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U.S. details Medicare fraud claims against Columbia/HCA

Sweeping federal investigations of Columbia/HCA Health-care Corp. are focusing on whether the company cheated federal health programs, including accusations from a Salt Lake-based investigation of fraudulent bills for laboratory tests at Columbia hospitals throughout the United States, according to a government affidavit that was partly unsealed Tuesday.

Most of the accusations in the affidavit have been previously disclosed in news reports. And indeed, much of the affidavit, filed July 7 in support of the government's efforts to obtain warrants to raid Columbia hospitals and offices, was unsealed last fall.But with the filing of the more fully unsealed document, the government for the first time has publicly disclosed the full range of the Columbia inquiries, as well as newly revealing certain evidence and testimony it has obtained.

In particular, the newly unsealed portions of the document described in great detail how the government believed that Columbia cheated programs such as Medicare by misreporting costs. One witness has told the government that in order to manipulate a complex reimbursement calculation for home care agencies Columbia has paid $13 in administrative costs a visit, when the true cost of service was only $3.

The document also said that the government had obtained evidence that Columbia hospitals improperly portrayed non-reimbursable costs for marketing and sales as "community education," which are reimbursable. Indeed, the document said, directors of community education had received bonuses and incentives for developing sales.

Rather than providing health education to the community, the affidavit said, executives charged with that responsibility spend most of their time making sales calls to doctors and "hunting" for patients, the document said.

The misrepresentation of community education alone, the government has been told, results in an overstatement of Columbia's reimbursable costs of $30 million to $40 million annually, the document said.

Prosecutors in Fort Myers, Fla., and El Paso, Texas, are investigating whether Columbia purposefully misreported costs to the government to illegally increase federal compensation and submitted false bills for services rendered, the document says.

A third portion of the criminal investigation, in Salt Lake City, is focusing on a possible scheme "involving Columbia hospitals operating throughout the United States" involving fraudulent bills for laboratory tests, it said.

In addition, the El Paso investigators are examining whether the company submitted false records to the Joint Commission on Accreditation of Health Care Organizations, the main hospital accreditation group, and provided compensation to doctors "as specific inducements for patient referrals to Columbia facilities," the affidavit said.

In a statement, Victor Campbell, a Columbia senior vice president, said, "This information does not appear to present new issues regarding the government's investigation," and said that the company would continue to work to resolve the case. He noted that since the affidavit was written the company had replaced its top managers and made a series of changes in its operations.

The most detailed new information unsealed Tuesday involved suspected schemes to inflate costs at Columbia's home care agencies. While the methods of those schemes have been reported, the details obtained by the government have not.

The affidavit, by Joseph Ford, an agent with the Federal Bureau of Investigation, said that Columbia acquired a group of home care agencies for a price far lower than comparable deals, but then entered into management agreements with the seller, Olsten Health Management, a subsidiary of Olsten Corp. Under the deal, Olsten was allowed to bill between $9.95 and $10.50 a visit. Such a transaction could allow Columbia to shift acquisition costs that are not reimbursable by the government into administrative costs that are.

In addition, according to the affidavit, a witness told the government that Columbia was paying a management agency it owned an additional $3 a patient visit, even though the services paid for were duplicative of Olsten.

Home care, like other outpatient services, are reimbursed on the basis of cost, meaning that the more expenses incurred, the higher the revenues.