!! History Commons Alert, Exciting News

Context of 'June 26, 2003: Largest Hospital Chain in US Settles with Government over Allegations of Health Care Fraud'

This is a scalable context timeline. It contains events related to the event June 26, 2003: Largest Hospital Chain in US Settles with Government over Allegations of Health Care Fraud. You can narrow or broaden the context of this timeline by adjusting the zoom level. The lower the scale, the more relevant the items on average will be, while the higher the scale, the less relevant the items, on average, will be.

Deputy Attorney General Lowell Jensen and other members of the Justice Department’s PROMIS Oversight Committee approve the termination of part of a contract with Inslaw, Inc., for the installation of PROMIS software (see March 1982). The termination, pushed through despite a report that there was progress with Inslaw’s attorney on the resolution of contract problems, only concerns the part of the contract for the installation of PROMIS on word processing hardware in 74 small US attorneys’ offices. Inslaw will still be contracted to install the application in 20 other US attorneys’ offices. The termination is to be for default, as Inslaw has allegedly failed to perform this portion of the contract, although a different reason will later be given (see February 1984). [US Congress, 9/10/1992]

Entity Tags: Lowell Jensen, US Department of Justice

Timeline Tags: Inslaw and PROMIS

HCA Inc., the largest for-profit hospital chain in the US, reaches a settlement with the Justice Department over allegations of having defrauded the government. HCA is owned by the family of Senate majority leader Bill Frist. As part of the agreement, the company pleads guilty to 14 criminal counts and agrees to pay more than $840 million in criminal fines, civil penalties, and damages. It is the largest fraud settlement in US history. The Justice Department’s investigation found that the company had employed a variety of schemes to falsely charge or overcharge for services provided to patients covered by federal health plans. HCA billed Medicare, Medicaid, and other federal health care programs for lab tests that were not medically necessary or ordered by physicians. It billed the government for non-reimbursable expenses by disguising them as reimbursable “community education” expenses or as “management fees.” Other violations included using incorrect diagnostic codes when billing the government in order to increase its revenue, billing for services rendered to patients who did not qualify to receive them, and billing for services that were never performed. Of the total amount settled upon, $95 million is for violations committed by two HCA subsidiaries, Columbia Homecare Group Inc. and Columbia Management Companies Inc. The two companies had engaged in cost report fraud, fraudulent billing, paying kickbacks to doctors for referrals, and paying kickbacks in connection with the purchase and sale of home health agencies. [CBS News, 12/14/2000; US Department of Justice, 12/14/2002] Not all of the Justice Department’s allegations are resolved in the settlement. In spring 2003, HCA will reach another settlement over allegations of fraudulent cost reporting and kickbacks to physicians for referrals (see June 26, 2003).

Entity Tags: US Department of Justice, HCA, Inc.

Timeline Tags: US Health Care

Thomas A. Scully is sworn in as head of the Health Care Financing Administration (HCFA), a division of the US Department of Health and Human Services. Prior to joining the Bush administration, Scully served as president and chief executive officer of the Federation of American Hospitals, a trade association that lobbies on behalf of 1,700 privately-owned and managed community hospitals and health systems. He held that position for six years [Healthcare Financial Management, 7/2001; US Department of Health and Human Services, 11/10/2003] and was making $675,000 a year when he left. As the administrator of HCFA, he will be paid a salary of $134,000 a year. [New York Times, 12/3/2003] During his confirmation hearings, Scully promised the Senate Finance Committee that he would “aggressively enforc[e] the fraud statutes.” Under the Clinton administration, the Justice Department had brought a number of lawsuits against hospitals alleging that they had over billed Medicare, Medicaid, and other federal heath programs. [Iglehart, 12/27/2001]

