Columbia/HCA Healthcare Corp. enforced a new hard line against fraud last week by firing two top hospital executives who the company said participated in a scheme to improperly boost future Medicare payments.
Both executives denied the charges.
Robert Bauer Jr., chief executive officer of Columbia's Indian Path Medical Center in Kingsport, Tenn., and Jim Matney, the hospital's chief financial officer, were dismissed June 15 after Columbia turned up evidence of illegal cost-shifting. The national chain's internal investigation of the 130-bed hospital was prompted by an anonymous call to the company's fraud complaint line.
Columbia concluded that the hospital had improperly allocated costs from other departments to its geriatric psychiatric unit in an attempt to inflate the hospital's Medicare payments. The hospital's general acute-care operations would be reimbursed under the government's DRG system, but the psychiatric unit would be paid based on actual costs, a higher reimbursement in this case.
Jeff Prescott, a Columbia spokesman, said the company does not know whether the alleged scam resulted in increased Medicare reimbursements to Indian Path. Prescott also said he didn't know when the alleged fraud occurred.
The Indian Path investigation was separate from a federal fraud probe of many Columbia operations, which is ongoing.
The U.S. attorney's office in Knoxville, Tenn., has issued a subpoena seeking information from Indian Path, according to the hospital's interim CEO, George Asbell. Russ Dedrick, the assistant U.S. attorney, declined to comment.
Columbia said it will turn over information gathered in its investigation to federal authorities.
Adamantly denying the charges, Bauer, the former Indian Path CEO, said the company is trying to make him a scapegoat. Taking action against a CEO allegedly involved in fraud could improve Columbia's image in the eyes of federal investigators carrying out the national probe.
Indian Path is one of six hospitals in the TriCities area of Tennessee that Columbia plans to sell (June 15, p. 40). Johnson City (Tenn.) Medical Center Hospital is buying all six for $280 million.
Johnson City Medical attorney Frank Anderson said Columbia's management changes do not "directly" affect Johnson City and would not scuttle the sale.
In a June 16 letter to employees, which was made available to the media, Columbia Chairman and CEO Thomas Frist Jr., M.D., and President and Chief Operating Officer Jack Bovender Jr. wrote: "This case should serve as an example that when such violations are uncovered, they will be dealt with swiftly and in the most severe terms."