CoxHealth pays to resolve allegations

By Dan Margolies

Jul. 22, 2008 (McClatchy-Tribune News Service delivered by Newstex) -- KANSAS CITY, Mo. -- CoxHealth of Springfield, Mo., one of the largest hospital systems in Missouri, has agreed to pay $60 million to resolve allegations of Medicare fraud and other irregularities, authorities said.

The U.S. attorney's office in Kansas City said Tuesday that Cox would pay $35 million immediately, followed by five yearly payments of $5 million each, plus interest.

In a separate agreement with the Office of Inspector General of the federal Department of Health and Human Services, Cox signed a so-called corporate integrity agreement to ensure its compliance with Medicare and other federal requirements.

The Kansas City Star reported in May that Cox had agreed to the settlement, which its chief executive had disclosed in a memo to employees.

The government's inquiry goes back more than three years and encompassed compensation of physicians, incorrect billing for renal dialysis claims and Medicare cost reporting issues.

The government charged that beginning in January 1996, Cox entered into prohibited patient-referral arrangements with a physician group, Ferrell-Duncan Clinic Inc. It also charged that from January 1997 through March 25, 2005, Cox fraudulently sought reimbursement for its medical clinics' overhead costs.

Finally, the government alleged that from January 1999 through December 2004, Cox improperly billed Medicare for end-stage kidney disease treatments.

The payments Cox has agreed to make will reimburse the Medicare trust fund. The U.S. attorney's office said the settlement amount was "considerably less than the alleged improper Medicare payments to Cox," but took into account Cox's ability to pay and to continue providing medical care.

In a statement, Cox President and Chief Executive Robert H. Bezanson said, "We will finally be able to focus more fully on our mission and begin the expansions and other projects that our growing community needs."

Bezanson said that the settlement arose from "potential errors made by Cox many years ago in interpreting highly complex Medicare billing regulations and in structuring business relationships with physicians. In almost every instance of what is included in the settlement, the issues were identified by hospital administration and the results of our review were reported to the government."

John Squires, the chairman of Cox's board, said the decision to settle was a difficult one. But after considering the uncertainties of litigation and the potential consequences of not settling, including exclusion from the Medicare program, he said the hospital concluded that a settlement "was the better path for the organization and the community in the long run."

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