IRS Seeks Back Taxes From Columbia / HCA

The government wants the largest U.S. hospital chain to pay millions of dollars in back taxes on a reserve fund kept in case federal insurers challenged its bills. Columbia/HCA Healthcare Corp. of Nashville filed a protest with the U.S. Tax Court on Dec. 11 of the Internal Revenue Service demand for $267 million in taxes for 1993 and 1994. The case involves other tax issues as well. Auditors contend the company took improper deductions for reserve accounts held in case federal health insurance programs such as Medicare questioned the hospital chain’s bills, according to Columbia/HCA spokesman Jeff Prescott. “We think those are legitimate deductions,” he said. “The reality of it is virtually every health-care company does this.” IRS officials declined to comment on the case. It is routine for health-care firms to keep money in reserve to guard against errors made in the complex process of filing Medicare claims. Columbia/HCA’s reserve accounts are under scrutiny as part of a Medicare-fraud investigation. Three of the company’s executives were indicted in connection with that inquiry earlier this year. Columbia shares were unchanged at $28.88 on the NYSE.