Federal fraud prosecutors are investigating cases in which layoffs by providers jeopardized patient safety and quality of care, Deputy U.S. Attorney General Eric Holder said last week.
In a speech at an American Health Lawyers Association meeting in Arlington, Va., Holder said reducing staff solely to improve the bottom line and endangering patients in the process "may constitute financial fraud against the government."
Holder said the federal government already has investigated some providers for such actions.
"We have cases under investigation where we're really concerned with downsizing . . . in an attempt to achieve a better bottom line," Holder told reporters after his speech.
Probes into deep staffing cutbacks are a change in emphasis for federal fraud investigators. Their primary focus has been on financial fraud by providers.
Federal enforcement agencies said earlier this year that they were looking into whether Medicare managed-care plans have shortchanged seniors on medically necessary services (March 2, p. 2).
Holder said the investigations are widely dispersed nationwide. He would not specify which types of providers are targeted in the investigation, although he suggested that nursing homes were a primary focus.
In fact, officials from the U.S. Justice Department, HCFA and HHS' inspector general's office met in suburban Washington last week to refine their approach in investigating such violations at nursing homes.
Holder acknowledged the difficulty in defining fraud in cases of downsizing, although he said the providers under investigation showed "callous disregard" for patients' well-being.
American Hospital Association officials said they were surprised by Holder's comments and wanted more information directly from him.
"Until we talk to him, we're not going to have a formal response, because we find it so off-base that they could construe restructuring and efficiency as fraud and abuse," said Richard Pollack, AHA's executive vice president for government and public affairs.