Medicare Plays Role in Reining in Columbia

by Martha Gruelle

The giant hospital chain Columbia HCA announced recently it's reforming itself. Without admitting guilt, a new CEO has announced policy changes that address millions of dollars worth of apparent abuses that are now under investigation by federal regulators. Thank goodness the feds were around! Who else could have taken on this multi-billion dollar corporation, which employs more people than McDonalds?

Michigan residents should be interested in Columbia, which owns 350 hospitals in 38 states, since the chain has been trying to purchase Capitol Medical Center in Lansing. Columbia, which operates for profit, has a history of expanding to dominate health care delivery wherever it gains a foothold.

Federal regulators in recent months have collected barrels of data showing that Columbia hospitals may have overcharged the Medicare system, health insurer of our nation's elderly. Medicare reimburses hospitals a standard amount for each diagnosis. Columbia apparently had a simple way to milk the system: report more acute diagnoses than were actually treated.

For instance, at a Columbia hospital in Miami, a study conducted by the New York Times found 93% of respiratory cases were reported to Medicare in the highest-paying category. Before the hospital was bought by Columbia in 1993, when it still operated independently, it reported 31% of respiratory cases at the highest-paying rate. That's roughly the percentage reported now by a public hospital across the street from Columbia's in Miami.

It has not yet been shown that this strange discrepancy is the result of fraud. But the pattern appears at least across the southern U.S., where Columbia's growth has been strongest.

Regulators are also examining possible conflicts of interest concerning the doctors that practice at Columbia hospitals. Since its beginning, Columbia's docs have been encouraged to invest in the for-profit hospital corporation, which also owns a host of companies that provide outpatient services like home care and rehabilitation.

Under federal law, doctors aren't allowed to refer patients to such companies if they own a financial interest; sending in patients just to increase profits proved to be too much of a temptation in the past. But hospitals are an exception to this law. Since Columbia is both, their practice of encouraging doctors to invest is in very murky legal water.

In August, Columbia announced some changes. For one thing, the company will no longer sell stock to doctors who practice in its hospitals. And managers say they are instituting independent reviews of how cases are reported to Medicare; that move, combined with eliminating cash bonuses for executives who meet financial goals, could greatly reduce the potential for fraud.

All of this is a grain of good news to our country's beleaguered health care system. The public - those who are lucky enough to get any health care - is rightly skeptical of medical decisions made on the basis of cost-cutting and profit. Private insurers, too are probably taking a close look at Columbia billings; they may well find reason to complain, that is IF they can muster the resources to dig for information as deeply as did the feds. Meanwhile, the federal agency responsible for Medicare is said to be taking a look at reporting practices by other hospital systems.

But what if Medicare weren't around? What if each of our older Americans were covered, if at all, by one of the private insurers - those wondering how badly they've been ripped off? We'd all, seniors and their children, still be paying Columbia for treatments not rendered.

The Medicare system worked in this case to rein in one of the most profit-hungry companies in health care. As the "single payer" for health care for a large part of our population, paying 36% of Columbia's income, Medicare had the wherewithal to notice certain patterns and grab the company by the collar. Columbia simply could not walk away.

Would that all of us had such a system for our health coverage. We could, for what our nation spends on needless administration sand profit-taking, provide health care for everyone, under a Canadian-style, single-payer system of private providers. It would be Medicare for everyone, so to speak, and a chance to make sure the health care industry puts people before profit.

(Martha Gruelle is a member of the steering committee of the Detroit chapter of MichUHCAN. We welcome contributions such as this to our newsletter and web site from any MichUHCAN member or interested party.)


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Last revised January 31, 1998