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US Health Care System

HCA - Inflated Costs

Project: US Health Care System
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A still from the original ‘Harry and Louise’ TV commercial.A still from the original ‘Harry and Louise’ TV commercial. [Source: American Environics]Neoconservative publisher and pundit William Kristol writes a five-page memo explaining why and how Republicans can ensure the Clinton administration’s health care proposal fails. The memo warns that if the Clinton health care plan is implemented, and actually improves the lives of Americans, the success of the program would badly damage the Republican Party by improving Americans’ relationship with government. Therefore, the plan must be stopped before it can begin. The memo’s strategy will be used in the powerful “Harry and Louise” media campaign, based on TV commercials featuring an older couple who worry that the program would destroy their relationships with their family doctor. Kristol writes in part: “Passage of the Clinton health care plan, in any form, would guarantee and likely make permanent an unprecedecented federal intrusion into and disruption of the American economy—and the establishment of the largest federal entitlement program since Social Security. It’s [sic] success would signal a rebirth of centralized welfare-state policy at the very moment we have begun rolling back that idea in other areas.… The long term political effects of a successful Clinton health care bill will be even worse—much worse. It will relegitimize middle-class dependency for ‘security’ on government spending and regulation. It will revive the reputation of the party that spends and regulates, the Democrats, as the generous protector of middle-class interests. And it will at the same time strike a punishing blow against Republican claims to defend the middle class by restraining government.… Its rejection by Congress and the public would be a monumental setback for the president, and an incontestable piece of evidence that Democratic welfare-state liberalism remains firmly in retreat.” In 2009, Washington Post columnist Greg Sargent will note: “Here’s what’s striking about this. Kristol repeatedly says defeating Clinton on health care would deal a death knell to something that at the time already appeared on its way towards extinction—the ‘welfare-state,’ or the idea that government can improve the lives of the middle class. Kristol describes this idea as ‘firmly in retreat,’ in the process of being ‘rolled back,’ in need of ‘re-legitimizing.’ At the time the defeat of health care was viewed as a potential final victory over liberalism.” [Plum Line, 3/2/2009; Politico, 3/2/2009; Plum Line, 3/2/2009]

Entity Tags: William Kristol, Clinton administration, Greg Sargent

Category Tags: HCA - Inflated Costs

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.

Category Tags: HCA - Inflated Costs, Medicare, Medicaid

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

Category Tags: HCA - Inflated Costs, Medicare, Medicaid

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.

Category Tags: HCA - Inflated Costs, Medicare, Medicaid

Tenet Healthcare Corp., the country’s second largest hospital chain, agrees to a $900 million settlement with the Justice Department over allegations that it defrauded Medicare. In 2003, the company was charged with violating the False Claims Act. The government alleged that Tenet had billed for services not rendered, inflated reimbursable costs, and paid kickbacks to doctors for referrals. The company, which admits no guilt—only that it made billing “mistakes”—will pay $725 million over a four-year period to resolve the billing dispute and will forfeit its right to collect $175 million in Medicare payments for past services. Wall Street analysts had expected the amount to be well over a billion. [Reuters, 6/29/2006; US Department of Justice, 6/29/2006; Tenet Healthcare Corp., 6/29/2006 pdf file]

Entity Tags: US Department of Justice, Tenet Healthcare Corp.

Category Tags: HCA - Inflated Costs, US Health Care Problems, Medicare

Washington Post columnist Greg Sargent writes that the current Republican plan of “total obstructionism” towards the Obama administration’s economic policies echoes the Republicans’ 1993 efforts to defeat the Clinton administration’s health care program (see December 2, 1993). In 1993, Republican pundit William Kristol warned that if the health care plan were successful and indeed improved the lives of Americans, the damage to the Republican Party’s image and ideology would be severe. Therefore, even though, according to Sargent, the plan stood an excellent chance of improving the US health care system, it had to be defeated. Sargent writes that today’s Republican opposition to President Obama’s economic plans “echo… the strategic objectives Kristol articulated 15 years ago.” Unfortunately, the Republican Party is far worse off “now than it was then in terms of being able to achieve those objectives.… Fifteen years later, of course, political conditions are dramatically different. Polls show the public broadly supports a far more activist role for government and backs Obama’s plans to expand the federal government’s role in a way not seen in decades. And it’s conservative ideas that are in retreat. Yet the GOP is pursuing roughly the same strategy today that it did then.” [Plum Line, 3/2/2009]

Entity Tags: Greg Sargent

Category Tags: HCA - Inflated Costs

Lewin Group logo.Lewin Group logo. [Source: WNY Media]The Republican National Committee plans to spend a million dollars in August on television ads opposing health care reform. One of the key elements of the ad campaign is a study released today by the Lewin Group that finds 119 million Americans would lose the coverage they currently have under the Obama administration’s health care reform proposal. MSNBC’s progressive talk show host Rachel Maddow airs video clips of Senators John Barrasso (R-WY) and Chuck Grassley (R-IA), Representatives John Boehner (R-OH), Tom Price (R-GA), Paul Ryan (R-WI), and former House Speaker Newt Gingrich (R-GA) all citing the Lewin study as evidence that health care reform is bad for Americans. The Lewin Group is a subsidiary of UnitedHealth Group, a health insurance provider. United Health operates a subsidiary called Ingenix, which in turn operates a consulting firm, the Lewin Group. Maddow notes that Republicans call the Lewin Group “nonpartisan and independent” when in fact it is a branch of a health care insurer. In January 2009, United Health agreed to pay $400 million to the State of New York after being charged with defrauding customers—manipulating data in order to shift medical expenses onto consumers. Former Vermont governor and Democratic National Committee chairman Howard Dean, himself a doctor, says the issue is “not… about Democrats versus Republicans. This is about the health insurance agency versus the American people.” [Ingenix, 7/27/2009; MSNBC, 7/28/2009]

Entity Tags: Republican National Committee, Tom Price, UnitedHealth Group, Rachel Maddow, Lewin Group, Obama administration, Paul Ryan, Ingenix, John Boehner, Howard Dean, MSNBC, Newt Gingrich, Charles Grassley, John Barrasso

Timeline Tags: Civil Liberties, Domestic Propaganda, 2010 Elections

Category Tags: HCA - Inflated Costs, US Health Insurers, Obama Health Care Reform

