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A Huge Victory Against Medicare Fraud
Largest Department of Justice fraud settlement ever!
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"My neighbor is getting bills from a home health provider when she thought Medicare shold be paying. What can she do?"
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• Medicare Fraud and Abuse Detection and Prevention Tips
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A Department of Justice investigation that started when an employee found questionable documents in the dumpster behind an El Paso, TX hospital ended December 14 when the largest fraud settlement in US history was announced. Attorney General Janet Reno announced the settlement in a Washington press conference, citing this as victory against those unscrupulous health care providers who would take taxpayer money that does not rightly belong to them.

In her statement, the Attorney General stated, "Under a civil settlement, HCA -The Healthcare Company will pay $745 million, plus interest, for its alleged false billing practices. And, it will pay $95 million in criminal fines.

"In addition to these fines and damages, HCA - formerly known as Columbia/HCA - has also signed a Corporate Integrity Agreement with the Department of Health and Human Services. The agreement will assure that the violations that led to this investigation in the first place are not repeated. It will also require HCA to self-report misconduct to the Department of Health and Human Services and cooperate in the ongoing investigations into the conduct of individuals."

In addition to the fines, two of HCA subsidiaries will no longer be able to participate in Medicare. HCA will also be under significant oversight with independent audits of all billing and contractual information for the next 8 years.

Of the $745 million, the settlement requires HCA to pay:

  • more than $95 million to resolve civil claims arising from the company's outpatient laboratory billing practices, which included billing to Medicare, Medicaid, the Defense Department's TRICARE health care program, and the Federal Employees' Health Benefits Program, for lab tests that were not medically necessary, not ordered by physicians, as well as other billing violations;

  • more than $403 million to resolve civil claims arising from "upcoding," where false diagnosis codes were assigned to patient records in order to increase reimbursement to the hospitals by Medicare, Medicaid, TRICARE and the Federal Employees' Health Benefits Program. The guilty plea includes one count relating to this upcoding practice;

  • $50 million to resolve civil claims that the company illegally claimed non-reimbursable marketing and advertising costs it disguised as community education. Medicare reimburses providers for "community education" - costs to educate the community at large about public health issues - but not for advertising and marketing a hospital's services;

  • $90 million to resolve civil claims that HCA illegally charged Medicare for non-reimbursable costs incurred in the purchase of home health agencies owned by the Olsten Corporation, as well as other agencies in Florida, Georgia and Alabama. According to the government, HCA devised an elaborate scheme to hide these costs in reimbursable "management fees" paid to third parties. In 1999, a subsidiary of Olsten Corporation, Kimberly Quality Care, entered into criminal plea agreements in three districts and paid more than $10 million in criminal fines. Olsten paid nearly $41 million as part of a civil settlement arising from its collusion with HCA for that conduct. HCA has now agreed to pay $90 million to settle this issue, and;

  • $106 million to resolve civil claims for billing Medicare, Medicaid and TRICARE for home health visits for patients who did not qualify to receive them or were not performed and for committing other billing violations.

While this is the biggest, it is certainly not the only incidence of fraud that has occurred. We are all responsible for reporting fraud if we see it. Preventing fraud is an important step in protecting the Medicare trust fund for seniors and the disabled for years to come.

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