CHS Settles HMA Kickback Case with Feds for $262 million

The Justice Department settled a fraudulent billing case with Community Health System's HMA for $262 million. 

Between 2009 and 2012, two former HMA hospitals, Lancaster Regional Medical Center and Heart of Lancaster Medical Center in Pennsylvania, billed federal health care programs for services referred to the hospitals by individual physicians and physician groups.  According to the government, HMA compensated these physicians and physician groups through complex kickback arrangements in exchange for a patient referral stream. In one instance, HMA bought two businesses from a physician group for grossly inflated amounts.  HMA also paid that same physician group under a contract that was styled as payment for services that were never performed or that neither party ever had any intention of performing. In another instance, HMA paid a local surgeon exorbitantly more than the fair market value of his services.  According to the government, these arrangements were intentionally structured to disguise payments which were, in actuality, payments for patient referrals, not for legitimate services. 

President Obama appointed White House Health Reformer Nancy Ann Deparle in March 2009.  Her for-profit health care credentials included serving on the board of Legacy Hospital Parnters, which is incestuously related to Community Health Systems (CHS) through Chairman Denny Shelton.  Community Health Systems bought HMA in 2014 after buying Shelton's Triad Hospitals in 2008.

Greed drives unethical behavior, in healthcare as in finance.   Australians have awakened to this fact.

A royal commission this year, the country's highest form of public inquiry, has exposed widespread wrongdoing in the industry.  It released an interim report on Friday, condemning an industry which it said valued profit over people.  The Australian government called the report a "scathing" assessment.  "[The report] shines a very bright light on the poor behaviour of our financial sector," Treasurer Josh Frydenberg said.  "Australians expect and deserve better."

Former Medicare Chiefs consistently arise from the for-profit healthcare industry and return to their swampy roots afterwards.    Former Medicare Chief Gail Wilensky sold nursing home giant Manorcare to The Carlyle Group as a board member.  Wilensky set up a structure that would prevent patients being harmed by Manorcare's PEU ownership.  It did not prevent Carlyle from bleeding the company for well over $6 billion in cash before completely bankrupting it. 

Nancy Ann Deparle returned to her PEU roots with Consonance Capital after designing greed focused PPACA.  Just days ago Bloomberg reported:

A new federal watchdog report warns that privately run Medicare health plans used by millions of older Americans may be improperly denying patients medical care.

Federal auditors have found “widespread and persistent problems related to denials of care and payment in Medicare Advantage,” the privately administered plans that insure more than 20 million people, according to the report from the Health and Human Services Office of Inspector General.

For-profit healthcare companies have internal incentive programs which distort behavior, as in the case of HMA.

According to the Justice Department, HMA, beginning in 2008, defrauded government healthcare programs like Medicare and Medicaid by illegally pressuring and inducing doctors into increasing the number of emergency department patient admissions.  Those admissions were made without regard to whether the they were medically necessary, prosecutors said.

PPACA instituted a complex series of pay for performance initiatives, HAC, HRRP, VBP, VM, MIPS, APM, MACRA, which drive similar bad behavior.  Reward/punishment systems distort behavior to achieve the reward and/or avoid the negative.

Roughly 30% of corporate executives cheated by backdating stock options to maximize their executive compensation.  President Obama once said "if pay for performance works," without sharing vast research that it causes major distortions by causing people to focus on the reward, not the quality of their work.  Many like executives at HMA will cheat to garner the prize.

The government settlement absolves CHS of any criminal charges:

Health Management Associates, which Community Health acquired in 2014, agreed to pay the sum to resolve criminal and civil claims as part of a deal in which a subsidiary also agreed to plead guilty to conspiring to commit healthcare fraud.

White collar criminals have their company's pay fines for unethical and illegal behavior.  Jail time is reserved for street urchins, not the landed gentry. 

Update 10-1-18:  Davita settled with the Justice Department for $270 million for overcharging Medicare via Medicare Advantage plans.  Health reformer Deparle was on the Davita board when President Obama tapped her.