Tenet Healthcare Corp., embroiled in a hostile takeover attempt by Community Health Systems Inc., has filed a federal complaint alleging that its bitter rival 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."
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.
"We filed this complaint because our due diligence revealed that Community Health has been systematically overbilling Medicare and likely other payers by causing patients to be admitted to its hospitals when industry practice is to treat them in outpatient observation status," Tenet spokesman Rick Black said in a statement. "We believe this unsustainable strategy has resulted in Community Health overstating its inpatient admissions, revenues and profits and has created substantial financial and legal liability. We are seeking to provide Tenet stockholders with the information they need to make an informed decision by asking the court to compel Community Health to correct its false and misleading statements and omissions."
According to the 70-page complaint filed Monday morning in U.S. District Court in Dallas, Tenet claimed that "CHS has for many years systematically billed cases as higher-paying inpatient admissions that would have been billed as lower-paying outpatient observations in most U.S. hospitals."
"CHS' strategy of driving up admissions and driving down observations is unsustainable," Tenet said. "It depends on a continuing pipeline of acquisitions of hospitals with normal observation rates that can be driven down." Tenet said its research shows that after CHS acquired Triad in 2007, Triad's observation rate dropped 52%.
Tenet said it identified 63,000 Medicare fee-for-service inpatient admissions from 2006-2009 at CHS hospitals that would have been outpatient observations if CHS was within the national average. The high volume and lowest acuity Medicare inpatient admissions paid on average more than $3,300 per patient than for outpatient observation.
Medicare FFS patients generated 27% of CHS' net operating revenue in 2010, Tenet alleged in the complaint. As a result of the alleged unnecessary admissions, Tenet said it identified between $280 million and $377 million in overbillings in 2006-2009.
If Tenet's allegations are true, CHS could be liable for triple damages under the False Claims Act that would be in excess of $1 billion.
CHS insisted in its statement that it "conducts its business with the utmost integrity and adheres to the highest business practice standards. The bottom line is that these self-serving allegations are an attempt by Tenet's management and board to continue their entrenchment strategy and to distract Tenet shareholders from CHS's pending offer. Its actions today prove that Tenet has adopted a 'scorched earth' defense without regard for the best interests of shareholders. CHS remains committed to its offer to acquire Tenet and both Credit Suisse and Goldman Sachs have reaffirmed their confidence in financing the transaction."
Tenet said it filed the federal complaint to "compel CHS to disclose fully its unique and non-industry standard patient admissions criteria and billing practices and the financial and legal implications arising from them. The allegedly unusually high admissions at CHS hospitals have resulted in "materially misleading financial reports and statements" that included overstated admissions, revenues, profits, and cash flow, Tenet said.
Regular readers of this column know that when it comes to unions, my mantra has been "management gets the union it deserves." If your healthcare organization has a union, or is in the midst of organizing activity, chances are that poor management or some sort of management-labor communications breakdown played a role. Ultimately the responsibility falls on management.
That came to mind when I read a recent item in the management-friendly HR Daily Advisor entitled: Warning Signs – Unions Organizing Behind Your Back.
The item was a synopsis of observations made by Mark Ricciardi, a Las Vegas attorney specializing in labor issues. While the observations were not specific to healthcare, Ricciardi's telltale signs included:
Employees are unusually busy and excited
Talking stops or groups break up when supervisor nears
Employees request information about policies and benefits
A new "spokesperson" emerges
Employees who typically talk to supervisors no longer do so
Employees no longer look you in the eye
Employees question managerial authority
New employee alliances form
Changes in nature/frequency of employee complaints
Increases in argumentative questions at meetings
Increases in unauthorized "group" complaints
Employees seem increasingly divided
Poor performers show improvement
According to the Advisor, Ricciardi said HR should establish an "early warning system" that includes training managers to report all signs of labor activity, no matter how "trivial."
I believe these "warning signs" and "early warning systems" – however valid the advice – raise more questions about management than they do about workers. If working conditions at your healthcare facility have deteriorated to the point where "busy and excited" employees arouse suspicion and concern, you need new management. In fact, the very idea that a union could organize "behind your back" – as the title states -- positively screams that management has failed to engage employees.
Let's be clear. I'm not rapping Ricciardi or the Advisor, which I browse every day. What they're saying is exactly right. In fact, Ricciardi has also said on the Advisor that the best way to keep union organizers out is to "consistently practice good, solid, fair employee relations," which he believes can only be accomplished by thorough management training. Bingo!
