Becker's Hospital Review

15 CFO / FINANCE Cleveland Clinic looks to rein in costs as Q1 operating income dips 22% By Ayla Ellison C leveland Clinic ended the first quar- ter of 2018 with operating income of $47.6 million, down 22 percent from $60.7 million in the same period a year earlier, according to bondholder documents. Cleveland Clinic's revenues increased to $2.12 billion in the first quarter of this year, up 2.6 percent from $2.07 billion in the first quarter of 2017. However, higher expenses offset the system's revenue gains. Cleveland Clinic said operating expenses climbed 3.3 percent year over year. During the first quarter of this year, Cleveland Clinic saw notable increases in expenses re- lated to salaries, wages and benefits, as well as pharmaceutical and supplies costs. To address the growth in expenses, Cleveland Clinic said it is developing and implementing cost man- agement and containment plans as part of an ongoing initiative launched in 2013. Cleveland Clinic commissioned a Care Af- fordability Task Force in 2013 to analyze the system's cost structure and identify cost and efficiency opportunities. Cleveland Clinic said the the task force helped roll out initia- tives that resulted in more than $860 million of improvements in the system's cost structure between 2014 and 2017. Aer factoring in nonoperating gains, which dropped 76 percent year over year, Cleveland Clinic recorded net income of $106.5 mil- lion in the first quarter of 2018, compared to $308.6 million in the same period of the year prior. n Aetna whistle-blower put on leave after accusing CVS Caremark of $1B billing scheme By Morgan Haefner A enta's former chief Medicare actuary was placed on administrative leave after filing a whistle-blower law- suit alleging pharmacy benefits manager CVS Care- mark overbilled Medicaid and Medicare for prescription drugs, according to The Columbus Dispatch. Here are four things to know about the lawsuit. 1. Sarah Behnke, Aetna's former chief Medicare actuary, filed the pending whistle-blower suit after her internal investiga- tion found CVS Caremark has been allegedly overbilling the federal government for prescriptions since 2007, according to the lawsuit. Ms. Behnke accused CVS Caremark of inappro- priately billing the government $1 billion-plus in fraudulent charges. 2. Aetna placed Ms. Behnke on administrative leave after the whistle-blower suit was unsealed in federal court in early April. The unsealing comes as CVS Health, the parent company of CVS Caremark, is attempting to buy Aetna for $69 billion. 3. Ms. Behnke's lawyer told The Columbus Dispatch Aetna's decision to place its then-Medicare actuary on administrative leave was "retaliatory and inappropriate." 4. CVS Caremark rejected the allegations and said it would hand documents over to the court by June 1. The company said it was unaware who filed the lawsuit until after its parent put out an offer to Aetna. CVS Health spokesperson Michael DeAngelis told the publication, "We believe this complaint is without merit, and we intend to vigorously defend ourselves against these allegations." Aetna officials declined The Co- lumbus Dispatch's request for comment. n Pennsylvania hospital accused of overbilling state by $9M By Ayla Ellison B ethlehem, Pa.-based St. Luke's University Health Network filed a proposed class-action lawsuit against Lancaster (Pa.) General Hospital on May 22, alleging Lancaster General submitted hundreds of inaccurate and overstated claims to the state's Extraor- dinary Expense Fund, which compensates hospitals for their charity care. According to the complaint, the Pennsylvania Auditor General found approximately 75 percent of all claims Lancaster General submitted to the EE program were invalid from fiscal year 2010 through fiscal year 2012. This rate of invalid claims was about 7.5 times higher than at other hospitals. St. Luke's alleges Lancaster General was overpaid by nearly $9 million from the EE program between fiscal years 2010 and 2012. "Given that only about $32.5 million in EE Program funds were distributed to hospitals during those three years, this means that more than one out of every four dollars disbursed during the relevant time period was improperly disbursed to Lancaster General," states the complaint. The alleged overpayments to Lancaster General low- ered reimbursements to other hospitals, including those in St. Luke's system. Lancaster General told Law360 St. Luke's allegations are meritless. n

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