HCA Holdings 2012 Annual Report Download - page 30

Health Care Industry Investigations
Significant media and public attention has focused in recent years on the hospital industry. This media and
public attention, changes in government personnel or other factors may lead to increased scrutiny of the health
care industry. Except as may be disclosed in our SEC filings, we are not aware of any material investigations of
the Company under federal or state health care laws or regulations. It is possible that governmental entities could
initiate investigations or litigation in the future at facilities we operate and that such matters could result in
significant penalties, as well as adverse publicity. It is also possible that our executives and managers could be
included in governmental investigations or litigation or named as defendants in private litigation.
Our substantial Medicare, Medicaid and other governmental billings result in heightened scrutiny of our
operations. We continue to monitor all aspects of our business and have developed a comprehensive ethics and
compliance program that is designed to meet or exceed applicable federal guidelines and industry standards.
Because the law in this area is complex and constantly evolving, governmental investigations or litigation may
result in interpretations that are inconsistent with our or industry practices.
In public statements surrounding current investigations, governmental authorities have taken positions on a
number of issues, including some for which little official interpretation previously has been available, that appear
to be inconsistent with practices that have been common within the industry and that previously have not been
challenged in this manner. In some instances, government investigations that have in the past been conducted
under the civil provisions of federal law may now be conducted as criminal investigations.
Both federal and state government agencies have increased their focus on and coordination of civil and
criminal enforcement efforts in the health care area. The OIG and the Department of Justice (“DOJ”) have, from
time to time, established national enforcement initiatives, targeting all hospital providers that focus on specific
billing practices or other suspected areas of abuse. The Health Reform Law includes additional federal funding of
$350 million over the next 10 years to fight health care fraud, waste and abuse, including $65 million for federal
fiscal year 2012 and $40 million in federal fiscal year 2013. In addition, governmental agencies and their agents,
such as MACs, fiscal intermediaries and carriers, may conduct audits of our health care operations. Private
payers may conduct similar post-payment audits, and we also perform internal audits and monitoring.
In addition to national enforcement initiatives, federal and state investigations have addressed a wide variety
of routine health care operations such as: cost reporting and billing practices, including for Medicare outliers;
financial arrangements with referral sources; physician recruitment activities; physician joint ventures; and
hospital charges and collection practices for self-pay patients. We engage in many of these routine health care
operations and other activities that could be the subject of governmental investigations or inquiries. For example,
we have significant Medicare and Medicaid billings, numerous financial arrangements with physicians who are
referral sources to our hospitals, and joint venture arrangements involving physician investors. Certain of our
individual facilities have received, and other facilities may receive, government inquiries from, and may be
subject to investigation by, federal and state agencies. Any additional investigations of the Company, our
executives or managers could result in significant liabilities or penalties to us, as well as adverse publicity.
Health Care Reform
The Health Reform Law will change how health care services are covered, delivered and reimbursed
through expanded coverage of uninsured individuals, reduced growth in Medicare program spending, reductions
in Medicare and Medicaid DSH payments, and the establishment of programs where reimbursement is tied to
quality and integration. In addition, the law reforms certain aspects of health insurance, expands existing efforts
to tie Medicare and Medicaid payments to performance and quality, and contains provisions intended to
strengthen fraud and abuse enforcement. On June 28, 2012, the United States Supreme Court upheld the
constitutionality of the individual mandate provisions of the Health Reform Law but struck down the provisions
that would have allowed HHS to penalize states that do not implement the Medicaid expansion provisions with
the loss of existing federal Medicaid funding.
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