HHS Moves To Exclude Tenet Healthcare’s Alvarado Hospital From Medicare Participation

HHS Office of Inspector General on Monday announced a move to exclude Alvarado Hospital Medical Center, a Tenet Healthcare hospital in San Diego, from participation in Medicare, Medicaid and other federal health care programs, the Wall Street Journal reports. HHS OIG announced the move based on allegations that Alvarado paid illegal kickbacks to physicians, despite the failure of two federal juries to convict the hospital on criminal charges filed by U.S. Attorney Carol Lam in San Diego (Rundle, Wall Street Journal, 5/9). In the trials, federal prosecutors alleged that Tenet HealthSystem, a Tenet subsidiary, Alvarado and former Alvarado CEO Barry Weinbaum paid more than $10 million in illegal kickbacks to physicians through relocation agreements in exchange for patient referrals. Under Medicare anti-kickback laws for federal health care programs, hospitals cannot directly pay physicians for patient referrals. The first trial ended in a mistrial in February 2005, and the second trial ended in a mistrial in April (Kaiser Daily Health Policy Report, 4/5). According to the Los Angeles Times, the move to exclude Alvarado from federal health care programs could force Tenet to sell the "profitable" hospital "at a fire-sale price" because the loss of revenue from Medicare "can undermine a hospital's viability." Tenet has 30 days to submit evidence and would have the right to appeal the exclusion of Alvarado from participation in federal health care programs.

Reaction
In a statement, Tenet said the exclusion of Alvarado from participation in federal health care programs "would be unfair and unwarranted," adding, "It could ultimately force Alvarado Hospital Medical Center to close, thus eliminating the jobs of hundreds of healthcare workers and reducing needed access to care" (Girion, Los Angeles Times, 5/9). According to the San Diego Union-Tribune, a potential link between the two mistrials and the move by HHS OIG to exclude Alvarado from participation in federal health care programs "wasn't clear." HHS Inspector General Daniel Levinson said in a statement that the two mistrials had no involvement in the move. However, attorney Mike Attanasio, a former federal prosecutor, said, "You would have to believe in incredible coincidence to assume that the move by the inspector general is not at least a reflection of the recent turn of events in the criminal prosecution." Patrick Hall, a criminal defense attorney in San Diego, added that the move "may be an alternative means to seek the same kind of (punishment that prosecutors) were seeking all along" (Darce, San Diego Union-Tribune, 5/9).