Tenet to pay $43 million in Medicare fraud settlement - ModernHealthcare.com

Tenet Healthcare Corp. has agreed to pay a record $42.3 million to the Justice Department to settle allegations that from 2005 to 2007 its hospitals overcharged Medicare by admitting patients who did not qualify for costly inpatient rehabilitation services.

HHS Inspector General Daniel Levinson said in a statement that the Dallas-based for-profit hospital operator disclosed the overbillings to the federal government as was required under a previous corporate integrity agreement between HHS and Tenet.

Tenet officials said the allegations came to light after its internal compliance department discovered overpayments at one hospital inpatient rehabilitation unit in Georgia. The settlement resolves civil liability for inpatient admissions at 25 Tenet inpatient rehab units, according to a company statement (PDF).

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Tenet spokesman Rick Black said the violation was one of the first things Tenet uncovered following the signing of its corporate integrity agreement in 2006. "As odd as it might sound, it is something that Tenet is proud of. … it is a testament to the strong compliance program that we have," Black said. "When we discover something, we take it to the authorities."

Company officials intend to make the cash payment to HHS, the Justice Department, and the U.S. attorney's office in Atlanta during the second quarter of 2012. The payment was fully reserved on the company's books as of Dec. 31.

Word of the settlement comes about a year after Tenet, in a lawsuit, accused a rival investor-owned system, Community Health Systems, of Medicare overbilling following CHS' bid to acquire Tenet through a proxy battle. CHS denied those allegations and the lawsuit was eventually dismissed, but the acquisition attempt failed.

Today, 51-hospital Tenet operates various inpatient rehabilitation facilities throughout the U.S., and about eight inpatient rehab units today.

The Justice Department said Tenet agreed to settle allegations that it violated the False Claims Act between May 15, 2005, and Dec. 31, 2007, by admitting patients to expensive, multidisciplinary inpatient rehab centers instead of acute-care hospitals or skilled nursing facilities, which are generally reimbursed at lower rates by Medicare.

The Justice Department said the settlement was the largest-ever recovery for allegations relating to inpatient rehab billings under the False Claims Act.