Entity Tags: Thomas A. Scully

Timeline Tags: US Health Care

HCA, the country’s largest for-profit hospital chain, announces that it has struck a deal with the Centers for Medicare & Medicaid Services (CMS) over unaudited Medicare and Medicaid billings. The company—which paid more than $840 million in criminal fines, civil penalties, and damages in 2000 for fraudulent reportings to Medicare (see December 14, 2000), and which is still being investigated—will pay CMS $250 million to zero out its account with the agency. [Associated Press, 3/28/2002] But according to numerous government whistle-blowers, the amount is far too low. In a letter to the Department of Health and Human Services, Senator Charles E. Grassley (R-IA) will later accuse Medicare officials of “seeking to allow HCA to resolve more than $1 billion of liability to the Medicare program for only $250 million, based on little to no evidence supporting this low figure.” Even more troubling, notes the Senator, Medicare has agreed not to audit the company’s cost reports that have been piling up since 1997 when the agency stopped processing HCA bills because of the lawsuit. “One would expect a company with such a track record to be subjected to heightened scrutiny.… [Instead,] the Centers for Medicare and Medicaid Services is proposing to excuse HCA from an even routine review of thousands of Medicare cost reports,” Grassley writes. He says the deal is “too lenient.” John R. Phillips, one of the attorneys involved in the lawsuit against HCA, later says the deal was quietly arranged between HCA and CMS head Thomas A. Scully. “The $250 million was a total sellout by Scully, who totally negotiated it behind Justice’s back,” he says. [New York Times, 11/19/2002] Similarly, Grassley, in a June 25 letter to a Justice Department lawyer, says comments by Scully “have given me great concern that there is an active, ongoing effort underway to change or modify enforcement [on Medicare fraud] policy that in my view could significantly undermine the [law].” [Office of Senator Charles Grassley, 7/25/2002] Scully, during his confirmation hearings, had pledged he would “aggressively enforc[e] the fraud statutes” (see May 29, 2001).

Entity Tags: HCA, Inc., Thomas A. Scully, Charles Grassley, Centers for Medicare & Medicaid Services

Timeline Tags: US Health Care

HCA Inc. and the US Justice Department sign a settlement agreement, resolving allegations that the company paid kickbacks to physicians and submitted false cost reports and fraudulent bills to Medicare, Medicaid, and other federal health programs. Under the terms of the agreement, HCA, the country’s largest for-profit hospital chain, will pay the US government $631 million in civil penalties and damages. Additionally, under a separate agreement that was negotiated more than a year ago, HCA will pay the Centers for Medicare and Medicaid Services (CMS) $250 million to resolve “outstanding cost report issues.” Critics of that settlement have alleged that the CMS head—a former lobbyist for the hospital industry—cut the deal behind the Justice Department’s back saving HCA several hundred million dollars (see March 28, 2002-November 2002). [CBS News, 12/18/2002; Washington Post, 12/19/2002; US Department of Justice, 6/26/2003; Nashville Business Journal, 6/26/2003; New York Times, 6/27/2003] These amounts, when combined with the $840 million settlement reached in December of 2000 (see December 14, 2000), make this the government’s single largest fraud settlement in US history. The $1.7 billion settlement concludes a nine-year investigation that began when whistle-blower James Alderson, a former chief financial officer of one of its former hospitals, filed a lawsuit alleging that the company’s cost reports to the government were fraudulent. During the course of the investigation, authorities discovered a second set of books marked “confidential,” revealing that the company had inflated reimbursable costs billed to government health programs. [Phillips & Cohen, 12/18/2002; New York Times, 12/18/2002]

Entity Tags: US Department of Justice, HCA, Inc.

Timeline Tags: US Health Care

The National Academy of Sciences issues a report calling for universal health insurance coverage by 2010. “It is time for our nation to extend coverage to everyone,” the report says. “Universal insurance coverage is an important and achievable goal for the country.” The report was drafted by a panel of 15 experts and is the product of three years of work.
Sampling of report's conclusions -
bullet People without insurance receive about half the medical care of those who have it. Consequently, they are on average sicker and tend to die sooner.
bullet Roughly 18,000 people die each year because they do not have insurance.
bullet In 2001, only half of uninsured children in the US visited a physician during 2001, compared with three-quarters of privately insured children.
bullet In 2001, taxpayers spent roughly $30 billion in unreimbursed medical care for uninsured Americans.
bullet The poorer health and premature deaths of uninsured people cost taxpayers between $65 billion to $130 billion a year.
Reaction in US government - Republican Senate majority leader Bill Frist of Tennessee—whose family owns HCA Inc., the largest for-profit hospital chain in the US—expresses concern that “the report may not focus enough on the reasons why health care costs continue to rise and how to pay for any reform.” Democratic Senator Tom Daschle of South Dakota supports the call. “It’s doable,” he says. “It’s essential. This is, I believe, the single most important domestic issue facing our country.” Tommy G. Thompson, secretary of health and human services, tells reporters the proposal is “not realistic.” [Institute of Medicine, 2004; National Academies, 1/14/2004; New York Times, 1/15/2004]

Timeline Tags: US Health Care

Ordering 

Time period


Email Updates

Receive weekly email updates summarizing what contributors have added to the History Commons database

 
Donate

Developing and maintaining this site is very labor intensive. If you find it useful, please give us a hand and donate what you can.
Donate Now

Volunteer

If you would like to help us with this effort, please contact us. We need help with programming (Java, JDO, mysql, and xml), design, networking, and publicity. If you want to contribute information to this site, click the register link at the top of the page, and start contributing.
Contact Us

Creative Commons License Except where otherwise noted, the textual content of each timeline is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike