News briefs

HealthSouth pays $7.9 million to settle

HealthSouth, the nation’s largest outpatient surgery and rehabilitation chain, has agreed to pay $7.9 million to settle allegations that the company overcharged federal health programs. The Justice Department announced the settlement recently, saying the health care provider had agreed to pay the penalty, plus 7% interest from Oct. 1, 2000, without admitting liability. HealthSouth is based in Birmingham, AL.

Acting Assistant Attorney General Stuart E. Schiffer, JD, said the government alleged that HealthSouth overcharged Medicare and the Defense Department’s TRICARE program for equipment and supplies purchased from G.G. Enterprises, a corporation owned by the parents of HealthSouth chairman and CEO Richard M. Scrushy. The allegations involved costs related to three rehabilitation hospital leases, the purchase of certain computers and related goods and services, and the abandonment of computer assets owned by another company acquired by HealthSouth in 1994.

HealthSouth said the previous company’s treatment of these costs in cost reports submitted for reimbursement was inconsistent with Medicare regulations, resulting in overpayments. In a statement released at the time of the settlement, HealthSouth officials said they decided to settle the matter to avoid the time, expense, and distraction of litigation. Scrushy said, "While we devote significant resources to complying with all reimbursement regulations, the volume and complexity of those regulations make it inevitable that differences in interpretation and even errors may occur."

The settlement stems in part from a lawsuit filed by whistle-blower Greg Madrid, a former HealthSouth billing clerk. As part of the settlement, Madrid will receive $1.48 million.

Joint Commission forms task force

The Joint Commission on Accreditation of Healthcare Organizations (JCAHO) is taking a hard look at the relevance of its hospital standards and compliance requirements. An 18-member task force will pinpoint which accreditation standards are most relevant to the safety and quality of patient care, with the goal of eliminating or modifying those that don’t contribute to good patient outcomes. In addition, the task force will identify redundant and overly burdensome documentation requirements for potential streamlining, as well as areas needing additional focus.

Led by Ken Shull of the South Carolina Hospital Association, the task force will include quality directors, medical records directors, nurses, physicians, engineers, risk managers, and other hospital leaders who have first-hand experience with Joint Commission accreditation standards and surveys. Doctor groups also will be enlisted to review medical staff standards.

Shull and his colleagues will consider the following when reviewing standards and regulations:

  • continuing relevance in promoting patient safety or high-quality care;
  • redundancy with other external quality requirements;
  • applicability of standards to hospital care;
  • likelihood that compliance will be consistently evaluated;
  • extent to which compliance can actually be measured;
  • linkage to patient outcomes.

The Joint Commission also will ask the task force to identify common misconceptions and misinformation regarding requirements for demonstrating standards compliance.