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Illinois Gov. Pat Quinn last month requested a
freeze on further revocations of hospital
property tax exemptions, signaling a thaw in
an increasingly acrimonious relationship
between that states department of revenue
and Illinois not for prot hospitals.
Quinns gesture is widely viewed as a
peace offering to the hospital industry in the
wake of some high prole tax revocations by
his administration.
At stake is tens of millions of dollars in
property taxes that not for prot hospitals
could be liable to pay to municipalities,
school districts and other taxing entities.
Increasingly cash-starved districts facing
budget decits, layoffs and services cuts are
seeking new revenue sources.
In Illinois, Ohio, Massachusetts and other
states those taxing entities are questioning
whether the charity care hospitals provide is
sufcient to justify tax exemptions.
Quinn took the Sept. 19 action one
month after the Illinois Department of
Revenue stripped three Illinois hospitals of
valuable property tax exemptions based on
allegedly inadequate charitable care.
The department denied exemptions for
Decatur Hospital; Edward Hospital in
Naperville and Prentice Womens Hospital in
Chicago, part of the Northwestern Memorial
Hospital health system. The department said
those hospitals provided charity care
comprising less than 2% of their annual
revenues and said it would review the tax
status of 15 other hospitals. In revoking those
exemptions, the department cited a 2010
Illinois Supreme Court decision afrming its
earlier revocation of Provena Covenant
Hospital in Urbana.
The Illinois Hospital Association then
denounced those August revocations, saying it
was disappointed and deeply concerned
and predicting hospitals would be forced to
cut services, increase healthcare costs and
reduce access to quality hospital care.
In response, Quinn instructed his staff and the
department of revenue to work with IHA, state
legislators and the state attorney general to
craft legislation addressing the problems. In
that Sept. 19 letter to Illinois Hospital
Association (IHA) President Maryjane Wurth,
Quinn urged state leaders to review the
charity care policy in context with the states
constitution.
The uncertainty in this area of the law, if
left unresolved, will serve only to distract from
the important work that must go forward to
transform our health care system, Quinn
wrote. He set a March 12, 2012 deadline for
recommendations and vowed that no
decisions will be reached on the recent
exemption denials while parties are working
together in good faith.
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November 14-16
October 5
Calendar
4 October 2011
December 4-7
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E-Mail
[email protected] with
the details of your event, or call
(877) 248-2360, ext. 3. It will be
published in the Calendar section,
space permitting.
Midwest Edition
Illinois Halts Hospital Tax Reviews
Freeze Came After Three Hospitals Lost Exemptions
Continued on Next Page
www.healthexecstore.com
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Payers & Providers Page 2
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Bottomless Potential
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In Brief
St. Marys Pays $3.5M
Settlement
Catholic-owned not for prot St.
Mary's of Michigan, a Saginaw, Mich.-
based health system owned by
Ascension Health, agreed to pay nearly
$3.5 million to settle Medicaid billing
allegations with the U.S. Attorney in
Detroit.
St. Marys, which operates the
Seton Cancer Institute and other 23
healthcare facilities in Michigan,
voluntarily disclosed that it incorrectly
billed Medicare and Medicaid for
seven years for chemotherapy infusions
provided at its Bad Axe clinic location.
CMS rules prohibit billing for
chemotherapy in outpatient settings
without direct physician oversight. St.
Mary's admitting administering
chemotherapy at its oncology clinic
without a physician present. It
discovered the error through a self-
audit and contacted federal regulators.
U.S. Attorney Barbara McQuade
lauded St. Marys for self-reporting the
error. Too many healthcare providers
do not take appropriate steps to ensure
that their claims to Medicare are
legitimate, McQuade said. We
encourage other providers in our area
to follow St. Mary's example.
McQuade announced the settlement
Sept. 2.
In a statement, St. Marys
spokeswoman Christine Bergman said
CMS supervision rules are complex
and different, depending on whether
the treatment is provided in a hospital
or physician ofce setting, which
resulted in this unintended billing
error.
Bergman said the proactive
nature of St. Marys compliance
program further demonstrates our
commitment to honest and responsible
conduct.
For years the HHS Inspector
General has encouraged healthcare
organizations to self-disclose payment
errors to reduce investigation and
Continued on Page 3
NEWS
Tax Exemptions (Continued from Page One)
e seeks recommendations that provide clear,
predictable guidance for hospitals to follow
the law, relieve the burden of government and
improve access to affordable care, especially
for poor and underserved populations.
Quinn said the public should be assured
that any tax benet is well deserved and
advances an important societal interest.
IHA General Counsel Mark Deaton
welcomed Quinns gesture.
