Tenet to Slash Certain Bills to Medicare

Mon January 6, 2003 11:25 AM ET
NEW YORK (Reuters) - Tenet Healthcare Corp.THC.N , whose bills to the U.S. Medicare program are being probed, said on Monday its hospitals will charge the government program substantially less for certain medical procedures, slashing its monthly reimbursement to about $8 million from $65 million.
Tenet, the nation's No. 2 hospital chain said the change is consistent with assumptions used in financial forecasts provided last month for fiscal 2003 and fiscal 2004.

Government regulators are investigating whether Tenet overcharged Medicare, which pays for health care to the elderly and disabled. The Department of Justice recently subpoenaed the Santa Barbara, California-based company demanding data on so-called outlier charges to Medicare, which help hospitals defray costs for unusual or higher-priced treatments.

Tenet, which operates 114 hospitals in 16 states, has maintained its outlier charges did not break the law. The company's officers have met with U.S. Securities and Exchange Commission officials and the U.S. Department of Health and Human Services is also querying the outlier payments.

Shares of Tenet, off 66 percent since an analyst raised questions about the Medicare bills in late October, fell 15 cents to $16.63 in early trading on the New York Stock Exchange. Analysts said their eyes are glued to the government probes.

"The ultimate story here is where the government investigations go," said Clifford Hewitt of Legg Mason. "We're going to see a drip-drip of neutral to bad news from time to time as this plays out."

The Centers for Medicare and Medicaid Services is considering ways to change the federal funding structure so that the overpayments are avoided in the future.

Nancy Weaver of Stephens, Inc. said most analysts aren't including any outlier payments in their estimates of Tenet's numbers.

"Even under this policy, it's still one sided until the government decides what it wants to do," Weaver said.