Columbia/HCA probe widens into 7 states
Columbia/HCA probe widens into 7 states
Olsten Management Services also under scrutiny
For the past few months, a different Medicare fraud-and-abuse story seemed to be making headlines almost daily.
If it wasn’t fraud accusations on National Public Radio, then it was another investigation, another audit, another report of Medicare overpayment. According to the latest report (July) from the Department of Health and Human Services’ Office of Inspector General (OIG), Medicare overpaid home health providers by $3.7 billion during fiscal year 1996.1 It’s getting so one almost expects to see a home health agency raided on the TV series COPS, or some hapless agency director cornered on America’s Most Wanted.
The latest scandal focuses on Columbia/HCA Healthcare Corp., the embattled hospital and home care giant, which faces a federal investigation of its laboratory billing practices, home health contracts, and government reimbursement practices. At last count, the probe involves at least two state attorneys general and 700 federal agents who have served 35 search warrants on the company’s facilities in seven states. In late July, Columbia’s board of directors ousted CEO Richard Scott, replacing him with Thomas F. Frist, Jr.
The Nashville, TN-based Columbia reportedly has an annual revenue of nearly $20 billion. Almost 6% of that, or about $1.2 billion, is derived from Medicaid, while 35% of its revenues come from Medicare.
The OIG has been joined in the investigation by the Justice Department, the Federal Bureau of Investigation, the Defense Criminal Investigation Service, the U.S. Postal Inspection Service, and the Medicare Fraud Unit of the Utah Department of Investigations.
In Texas, where Columbia owns more than 60 hospitals, state Attorney General Dan Morales has launched an inquiry into potential Medicaid abuses by an unspecified number of Columbia facilities, according to news reports. Meanwhile, Alabama Attorney General Bill Pryor is pursuing a criminal investigation of possible Medicaid fraud at one hospital.
In July, the FBI issued warrants in Florida, Texas, Tennessee, North Carolina, Utah, and Oklahoma. The FBI says this is part of an ongoing probe that made the news in March when officials raided Columbia/HCA’s El Paso, TX, site.
The net also has been thrown at Olsten Health Services of Melville, NY, whose Olsten Health Man agement division manages some Columbia-owned home health operations. According to HHH’s sister publication, Home Health Business Report (July 30, p. 12), Olsten Health Management currently services 200 management contracts, and 150 of them are with Columbia operations.
Olsten Health Management says it is cooperating with federal agents in the investigations of home care operations in Florida. An Atlanta location also was served with a subpoena seeking documents relating to Columbia’s home health care business. In New Mexico, Olsten Health Services division is under investigation for the company’s preparation of Medicare cost reports, as well as for a charge that Olsten provided inducements and gifts to patients and doctors.
Executives at Columbia/HCA so far have refused to talk publicly about the probe. Columbia spokeswoman Eve Hutcherson says the warrants "requested various records and documents primarily in the areas of hospital laboratory billing and home care operations."
Likewise, the OIG has disclosed little, except to say through spokeswoman Judy Holtz that the investigation is "extremely sensitive, they are just not talking at all. We haven’t been told anything."
Holtz maintains a strict OIG line: "All we’re saying is there have been approximately 35 subpoenas issued in seven states, and they are related to violations of federal law."
Home care attorney Elizabeth Hogue, JD, observes, "I think the problem is, no one knows. It’s just rumor at this point. I’ve heard they’re looking for anything and everything, and probably no one knows what they’re looking for, maybe not even the investigators themselves. It’s open season, a fishing expedition. They will latch on to anything they can find."
Shortly after the investigation was announced, some Columbia shareholders filed a lawsuit in the U.S. District Court for the Middle District of Tennessee, Nashville Division, against some company directors and officers, alleging they breached their fiduciary duties to the company and are liable for abuse of control, waste, and gross mismanagement. Columbia/HCA chairman and chief executive Richard Scott was among the defendants named in the lawsuit.
The suit also alleges that the 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 Acts, the tax laws and criminal laws of the United States, and the tax laws and criminal laws of the various states in which Columbia does business."
"They’re getting it from all sides," Hogue says.
Meanwhile, it has been reported that Columbia and Tenet Healthcare are discussing a possible combination of their companies that would have Tenet purchase the much bigger Columbia. However, the discussions have been put on hold in light of Scott’s departure, according to a company spokesman.
Such a union would create a giant with $30 billion in revenue and nearly 500 hospitals from Florida to California. However, the current investigation may be a sticking point, especially if Columbia is forced to pay a major fine.
"They’ll hit em for millions," Hogue says, "maybe a billion dollars. Then they [federal investigators] will go to the politicians and say, Look at how well our [fraud and abuse] program works.’"
Reference
1. Brown JG. Report of the Financial Statement Audit of the Health Care Financing Administration for Fiscal Year 1996. A-17-95-00096. Office of Inspector General, Department of Health and Human Services. Washington, DC; 1997.
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