Its important because we do want a
legislative solution for this complex issue,
Deaton said.
He said the governors letter creates
some breathing space so parties can get
together. Achieving legislative consensus will
require constructive dialogue that could not
move forward in a climate of anxiety and
uncertainty
He said last years Supreme Court
decision offered little guidance, clarity or
resolution to the ongoing legal controversy
and failed to dene an appropriate amount of
charity care to warrant tax exemptions.
Deaton said IHA seeks a fair and reasonable
solution so hospitals and the public will
understand the legal standards, although he
conceded that the IHA isnt necessarily
seeking a mandated charity care threshold
formula.
The imbroglio dates back to 2003 when
the Champaign County Board of Tax Review
found that 254-bed Provena had not met its
charity care obligation by paying less than 1%
of its revenue in 2002. The Illinois
Department of Review upheld the review
boards recommendation for revocation, but
Provena challenged the ruling all the way to
the Illinois Supreme Court and lost. Provena
now pays $1.2 million annually in taxes.
Illinois Attorney General Lisa Madigan also
challenged hospital charity care contributions
and attempted to draft legislation mandating a
minimum threshold, but IHA successfully
lobbied against those efforts.
James Unland, a hospital valuations
consultant and president of Chicago-based
Health Capital Group, said the Supreme Court
decision emboldened the state department of
revenue to challenge the tax exempt status of
other hospitals providing low levels of charity
care.
The IHA nally concluded this is
ultimately a losing battle and a losing war and
theyve come to the table to negotiate
prospective legislation to establish consistent
standards for charity care, said Unland.
Stephen Weyl, a healthcare tax attorney
with the law rm Hinckley, Allen & Snyder in
Concord, N.H., said the Illinois constitution is
very strict in its denition of the charitable use
of tax exempt property and courts have
interpreted that very narrowly. He said in
Illinois, county boards of tax review make
recommendations on tax exempt status and
collect property taxes, but the state
department of revenue ultimately decides
exemption eligibility.
Weyl said while Illinois has garnered the
lions share of publicity, hospital charity care
disputes arent exclusively local. He noted the
Cleveland Clinic and several Boston teaching
hospitals face the prospect of paying property
taxes or payments in lieu of taxes.
Weyl indicated there is nothing in the
federal tax code requiring states to grant
property tax exemptions to organizations that
the IRS has deemed tax exempt. That is
interpreted differently on a state by state basis
and each state legislates that, he said.
He said hospitals believe charity care
levels alone should not determine tax exempt
status, but that bad and uncollectible debts;
Medicare and Medicaid payment shortfalls
and the value of community benets like
screenings and public health events should
also be considered.
But Illinois hospitals arent in the same
bargaining position they were in before
Provena, he said.
Stan Jenkins, the Champaign County
Assessor and former chair of the countys
board of review, said tax exempt organizations
must reapply for tax exemptions when faced
with material changes in circumstances. He
said new hospital additions or changes in
ownership trigger reapplications for
exemptions, which is why in August the
department of revenue reviewed the tax
exempt status of those three Illinois hospitals.
Jenkins said barring a legislative change, larger
numbers of Illinois hospitals could face similar
scrutiny of their property tax exemptions,
pointing out that most Illinois hospitals
provide only 1% to 2% of revenue in charity
care. He said the Illinois constitution requires
that property owned by a tax exempt
organization must be used exclusively for
charitable purposes.
Though Jenkins, whose board launched
the controversy when it recommended
Provenas tax revocation, still believes that
action was correct, he conceded that some tax
exempt hospitals are nancially distressed and
may be unable to pay annual property taxes
exceeding $1 million or more.
I understand the hospitals frustration,
he said. There is no legal standard now.
!!"#$"%&"'!()*!(+,,!-!(+,,!&.!/0."'1!2!/'3456"'1!/7&85195:;*!<<=
Page 3
Payers & Providers
Longer ALOS!*
Advertise Here
(877) 248-2360, ext. 2
*For our ads, not your hospital
NEWS
In Brief
litigation costs and the size of any
settlements or penalties.
K.C. Blues Takes Aim At
Obesity
Blue Cross and Blue Shield of Kansas
City announced Sept. 28 it would
commit $7 million to ght obesity.
One of every three children in
our community today is now
overweight or obese and this places
them at a much higher risk of health
complications throughout their lives,
said David Gentile, president and
CEO of the K.C. blues plan. Were
realigning current community
investment funding to more effectively
focus on the issues affecting our
community. Chief among them is the
health of our children.
