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Health care providers accused of bilking taxpayers by inflating Medicare or Medicaid expenses have paid billions of dollars in settlements with the federal government over the past decade for a variety of transgressions, some of which risked patients' lives. Now the money is flowing the other way.

Companies that settled cases involving overbilling or fraud -- among them Tenet Healthcare Corp., Universal Health Services Inc. and Beaumont Health -- received more than $36 billion in interest-free loans from a U.S. Health and Human Services Department program to help providers handle cash-flow shortages caused by the pandemic, according to data compiled by Bloomberg and Good Jobs First, a watchdog group that has been monitoring federal relief payments.

That's more than one-third of the $100 billion distributed through the loan program. In addition, companies accused of wrongdoing got more than $20 billion in grants issued by the Health and Human Services Department to stave off coronavirus-related losses. In most of the cases, there was no determination of liability.

Health care companies applied for the loans based on previous Medicare billings -- the same metric many of them were accused of inflating. Grants were distributed automatically based on patient revenue.

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In November, the Health and Human Services department enacted new regulations intended to replace its "pay and chase" system, which reimburses providers first, then has auditors investigate those it thinks engaged in fraud, an approach it acknowledges is "expensive and inefficient" and leaves billions of dollars unrecoverable. The new guidelines permit the agency to deny Medicare enrollment to providers that have exhibited "a pattern or practice of abusive" charges.

Health and Human Services Department spokeswoman Katie McKeogh said in an email that the new regulations weren't used to vet health care companies for covid-19 grants or loans but didn't offer an explanation for that decision. Instead, she said, the agency sought only to determine whether providers were on a list of companies banned from doing business with Medicare.

McKeogh didn't respond to a question about whether the department knew how large a portion of the aid had been paid to companies that settled fraud claims, but she said providers are forbidden from using coronavirus aid to pay legal settlements. Health and Human Services Secretary Alex Azar and Seema Verma, administrator of the Centers for Medicare and Medicaid Services, which oversees the loan program, declined requests to be interviewed.


Medicare covers almost 60 million Americans. It has a budget of more than $740 billion and an uneven record at deterring fraud. Despite sporadic attempts to crack down on providers who bilk the system, there's still an estimated $50 billion a year in fraud, according to the Government Accountability Office.

Government watchdog groups say the amount of aid that went to companies that paid to settle fraud claims illustrates rampant abuse in the Medicare and Medicaid system and the government's failure to enact effective safeguards.

"You can't call it a few bad apples, because it goes across the board from small regional providers to giants of the industry," said Phil Mattera, research director for Good Jobs First, which is compiling and analyzing Health and Human Services Department data as part of its Covid Stimulus Watch Program.

An American Hospital Association spokesman, Colin Milligan, defended the way the department disbursed the loans and grants. "Congress made it very clear that the provider relief fund was intended for all hospitals on the front lines in the fight against the greatest pandemic of our lifetime as they deal with lost revenue and covid-related expenses," he said. "That was Congress' intent, and we concur with it."

As a result, Prime Healthcare Services Inc., an Ontario, Calif., hospital system with 45 acute-care centers in 14 states, was free to collect almost $600 million in relief grants and loans despite its history of overbilling Medicare.


In 2018, the company and its chief executive officer agreed to pay $65 million in penalties to settle a lawsuit alleging that they had for years run a "deliberate corporate-driven scheme" to overcharge Medicare by unnecessarily admitting more than 35,000 patients to 14 California hospitals for overnight stays that weren't medically warranted.

Prime Healthcare, which didn't admit to wrongdoing, said in an email Tuesday that it has been in full compliance with federal guidelines. Elizabeth Nikels, a spokeswoman for the company, said its hospitals have been caring for thousands of covid patients.

Among the biggest recipients of Health and Human Services Department loans and grants are large health care companies that have settled numerous cases. Dallas-based Tenet, which owns 65 hospitals around the country, received at least $700 million in loans and $300 million in grants from the programs.

Tenet has paid more than $530 million in fines over the past decade, including $513 million in October 2016 to resolve criminal charges and civil claims that it offered kickbacks to doctors to refer pregnant women to its hospitals, reaping hundreds of millions of dollars. Two subsidiaries pleaded guilty to conspiracy to defraud the government and paying kickbacks and bribes. The parent company entered into a non-prosecution agreement with the Justice Department, promising to improve compliance.

Earlier this year, Tenet paid $1.4 million to settle allegations that it had implanted cardiac monitors in patients who didn't need them. It had previously been among a group of companies that paid $250 million in 2015 to settle claims about cardiac implants that violated Medicare requirements. In both cases, liability wasn't determined.

Tenet declined to comment on the settlements or the coronavirus aid it has received.


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