Employee engagement is not an exact science, thank God, because human beings aren't robots. Each employee brings to the job his or her own personality, skills, values, demands, concerns, and pet peeves. Nonetheless, there are some universal truths that apply to the vast majority of people. For example, treat your employees with courtesy and respect. Make yourself available. Give them your time. Learn their names. Encourage them to voice their concerns and listen when they do. Try to act promptly on those concerns, and if you can't resolve the problem, explain why you cannot.
If management demonstrates a genuine belief that employees are valuable team members on a shared mission, then managers have nothing to fear when their backs are turned. We talk a lot about employee engagement. We should concentrate more on management engagement.
Two medical office workers in south Florida have been indicted on HIPAA violations and related charges for their alleged roles in an identity theft ring that used stolen patient information to access to their bank and credit card accounts, federal prosecutors said.
According to the indictment, defendants Erica Hall, 27, and Sharelle Finnie, 22, worked as office assistants at two separate medical offices in Coral Springs and Fort Lauderdale, respectively. The pair allegedly swiped patient information, including names, dates of birth, social security numbers, and other medical information, and sold it to co-conspirators. If convicted of the HIPAA violations, Hall and Finnie each face a maximum statutory term of 10 years in prison, federal prosecutors said.
Ten other alleged members of the theft ring – all Florida residents -- also were indicted on bank fraud, identity theft, and related charges, including:
Jasmin Rembert, 33, of Miramar;
Rufus Bethea, 30, of Hollywood;
Bianca Cook, 21, of Lauderhill;
Courtney Gissendanner, 28, of Hollywood;
Brandi Johnson, 39, of Miramar;
Demarcus Hough, 30, of Ft. Lauderdale;
Darren Baldwin, 43, of Ft. Lauderdale;
Aaron Hough, 30, of Hollywood;
Minnie Powell, 49, of Pembroke Pines;
Eloise Sermons, 24, of West Park
Sermons, Cook, and Hough remain at large.
Gissendanner was identified by prosecutors as the alleged ringleader. He would use the stolen information to illegally add himself and others as “authorized users” on the victims’ credit card and bank accounts. The defendants then used the stolen personal identification information to empty their bank accounts and run up credit card charges as high as $128,000 in one case.
Prosecutors said Rembert worked at the Broward County School Board in the teacher certification department, where she had access to – and allegedly stole and sold -- sensitive personal identification information from teacher certification databases.
If convicted of conspiracy to commit bank fraud, the defendants each face a maximum statutory term of 30 years’ imprisonment. If convicted of conspiracy to commit access device and identity theft, the defendants each face a maximum statutory term of five years’ imprisonment. If convicted of the substantive counts of access device fraud, the defendants each face a maximum statutory term of 10 years’ imprisonment.
Farzad Mostashari, MD, has been named National Coordinator for Health Information Technology, effective immediately. He replaces David Blumenthal, MD, who is returning to Harvard University after leading Office for the past two years, the Department of Health and Human Services announced.
Mostashari joined the Office of the National Coordinator in July 2009, serving as deputy national coordinator for the office, which is within the Department of Health and Human Services, said ONC in a media release.
Before that, Mostashari served at the New York City Department of Health and Mental Hygiene as assistant commissioner for the Primary Care Information Project, where he helped adopt prevention-oriented HIT used by more than 1,500 providers in underserved communities, ONC said.
Mostashari also led the NYC Center of Excellence in Public Health Informatics and an Agency for Healthcare Research and Quality funded project that focused on quality measurement at the point of care. Before that he established the Bureau of Epidemiology Services at the NYC Department of Health, charged with providing epidemiologic and statistical expertise and data for decision making to the health department, ONC said.
Trained at the Harvard School of Public Health and Yale Medical School, internal medicine residency at Massachusetts General Hospital, Mostashari completed the Centers for Disease Control and Prevention's Epidemic Intelligence Service.
Mostashari was among the first developers of real-time electronic disease surveillance systems and acted as a lead investigator in the outbreaks of West Nile Virus and anthrax in New York City, ONC said.
The pacing, the toe tapping, and the finger drumming ended last week for an anxious and expectant healthcare industry when the federal government – two months overdue – finally delivered its much anticipated 429-page proposed guidelines for accountable care organizations.
