Last week, the hospital business in Georgia’s second-largest city received a double dose of financial misery.
The first round of bad news centered on Columbus Regional Health.
State Attorney General Sam Olens announced Friday that Columbus Regional and other related entities had agreed to pay Georgia and the United States up to $35 million to resolve allegations of false Medicaid claims.
Then the Columbus Ledger-Enquirer reported Saturday that the other hospital organization in town, St. Francis, has been told by the feds that it must repay $21.4 million and make major changes in the way it does business.
The federal audit report came 10 months after St. Francis said it could not account for about $30 million on its financial books.
The two situations are unrelated and very different, experts point out. But together they put a spotlight – and force large payouts – in Columbus. And what happens economically in the big city on the Chattahoochee River affects large areas of west Georgia and east Alabama.
“The timing is certainly unusual,” state Sen. Joshua McKoon, a Columbus Republican, told GHN on Tuesday when he was asked about the nonprofit hospitals’ financial hit. “I can’t recall anything like this happening in the past.”
But McKoon added that he expects both hospitals to survive. “They are very different issues,’’ he said. “We can expect them to continue to operate.”
The Columbus Health settlement resolves allegations that the defendants submitted claims for services billed at higher levels than supported by documentation; for radiation therapy that did not qualify as such; and for claims submitted in violation of Medicaid rules prohibiting the payment of remuneration in return for patient referrals.
Columbus Health isn’t the first Georgia hospital system hit hard this year under a federal and state crackdown on Medicare and Medicaid fraud. In April, a Macon hospital agreed to pay $20 million to settle allegations that it violated the False Claims Act by overcharging Medicare on patient admissions.
Federal officials said that from 2004 to 2008, the Medical Center of Central Georgia billed Medicare for inpatient services when the billing should have been for less costly outpatient or observation services.
Crackdown on loose practices
NPR reported last week that White House budget director Shaun Donovan called for a “more aggressive strategy” to thwart improper government payments to doctors, hospitals and insurers in a previously undisclosed letter to U.S. Health and Human Services Secretary Sylvia Burwell earlier this year.
Government health care programs covering millions of Americans waste billions of tax dollars every year through these improper payments, Donovan said in the Feb. 26 letter.
Donovan cited problems with Medicare and also noted that payment errors in Medicaid rose by $3.1 billion last year.
In the Columbus Regional case, Olens said Georgia also reached a civil resolution with Dr. Andrew Pippas, a medical oncologist who agreed to pay Georgia and the feds $425,000. That settled allegations that he received improper salary and medical directorship payments from Columbus Regional, resulting in the illegal submission of claims to Medicare and Medicaid.
“Cancer patients are among those most in need of a doctor’s earnest and unbiased medical advice,” Olens said. “Medical providers must ensure that they do not solicit, offer, or accept payments based on their referral of patients.”
Sen. McKoon defended Pippas. The doctor “has been a real leader in our community,” McKoon said. “I’m very comfortable saying Dr. Pippas is extremely honest.”
McKoon is also an attorney, and he said it’s better sometimes to settle an allegation rather than have a long court fight, regardless of whether the allegation is valid.
The Columbus Regional case began with a whistleblower lawsuit filed in 2012 by Richard Barker, the former top administrator of the John B. Amos Cancer Center, part of Columbus Regional.
“We have been dealing with this lawsuit the last two years,” said Columbus Regional President and CEO Scott Hill. “To continue to fight this litigation is costly for the organization, and ultimately the end result of going to trial is probably not one that is feasible for our organization at this moment.”
Christopher Press, a consultant with Morgan Healthcare Consulting, noted the complexity of government insurance program billing. “First, if people think their taxes are complex, Medicare coding and billing are your taxes to the 20th power,’’ Press said. “This is not two plus two is four. It’s not arithmetic; it’s more like particle physics.”
Shake-up at St. Francis
The St. Francis situation comes at an inopportune time for the hospital, which is in talks to be acquired by Tennessee-based LifePoint Health.
A federal audit said St. Francis Hospital and its management did not comply with federal regulations and a regulatory agreement connected to the financing of its $252 million expansion and campus renovation, which was completed in 2013, the Ledger-Enquirer reported.
Specifically, the audit report dated Sept. 3 said the hospital “submitted inaccurate financial information, improperly disbursed mortgage proceeds, incurred an unauthorized liability, and subjected mortgage funds to bank sweeps.”
Originally terming the $30 million financial hole an “accounting inaccuracy,” St. Francis disclosed that it had suspended Chief Financial Officer Matt Moore and that he had been “permanently relieved of his duties’’ in November.
The fallout rippled through the organization, with then-President and CEO Robert Granger announcing that 80 jobs were being eliminated at the hospital, 65 of them filled positions, the newspaper reported. The hospital also began a series of talks with potential buyers or investors. Granger himself then resigned in early March.
The audit report initiated by HUD and its Office of Hospital Facilities paints a picture of a Columbus hospital that severely lacked financial oversight. It said management failed to put in place “adequate controls,” “internal controls” and “written policies and procedures” to make sure the hospital’s $210 million mortgage insured by HUD was administered properly, according to the Ledger-Enquirer.
“I don’t think there’s really a surprise in respect to St. Francis,” McKoon said. “As a community, we need the facilities and services that St. Francis provides.”
LifePoint told the Ledger-Enquirer that the payout issue at St. Francis will not derail the company’s plan to acquire the hospital.
Michelle Augusty, senior director of communications for LifePoint Health, said, “We are confident that the steps St. Francis has taken and their continued efforts are proving effective.”
State Rep. Debbie Buckner (D-Junction City) noted that the competition between St. Francis and Columbus Regional has been fierce.
“That competition, combined with increased costs of doing business, decreased reimbursements and the large number of uninsured patients, can lead to dangerous cash-flow situations,” Buckner said Tuesday. “However, as difficult as the financial management of hospitals may be today, it is an expectation and a requirement that the laws of the land and the quality of care be conscientiously adhered to in all cases. I hope these payments of fines will serve as strong incentives to those involved, to never make these same type decisions again.”