LA hospital may have to repay CMS for CEO's misdeeds

The CEO of Madison Parish Hospital in Tallulah, La., is in prison for healthcare fraud, but the facility he ran may have to foot the bill for his misdeeds, the Monroe News-Star reported.

The hospital may have to reimburse the Centers for Medicare & Medicaid Services $2.5 million in overpayments as a result of fraud perpetrated by its former administrator Wendell Alford, according to the News-Star. The current hospital management made the disclosure to a state board overseeing the hospital's transition to greater financial transparency after years of ongoing abuse.

Alford split the proceeds--which came in part from fraudulent Medicare and Medicaid billing--with two outside contractors that provide the hospital's insurance and healthcare IT services, both of which paid Alford kickbacks in order to keep their contracts in place. Alford kept the illegal agreements from the hospital's board of directors.

All three pled guilty to federal healthcare fraud charges earlier this year and face prison, with Alford receiving 37 months in a federal pen and an order from a judge to pay nearly $1.4 million in restitution.

However, it appears unlikely that Alford and his two co-conspirators can pay back the sum they stole. In that event, Madison Parish Hospital may have to pay back CMS on its own. Moreover, the agency could suspend Medicare and Medicaid payments to Madison Parish later this year until the hospital pays back the outstanding sum, according to the News-Star.

"Barring any type of repayment plan, we could be saddled with a $2.5 million payback. At that point we go negative, and we will stay negative for the rest of the year. That would be devastating. If we have to cut a check for $2.5 million, it would shutter us," Madison Parish Chief Executive Officer Scott Barrilleaux told the newspaper.

The hospital has never had a chief financial officer in place, according to state regulators, which likely contributed to its current financial woes. It currently has an outside accounting firm helping out with its finances. The hospital reported a $2.2 million deficit in fiscal 2012 and a variety of accompanying financial deficiencies, according to the News-Star's previous coverage.

"They now have this firm to give financial advice and prepare monthly financial statements until staff can be brought up to speed and manage the hospital's accounting department," Michael Cragin, senior adviser for the Louisiana legislative auditor, told the News-Star.

To learn more:
- read the first News-Star article
- here's the second News-Star article