Mercy Health Care Fraud Allegations Could Bring Down Mercy
In the aftermath of the health care fraud scandal at Mercy Health, the nation’s largest hospital system, the Obama administration has ordered its inspector general to look into whether Mercy’s management of the Medicare and Medicaid payments were fraudulent.
In a March 6 letter, Acting Inspector General Paul M. Ryan, the director of the Office of Inspector General for the Department of Health and Human Services, wrote that the investigation could uncover “substantial and serious mismanagement of the Federal Medicare Program.”
But in a March 17 interview with The Associated Press, Ryan said he had not determined whether the inspector general’s report would be made public.
The Inspector General’s report will be sent to Ryan by June 25.
According to the letter, “we will also work with other relevant federal agencies to ensure appropriate action is taken to address this matter.”
Ryan did not immediately respond to a request for comment.
In May 2016, Mercy paid a record $6 billion in Medicare payments to patients and suppliers.
That figure includes $2.9 billion in the first quarter of this year and $4.3 billion in 2016.
The company’s CEO, James T. Sullivan, acknowledged the fraud in a May 10 interview with CNBC, saying he had been warned in the summer of 2015 that fraud was going on.
But Sullivan said he did not know of any cases of fraudulent payments and he had “no evidence” that any were made.
“We’re not a hospital,” Sullivan said in the interview.
“It’s not a medical facility.
We’re not going to be a hospital.”
Mercy’s Medicare payments were initially disclosed in a government watchdog report, written by the Government Accountability Office, which investigated the company’s handling of Medicare payments.
The GAO said in March that Mercy had been “misleading Medicare recipients” about the amount of Medicare reimbursements it had made, and that it had misreported payments to doctors, pharmacies and hospitals.
The inspector general report found that the company had not been truthful with the Medicare system.
It said Mercy’s executives had told Medicare recipients that they could pay with their debit cards at a cash-only machine.
In an interview with Reuters in May, Ryan denied any wrongdoing.
“There are no examples of fraud or misconduct at Mercy,” Ryan said.
The audit also found that Mercy’s billing practices were inconsistent.
Medicare pays hospitals and clinics an annual fee for services provided.
The auditor general found that in the fiscal year ending March 31, 2016, the amount paid to Mercy was $8.4 billion, including $3.6 billion for billing services.
The amount paid in payments to providers was $2 billion.
The auditors also found some instances of Mercy billing patients improperly, and for improper billing of Medicare patients.
“The hospital has repeatedly and repeatedly, over the last several years, failed to comply with the terms of its agreement with Medicare,” the audit found.
“For example, Mercy failed to pay patients their Medicare payments and did not adequately monitor its billing practices.”
In 2016, two separate audit reports found that Medicare fraud investigators had documented “at least two instances of fraud” at Mercy, including an instance where one of Mercy’s employees falsified a Medicare claim.
In one case, the inspector found that a former Mercy employee falsely billed a Medicare patient for an unnecessary service.
“As a result of Mercy Healthcare’s inability to properly and effectively monitor and control the billing and fraud activity at the hospital, Medicare may have been improperly billed for medical services and the payment may have actually gone to Mercy,” the auditors wrote.
In the March 19 interview, Ryan did say that Mercy was “doing a lot” to ensure that its Medicare payments are being made “correctly.”
The hospital is still under investigation by the Justice Department and HHS.
The Justice Department’s inspector general has not found evidence that Mercy is criminally responsible for the fraud, but the inspector’s letter does say that the Justice department “will take appropriate action” to address the issue.
Mercy’s chief financial officer, Daniel D. Kuczba, said in a statement that the audit was a “miscommunication” and that the agency “strongly disagrees with the conclusions reached.”
In an emailed statement, Kuczy said the audit report did not contain any evidence that “Mercy was involved in any fraudulent activity at any time.”
Kuczyk said the auditor general’s findings “are based on an examination of the facts and circumstances” and the agency is reviewing the report “to ensure any potential issues are addressed.”