Allina Health System To Limit Consulting, Executive Expenses, Makes $16M Settlement Deal on Medicare/Medicaid Fraud Charges

Minnesota-based Allina Health System and its subsidiary Medica health plan will limit spending on consultants, travel and executive compensation in an agreement announced Sept. 24 with state Attorney General Mike Hatch, the Minneapolis Star-Tribune reports. Hatch released "six volumes of documents" from an investigation into the two not-for-profit companies that "show that the companies spent excessively" on consultants, travel, gifts and administrative expenses. Hatch's office also had accused Medica of spending health insurance premium dollars to "entice" the system's clinics to refer patients to Allina hospitals. Under an agreement with Hatch's office, Allina and Medica will limit expenses to "prevent abuses" in the future. They agreed not to spend more than $2 million per year on lobbyists, trade group memberships and consultants or to fund memberships in spas, country clubs, golf clubs or fitness clubs, all things in which the companies had previously spent money. In addition, the two companies must limit conferences to Minnesota, North Dakota or Wisconsin. The companies also cannot use limousines or provide reimbursement for spousal travel and must allow the public to view executive expense summaries. "We need to get people to understand that they can be confident in this health plan," new Medica Chair Ted Deikel said. Hatch said, "For my part, I do not intend to take further action" (Howatt, Minneapolis Star-Tribune, 9/25).

Medicare Fraud Deal
Meanwhile, USA Today reports that Allina has reached a $16 million agreement with the U.S. attorney's office to settle allegations of Medicare and Medicaid fraud ( USA Today, 9/25). According to Allina officials the company has agreed to repay the federal government $13 million in Medicare and Medicaid payments and $3 million in interest. Allina had faced a federal grand jury probe on charges that the company had "overbilled or double-billed" Medicare for $19 million. U.S. Attorney Tom Heffelfinger declined to comment on the investigation (Minneapolis Star-Tribune, 9/25).