HCA's Upcoding and ER Dumping

HCA settled allegations of improper billing with the federal government for $1.7 billion for sins made in the mid to late 1990's.  HCA CEO Rick Scott, currently Florida's Governor, set aggressive revenue targets and held leaders accountable.  Those who met the numbers received Rick's adulation and handsome bonuses, while those who failed were berated, belittled and eventually fired.  Rick Scott prepared HCA well for its eventual private equity ownership. NYT reported:

(PEU) owners, who now occupied the majority of seats on HCA’s board, contributed only about $1.2 billion apiece in equity outlay from funds they oversaw 

The NYT piece highlighted HCA's recent aggressive coding and billing practices, which produced a financial windfall for its PEU owners.  To my ears it rang a virtual echo of the Scott years.

HCA's PEU owners bled $4.25 billion in special dividends from the company prior to its IPO.  NYT shed a bit of light on HCA's ER coding:

HCA was still operating under a corporate integrity agreement resulting from its (Scott years) Medicare fraud settlement, and an independent reviewer was scrutinizing its billing. By late 2008, however, just as the agreement with federal regulators was ending, HCA introduced a new coding system for its emergency rooms. 

HCA informed investors and the SEC of their planned change in 2010:

Approximately 81% of our admissions of uninsured patients occurred through our emergency rooms.We are taking proactive measures to reduce our provision for doubtful accounts by, among other things: screening all patients, including the uninsured, through our emergency screening protocol, to determine the appropriate care setting in light of their condition, while reducing the potential for bad debt and increasing up-front collections from patients subject to co-pay and deductible requirements and uninsured patients. 

This week's news revealed the impact of such changes in an article titled "EMTALA lacks anti-patient dumping enforcement."  It stated:

Even under health reform, uninsured Americans are still at risk for being turned away from the emergency room or transferred to another facility, known as patient dumping.

For more than two decades, it's been illegal to turn away uninsured patients who need emergency care. EMTALA requires hospitals to screen and stabilize patients regardless of their ability to pay. However, study authors, like the Government Accountability Office and the Office of Inspector General, criticized the U.S. Department of Health & Human Services for lax oversight, specifically over a lack of a public reporting system in which people could report potential violations.

I find it ironic Marilyn Tavenner, the Acting head of Health & Human Services worked for HCA for 25 years.  At one point she sat at the top of the organization, President Outpatient Services Group.  As an insider Tavenner once held nearly 50,000 shares of HCA.  When she ceased her insider role Tavenner held over 15,000 HCA shares. 

If the Clinton administration couldn't hold Rick Scott personally accountable for the carnage he created, I expect HCA's PEU owners to skate under President Obama.  The sad thing is health reform is designed for investors to make big money, a call I made years ago.  HHS' various reimbursement schemes manipulate behavior via "pay for performance."  

It deformed HCA before and clearly is doing so again.  I don't expect much for clinicians or patients who'll have to endure PEU's mean and greedy leaders.  The tonic for America's health care ills may kill the system.  Meanwhile, a high performance model based on intrinsic motivation languishes in plain sight.  Think Mayo.  The Obama solution to health care?  Hold the Mayo...

Update 8-19-12:  HCA revealed the U.S. attorney's office in Miami has launched an investigation into the medical necessity of cardiac procedures at 10 of its hospitals, including several in Florida. The Miami Herald focused an editorial on HCA's perceived abuse.  Also, sleazy Governor Rick Scott will host the GOP Party in seedy Tampa.

Update 10-6-14:  Rick Scott's former accountant said a hand's on CEO like Scott knew HCA had two sets of books, one for the Feds (Medicare & Medicaid) and the other a confidential internal use only set.