Better Solutions for Healthcare

KHN: COVID Bailout Cash Goes To Big Players That Have Paid Millions To Settle Allegations Of Wrongdoing

By Rachana Pradhan and Fred Schulte

Mary 9, 2020

The Trump administration has sent hundreds of millions of dollars in pandemic-related bailouts to health care providers with checkered histories, including a Florida-based cancer center that agreed to pay a $100 million criminal penalty as part of a federal antitrust investigation.

At least half of the top 10 recipients, part of a group that received $20 billion in emergency funding from the Department of Health and Human Services, have paid millions in recent years either in criminal penalties or to settle allegations related to improper billing and other practices, a Kaiser Health News review of government records shows.

They include Florida Cancer Specialists & Research Institute, one of the nation’s largest U.S. oncology practices, which in late April said it would pay a $100 million penalty for engaging in a nearly two-decade-long antitrust scheme to suppress competition. A top Justice Department lawyer described the plot as “limiting treatment options available to cancer patients in order to line their pockets.” The company, which is required to pay the first $40 million in penalties by June 1, received more than $67 million in HHS bailout funds.

HHS distributed emergency funding to hospitals and other providers to help offset revenue losses or expenses related to COVID-19. In April, it distributed the first $50 billion based on providers’ net patient revenue, a calculation that gives more money to bigger systems or institutions charging higher prices.

Companies that have attested to receiving payments as of May 4 collectively received roughly $20 billion. The list is likely to change in the coming days as other companies confirm they’ve received money.

In total, the CARES Act, signed into law by President Donald Trump in March, provides $100 billion in emergency funding. Subsequent coronavirus relief legislation added another $75 billion. Money has also been steered to hot spots with high numbers of COVID-19 patients, rural health care providers and the Indian Health Service.

Of the companies documented to date, other top recipients ― including Dignity Health in Phoenix, the Cleveland Clinic, Houston’s Memorial Hermann Health System and Massachusetts General Hospital in Boston — have paid millions in recent years to resolve allegations related to improper billing in federal health programs, false claims to increase their payments or lax oversight that enabled employees to steal prescription painkillers.

Dignity Health, one of the largest hospital systems in the West, received $180.3 million in HHS bailout funds, making it the top recipient listed. It has settled civil accusations by DOJ that it submitted false claims to Medicare and TriCare, the military health care program.

The Cleveland Clinic, which in 2015 paid $1.74 million to settle federal allegations that it mischarged Medicare for costly spinal procedures to increase their billings and has entered into other similar settlements, received $103.3 million from HHS, the second-largest amount.

Memorial Hermann Health System and Massachusetts General Hospital received more than $93 million and $58 million, respectively. In 2018, Memorial Hermann paid nearly $2 million to the government to settle allegations that it improperly billed government health care programs by charging for higher-cost services when patients only needed lower-cost outpatient services.

Massachusetts General Hospital in 2015 paid the federal government $2.3 million to settle allegations that lax oversight enabled hospital employees to steal thousands of prescription medications, mostly addictive painkillers, for personal use.

Malcolm Sparrow, a professor at the Harvard John F. Kennedy School of Government, said the HHS methodology for its general distribution of relief funds is “a little bit worrying.”

“If you peg the amount based on historical volume and you’ve got good reason to believe that historical volume is inflated due to fraud and abuse, the irony is that they get more money because they’re more dishonest,” Sparrow said. “But you can’t prove that in a short period of time.”

Public tolerance for fraud and abuse naturally rises during times of emergency, Sparrow said, and now is not the time to revisit historical decisions to determine which companies are entitled to federal relief based on legal issues.

“I think that’s a tough case to make,” he said.