Twelve Blue Cross and Blue Shield plans sued nine surgery centers in Southern California, seven management companies and 34 individuals for allegedly paying patients to undergo needless and sometimes dangerous surgery, most often colonoscopy or endoscopy. Paid recruiters allegedly enlisted patients from more than 40 states to undergo surgery at the California centers in return for cash or discounts on cosmetic surgery. The so-called "Rent-a-Patient" scheme allegedly began in 1999. The lawsuit, filed in U.S. District Court in Los Angeles, seeks to recover $30 million in payments. The plaintiffs include Blues plans of Alabama, Massachusetts, Michigan, Nebraska, North Carolina and Tennessee; as well as CareFirst, Empire, Excellus, Highmark, Premera and Regence.
Ex-AHERF hospital closes
Woman's Medical Hospital, Philadelphia, pulled the plug on its operations after a six-month effort to stay afloat. Officials at the former Tenet Healthcare Corp. facility blamed low patient volume. The decision came a day after officials reportedly asked employees to take voluntary pay cuts of 10%. Tenet acquired the hospital after the bankruptcy of Allegheny Health, Research and Education Foundation and announced plans to close the facility in December 2003. State officials stepped in, and Tenet ultimately turned the hospital over to physicians and staff members.
Critical access boosts margins
The overall profit margin of hospitals that switched to critical-access status increased to 2.2% from negative 1.2% between 1998 and 2003, according to preliminary findings by the Medicare Payment Advisory Commission. Potentially eligible hospitals that did not make the conversion dropped to an overall margin of negative 0.2% in 2003 from a profit of 2.2% in 1998. The analysis was part of MedPAC's preparations for a June report to Congress on critical-access hospitals. MedPAC officials said the debate should cover whether critical-access hospitals should continue to be paid 101% of costs or be moved to a fixed payment for providing emergency services and regular DRG rates for all other services. More hospitals became eligible for critical-access status with the Medicare Modernization Act of 2003, which raised the bed maximum to 25 from 15.
CMS works on guidelines
The CMS outlined factors considered in determining whether Medicare will cover a health-related item or service on a national basis. The description was part of a CMS effort to meet a Medicare Modernization Act requirement that the agency make data about national coverage determinations more available to the public. The CMS said it would develop several guidance documents for the coverage determination process. Public comment on the first set of draft documents is due in 60 days.