Tenet Healthcare, the parent company of Hilton Head Hospital, is denying allegations that the hospital was involved in a kickback scheme involving the Medicaid program.  The lawsuit says the hospitals fraudulently billed Medicaid for tens of thousands of ineligible claims, and asks that the hospitals pay damages and penalties. A federal whistle-blower accuses the Hilton Head Hospital and others in Georgia of paying kickbacks to clinics that directed expectant mothers in the country illegally to their hospitals and filed fraudulent Medicaid claims on those patients.

Federal law prohibits hospitals from paying to get patient referrals.  Also, people living in the country illegally are not eligible for Medicaid coverage except in emergencies. Medicaid does consider childbirth an emergency condition.



A few weeks ago, we posted a blog about the connection between doctors and prescription sales. In that article, financial data was used to show that doctors who worked with a pharmaceutical company, giving presentations and speeches, were more likely to prescribe a drug that the company had marketed.

In a similar tale of big pharma influence, one St. Louis company has been entangled in a lawsuit under the False Claims Act. John Prieve, the whistleblower who brought forth the suit, worked at Mallinckrodt LLC. In his suit, he claims that Mallinckrodt defrauded the government because they used financial incentives to increase the number of doctor prescriptions their drug got. In doing so, many of the prescriptions were paid by Medicare and Medicaid, essentially placing the added cost on the government. The suit alleges that the company ‘targeted doctors’ who prescribed similar drugs in an attempt to increase sales of the less effective and more expensive antidepressants and sleep aids that Mallinckrodt made. The company is settling the suit for $3.5 million.

The Wall St. Journal reported that “some of the nation’s largest health-care landlords are pulling back from nursing homes on concerns they will be less profitable in an era of steep Medicare and Medicaid cuts.” Health Care REIT Inc., which leases to about 250 nursing homes nationwide, and Senior Housing Properties Trust, which is the landlord to nearly 50 nursing homes, have indicated they are greatly reducing their exposure or that they might exit the sector.

“Ventas Inc., one of the largest health-care landlords in the U.S., said it is comfortable with the approximately 300 nursing homes it already houses but won’t make major new acquisitions in the sector until there is more clarity on Medicare rates. Instead, Ventas plans to expand into assisted-living properties that aren’t dependent on government subsidies.”

REIT equity investors remain attracted to nursing-home landlords, in part because of their relatively high dividend yields. Health Care REIT’s share price is up 22.6% so far this year and it pays a dividend yield of 4%, higher than the 3.3% yield for the overall REIT sector.

These entitlement programs combined make up about 90% of nursing-home revenue. If they are diminished, some nursing homes could have difficulty paying their rent.  Medicare pays for patients admitted for post-surgery rehabilitation for stays around 90 days or less. Medicaid, accounting for about 70% of most nursing-homes’ revenue, subsidizes longer stays for indigent elderly patients. The sequester will result in $11 billion in reduced revenue to Medicare providers. That is on top of an estimated $7 billion shortfall in Medicaid reimbursements nationwide last year, a 14.3% jump from 2011, according to the American Health Care Association.

Some nursing-home landlords say the market risk is overstated. If the sequester-induced cuts do occur, “We don’t believe it will have a big impact on the operators profitability,” said Craig Bernfield, chief executive and founder of Aviv REIT Inc., based in Chicago.



The Daily Journal reported that two former employees of the Momence Meadows Nursing Center, who turned whistleblowers against their employer in 2004, helped convince a jury in federal court that the nursing home abused its residents and filed phony Medicare and Medicaid claims — prompting a $28 million verdict against the former owner.

Following a two-week trial in Urbana, a jury found that Jacob Graff oversaw a home that “provided worthless services to the residents,” and hit him with the stiffest civil penalty it could.



The Miami Herald’s Naked Politics had an interesting article on the arrest of CEO Maxcine Darville and Assistant CEO and Assistant CEO Joanne Carter of the Council on Aging of Florida; the product of an investigation by the Attorney General Office’s Medicaid Fraud Unit.  Darville and Carter were in command of the nursing home management company and charged with misusing Medicaid funds. Darville and Carter are accused of using $2.75 million in Medicaid allocations to give themselves excessive salaries and pay for personal expenses like mortgage payments, cell phone service and household bills. The questionable spending occurred by January 2006 and March 2012.

The Council on Aging of Florida, a for-profit company that operates four facilities, is not affiliated with the Florida Council on Aging, a statewide advocacy group for the elderly.
Here is the full press release:
Today Attorney General Pam Bondi’s Medicaid Fraud Control Unit, with the assistance of the Alachua County Sheriff’s Office, arrested the CEO and Assistant CEO of the Council on Aging of Florida, Maxcine Darville and Joanne Carter, respectively, for using more than $2.75 million of Medicaid dollars for excessive salaries and personal expenses. The Attorney General’s Office investigated the women for allegations that between January 2006 and March 2012 the two used Medicaid program payments to the Council on Aging of Florida to cover excessive salaries and personal expenses, such as mortgage payments, Internet service, utility bills, cell phone service, and personal long distance calls. The Council on Aging of Florida is a nursing home management company, and it is not affiliated with the Florida Council on Aging.
“We will not allow those who are entrusted with providing legitimate Medicaid services and accurately billing the program to exploit the system,” stated Attorney General Pam Bondi. “We will continue to protect taxpayers’ dollars by investigating and prosecuting those who commit Medicaid fraud.”
Darville and Carter are each charged with one count of organized scheme to defraud, a first-degree felony. If convicted, Darville and Carter each face up to 30 years in prison and $10,000 in fines. Attorney General Bondi’s Office of Statewide Prosecution will prosecute the case.

