San Francisco-based Dignity Health and two Tenet Healthcare-affiliated facilities in California agreed to pay more than $22 million combined to settle Medi-Cal billing fraud allegations.
The federal government and state of California accused Dignity, Twin Cities Community Hospital and Sierra Vista Regional Medical Center of submitting Medi-Cal claims for services that were not allowed medical expenses, did not reflect the fair market value of the enhanced services provided or were duplicated services, according to a Dec. 7 Justice Department news release.
Medi-Cal was expanded under the ACA in January 2014 to cover adults ages 19 to 64 who had dependent children and an annual income up to 133 percent of the federal poverty level. The federal government funded the expansion for three years and required county organized health systems in California to spend at least 85 percent of funds for the adult expansion population on allowed medical expenses, or repay the difference to the federal government.
Dignity Health agreed to pay $13.5 million to the federal government to resolve allegations its three hospitals and a clinic in Santa Barbara County and San Luis Obispo County knowingly submitted false claims for "enhanced services" related to Medi-Cal expansion from February 2015 to June 2016. The health system also agreed to pay $1.5 million to the state of California as part of the settlement, the Justice Department said.
Twin Cities and Sierra Vista agreed to pay $6.75 million to the federal government to resolve allegations the hospitals filed false claims between January 2014 and April 2015. The hospitals will also pay $750,000 to the state of California.
"We stand behind the efforts of our team to serve the Medi-Cal population in San Luis Obispo and Santa Barbara counties, California. Sierra Vista Regional Medical Center and Twin Cities Community Hospital strongly deny the allegations but resolved this matter to avoid the expense and distraction of further litigation," said Rob Dyer, vice president of communications at Dallas-based Tenet Healthcare. "The hospitals used the Medi-Cal funds received from CenCal Health to serve Medi-Cal beneficiaries as intended."
He said in late February 2015, health plan CenCal Health presented the ACE Program to hospitals, which was a reimbursement model for services provided to the Medicaid expansion members. Hospitals provided services to expansion members and were paid according to the ACE Program contracts. The federal government later decided not to approve CenCal's method of administering expansion funds and sought to recoup the funds from CenCal and participating providers. Hospitals did not have input into the terms of the ACE Program.
"We strongly disagree with any assertion that the hospitals misused the funds in any way or received any improper benefit. Sierra Vista and Twin Cities remain committed to full compliance with all California and federal health care program requirements," said Mr. Dyer. "Our hospitals and dedicated care teams remain committed to providing high quality care to Medi-Cal patients in our community."
The lawsuit was filed by Julio Bordas, MD, the former medical director of the county organized health system contracting with Dignity, Twin Cities and Sierra. Dr. Bordas received $3.9 million of the recovery as the whistleblower, according to the release.
Editor's Note: This article was updated at 9:10 pm CST on Dec. 8 to include the statement from Tenet Healthcare.