Tenet posts larger profits, but overbilling charges loom

The Dept. of Justice has filed suit alleging the plan submitted Medicare claims with inflated diagnosis codes.

By Robert Kazel, AMNews staff. Feb. 3, 2003.

Tenet Healthcare, the nation's second-largest for-profit hospital chain, reported strong profits for its most recent quarter, despite recent regulatory troubles.

Tenet said its profit for the fiscal second quarter of 2003, ending Nov. 30, 2002, was $315 million, or 64 cents per share, more than triple the $89 million profit from the same quarter in fiscal 2002. Revenue went up 4.3%, to $3.8 billion.

But Tenet tempered its announcement by saying profits are likely to go down because of a change in policy toward coding for Medicare outliers. The company said that it would reduce outlier payments to $8 million per month rather than $65 million per month.

On Jan. 9, four days before the release of Tenet's financial information, the Dept. of Justice filed suit against Tenet, saying it had overbilled Medicare by submitting claims with inflated diagnosis codes.

The suit is the latest in a series of storms to hit the insurer:

• In June 2002, 139 current and former Tenet hospitals agreed to pay $17 million to federal and state governments in connection with alleged overcharging for laboratory tests. The government said Tenet submitted claims, without evidence they were needed or properly ordered, to Medicare, Medicaid and other federal insurance programs.