, we are currently awaiting the judge’s decision. The Hospital Authority of Albany-Dougherty County and Phoebe have cooperated 110% with FTC requests for information. The FTC’s attempt to block this transaction is disheartening because we remain confident, especially with the increasing demand for collaboration in health care delivery, this transaction will benefit the health of the citizens in our community."
Community Health Systems, Inc. has asked a federal judge in Dallas to throw out a "baseless lawsuit" brought by rival Tenet Healthcare Corp., alleging that CHS practices widespread and systematic overbilling of Medicare.
In a petition filed in U.S. District Court for the Northern District of Texas on Tuesday, Franklin, TN-based CHS said the Tenet suit is "entirely without merit and contains a number of fatal flaws."
CHS said that its move this week to reconfigure its Tenet buyout offer to $6 a share in cash – replacing a previous offer of cash and stock -- negates Tenet's primary basis for a federal securities lawsuit. "Now that the offer is all cash, and the stock component has been eliminated, so has Tenet's pretext for alleging a securities law violation. For this reason alone, Tenet's claim must be dismissed," CHS said in its filing.
Dallas-based Tenet issued a brief statement in response to the CHS filing, stating: "This changes nothing. We intend to vigorously prosecute our claims."
The CHS filing is the latest twist in a very public and very bitter battlebetween the rival for-profit hospital chains. Last November, Tenet's board rejected what it said was a "grossly undervalued" acquisition offer by CHS, of $6 per share, which included $5 per share in cash and $1 per share in CHS common stock. Scorned, CHS went public with its offer in December, alleging that the Tenet board was keeping its shareholders in the dark about the deal. CHS announced plans in January to pack the Tenet board with its own proxy candidates, who would approve the acquisition.
Earlier this month, Tenet filed the federal suit alleging that CHS overbilled Medicare by as much as $377 million using medically unnecessary admissions that improved its bottom line and appeal to investors. CHS has denied the allegations, but last week confirmed that it has received a subpoena, dated March 31, from the Office of Inspector General, related to an investigation of "possible improper claims submitted to Medicare and Medicaid."
In its motion on Tuesday to dismiss the suit, CHS also claimed that:
Tenet's suit attacks the ethics and professional judgment of thousands of attending physicians at CHS-affiliated hospitals, which has no basis and is not material to the proxy contest concerning the election of Tenet's directors.
Tenet is not seeking to compel CHS to disclose facts, but instead is attempting to compel CHS to confess some sort of culpability, which has no basis under the securities laws.
A ruling for CHS will dispose of this case in its entirety.
