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Context of 'December 16, 2003: Thomas A. Scully Resigns as Head of the Centers for Medicare & Medicaid Services; Takes Job in Private Sector'

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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

Thomas A. Scully, administrator of the Centers for Medicare & Medicaid Services (CMS), tells Congress that he believes only a third of the estimated $12 billion in improper payments to health care providers is fraudulent. He says “the rest is probably billing mistakes.” Scully, a former lobbyist for the health industry, admits the inspector general would probably disagree with his estimate. [US Congress, 7/26/2001, pp. 27 pdf file]

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

At the same time top Medicare official Thomas A. Scully is working with Congress to draft new Medicare legislation, he is looking for a private sector job that will pay him to advise clients affected by the very same Medicare program he is helping to draft. The fact that Scully’s job search is taking place at the same time he is working on legislation, raises concerns that his contributions to the bill are potentially being influenced by his own private interests. Scully insists however that he is complying with all federal ethics regulations and says he has a waiver from the department’s general counsel permitting him to seek work in the private sector. By December he has narrowed his list of prospective employers to five companies: Alston & Bird; Baker, Donelson, Bearman, Caldwell & Berkowitz; Ropes & Gray; Welsh, Carson, Anderson & Stowe; and Texas Pacific Group. All of the companies have clients in the health care industry. Scully, who made $675,000 a year as a lobbyist before taking his current position in the government at $134,000 a year, is expected to make a hefty salary in the private sector with his insider knowledge of the new Medicare program. “His exhaustive knowledge of the Medicare program and the intricacies of the legislation, approved by Congress last week, would make him a prize catch for any law firm or private equity firm,” notes the New York Times. Scully will resign on December 16, less than a month after Congress passes the Medicare bill. [Washington Post, 12/3/2003; New York Times, 12/3/2003]

Entity Tags: Thomas A. Scully

Timeline Tags: US Health Care

Thomas A. Scully resigns as head of the Centers for Medicare & Medicaid Services (CMS)(formerly called the Health Care Financing Administration (HCFA)). [Washington Post, 12/3/2003] For the last six months Scully, a former lobbyist for the health care industry, has been shopping around for a job in the private sector hoping to find a firm that would hire him to advise clients affected by the new Medicare program that he helped draft (see June-December 2003). Shortly after resigning, Scully is hired by Alston & Bird LLP to help the law firm build a health practice in their Washington office. He also lands a second part-time job with Welsh, Carson, Anderson & Stowe, a New York investment firm specializing in telecommunications and health care. [Washington Post, 1/14/2004]

Entity Tags: Thomas A. Scully

Timeline Tags: US Health Care

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