HMA to repay government $31 million for improper EHR claims

(This article was updated with a correction on Nov. 8, 2013.)

Health Management Associates late Tuesday revealed 11 of its 70 hospitals had improperly claimed $31 million from the federal government's electronic health-record incentive program by incorrectly claiming they had met its “meaningful use” requirements. The Naples, Fla.-based hospital chain notified the CMS after identifying the error and announced it would restate its earnings for 2010 through 2012 and the first two quarters of 2013. The improper claims should not affect the closing of HMA's merger with Community Health Systems, which is expected in the first quarter of next year pending stockholder approval, according to its filing with the Securities and Exchange Commission.

The company blamed the improper claims, which were uncovered last month, on an error in the accounting treatment of the incentive payments due to “a control deficiency related to the administration and oversight of the company's EHR enrollment process.”

HMA said the claims totaled $8.3 million in 2011, approximately $17.3 million in 2012 and approximately $5.4 million in the first six months of 2013. The 11 hospitals have discontinued participation in the incentive program and will repay most of the money to CMS with some being returned to state programs.

HMA said it will restate earnings for the previous three years and the first two quarters of this year. It also has withdrawn its earnings guidance for the rest of this year and 2014 and warned stockholders that the statement by accounting firm Ernst & Young certifying the effectiveness of HMA's internal controls over its financial reporting “should no longer be relied upon.”

HMA has retained Ober Kaler, a Baltimore-based law firm specializing in healthcare regulations, to review its procedures for certifying its achievement of the government's meaningful-use standards. Over the past 3 years, hospitals needed to meet 14 core standards (e-prescribing, electronically recording patient demographic data and vital signs and the like) and five “menu” objectives as well as report 15 quality measures to CMS to qualify for meaningful-use incentive payments.

(This story was updated to correct the timeframe for meeting core standards.