U.S. Widens Probe Into Columbia / HCA

The federal government on Wednesday expanded its probe into suspected Medicare and Medicaid billing abuses at the nation’s largest hospital chain, Columbia/HCA Healthcare Corp., as investigators searched current and former company facilities in six states.

Thirty-five search warrants were issued for Columbia/HCA hospitals and business offices in Florida, North Carolina, Oklahoma, Tennessee, Texas and Utah. The warrants were filed under court-ordered seal, and information about what exactly investigators were looking for was sketchy.

The Columbia/HCA probe has become the centerpiece of a sweeping investigation by the Department of Health and Human Services into hospital billing practices that are suspected of costing the government billions of dollars in excessive spending annually.

Columbia executives in Nashville said investigators sought records and documents primarily involving hospital laboratory billing and home-health-care operations. FBI spokesmen would say only that the investigation was part of an “ongoing probe” that became public in March, when federal agents raided a Columbia facility in El Paso.

Shares of Louisville, Ky.-based Columbia plunged $4.75 to $34.19 on Wednesday in New York Stock Exchange trading. The decline amounted to $3.2 billion in stock market value.

Rep. Pete Stark (D-Calif.), an outspoken critic of Columbia, praised the government for “taking aggressive action in investigating potential health-care fraud abuses by Columbia/HCA.”

In the last several years, Columbia has expanded aggressively in California, where it now operates 15 hospitals, 13 surgery centers and 10 home-health-care agencies, employing more than 11,000 people.

There has been no indication that California facilities are a focus of the investigation.

The expanded federal probe is another in a string of blows to Columbia, which has grown into the nation’s most powerful health-care company by buying up hospital and health-care facilities and mounting an aggressive marketing campaign that boasts such slogans as “You’ve Never Seen Health Care Like This Before.”

The for-profit hospital chain’s national expansion has been plagued by controversy almost everywhere it has gone. State prosecutors, labor unions, consumer groups and other health-care officials have accused the firm of profiteering at the expense of charity care or the quality of patient care--allegations Columbia has strongly disputed.

The federal probe has specifically looked at the issue of what is known in industry jargon as “upcoding”--the practice of upgrading the seriousness of a medical illness under the Medicare program in order to receive a higher fee. Experts say upcoding is a fairly widespread practice in the hospital industry but is not necessarily illegal.

The Columbia probe has many hospital administrators taking a close look at their practices.

“Until we know what the government is looking at, it’s hard to tell whether [the upcoding problem] would pertain” to most hospitals, said Rick Wade, senior vice president of the American Hospital Assn., a trade group. “In the 1980s, there were a lot of consultants that made a business out of showing hospitals how to code correctly. Now some of these hospitals are finding out the advice they got was pretty bad.”

FBI spokesman Derek McGraw said the searches of Columbia facilities were conducted by the FBI, Health and Human Services personnel, the Defense Criminal Investigative Services, postal inspectors and the Utah Department of Investigation’s Medicaid fraud unit.

Bloomberg News quoted Columbia Chairman Richard Scott as saying: “It’s my understanding there has been a lot of focus on blood tests through emergency rooms. I think this might have something to do with that.”

Columbia operates 342 hospitals, 150 outpatient surgery centers and more than 570 home-health-care centers in 36 states, Britain, Switzerland and Spain. The company has more than 285,000 employees, assets of $20.2 billion and revenue approaching $20 billion.