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Dignity Health, Sierra Vista Regional, and Twin Cities Community Hospital reach $22.5 million settlement with CA and U.S. government


SANTA BARBARA, Calif. – Dignity Health, Twin Cities Community Hospital, and Sierra Vista Regional Medical Center will pay portions of a $22.5 million settlement to the state of California and the United States for false Medi-Cal claims in an organized scheme to retain federal funding from Medi-Cal's Adult Expansion program, according to the California Attorney General's Office.

The Attorney General's Office said Wednesday that the three health organizations claimed to provide health services to adult expansion patients under Medi-Cal for specific periods of time between 2014 and 2016.

The lawsuit brought by the state of California argued the payments were pre-determined amounts that did not accurately reflect the market value of enhanced services.

Dignity Health will pay $13.5 million to the United States and $1.5 million to the state of California, while Twin Cities and Sierra Vista, which are operated by Tenet Healthcare Corporation, will pay $6.75 million to the U.S government and $750,000 to California.

Dignity Health provided the following statement to News Channel 3-12.

"Under the program, Dignity Health submitted to CenCal Health detailed monthly reconciliation statements and annual reports, and was paid by CenCal in accordance with the agreements. As such, Dignity Health received fair market value compensation from CenCal for services actually provided to this vulnerable population, and maintains that all reimbursements were properly received. Dignity Health entered into a settlement agreement with the United States and State of California to resolve the matter without the expense of litigation, and without admitting any liability."

Dignity Health

Tenet Health Central Coast provided the following statement to News Channel 3-12

“We stand behind the efforts of our team to serve the Medi-Cal population in San Luis Obispo and Santa Barbara counties, California. Sierra Vista Regional Medical Center and Twin Cities Community Hospital strongly deny the allegations but resolved this matter to avoid the expense and distraction of further litigation. The hospitals used the Medi-Cal funds received from CenCal Health to serve Medi-Cal beneficiaries as intended.

Starting in 2014, the federal government provided incentives to states to encourage the adoption of Medicaid expansion under the Affordable Care Act.  States then offered incentives to managed health plans like CenCal Health to administer their state-specific Medicaid programs.  In turn, health plans contracted with providers like Sierra Vista and Twin Cities to care for the newly eligible Medicaid expansion members.

In late February of 2015, CenCal presented to the hospitals the “ACE Program”—a reimbursement model for the services provided to Medicaid expansion members.  The hospitals had no input as to the terms of the program. 

The hospitals provided the services to the expansion members and were paid in accordance with the ACE Program contracts with CenCal.  Years later the government decided they did not approve of the method CenCal chose to administer the expansion funds and sought to recoup those funds from CenCal and multiple participating  providers in San Luis Obispo and Santa Barbara Counties.  We strongly disagree with any assertion that the hospitals misused the funds in any way or received any improper benefit. 

Sierra Vista and Twin Cities remain committed to full compliance with all California and federal health care program requirements. Our hospitals and dedicated care teams remain committed to providing high quality care to Medi-Cal patients in our community.”

Tenet Health Central Coast

The Attorney General's Office says the settlements resolve allegations that the providers knowingly caused the submission of false claims to Medi-Cal for “Enhanced Services” provided to Adult Expansion Medi-Cal members.

To read the full Dignity Health settlement, click here.

To read the full Tenet Health settlement, click here.

A news release from the U.S. Department of Justice said, "the claims resolved by the settlements are allegations only and there has been no determination of liability."

“When health care providers misuse Medicaid funds, they undermine the integrity of the Medicaid program and waste taxpayer funds,” said Deputy Assistant Attorney General Michael D. Granston from the Justice Department’s Civil Division, in the news release. “These settlements demonstrate the Department’s continued commitment to prevent providers from inappropriately using Medicaid or other federal health care programs for their own financial gain.”

Anyone with a tip or complaint regarding potential fraud, waste, abuse, or mismanagement can report that information to the Department of Health and Human Services at 800-447-8477.

Article Topic Follows: Santa Barbara - South County
Santa Barbara

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