Tenet Healthcare will pay $725 to settle Medicare case
The [tag]justice department[/tag] has been investigating Tenet Healthcare since late 2002, after questions were raised about the company’s [tag]Medicare[/tag] revenue. The case started when questions came up about Medicare payments for [tag]outliers[/tag], a hospital’s sickest patients.
Outlier payments are bonuses paid to hospitals by Medicare, and are intended to compensate the hospitals for the unusually expensive care of these very sick patients. This type of payment was created in order to encourage hospitals to treat the sickest patients.
Tenet found a way to exploit Medicare’s system of complicated formulas. Most [tag]Medicare reimbursements[/tag] are tied to [tag]diagnosis codes[/tag], but the outlier payments are calculated based upon the hospital’s [tag]chargemaster[/tag] (a price list for treatments). Tenet found that if chargemaster prices were raised sharply, the hospital would automatically begin receiving increased payments.
The case will be closed with $725 million in [tag]restitution[/tag], paid by Tenet over 4 years. This follows other large payments made by the company to the government and private plaintiffs, all related to allegations of [tag]misconduct[/tag]. Tenet will also waive its claim to $175 million of outlier and other Medicare payments not collected.
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