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Health Management Associates to pay $260 million to settle criminal charges for allegedly defrauding Medicare, Medicaid

Key Points
  • HMA agrees to pay more than $260 million to settle criminal charges that the hospital chain paid physicians kickbacks in a scheme to defraud Medicare and other federal health programs.
  • HMA was acquired by the for-profit hospital Community Health Systems in 2014.
Andre Blais | iStock | Getty Images

Health Management Associates has agreed to pay more than $260 million to settle fraud charges that included paying kickbacks to physicians and ripping off federal health programs, the Justice Department said.

HMA, which was acquired by the for-profit hospital Community Health Systems in 2014, paid physicians in exchange for patient referrals and submitted inflated claims for emergency department fees to federal health insurance programs, prosecutors said.

The agreement announced Tuesday also resolves several outstanding civil claims against the hospital operator, the DOJ said. An HMA subsidiary that operated under the name Carlisle Regional Medical Center additionally agreed to plead guilty to one count of conspiracy to commit health-care fraud.

"HMA pressured emergency room physicians, including through threats of termination, to increase the number of inpatient admissions from emergency departments — even when those admissions were medically unnecessary," Assistant Attorney General Brian Benczkowski said in a statement. "Hospital operators that improperly influence a physician's medical decision-making in pursuit of profits do so at their own peril."

Community Health Systems did not respond to CNBC's request for comment.

Shares of Community Health Systems were down 2.2 percent in Wednesday's premarket. Community Health Systems' shares have fallen nearly 20 percent so far this year.

The federal government has been cracking down on overbilling practices by health-care companies. Last year, the government sued UnitedHealth Group for allegedly overcharging Medicare by hundreds of millions of dollars.

The suit was eventually dropped.

"Billing for unnecessary hospital stays wastes federal dollars," Assistant Attorney General Joseph Hunt said in a statement. "In addition, offering financial incentives to physicians in return for patient referrals undermines the integrity of our health care system. Patients deserve the unfettered, independent judgment of their health care professionals."

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