Tenet gets DOJ subpoena on Medicare payments

Reuters, 01.03.03, 6:13 AM ET

SANTA BARBARA, Calif., Jan 3 (Reuters) -

Hospital chain Tenet Healthcare Corp. (nyse: THC - news - people), whose billing practices are being investigated by the U.S. government, said late on Thursday it received a subpoena from the Department of Justice demanding information on certain Medicare payments.
The number two U.S. for-profit hospital operator, which has been under scrutiny since October when two of its doctors were accused of performing unnecessary heart surgeries, said the subpoena requests documents from Tenet and 19 hospitals owned by its subsidiaries.

At issue are Tenet's past high volume of so-called outlier charges to the Medicare health plan for the elderly. The payments are made to help hospitals defray the extra cost of treatment involving unusual or higher than average patient costs -- usually very ill patients.

Tenet Healthcare, which through its subsidiaries owns and operates 114 hospitals in 16 states, has maintained that it did not break the law regarding the Medicare outlier payments.

"Given the scrutiny and controversy regarding outlier payments, it is not surprising that the Justice Department is interested in reviewing the matter," said Christi Sulzbach, Tenet's chief corporate officer and general counsel.

Tenet said 15 of the 19 hospitals that received requests are located in California, with the rest in Texas, Pennsylvania and Louisiana. Tenet said it would cooperate with the Department of Justice requests.

Tenet has suffered a host of problems during the second half of 2002, including the questions over outlier payments, the two doctors at its Redding, California medical center, the resignation of two top executives, a dissident shareholder lawsuit and union accusations that it exposed patients to higher risks of injury and death from dangerously low staffing levels.

The company disclosed in early November that U.S. regulators plan to audit payments made to its hospitals to determine whether it overbilled the federal Medicare program.
The company warned on December 3 that its fiscal 2003 and 2004 profits would fall short of estimates as Medicare cuts payments to high-cost hospitals.

The Centers for Medicare & Medicaid Services, which administers the Medicare program, said it would "clamp down on hospitals for overcharging for complex cases."