Case Against Hospital Chain Puts Spotlight on Bold Scheme to Gin Up Bills

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As those who follow these blog postings have seen, Medicare fraud can come in a variety of guises, and the perpetrators of schemes to defraud the federal government can range from small medical practices all the way up to hospitals and medical organizations. Then there are the really brazen schemes of various sizes that can even surprise seasoned observers of healthcare fraud, such as qui tam lawsuit attorney Gregory J. Brod of San Francisco.

One especially eyebrow-raising alleged plot to fleece the U.S. Treasury surfaced Friday when, according to The New York Times, the Justice Department announced that it had joined eight separate lawsuits in six states against Health Management Associates, a for-profit hospital chain based in Naples, Fla. And the charges against HMA describe an organization that encouraged its physicians to meet its targets for fraud much as any corporation would set quarterly or year-end goals for profit.

HMA allegedly used scorecards to grade participating doctors, assigning the optimum green color coding for those emergency room physicians who met their target by admitting at least one-half of all patients over 65 years old; with doctors on the bubble of the desired number of patient admittances assigned a yellow code; and physicians way off the mark given a failing red color code.

The Justice Department lawsuits detail a strategy that involved sophisticated software systems, financial incentives and threats in order to boost HMA’s payments from Medicare and Medicaid. And whistleblowers who stepped forward with the details about the schemes have pointed to former HMA chief executive Gary D. Newsome as the driving force behind the alleged fraud.

HMA administrators were allegedly asked to keep track of the number of patients being admitted through the use of the customized software program Pro-Med, whose findings were then used to grade physicians on the scorecards. According to the federal lawsuit, Newsome put in place the new protocols associated with the software that was geared to “drive admissions” at HMA hospitals.

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According to the lawsuit, a former division vice president and chief executive of an HMA-owned facility told Newsome that member physicians were concerned that the new protocols were clinically inappropriate and would result in unnecessary tests and admissions and added that his doctors refused to do things that way. Newsome’s reply, according to the lawsuit, was straightforwardly unambiguous: “Do it anyway.”

While the wheels of the alleged scheme were turning, patients who did not require inpatient treatment were often admitted, which allowed the hospital to bill Medicare and Medicaid more money for the care, according to a former physician who cited numerous examples.

HMA’s alleged attempt to cover up its scheme to defraud the government was about as brazen as the fraud itself. When one experienced accountant in hospital management sought an independent review and presented its findings that showed a higher admission rate, he was told to “burn it,” according the qui tam lawsuit the accountant filed, which states that he was soon fired.

While every scheme to defraud the government has its masterminds and driving forces, it is the brave whistleblowers such as the ones described herein who are the main catalysts behind the quest for justice. Whistleblowers are protected by the law, but they are best served when they seek the help of an experienced attorney. If you are aware of any scheme to defraud Medicare or Medicaid, please contact the legal team at the Brod Law Firm for a free consultation.
-James Ambroff-Tahan contributed to this article.

See Related Blog Posts:
The Many Guises of Medicare Fraud: Part I

Who Commits Health Care Fraud?

When a Seemingly Harmless Editing Tool Can Contribute to Medicare Fraud