And even though the ACO program is voluntary and will be limited to only about five million Medicare beneficiaries when it opens on Jan. 1, 2012, there remains a sense among supporters and detractors that there is no going back – that no matter what happens during the ensuing public comment period, the healthcare world has changed forever.
When the proposed guidelines were released last Thursday, Health and Human Services Secretary Kathleen Sebelius boldly stated that ACOs will put patients and their doctors “in control” of their own healthcare. “For too long, it has been too difficult for healthcare providers to work together to coordinate and improve the care their patients receive,” Sebelius said, in the HHS media presentation. “That has real consequences: patients have gaps in their care, receive duplicative care, or are at increased risk of suffering from medical mistakes. Accountable care organizations will improve coordination and communication among doctors and hospitals, improve the quality of the care their patients receive, and help lower costs.”
The major healthcare lobbying groups offered noncommittal – and possibly prefabricated – immediate reactions to the guidelines – saying just enough to appease befuddled journalists asking fuzzy questions about a concept that many clearly do not yet understand, and careful enough to avoid aggravating the federal policyholders they’ll attempt to sway during the coming public comment period, but also reasserting their longstanding concerns about the impact of ACOs on their corner of the healthcare market.
“This is an historic effort among government agencies to achieve the goal of better coordinated care," said Linda Fishman, senior vice president for Policy at the American Hospital Association, in a statement issued soon after the guidelines were made public. “However, it does not go nearly far enough to eliminate the barriers to clinical integration among caregivers.”
From the payer perspective, America’s Health Insurance Plans President and CEO Karen Ignagni also expressed concerns about antitrust provisions needed to protect insurers from “the trend of provider consolidation that drives up medical prices and result in additional cost-shifting to families and employers with private coverage.”
As for providers, before they can begin to create ACOs, they have to realize who such entities are accountable to. "The accountability is not unilateral; it's trilateral, for the management of care across locations and time," Tom Enders, managing director of CSC's Health Sector Group in New York told HealthLeaders Media last fall. Then they must decide whether the potential cost savings worth the effort to establish an ACO.
Among the potential pitfalls recognized by the federal government are the legitimate antitrust concerns from payers and providers. So the feds piggybacked onto the ACO guidelines a separate proposal calling for expedited antitrust reviews and designated antitrust "safety zones" for some ACOs. “The Administration has led an unprecedented, collaborative effort among all of the agencies responsible for developing guidance for ACOs," said Federal Trade Commission Chairman Jon Leibowitz. "This guidance will help ensure that ACOs meet their goals of improving quality and lowering costs while minimizing the regulatory burden on healthcare providers."
Paul Keckley, executive director of the Deloitte Center for Health Solutions, said he was impressed by the federal government’s “deliberate process” of crafting guidelines for an extremely complex proposal that has the potential to revolutionize healthcare delivery and outcomes. “The amount of effort they built into calibrating the quality metrics, the indices of the five domains, the waivers, the safety zones, the antitrust issues. They were pretty thoughtful about balancing all of those moving parts of what is a pretty complicated concept," he told HealthLeaders Media.
"I read carefully the discussion of antitrust safety zones, how primary service areas are defined, the 30% threshold," he said. "The language in the guidance suggests that they have been very thoughtful about waivers and antitrust. And, they have maybe been cautious thinking about what will happen if commercial health plans piggyback the ACOs and use them as their contracting organizations. Does that consolidate power? Does it create cartels? I was impressed by the granularity of the language in that section."
Keckley said the overarching theme from the government is the emphasis on physician-hospital alignment. “You have value-based purchasing, and episode-based payments and avoidable readmissions, and the medical home, the ACO, physician quality reporting initiative and the physician self-referral language and you step back and see they are compelled by the vision of integrated systems," he says. "That to me is the big cake here."
And, like any sweeping government program, ACOs come with their own language. Soon, healthcare wonks and consultants who last week couldn’t tell a “Safety Zone” from a “Primary Service Area” will be tossing out eye-crossers like “Precompetitive,” “Retrospective Assignment,” “Dominant Provider Limitation,” and “Group Practice Reporting Option” (which will undoubtedly morph into the catchy GPRO) in dozens of forums, webcasts, seminars, and retreats from coast to coast. That’s the first thing you do when you’re in a new culture -- you learn the language.
