Government & Politics

McCaskill calls for federal probe of $90 million billing scheme at Missouri hospital

U.S. Sen. Claire McCaskill
U.S. Sen. Claire McCaskill

U.S. Sen. Claire McCaskill on Thursday called for a federal investigation into what she called “potentially fraudulent practices” stemming from a $90 million billing scheme at a rural Missouri hospital.

McCaskill, D-Mo., said the inspector general of the U.S. Department of Health and Human Services should examine billings at Putnam County Memorial Hospital.

That hospital in Unionville, Mo., she said, was where a questionable spike in revenues may have occurred when a private hospital management company called Hospital Partners Inc. allegedly billed for out-of-state laboratory services for people who were not actually patients at Putnam County Memorial Hospital.

McCaskill said Hospital Partners used Putnam County Memorial Hospital as “essentially a shell organization for labs across the country.”

Missouri Auditor Nicole Galloway investigated the alleged billing scheme last year and issued a blistering audit. Galloway also sent her findings to Missouri Attorney General Josh Hawley’s office, where its public corruption unit acknowledged that it started reviewing the situation.

“This is an active investigation,” Hawley’s press secretary, Mary Compton, said in an email to The Star. “Those who violate the law will be investigated and prosecuted to the fullest extent of the law.”

McCaskill is running for re-election this year, and Hawley is the frontrunner for the GOP nomination to challenge her.

Galloway lauded McCaskill’s decision to ask for federal involvement.

“I appreciate Sen. McCaskill’s bringing Congressional scrutiny to this national problem that my audit uncovered last summer,” Galloway said in a statement. “It has become clear that these billing schemes extend well beyond Putnam County Memorial Hospital and impact health care costs for all of us."

The Star last year interviewed a woman in Texas who had never visited Missouri, yet still received a $700 bill from her insurance company for blood work done at Putnam County Memorial Hospital. That was on top of $3,000 that the insurance company had already paid.

Hospital Partners, based in Florida, in 2016 entered into a management contract with Putnam County Memorial Hospital, which serves Unionville, a north-central Missouri town of about 1,800.

McCaskill’s letter to the Health and Human Services inspector general said questionable billings started occurring at Putnam County Memorial shortly after Hospital Partners took over day-to-day management of the hospital.

Hospital Partners allegedly put 33 mostly out-of-state phlebotomists, who specialize in blood work, on Putnam County Memorial's payroll to perform lab services all over the country.

McCaskill, ranking member of the Senate Committee on Homeland Security and Government Affairs, asked the inspector general to examine whether those employment contracts violated federal anti-kickback laws. That’s in addition to investigating whether the hospital management company’s billing practices were fraudulent.

An attorney for Hospital Partners was not immediately available for comment.

Joe Bednar, an attorney representing the board of trustees for Putnam County Memorial Hospital, said the board has been cooperative with audits and investigations.

“I have not had the opportunity to talk to Sen. McCaskill about her concerns, but the board has taken the position that we are cooperating with everyone to take a look at what has occurred,” Bednar said.

The management agreement with Hospital Partners was terminated earlier this year, triggering a lawsuit by Hospital Partners against the hospital and Galloway’s office. That case is ongoing.

Putnam County Memorial Hospital has since put out a request for proposals seeking a new management company’s help in running the facility.