In a news release posted on the Cox website, Cox officials say they didn't do anything seriously wrong, they only settled for millions and millions of dollars because if the process continued they could have lost some real money...and, of course, they repeat over and over again that none of the allegations had anything whatsoever to do with the "quality of patient care:"
CoxHealth and CoxHealth affiliate, Cox HPS of the Ozarks, Inc., announced today that they have reached an end to a three-year process with the federal government and have finalized a settlement agreement with the U.S. Department of Justice.
“CoxHealth can now move on with plans that we have had to put on hold due to the constraints we were under while this process was taking place,” said CoxHealth President and CEO Robert H. Bezanson. “We will finally be able to focus more fully on our mission and begin the expansions and other projects that our growing community needs.”
The settlement negotiated with the U.S. Department of Justice is for an initial
payment of $35 million with five additional $5 million payments per year. There will be annual interest at 4% on the deferred amounts.
“The settlement revolves around potential errors made by Cox many years ago in
interpreting highly complex Medicare billing regulations and in structuring
business relationships with physicians,” said Bezanson. “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.”
None of the government’s claims against CoxHealth involved the quality of patient care or safety. Similarly, there were no findings by the government that CoxHealth had billed the government for any services that were not actually provided.
In a separate agreement with the Office of Inspector General of the U.S. Department of Health and Human Services, CoxHealth agreed to participate in a five-year program of intensified legal compliance education for employees, physicians and others associated with CoxHealth, as well as heightened monitoring and reporting to the Department.
“Because we already have a strong internal Corporate Integrity program here at
CoxHealth - which includes extensive annual compliance education - we feel very confident that we as an organization will be able to honor this commitment,”
“Every health care organization in this country that chooses to participate in
Medicare and Medicaid is challenged to navigate the very same maze of regulations without committing errors,” said John Squires, chairman of the CoxHealth Board of Directors.
In the past decade, numerous other well respected hospitals and health care
organizations—including Harvard University’s Beth Israel Medical Center, Columbia University, Corning Hospital, Johns Hopkins University, Mount Sinai Medical Center, Mayo Clinic, and Sharp Medical Center of San Diego—have been subject to similar government investigations on potential errors relating to Medicare and Medicaid.
How the settlement amount was determined:
“These health care laws are very complex and are very unforgiving,” Bezanson said. “They require that the government demand repayment, which can be very large. In fact, given the size of CoxHealth and the number of patients we treat on a daily basis, one potential error in interpreting a billing regulation can affect every claim filed thereafter – in our case, tens of thousands of claims. Since damages can be assessed on a per claim basis, the repayment can quickly result in an amount that is well beyond our ability to pay.”
“The government began its settlement negotiations by taking the position that Cox should repay every claim the government alleges we improperly billed to Medicare,” said Squires. “The amount of these alleged damages exceeded the amount Cox could pay. Given the magnitude of the repayment if we were to go to trial and lose, which is always a possibility with jury trials, we negotiated with the government until we reached an amount we could pay and still continue to fulfill our mission to serve the community now and in the future.”
“In addition the federal government can impose a pretty large consequence if a hospital will not settle, since it has the power to exclude hospitals from the Medicare program, which means a hospital can no longer accept Medicare or Medicaid patients. No tax-exempt hospital can survive an exclusion from Medicare,” said Bezanson. “This would essentially shut down a hospital – a devastating event to any community… and that weighed heavily on our minds.”
“The Board of Directors determined that the organization and our community had been through enough, and that it was in the best interest of CoxHealth and those we serve, to settle with the government rather than engage in litigation that would take many more years to resolve and cost millions in legal fees,” said Dona Elkins, Board of Directors member. “Our Board and management team have been keenly aware for some time of the need to put the investigation behind us so we can move forward with crucial expansion projects that are necessary to serve the growing needs of our community.”
“Words can’t express how difficult the decision was to agree to a settlement amount of this magnitude, but we as Board members, along with senior leadership and those advisors with prior experience in such negotiations, finally came to the conclusion that agreeing to the settlement amount was the better path for the organization and the community in the long run,” said Squires. “We fully support the leadership, employees, and physicians in their future efforts and have a strong commitment to the people we serve in the region.”
How CoxHealth will fund the required repayment:
“The Board of Directors and leadership of CoxHealth have been reserving funds from the time we knew there would be an impact from the investigation,” said Bezanson, “These monies, along with some that we have had in a long-term reserve fund, will pay for the initial installment of the settlement.”
“This reserve fund has been in existence for many years and is one that helps us
maintain enough cash to allow us to borrow money at better interest rates,” continued Bezanson. “Use of funds from the reserve fund will not jeopardize our ability to begin our much-needed expansion projects, since we will finance these projects through bonds, and our bond ratings will not suffer as a result of drawing down on this reserve.”
“CoxHealth will continue to have a sound financial foundation that will allow us to
continue to meet our mission,” said Squires. “We also have a low cost structure, and we intend to stay cost competitive. CoxHealth will remain financially equipped to continue to serve the residents of southwest Missouri, thanks to years of sound financial management and reserving funds for unexpected situations such as this.”
The issues involved in the investigation and settlement:
There were two primary issues involved in the government’s investigation; each
is slightly different in nature:
Dialysis Billing and Medical Directorships: Kidney dialysis services are governed by unique and highly technical Medicare billing regulations that can be interpreted in different ways. CoxHealth determined that under one interpretation, it may have billed dialysis services provided through its Ozarks Dialysis Services (“ODS”) from 1999 to 2004 using a method it was not eligible to bill under. Similarly, medical director agreements with physicians are also subject to different interpretations. CoxHealth determined that again, under one interpretation, the way it structured its dialysis medical director agreements at ODS from 1996 to 2004 may have been incorrect. CoxHealth self-reported these issues to the government in January 2005. None of the government’s allegations relating to dialysis billing involved quality of patient care or safety. In addition, there were no claims that payments were paid for services that were not provided.
Compensation to Physicians: The government’s rules regarding payments made to physicians and their practices have shifted dramatically over the last decade. CoxHealth internally discovered that under one interpretation of these rules, it
may have provided improper compensation to physicians with Ferrell-Duncan Clinic, Inc. (“FDCI”). FDCI is a separate physician corporation - not owned by CoxHealth - that is under contract with Cox to provide professional services to Ferrell-Duncan Clinic (which is owned and operated by CoxHealth).
CoxHealth determined that from 2000 to 2004, we may have paid physicians from a revenue source from which they may not have been eligible to be paid. The results of hospital administration’s review were reported to the government in February 2005. None of the government’s claims relating to FDCI’s physicians involved quality of patient care or safety. In addition, there were no claims that FDCI’s physicians were paid for services that were not provided.
“This process has been trying for just about everyone at CoxHealth,” Bezanson said. “Despite that, our people have remained dedicated and loyal to our mission, day in and day out. We cannot fully express our appreciation for their steadfast commitment to serving and caring for our patients and our community.”
The allegations against Cox and a resulting grand jury investigation of Cox were first revealed in a