CHS’ Health Management Associates to pay $262 million false-billing settlement

Community Health Systems subsidiary Health Management Associates agreed to pay the federal government $262 million to settle false-billing and kickback allegations, authorities announced last week.

The government alleged that HMA knowingly billed government healthcare programs for inpatient services that should have been classified as outpatient or observation services, paid physicians in return for patient referrals and submitted inflated claims for emergency department facility fees. The alleged activity occurred between 2003 and 2012, before CHS acquired HMA.

“Since acquiring HMA in 2014, it has been our goal to resolve the government’s investigation into all of these allegations which occurred prior to the acquisition and which were already under investigation at the time of the transaction,” CHS Chairman and CEO Wayne Smith said in a statement. “We are pleased to have reached the settlement agreements so we can move forward now without the burden or distraction of ongoing litigation.”

Franklin, Tenn.-based CHS has struggled since it acquired Naples, Fla.based HMA and its $3.7 billion in debt as it has tried to turn around HMA’s embattled facilities and integrate its vast hospital footprint.

The federal government noted that CHS tried to right the ship after it acquired HMA by removing HMA’s board members and senior executives and integrating the HMA-affiliated hospitals into CHS’ compliance program.

The settlement includes a nonprosecution agreement in which the government agreed not to bring criminal charges as long as HMA and CHS agreed to cooperate with the investigations, report any wrongdoing, and ensure that their compliance and ethics program is satisfactory.

In addition, HMA’s defunct subsidiary formerly known as Carlisle Regional Medical Center, agreed to plead guilty to one count of conspiracy to commit healthcare fraud.