State Investigates Billing Practices of Tenet, Others

Tenet Healthcare Corp. and other owners of for-profit hospitals in California are under investigation by a state legislative committee probing billing practices.

The California Assembly Health Committee will open hearings in January to investigate whether Tenet and other hospital chains charged health maintenance organizations and the state too much for services and drugs, said Assemblyman Dario Frommer (D-Los Feliz), the committee chairman.

Tenet executives will be asked to testify and turn over records and pricing schedules. Frommer vowed to subpoena hospital officials if necessary.

The committee will investigate accusations that Tenet’s average hospital charges are 63% higher than those at other California hospitals, that it increased charges as much as 31% since 1999 and that it raised drug prices at some hospitals more than elevenfold, Frommer said. The information will be shared with the state attorney general.

Frommer compared the rising costs to the energy crisis of 2000 and 2001 and promised to investigate whether alleged overbilling by hospitals has violated state laws. “It is outrageous when so many people are having trouble paying for their health care,” he said.

Frommer didn’t disclose the names of other hospital chains that might be investigated or asked to testify.

Tenet spokesman Harry Anderson said that the California Nurses Assn. is the source of the accusations cited by Frommer about the company’s drug pricing and that the group has supported a current labor strike by nurses at Tenet hospitals.

“We are talking about a list price that nobody pays,” Anderson said. “We have acknowledged that our list prices did increase and in some cases were higher. However, the simple realistic fact is that nobody pays those prices, so why are we talking about them?” Anderson said the company would cooperate with the committee.

The California probe is the latest setback for Santa Barbara-based Tenet. Tenet has said the Securities and Exchange Commission is looking into sales of its stock at about the same time the company disclosed a federal audit of special Medicare payments.

Shares of Tenet, which owns 40 hospitals in California, rose 91 cents Wednesday to $18.75 on the New York Stock Exchange.