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BayCare will pay feds $20 million to settle Medicaid fraud allegations

BayCare still denies the allegations, but the hospital system says it settled to avoid expensive and likely lengthy litigation.

WASHINGTON — BayCare Health System Inc. will pay the federal government $20 million to settle allegations it inappropriately donated to the Juvenile Welfare Board of Pinellas County to improperly fund Florida's share of Medicaid payments to get federal matching funds in violation of the False Claims Act, the U.S. Department of Justice announced Thursday.

Florida's Medicaid program is jointly funded by state and federal dollars. Legally, Florida's share of the funds must come from state or local government money. It can't be donated by a private health care provider and then returned to that same provider as a share of state Medicaid money in order to collect federal matching dollars.

That's what federal investigators allege happened in this case.

To put it simply: Both the state and federal governments are supposed to chip in for Medicaid. So, hypothetically, if a hospital donates $10 to support Florida's piece but then gets $10 back from Florida in Medicaid funds...the state didn't really contribute anything. But, the state "payment" triggers a federal payment that might also be for $10. So, in short, the hospital ends up getting $10 in federal money without the state truly having to pick up its share.

Obviously, the money in situations like this is a lot more than $10.

"This unlawful conduct causes federal expenditures to increase without any corresponding increase in state expenditures, since the state share of the Medicaid payments to the provider comes from and is returned to the provider," the Justice Department wrote in an email.

"The prohibition of this practice ensures that states are in fact paying a share of Medicaid payments and thus have an incentive to curb Medicaid costs and prevent unnecessary services," the DOJ added.

Between October 2013 and September 2015, prosecutors claim BayCare knowingly caused false claims for matching funds to be submitted to the federal government.

"The funds transferred by [the Juvenile Welfare Board] to the state were 'matched' by the federal government before being returned to the BayCare hospitals as Medicaid payments, and BayCare was thus able to recoup its original donations to JWB and also receive federal matching funds, in violation of the federal prohibition on non-bona fide donations," the DOJ wrote in a release. 

In short, the DOJ says BayCare's donations to the welfare board caused an increase in its federal Medicaid payments without state or local governments spending anything. That would violate the state-federal partnership and undermine the design of the Medicaid program, according to prosecutors.

“When the federal government provides Medicaid matching funds, there must be a corresponding expenditure by the state, or a local unit of government," Principal Deputy Assistant Attorney General Brian M. Boynton wrote in a statement. "When private parties make unlawful, non-bona fide donations to state or local governments, they undermine a key safeguard for ensuring the integrity of the Medicaid program.”

Special Agent in Charge Omar Pérez Aybar with the U.S. Department of Health and Human Services Office of Inspector General did not mince words in a statement.

“When health care providers participate in fraud schemes to boost federal payments, they do so at the expense of federal health care programs,” Aybar wrote. “Our agents will continue to coordinate with our law enforcement partners to root out health care fraud and hold bad actors accountable for their actions.”

BayCare released the following statement on the matter:

“BayCare’s primary goal is to provide quality services for the health needs of our community, and as such, we are glad to have resolved a disagreement with the government over a complex regulatory question. BayCare has admitted no wrongdoing and expressly denies the allegations against it, but we have settled to avoid the delay, uncertainty, and expense of litigation.  At all times, BayCare fully cooperated with the government with respect to this matter.  BayCare remains committed to the highest integrity practices, and we look forward to continuing to serve all patients and our communities’ health needs.”


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