Gentile said the initiative is a key
component of the companys new
health promotion strategy targeting
childrens health and obesity, while
developing ways to educate and
empower families to live healthier
lives. The not for prot K.C. blues plan
is partnering with the YMCA Healthy
Families program
Blake Williamson, M.D., the
plans vice president and chief
medical ofcer, said: The best action
against childhood obesity is
prevention. We want to reach kids and
parents early with our messages and
engage them before they become
overweight.
Minn. Gets Federal
Diabetes Grant
Minnesota is among 10 states CMS
awarded health grants to ght diabetes
and other chronic conditions within
Medicaid populations through its One
Million Hearts initiative. That program
aims to prevent one million heart
attacks and strokes within the next ve
years. Minnesotas Department of
Human Services and its Department
of Health could share up to $10
million over ve years, but must
reapply annually.
Batesville, Ind.-based hospital bed maker Hill-
Rom Holdings agreed to pay $41.8 million to
settle civil Medicare fraud allegations with the
U.S. Attorney Bill Killian in Knoxville, Tenn.
Hill-Rom, a large manufacturer and
provider of medical technology products and
durable medical equipment, including
specialty hospital beds, settled the
whistleblower allegations without admitting
guilt.
Hill-Rom is dedicated to the highest
standards of business conduct and integrity,
the company said in a statement. !We
vigorously disagree that there was any
wrongdoing in this situation and this
settlement does not represent any admission
on our part. We remain committed to
adherence with all applicable laws and
regulations.
Hill-Rom ofcials said the company
recognized a charge for this matter as
previously announced in our scal third
quarter earnings report.
The allegations stem from a False Claims
Act whistleblower lawsuit led in 2005 by
Laurie Salmons and Lisa Brocco, two nurses
working as !sales representatives for the
company, which has built more than one
million hospital beds around the world. !The
two will split $8 million from the settlement.
U.S. Attorney Killian said that from
1999-2007, Hill-Rom knowingly submitted
numerous and repeated false claims to the
Medicare program for certain specialized
medical equipmentbed support surfaces for
treatment of pressure ulcers, or bed sores, for
patients who did not qualify for the
equipment, had died or were no longer using
it.
At the time it submitted these false
claims, Hill-Rom was well aware of the
Medicare laws and rules regarding coverage
and claims for this equipment and its ongoing
obligation to reasonably follow the condition
of its patients, the U.S. Attorney said.
Hill-Rom Holdings, Inc., is a publicly traded
company with annual revenues of $1.5
billion.
Southeld, Mich.-based Signature Healthcare,
which operates as Aurora Behavioral
Healthcare, will not buy two Las Vegas
psychiatric hospitals as previously announced
from for-prot hospital chain Universal Health
Services of King of Prussia, Pa.
UHS rescinded its June 3 application
seeking approval from the Federal Trade
Commission to sell the two specialty hospitals:
Montevista Hospital and Red Rock Behavioral
Health Hospital, to Michigan psychiatrist Soon
Kim, M.D., who owns Signature.
However, under an FTC agreement, UHS
must still divest the two Las Vegas hospitals. In
November 2010 the FTC approved UHSs $3.1
billion purchase of Psychiatric Solutions, but
required UHS as a condition of approval to
divest 15 mental health facilities (including
three hospitals), saying that the acquisition as
originally proposed would have been
anticompetitive. The FTC said the original deal
would have reduced competition in markets in
Delaware, Las Vegas and Puerto Rico.
UHS Sept. 14 letter to the FTC does not
explain why the deal collapsed or why the for
prot hospital management chain rescinded its
application for FTC approval.
In its June letter requesting FTC approval,
UHS described Signature as a well-qualied
provider of psychiatric services whose
corporate ofcers have signicant experience
operating inpatient psychiatric services.
UHS said Signature then owned eight
psychiatric facilities in Arizona, California and
Illinois; employed 1,700 as of April 2011 and
reported 2010 revenues of $132 million.
However, Signature and Kim have
recently faced legal issues. In 2009 Kim paid
$350,000 to settle a lawsuit brought by
Michigan Attorney General Mike Cox for
allegedly burning dump truck loads of patient
medical records in 2007 on his 415 acre farm
in Salem Township outside of Detroit,
allegedly violating public health codes and
privacy laws. !Aurora Behavioral Health also
faces a California civil whistleblower lawsuit.
Auroras Nevada Deal Cancelled
UHS Rescinds Application to Divest Psych Hospitals
Hill-Rom Settles Whistleblower Suit
Pays $41.8M Over Civil Medicare Fraud Challenge
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Payers & Providers Page 4
Kansans value innovation. We are leading the
way on multiple fronts, from the biosciences to
aerospace and agriculture.
Unfortunately, Gov. Sam Brownbacks
decision to return a $31.5 million grant doesn't
just represent a loss of federal funds, it
represents a missed opportunity for our state.
