Tenet Tangles With California Blue Cross

Blue Cross currently has contracts with most of Tenet's California facilities. Redding, which once ranked as the most profitable of the lot, would have lost Blue Cross reimbursements for heart bypasses if the hospital still performed them.

In the meantime, Redding could still lose its eligibility to participate in crucial government health care programs. Medicare has already threatened to revoke Redding's privileges unless the hospital -- which has already paid a record-breaking fine for performing unnecessary surgeries -- can sway it to do otherwise. And two other government programs, Medi-Cal and County Medical Services Program, have since come forth will altogether new allegations against the facility.

This week, the California Department of Health Services said Redding had overcharged the two state programs by nearly $12 million, $4 million of which is still outstanding. To increase payments from the agencies, CDHS said, Redding inflated billing charges, manipulated Medi-Cal billing codes, inappropriately recorded costs and charges, consistently reported cost-report errors that favored the hospital, submitted undocumented depreciation expenses and unsubstantiated interest expenses charges and inflated workers' compensation costs.

"We are very concerned about the number and severity of discrepancies found at Redding Medical Center," said Diana Ducay, deputy director of CDHS Audits and Investigations. "We will further expand our audits of all Tenet facilities in California to ensure that these inconsistencies are not widespread. We will refer our audit findings to the state Department of Justice, the FBI and federal Centers for Medicare and Medicaid Services."

In the meantime, the state agency has given cash-strapped Tenet 60 days to repay the balance of what it says it is still owed.