One thing is clear—technology will play a huge role. "Clearly, health IT is the backbone, the enabler to an ACO," says Warren Skea, PhD, director, health industries advisory practice at PricewaterhouseCoopers, which sponsored HealthLeaders Media's Breakthrough's report, The Bridge to Accountable Care Organizations.
Nashville Based AmSurg Corp. announced Thursday afternoon that it would buy National Surgical Care in a $173.5 million cash deal.
NSC, based in Dallas, owns 18 ambulatory surgery centers in nine states, including 16 multi-specialty centers and two centers that specialize in gastroenterology procedures, which combined performed more 100,000 cases in 2010.
AmSurg President/CEO Christopher Holden said in a media release that the acquisition would "complement and expand our existing footprint."
"Through this transaction, we will increase our multi-specialty ASCs to a total of 43, based on year-end 2010 numbers, making AmSurg's network of majority-owned multi-specialty centers one of the largest among ASC companies in the country, in addition to our leading positions in the single surgical specialty markets for GI ASCs and ophthalmology ASCs," Holden said. "This strategic acquisition diversifies our portfolio and advances our vision of becoming a global leader in ambulatory healthcare services."
NSC's consolidated revenues in 2010 were $124.5 million and its adjusted EBITDA was $21.5 million. AmSurg will fund the transaction with cash and loans and has exercised the accordion feature on its revolving credit facility, allowing it to borrow up to $450 million from $375 million previously. Pending regulatory approval, the deal is expected to be finalized by the end of June, AmSurg said.
Sami S. Abbasi, chairman/CEO of NSC, said in the joint media release that the two healthcare companies share a "physician-centric culture and commitment to excellence."
"Our mission has always been to be the surgical provider of choice in our communities, with a culture that attracts the best possible people and that promotes learning, continuous improvement and growth," Abbasi said. "We are confident that our agreement to join AmSurg represents the right opportunity to carry this mission forward successfully."
Holden said AmSurg would continue with its ongoing plan to add 18 to 20 new centers in addition to those acquired in the NSC deal.
Wright Memorial Hospital in Trenton, MO said it will open a 25-bed hospital next week.
The $30 million facility includes a 60,000 square foot hospital and adjoining 12,000 square foot medical office building. Hospital services will include digital mammography, a 64-slice CT scanner, two surgical suites and a 24/7 physician-staffed emergency department with trauma bay and private ambulance entrance, Wright Memorial said in a media release.
The hospital, part of the not-for-profit 11-hospital Saint Luke's Health System, also features patient-centered amenities, including two labor and delivery suites with private bathrooms and a secure nursery area. Private inpatient rooms are equipped with wireless internet, flat screen televisions and handicap accessible bathrooms with walk-in showers.
This fall, Wright Memorial will link into an electronic ICU that will allow patients to be cared for both by on-site staff and by an off-site patient monitoring system that observes patients in ICUs across Saint Luke's Health System. The eICU team has immediate access to patients' computerized records, from medications and vital signs to test results and X-rays, along with automated warning and decision–support software.
In addition, a complete electronic medical records system will be in place by 2012, Wright Memorial said.
"Planning for the new facility began more than five years ago. The long-anticipated opening of the hospital and medical office building is the culmination of a vision to enhance healthcare services for citizens of Trenton and the surrounding area," said Don Sipes, vice president for Regional Services at Saint Luke's Health System.
More than 350 hospitals in 22 states in a national pilot project to tackle central line-associated bloodstream infections in their adult intensive care units are reporting CLABSI reductions of 35%, according to the Agency for Healthcare Research and Quality.
An interim report issued Tuesday by AHRQ, On the CUSP: Stop BSI, found that CLABSI rates dropped from an average of 1.8 infections per 1,000 central line days to an average of 1.17 infections per 1,000 central line days in ICUs that participated in the project.
The project is led by the Health Research & Educational Trust, an affiliate of the American Hospital Association. "AHRQ's vision of spreading a proven method of reducing these infections to all states has demonstrated its innovative leadership in patient safety, and HRET is proud to be part of this groundbreaking work along with Johns Hopkins and the MHA Keystone Center," said John R. Combes, MD, AHA senior vice-president and senior fellow at HRET, in a statement.