The governor announced in August that the
state would return the early innovator grant it
received from the Department of Health and
Human Services to develop
cutting-edge health
technology infrastructure
necessary for Kansas to
successfully operate its
health insurance exchange.
(Payers & Providers, Aug.
16 edition.)
Only seven states in the
country were successful in
their bids to secure these
grants, and Kansas was
fortunate enough to be one
of them.
Kansas had an
opportunity to continue its
long-standing tradition of
innovation and to serve as
a model for other states
across the nation.
A health insurance
exchange, which the
Affordable Care Act
requires each state to
establish by Jan. 1, 2014, is a
competitive marketplace aimed
at increasing transparency and
decreasing costs for consumers purchasing
private health insurance. These exchanges will
function much like travel-booking websites: You
compare all your health insurance options and
select the right choice for you and your family.
With 347,400 uninsured individuals in
Kansas nearly 75,000 of whom are children
the exchange stands to ll an important void
in the marketplace. Consumers will be able to
access the coverage options available to them
in a one-stop shop with many user-friendly
features built in.
The exchange also will serve as a gateway to
enroll children who are eligible for Medicaid
and the Children's Health Insurance Program,
ensuring that children receive the preventive
care they need to grow up to be healthy,
contributing adults.
The health insurance exchange will also
benet small businesses facing a growing
administrative burden and skyrocketing insurance
costs. The exchange will allow small businesses to
offer their employees greater choice in coverage
options, while facilitating comparison shopping
and simplifying the enrollment process.
By passing up the early innovator grant,
Kansas has signaled that it neither wants to be an
innovator nor a leader
among states.
Turning our backs on
this signicant opportunity
doesn't change the fact that
hundreds of thousands of
Kansans need access to
affordable, quality health
coverage that will help
improve their health and
the nancial stability of
their families. It doesn't
change the fact that
creating a health insurance
exchange is required by
law.
Without a home-grown
exchange we build
ourselves, the law requires
the federal government to
step in and provide an
exchange to serve Kansans,
as well as residents of any
other state that has declined
to create its own, distinctive
operation.
The early innovator grant gave
us the exibility and the funds to create an
exchange for Kansans by Kansans. Now, the key
question is this: How will we move forward
without breaking the bank?
And perhaps more importantly, what will
Kansas look like once the primary components of
reform go into effect over the next several years?
OPINION
Why No Health Exchange For Kansas?
Brownback Declines Leadership Role Among States
By Shannon
Cotsoradis
Shannon Cotsoradis is president and CEO of
Kansas Action for Children, based in Topeka.
A version of this essay first appeared on the
web site of the Kansas Health Institute,
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Op-ed submissions of up to 600 words are
welcomed. Please e-mail proposals to
[email protected],
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MARKETPLACE/EMPLOYMENT
Payers & Providers Page 5


luyors & lrovdors und MCCL prosont koundtubo lntoructvo. lt dobuts Murch 20ll n tho luyors & lrovdors Nutonu odton.
Cur roudors uvuys vunt to knov vhut s on tho mnds ol houthcuro's c-suto oxocutvos. Conloroncos und trudo ovonts olton
ony uov lor crucu momonts to ntoruct vth thoso thought oudors. \th koundtubo lntoructvo, you' cut through tho
promnuros und mmodutoy knov vhut's on thor mnd.
Lvory koundtubo lntoructvo v louturo u &A sosson conductod by luyors & lrovdors lubshor kon Shnkmun. Hs
docudos ol oxporonco n ournusm und tho houthcuro ndustry v promso concso und rovoung ntorvovs.
1opcs lor upcomng koundtubo lntoructvos ncudo:
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mpcutons n toduy's onvronmont:
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houth puns und systoms try to ncrouso shuro und concontruton n ths murkot:
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vhut systoms shoud bo sttng on tho sdonos lor nov: Hov tod s tho ACC movomont to tho succoss or luuro ol
Modcuro ACC pots: Doos tho dolnton ol ACCs nood moro spoclcty, or s t prolorubo to huvo u bg tont ol
ncuson:
Do you vunt to proposo or purtcputo n u luturo koundtubo lntoructvo: lurtcputon s ontroy onno, vth u commtmont ol
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It costs up to $27,000 to fill a healthcare job*
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Payers & Providers
MARKETPLACE/EMPLOYMENT
Page 6
SEEKING A NEW POSITION?
CAN HELP.
We publish advertisements for those seeking
new career
opportunities for just $1.25 a word.
If you prefer discretion, well handle all
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Call (877) 248-2360, ext. 2, or e-mail
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