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Hospital Chain Allegedly Inflating Bills

Published on Feb 14, 2014 at 8:52 am in Business Litigation.

Kentucky Business LitigationHealth Management Associates, a for-profit chain of hospitals headquartered in Florida, is under fire for allegedly using elaborate schemes to overbill Medicare and Medicaid clients. The U.S. Justice Department recently joined eight lawsuits filed by company whistleblowers in six states.

The whistleblowers have described a strategy to admit more patients into the hospitals, regardless of the patients’ actual condition. Emergency room doctors were given targets to admit at least half of all patients over 65 years old that came into the emergency room. These goals were buffeted with scorecards posted on the wall. Doctors who made the target were colored green, those near were yellow, and doctors not even close were assigned the color red.

Even children were targeted, with tales of doctors admitting babies to the hospital because they had a fever, even though their temperatures were within normal range.

The whistleblowers report that the CEO himself was allegedly driving the high admission strategy, which also utilized financial rewards and threats. The company designed its own software to track admission numbers – this was the program that provided daily updates of each doctor’s admission rates,

One hospital executive reported that he approached the CEO with complaints from doctors that the requirements were not clinically appropriate, and that they would result in tests and admissions that weren’t necessary.

Many of the whistleblowers were doctors, hospital administrators, and compliance officers. Several of them were fired for complaining or not complying. One whistleblower is an administrator from a physicians group who refused to fire doctors who didn’t meet their admission quotes, and she in turn was fired.

Federal regulators are currently investigating billing procedures at several hospital chains, including Health Management Associates. Experts say these developments are the result of a shift in medicine from a field where decisions are made by a patient’s personal doctor to one where corporate owners make decisions.

These large hospital chains earn billions of dollars in revenue and, somewhat like banks, are proving difficult for the federal government to regulate. In fact, The New York Times reports that analysts have shrugged off these lawsuits. Even since the U.S. Justice Department has joined in the lawsuits, the company’s stock has not seen a real impact.

Part of the reason is that many settlements in these kinds of cases are only for tens of millions of dollars and are written off as a cost of doing business. One analyst said a penalty would have to be in the range of $500 million to seriously have any effect.