News in brief - June 26, 2006

Humana responds to ID breaches - HCA to sell only 4 hospitals to LifePoint - IRS surveys nonprofit hospitals

Humana responds to ID breaches

Humana announced that it's taking additional steps to safeguard the personal health records and financial information of its 3.4 million Medicare health plan members.

The Louisville, Ky.-based insurer said it is strengthening policies related to computer software maintenance and technical controls protecting the privacy of members' information. Also the insurer said it's increasing education on privacy issues for its associates and sales agents.

The action was prompted after a company employee called up the Social Security numbers and other personal information for nearly 17,000 Medicare beneficiaries on a hotel computer and then failed to delete the information. An auditor for the Dept. of Health and Human Services' Office of the Inspector General came across the information a few weeks later on the same hotel computer in Baltimore. In an unrelated event, copies of paper applications were stolen from an independent agent's vehicle.

Both Medicare and Humana officials said no one's personal security was compromised.

HCA to sell only 4 hospitals to LifePoint

A revised agreement called for HCA Inc. to sell to LifePoint Hospitals Inc. four hospitals for $239 million, carving out a fifth facility that had originally been part of the deal.

Under the new terms, LifePoint will acquire three hospitals in West Virginia and one in Virginia for the purchase price plus working capital and other expenditures. The transfer was set to be completed by June 30.

Last year, the two Tennessee-based hospital chains announced that they had reached an agreement that would transfer five rural HCA hospitals to LifePoint for about $330 million.

The new deal excluded the 68-bed Putnam General Hospital in Hurricane, W.Va., which will continue to be owned by HCA.

The hospitals included were: the 200-bed Clinch Valley Medical Center in Richlands, Va.; the 325-bed St. Joseph's Hospital in Parkersburg, W.Va.; the 155-bed Saint Francis Hospital in Charleston, W.Va.; and the 369-bed Raleigh General Hospital in Beckley, W.Va.

IRS surveys nonprofit hospitals

The Internal Revenue Service has sent letters to nearly 600 nonprofit hospitals seeking information about their executive compensation and community benefits practices. The letters, sent May 15 to randomly selected nonprofit hospitals, include a survey with 81 questions on topics such as whether the hospital operates an emergency department or training program, how much it spent on uncompensated care, and whether it includes bad debt in that calculation.

Though the IRS has been conducting similar so-called compliance checks in recent years in the broader world of nonprofit organizations, this is the first time the agency has specifically targeted hospitals.

Jack Reilly, a technical adviser with the tax-exempt section of the IRS, said the voluntary information would be used to help the agency examine what hospitals need to do to live up to the community benefits they promise in exchange for tax breaks.

The American Hospital Assn. says it hopes the IRS will also use as a resource a recent guide by the Catholic Health Assn. and Irving, Texas-based VHA about how to report and define community benefits.