States May Be Profiting From Federal Funding to Private Hospitals
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Several states may be pocketing federal dollars to run hospitals that have been taken over by private companies, an HHS watchdog warned on Friday.
HHS’ Office of Inspector General found that Alabama’s Medicaid agency received more than $5 million over two years to run three hospitals that were actually managed by Infirmary Health, a private not-for-profit system that’s the largest healthcare provider in the state.
The funds, known as certified public expenditures, are federal reimbursements for some Medicaid expenses. Since the Infirmary Health-run hospital facilities are owned by the state or a state university, they were eligible for the CMS’ certified public expenditures program even though they received no state or local funding to operate.
The three hospitals didn’t receive any of the $5 million that Alabama’s Medicaid agency received under the CPE program in fiscal years 2010 and 2011, the HHS OIG memorandum said, and the loophole raises concerns that state agencies could financially benefit from these arrangements, to the feds’ expense.
Alabama and other states including Georgia, Kentucky and Virginia define a public hospital as one “owned or operated” by a public entity, and could similarly receive CPE funds even though the state may not actually run the facilities.
“Obviously this is an issue OIG is paying close attention to,” said Don White, a spokesman for HHS OIG. “We can anticipate that there will be further action on this issue.”
Two of the hospitals in question are owned by Alabama and Infirmary Health uses the facilities free of charge. The Mobile, Ala.-based health system leases the last facility from the University of South Alabama.
The CMS hasn’t responded to HHS OIG’s recommendation that it require hospitals be publicly run in order to obtain CPE payments, the memorandum said.
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