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Health Management Associates Launches Preemptive Strike Against "60 Minutes"

Executives from Naples-based Health Management Associates released data today that appear to show HMA is right in line with industry averages on admissions through the emergency department -- countering what they expect will be the subject of an unflattering CBS 60 Minutes segment scheduled to run Sunday.

HMA owns 70 hospitals in the United States with 22 in Florida. These include Pasco Regional Center, Spring Hill Regional Hospital and Brooksville Regional Hospital.

Alan Levine, the headliner for HMA’s before-the-fact rebuttal via Internet and teleconference, said that physicians, not administrators, decide which patients need to be admitted, which need to be observed for a while, and which can be sent home.

"The guidance we give to our doctors is simply 'Do what is medically appropriate for your patients," said Levine, HMA Senior VP and  president of Florida operations. "Don't ever make decisions for administrative reasons...That's the last thing you should do."

CBS' 60 Minutes typically does not disclose the topic of a program to the public, but HMA officials said they got the gist of the story from the questions that Correspondent Steve Kroft asked Levine in an October interview. They also found clues in legal cases that involve the company.

After the presentation, Health News Florida sent the data to the producer of the "60 Minutes" segment on HMA, Sam Hornblower, seeking a response. (This story will be updated if CBS responds).

Levine said it hopes the study by independent analytics company Opera Solutions will show 60 Minutes that the accusations by former HMA emergency physicians and others are off-the-mark, and in some cases fueled by whistleblowers who stand to profit by suing the company.

“We believe transparency is the right formula here,” Levine said.  “We believe no matter what anyone says or alleges, the data speaks for itself.”

What do the data show?

The first chart shows the rate of hospital admission through the emergency department for all patients between January 2008 and June 2011. It followed a predictable pattern -- a bit higher in the flu months of winter than in summer -- but remained around 13 percent.

The second chart, which displays Medicare data, compares HMA with other hospital systems on the rate of one-day stays -- so short that they raise questions about inappropriate admissions. HMA is either in the middle or on the low end for each year 2007 through 2011, the chart shows.

The remaining charts look at rates for one-day-stay rates at HMA in comparison to the national average and the average for hospitals of the same type. There is not much difference -- sometimes slightly above, sometimes slightly below.

If anything, the short-stay trendline for HMA is down, not up. It would look quite different if the hospitals were pushing doctors to admit patients for whom an inpatient stay was not medically necessary, Levine said.

Behind the scenes

Levine, who headed health agencies in Florida and Louisiana under Republican governors before joining HMA in 2010, was the company’s point man in responding to the questions from 60 Minutes.  In a TV news magazine show, most of the work on a story is done by assistant producers, who function as reporters.  Only after the story has taken shape do the correspondent and camera crew record interviews.

This story has been in the works most of the year; Jeff Hamby, an Arkansas ER doctor at an HMA hospital who sued for wrongful termination, said in a deposition that Hornblower contacted him in March and asked him to help find other doctors for the story.  Naples Newsreported in July that Hornblower had asked the American Academy of Emergency Medicine for help finding emergency-room doctors who had worked in HMA hospitals. HMA gave investors a heads-up in July that something was brewing with 60 Minutes.

The News said Hornblower was apparently interested in an ongoing federal investigation into Pro-Med software and whether it led to overbilling for unnecessary tests and hospital stays. HMA is one of the systems that used Pro-Med, but Levine said today it no longer does.

A federal subpoena was issued to HMA in the Pro-Med matter in 2011; another subpoena sought information on physician referrals and joint ventures. HMA has said it is cooperating with the government.

Admissions have to be tracked: HMA

Levine said today that HMA hospitals have no evil intent when they track ER admissions; he said they have to do it in order to predict staffing levels. Also, the hospital needs to know if a doctor's admission rates are a lot higher or lower than average. Either could indicate a potential problem for patients and  the hospital.

Under the antiquated Medicare payment system, hospitals receive several times as much money for admitted patients as they do for those classified as “under observation.” Only doctors can admit patients to the hospital, but it’s the hospital that loses money or gets into trouble if the doctor is wrong.

If the admission rates are deemed too high, Medicare could accuse the hospital of overbilling. If it is too low, it could indicate that a doctor is keeping patients in observation status when they should be admitted.

As CNN Moneyreported in August, the use of observation is booming because of changes in Medicare payment policies. To cut down on abuses and save billions of dollars, Medicare now contracts with auditors to find examples of patients who were admitted to the hospital but could have been treated as outpatients.

If the contractors decide the admission wasn’t medically necessary, the hospital has to pay the money back. These "RACs" -- Recovery Audit Contractors" -- used to actually get bonuses when they forced such paybacks. That practice was discontinued when it was seen as inspiring RACs to be hyper-aggressive, but RACs still want to please Medicare, hospital officials say.

Defending against readmission

Another reason for the increased use of observation status is Medicare’s new penalty for hospitals that have higher-than-average rates of readmission – in which patients bounce back to the hospital shortly after going home.

If the patient is kept in observation status, that doesn’t count as an admission. So if that patient comes back to the hospital within the penalty window, it won’t count as a readmission.

Patients who are in observation often aren’t told and would have no way of knowing, hospital experts say.  They may have no idea they weren’t formally admitted until they get socked for charges they wouldn’t have to pay if they had been.

Even worse, patients who need admission to a rehabilitation facility after they leave the hospital can only get Medicare to cover it if they were formally admitted. Observation status doesn’t count, so patients are faced with paying the entire bill, which can run more than $10,000 for a short-term stay.

"This is disgraceful," Levine said today. "It's very harmful to seniors."

The American Hospital Association filed suit against the Department of Health and Human Services over this practice on Nov. 1.

Carol Gentry, founder and special correspondent of Health News Florida, has four decades of experience covering health finance and policy, with an emphasis on consumer education and protection.