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Feds Threaten to Withhold Alvarado Payments

The U.S. Department of Health and Human Services announced May 8 that it intends to exclude Alvarado Hospital Medical Center from the federal Medicare and Medicaid insurance programs, which could cause the hospital to close.

Alvarado said in a statement that the action could “ultimately force Alvarado Hospital Medical Center to close, thus eliminating hundreds of health care workers and reducing needed access to care for the communities of eastern San Diego County.”

The hospital has 1,022 employees.

To avoid exclusion from the programs, which typically are the largest payers to hospitals, the 311-bed hospital in La Mesa must submit an appeal within 30 days to the agency, the federal department reported May 8. Alvarado said in its statement that it will “continue to discuss an overall resolution and hope to reach an equitable result.”

Spokesman Harry Anderson at Dallas-based Tenet HealthSystem Hospitals, Inc., which owns Alvarado, would not comment further on whether Alvarado would appeal.

The federal department’s Office of the Inspector General will review any appeal, and may propose to exclude the hospital from all federal health care programs, but Alvarado would then have the right to a more formal administrative appeal, the office said.

The threat comes following two trials that ended in hung juries, in February 2005 and April 2006, where the U.S. attorney’s office for the Southern District of California tried Alvarado on felony kickback charges.

In the case, federal officials accused Barry Weinbaum, a former chief executive officer of Alvarado, and Tenet, of administering more than $10 million in bribes during the 1990s in the form of relocation assistance to doctors. In return, the U.S. attorney’s office alleged, doctors were referring patients to Alvarado.

The Office of the Inspector General charges that Alvarado paid unusually large sums in relocation expenses to doctors.

Inspector General Daniel Levinson said in a press release that Alvarado’s potential exclusion from federal reimbursement should be a reminder to other health providers that referrals “should be based on the quality of care that is to be provided not as a result of a financial benefit to be realized by the source of the referral or the practitioner providing the service.”

, Katie Weeks

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