About 1,100 hospitals in 45 states, the District of Columbia, and Puerto Rico have enrolled in the national effort, which is based on a Michigan Health & Hospital Association Keystone Center project that dramatically reduced CLABSI rates in Michigan hospitals.
The On the CUSP: Stop BSI initiative, is scheduled to continue through 2012. Participating hospitals are given training developed by Peter Pronovost, MD, at Johns Hopkins University Quality and Safety Research Group. Participating hospitals also receive data reports and implementation guidance from the MHA Keystone Center and collaborate with other participating hospitals in their state.
HealthSouth Corp. said it has received permission from the state of Florida to build a $21 million, 40-bed hospital in Ocala that will specialize in physical rehabilitation for patients with trauma, brain and orthopedic injuries, strokes, and other major illness or injuries.
"This state-of-the-art hospital will provide a new and different type of service which will further augment the already strong continuum of healthcare services provided in Ocala/Marion County," Linda Wilder, president of HealthSouth's Southeast region, said in a media release. "We look forward to working with other providers in the community to integrate this new service in Marion County."
Construction on the 49,000-square foot Ocala Rehabilitation Hospital of Marion County, LLC is expected to begin by the end of 2011. Once it is operational, the hospital will create around 112 new, full-time jobs.
With 81,000 residents over the age of 65, Marion County is the largest county in Florida that doesn't have access to inpatient rehabilitation—a number that is expected to grow at a rate of 18%, faster than any other county in Florida, Wilder said.
"Currently, Marion County residents have very limited access to an inpatient rehabilitation hospital requiring patients and their families to travel to Gainesville or Spring Hill. This new hospital will ensure that residents have appropriate and reasonable access to the latest rehabilitative treatment and technology in a hospital setting," Wilder said.
Birmingham, AL-based HealthSouth is the nation's largest provider of inpatient rehabilitative healthcare services, with operations in 26 states, including nine inpatient rehabilitation hospitals and one long-term acute care hospital in Florida.
Rex Healthcare in Raleigh, NC has been ordered to pay the federal government $1.9 million, plus interest, to settle whistleblower allegations that its flagship hospital submitted false claims to Medicare to get pricier inpatient reimbursements for kyphoplasties and other minimally invasive procedures, the Justice Department announced this week.
The allegations arose from a whistleblower lawsuit filed in 2008 in federal court in Buffalo, NY, by Craig Patrick and Charles Bates, former employees of the medical device company Kyphon. The two men will receive a total of $80,000 of the settlement proceeds for kyphoplasty-related claims, DOJ said.
"We pursue cases like this because when hospitals submit false claims in order to increase their Medicare reimbursement, as we allege here, it artificially drives up the cost of healthcare, leaving taxpayers to foot the inflated bill," Tony West, Assistant Attorney General for the Justice Department's Civil Division, said in a media release announcing the settlement.
Rex Hospital is the second North Carolina hospital to settle Medicare fraud charges involving kyphoplasties. Presbyterian Orthopaedic Hospital in Charlotte paid the federal government more than $637,000 in December to settle fraud charges.
In May, 2008, Medtronic Spine LLC, the corporate successor to Kyphon Inc., agreed to pay the federal government $75 million to settle Medicare settle false claims allegations that it advised hospitals on how to improperly bill for the procedures. Since then, 26 hospitals have negotiated kyphoplasty settlements with DOJ.
The alleged improper billing at Rex Hospital took place from 2004 through 2007, DOJ said.
Federal prosecutors have used the False Claims Act to recover $5.3 billion since January 2009 in cases involving fraud against federal healthcare programs. DOJ's total recoveries in False Claims Act cases since January 2009 have topped $6.8 billion.
Linda Butler, MD, CMO of Rex Healthcare said in a phone interview with HealthLeaders Media:
"We don't feel like we did anything wrong. We were following rules at the time but it was probably easier and cheaper to settle than to fight the government on this. We were performing this procedure on elderly frail patients in their 70s and 80s who were in excruciating back pain and they had a lot of problems like cancer and cardiac issues. Some even spent the night in the ICU due to their frail state. During that time we were following the InterQual third-party billing recommendations to bill this as an inpatient procedure. In 2007 when it was deemed to be an outpatient procedure we began billing it as outpatient. When the government decided to retroactively penalize people who had billed it as inpatient before 2007 we were caught with that. We didn't think we did anything wrong. We think it is unfair, but it was probably better to settle."