President Obama holds a “town hall” meeting on health care reform, sponsored by the American Association of Retired Persons (AARP). The meeting is conducted by telephone at AARP’s Washington headquarters, where a small studio audience and approximately 180,000 callers from around the country listen and take part.
Rumor Control - In his introduction, AARP CEO A. Barry Rand tells the participants: “There’s a lot of misinformation about health care reform—even on what AARP stands for, and what AARP supports. This town hall is part of our ongoing effort to debunk myths and provide accurate information.… I want to make it clear that AARP has not endorsed any particular bill or any of the bills being debated in Congress today. We continue to work with members of Congress on both sides of the aisle and with the administration to achieve what is right for health care reform.” AARP president Jennie Chin Hansen notes some of the most prevalent myths and misinformation about health care reform as expressed in previous AARP-sponsored town halls: “Like, will the government tell my doctor how to practice medicine?” For his part, Obama says: “Nobody’s trying to change what does work in the system. We are trying to change what doesn’t work in the system.” He reassures the participants that “Nobody is talking about cutting Medicare benefits. I just want to make that absolutely clear.… [W]e do want to eliminate some of the waste that is being paid for out of the Medicare trust fund that could be used more effectively to cover more people and strengthen the system.”
Opposition Profiting from Status Quo - Of the anti-reform opposition, Obama says: “I know there are folks who will oppose any kind of reform because they profit from the way the system is right now. They’ll run all sorts of ads that will make people scared.… Back when President Kennedy and then President Johnson were trying to pass Medicare, opponents claimed it was socialized medicine. When you look at the Medicare debate, it is almost exactly the same as the debate we’re having right now. Everybody who was in favor of the status quo was trying to scare the American people saying that government is going to take over your health care, you won’t be able to choose your own doctor, they’re going to ration care.… You know what? Medicare has been extraordinarily popular. It has worked. It has made people a lot healthier, given them security. And we can do the same this time.” If nothing is done to change the status quo, Obama says, the cost of health care coverage will rise dramatically. “Health care costs are going up much faster than inflation,” he says, “and your premiums will probably double again over the next 10 years.… We’re already seeing 14,000 people lose their health insurance every day. So the costs of doing nothing are trillions of dollars over the next couple of decades—trillions, not billions… without anybody getting any better care.” Controlling health care inflation will allow the government to stabilize the Medicare trust fund: “[N]ot only can we stabilize the Medicare trust fund, not only can we help save families money on their premiums, but we can actually afford to provide coverage to the people who currently don’t have health care.”
End-of-Life Rumors - One caller is concerned about rumors surrounding end-of-life care. “I have been told there is a clause in there that everyone that’s Medicare age will be visited and told to decide how they wish to die,” she says. “This bothers me greatly, and I’d like for you to promise me that this is not in this bill.” The host elaborates: “As I read the bill, it’s saying that Medicare will, for the first time, cover consultation about end-of-life care, and that they will not pay for such a consultation more than once every five years. This is being read as saying every five years you’ll be told how you can die.” Obama replies, “Well, that would be kind of morbid,” and reassures the caller that the rumors are not true, adding, “Nobody is going to be knocking on your door.” He explains that one proposal would have Medicare pay for consultations between doctor and patients about living wills, hospice care, and other information critical to end-of-life decisions. “The intent here is to simply make sure that you’ve got more information, and that Medicare will pay for it,” he says. “The problem right now is that most of us don’t give direction to our family members, so when we get really badly sick… the [doctors] are making decisions in consultation with your kids or your grandkids and nobody knows what you would have preferred.” Obama is refuting rumors that claim under his reform proposal, elderly Americans would be encouraged to die sooner (see July 16, 2009 and July 23, 2009).
Pre-Existing Conditions - Insurers will no longer be able to deny care to people with so-called “pre-existing conditions.” Obama reflects on his mother, who died of cancer: “She had to spend weeks fighting with insurance companies while she’s in the hospital bed, writing letters back and forth just to get coverage for insurance she’d already paid premiums on. And that happens all across the country. We’re going to put a stop to that.… We’re going to reform the insurance system so that they can’t just drop you if you get too sick. They won’t be able to drop you if you change jobs or lose your job.… We want clear, easy-to-understand, straightforward insurance that people can purchase.”
Keeping Existing Coverage - Obama reassures another caller that she will not have to drop the coverage she has. “Here’s a guarantee that I’ve made: If you have insurance that you like, then you’ll be able to keep that insurance. If you’ve got a doctor that you like, you’ll be able to keep your doctor. Nobody is going to say you’ve got to change your health care plan. This is not like Canada where suddenly we are dismantling the system and everybody’s signed up under some government program. If you’ve already got health care, the only thing we’re going to do for you is, we’re going to reform the insurance companies so that they can’t cheat you.… If you don’t have health insurance, we’re going to make it a little bit easier for you to be able to obtain health care.” Those dissatisfied with their coverage, or who have no coverage at all, would have a wider array of choices, including, perhaps, a government-run plan (the “public option”).
Rationing Health Care? - One caller asks, “Even if I decide when I’m 80 that I want a hip replacement, am I going to be able to get that?” Obama responds: “My interest is not in getting between you and your doctor—although keep in mind that right now insurance companies are often getting between you and your doctor. [Decisions] are being made by private insurance companies without any guidance as to whether [they] are good decisions to make people healthier or not. So we just want to provide some guidelines to Medicare, and by extension the private sector, about what [treatments] work and what doesn’t.… We don’t want to ration by dictating to somebody [that] we don’t think this senior should get a hip replacement. We do want to provide information to [you and your doctor about what] is going to be most helpful to you in dealing with your condition.” He gives the following analogy: “If you figure out a way to reduce your heating bill by insulating your windows… you’re still warm inside. [But] you’re not wasting all that energy and sending it in the form of higher bills to the electric or gas company. And that’s then money you can use to save for your retirement or help your kid go to college. Well, it’s the same principle within the health system.” Obama is refuting claims by health care opponents that the government intends to ration health care and deny elderly patients needed treatment (see November 23, 2008, January 27, 2009, February 9, 2009, February 11, 2009, February 18, 2009, May 13, 2009, June 24, 2009, June 25, 2009, July 10, 2009, July 16, 2009, July 17, 2009, July 21, 2009, July 23, 2009, July 23, 2009, July 23, 2009, July 23-24, 2009, July 24, 2009, July 28, 2009, July 28, 2009, and July 28, 2009).
Reform Not 'Socialized Medicine' - Obama assures the participants that his vision of health care reform is not socialism under any guise. “A lot of people have heard this phrase ‘socialized medicine,’” he says. “And they say, ‘We don’t want government-run health care. We don’t want a Canadian-style plan.’ Nobody is talking about that. We’re saying, let’s give you a choice.” He recalls: “I got a letter from a woman the other day. She said, ‘I don’t want government-run health care. I don’t want socialized medicine. And don’t touch my Medicare.‘… I wanted to say, ‘That’s what Medicare is. It’s a government-run health care plan that people are very happy with.’”
Conclusion - Obama says he doesn’t expect a perfect health care system. “But we could be doing a lot better than we’re doing right now,” he says. “We shouldn’t have people who are working really hard every day without health care or with $8,000 deductibles—which means basically they don’t have health insurance unless they get in an accident or they get really sick. That just doesn’t make sense. So we’ve got to have the courage to be willing to change things.” After the town hall ends, AARP board chair Bonnie Cramer says she believes Obama “really made it very clear that Medicare beneficiaries will not see cuts in Medicare services.” By speaking directly to older Americans, Cramer says, “He put to rest a lot of their concerns.” [Slate, 7/28/2009; AARP Bulletin Today, 7/29/2009; McKnights, 7/29/2009]

Entity Tags: Medicare, Barack Obama, Bonnie Cramer, American Association of Retired Persons, A. Barry Rand, Jennie Chin Hansen

Timeline Tags: Domestic Propaganda, 2010 Elections

Category Tags: HCA - Inflated Costs, Obama Health Care Reform, US Health Insurers, Medicare

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