Last week was a real roller coaster ride for Tenet Healthcare. On Tuesday, the Justice Department announced it was fining the hospital network $42.75 million to settle allegations it violated the False Claims Act; then on Thursday Tenet announced an agreement with HHS that would add $84 million to its coffers to correct Medicare underpayments.
Relating to the Justice Department action, it was alleged that between May 15, 2005, and Dec. 31, 2007, Tenet improperly billed Medicare for the treatment of patients at its inpatient rehabilitation facilities (IRFs) when, in fact, these patient stays did not meet the standards to qualify for an IRF admission.
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The Justice Department touted the recovery as the largest single settlement it had yet received relating to improper admissions at IRFs.
"This settlement demonstrates our office's continued commitment to protect crucial Medicare dollars from fraud and abuse," said Sally Quillian Yates, U.S. Attorney for the Northern District of Georgia, in a DOJ press release. "Inpatient rehabilitation facilities are expensive, and Medicare dollars should be reserved for patients who need the services - not for hospitals seeking to make money through improper billing."
According to the release, Tenet self-reported the inappropriate billing, as required under its corporate integrity agreement with the federal government.
On the plus side of the ledger, Tenet reported that the $84 million settlement to be paid to the company by HHS, was the result of underbilling by the company to the Medicare inpatient prospective payment system that occurred over a number years.
[See also: Tenet rejects $3.3B buyout offer from Community Health Systems]
Of the settlement total, the company reported that $77 million is expected to relate to continuing operations. The cash proceeds related to this settlement are expected to be received on or about June 30, 2012.
Earlier this year, Tenet raised its 2012 income projections in anticipation of a favorable ruling from HHS, though it only bumped guidance by $25 to $50 million at its February announcement. Given the higher settlement figure, the company said it intends to further revise its 2012 guidance during its first quarter earnings release scheduled for May 8.