Becker's Hospital Review

13 CFO / FINANCE HCA accused of billing fraud: 3 things to know By Ayla Ellison A former nurse at Regional Medical Center in San Jose, Calif., filed a fed- eral lawsuit alleging the hospital and its owner, Nashville, Tenn.-based HCA Health- care, submitted false claims to Medicare. ree things to know: 1. e lawsuit, which was filed in 2017 and unsealed in February of this year, alleges Re- gional Medical Center and HCA billed for certain services on an inpatient basis when the patients were still waiting in the ED. "e Regional Medical Center is frequently out of beds in its units and the emergency department is frequently well over capacity," the complaint states. "When this happens, patients that have been admitted to the hos- pital from the emergency department are le waiting in the emergency department. ese patients that are admitted into fabri- cated room but that are still physically wait- ing in the emergency department for a bed in their admitted unit are known as 'holds.'" 2. e whistle-blower alleges that claims sub- mitted to Medicare on an inpatient basis while the patient is still in the ED are fraudulent. "When emergency department nursing staff chart patients as if the patient is locat- ed in the ICU, medsurge or telemetry units, [Medicare audit contractors] and other gov- ernment claims processers have no way of knowing that the patient was physically lo- cated in the emergency department. us, any claims for 'holds' that seek reimburse- ment at greater than emergency department rates are fraudulent," the complaint states. 3. According to the complaint, hospital ad- ministrators also directed staff to upcode claims to inflate reimbursement. "Placing the ER patients in fraudulent rooms allows defendants to upcode as many revenue codes and revenue code units on the UB04 forms and make the final bill as high as pos- sible," the complaint states. "Defendants then benefit by receiving additional outlier reim- bursements that they would otherwise not qualify for under CMS' standards." n Quorum aims to shed up to 9 hospitals By Ayla Ellison Q uorum Health began selling off hospitals in 2016, and the Brent- wood, Tenn.-based company plans to further refine its hospital portfolio this year. Quorum is focused on selling hospitals to improve financial performance. Since its spinoff from Franklin, Tenn.-based Community Health Systems in April 2016, Quorum has divested 10 hospitals and closed one other. The company has received $86.5 million in net proceeds from hospital divestitures, and it has used the bulk of those funds — $84.8 million — to pay down its debt, ac- cording to a March 12 filing with the Securities and Exchange Commission. In the filing, Quorum said it intends to divest or close underperforming hos- pitals. Quorum President and CEO Bob Fish provided more details about the company's divestiture plan during a fourth-quarter earnings call on March 13. Mr. Fish said the company is actively marketing both individual hospitals and groups of hospitals. "We continue to see active interest in the assets being marketed," he said. "Once we're able to complete our currently planned dives- titures, we expect the profile of our business to consist of 18 to 20 premier ru- ral and non-urban hospitals generating $1.2 million to $1.4 million in revenue with enterprise adjusted EBITDA margins in the mid-teens." Quorum, which currently owns 27 hospitals, plans to make progress toward its divestiture goal this year. In January, the company entered into a definitive agreement to sell Scenic Mountain Medical Center in Big Spring, Texas. Quo- rum expects that deal to close by the end of April. n Cleveland Clinic's annual net income drops 91% on heavy investment losses By Ayla Ellison C leveland Clinic's revenue increased in 2018, but the system's operating income and net income declined year over year, according to audited financial documents released March 14. Cleveland Clinic's revenues climbed to $8.9 billion in 2018, up more than 6 percent from $8.4 billion in the year prior. The boost was largely attributable to higher net patient service revenue, which increased 3 percent year over year. Increases in operating expenses outpaced Cleveland Clinic's revenue growth. The system's expenses were up nearly 8 percent year over year in 2018. Ex- penses grew across all categories, including supplies, administrative services, and salaries, benefits and wages, according to the financial documents. Cleveland Clinic ended last year with operating income of $266.4 million, down from $330.6 million in 2017. During 2018, Cleveland Clinic's nonoperating losses totaled $162.5 million. That's compared to 2017, when the system reported nonoperating gains of $819.8 million. The decline is primarily attributable to a $191.2 million invest- ment loss in 2018 due to turbulent financial markets, which was partially offset by other nonoperating gains. After factoring in nonoperating losses, Cleveland Clinic ended 2018 with net income of $103.9 million, down 91 percent from $1.2 billion in the year prior. n

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