The New York times reported that millions of poor and elderly Americans may have to contribute more for health care under a proposed federal policy that would give states more freedom to impose co-payments and other charges on Medicaid patients. Under the proposal, a family of three with annual income of $30,000 could be required to pay $1,500 in premiums and co-payments.

The 2010 health care law extended Medicaid to many childless adults and others who were previously ineligible. The Supreme Court said the expansion of Medicaid was an option for states, not a requirement as Congress had intended.  Hoping to persuade states to expand Medicaid, the Obama administration is allowing state Medicaid officials to charge higher co-payments and premiums for doctors’ services, prescription drugs and certain types of hospital care, including the “nonemergency use” of emergency rooms.

With patients paying more, the federal government and states would pay less than they otherwise would.


Several media outlets have reported that national health spending has remained stable as a share of the economy since Obamacare was enacted.   Spending increased overall to $2.7 trillion in 2011, or an average of $8,700 for every person.  The rate of increase in health spending, 3.9 percent in 2011, was the same as in 2009 and 2010 — the lowest annual rates recorded in the 52 years the government has been collecting such data.   National health spending grew at roughly the same pace as the overall economy, without adjusting for inflation, so its share of the economy stayed the same, at 17.9 percent in 2011, where it has been since 2009.

Kathleen Sebelius, the secretary of health and human services, said that “the statistics show how the Affordable Care Act is already making a difference,” saving money for consumers. Medicaid spending grew less quickly in 2011 than in the prior year, as states struggled with budget problems. But Medicare spending grew more rapidly, because a one-time increase in Medicare payments to skilled nursing homes.

A sign that the effects of the recession have begun to fade is the percentage of people with private health insurance increased 0.5 percent in 2011 after losing ground the previous three years.
And the share of Americans with health coverage is expected to grow substantially in 2014, when some states will expand their Medicaid programs, and federal subsidies will be offered through insurance exchanges under the Affordable Care Act.  More people gained health insurance as a result of the health law’s requirement that young adults can stay on a parent’s plan until age 26.


Health care spending is highly skewed toward the sickest people. Five percent of patients account for nearly half the total spending in any given year.  Prevention and early treatment are the keys to keeping health care spending low.

See articles at The Washington Post, The N.Y. Times, The Wall St. Journal, and Politico.

The Florida Times Union reported that Florida’s Republican Tea Party Governor Rick Scott will cut Medicaid.  Nursing home industry and patient advocates agree that the cuts will harm nursing home residents.  Scott’s plan includes Medicaid rate cuts of $429 million as part of a budget-cutting exercise. Though state economists’ early projections show a $71 million budget surplus going into 2013-14, Scott required all state agencies to submit an initial budget plan that would cut spending by 5 percent.

“More than 60 percent of that cut — $274 million — would be shouldered by nursing homes under the proposal presented this week by the Agency for Health Care Administration.”  This will clearly affect staffing and the care of the residents.


“Two-thirds of my costs are people,” said Marty Goetz, CEO of River Garden Hebrew Home in Jacksonville. “If that level of cut happens, I will have to reduce staff, salaries or hours.”



“During the spring legislative session, lawmakers cut $38 million from nursing homes, and $49 million for hospital outpatient services. The latter would see another $119.4 million reduction as part of the agency’s proposal.”


Fox Business News had a good article on who is responsible for paying the nursing home bill when the resident is indigent.  Typically, Medicaid pays for the services.  However, 29 states have parental support laws, also known as “filial support,” which could force the resident’s children to pay for unpaid bills. These laws allow long-term care providers to pursue payment from a parent’s children.  Parental support laws are archaic dating back to colonial times to make sure family members relied on one another rather than turning to public resources for help.  They were rarely enforced after Medicaid’s enactment.

The article mentions a recent study published by Katherine Pearson, a professor of law at the Dickinson School of Law at Penn State University, found that long-term care providers are taking advantage of such laws in at least two states: Pennsylvania and South Dakota.

After one case involving a $93,000 bill wound its way through the court system, in May 2012, the superior court found against the resident’s children, based on the son’s ability to pay.

By holding the son liable for a lump sum of close to $93,000 in the Pittas case, the superior court appears to confirm a significant tool for certain creditors of individuals who are unable to pay their debts personally, permitting the filial support statute to be applied retroactively to substantial accrued debt, without requiring evidence of fault on the part of the targeted family member,” according to Pearson’s study.

“At the same time, new restrictions have been placed on Medicaid, which traditionally has paid a large percentage of long-term care costs in the United States. For example, the Deficit Reduction Act of 2005 increases penalties on people who transfer assets for less than market value prior to applying for Medicaid.”  Medicare may cover nursing home care if certain conditions are met, but only for a maximum of 100 days.


Kaiser Health News reported the Republican plan to cut Medicaid.  “The House Republican plan to repeal President Barack Obama’s health law and turn Medicaid into a block grant program would save the federal government $1.7 trillion from 2013 to 2022, a 38-percent spending reduction, according to a report today by the Urban Institute for the Kaiser Family Foundation.”  This will affect children, people with disabilities, and the elderly especially in nursing homes. “It would also result in 31 million to 38 million fewer people getting Medicaid coverage in 2022, according to the report.”

Of the $1.7 trillion cut to Medicaid spending, $932 billion of the reductions come from repealing the Medicaid expansion in Obama’s health law and $810 billion is a result of spending cuts that are part of the block grant.