The first thing that comes to mind here is the software and what versions they were using. That could easily be the case if major revisions and updates were not done. 
When you look at the certifications on software systems it can be complex as some vendors versions are certified and some are not, and some are certified for some areas while they are not in other areas. If a hospital were perhaps using an older software version that was not certified and it was not caught, well this could be on scenario. In addition you could have the opposite with a new version applied but the vendor was slow in getting that updated version certified too. Then again it could be something else.
In May the CEO retired with some pressure coming from a Hedge Fund. In addition you may recall the 60 Minutes story from December of 2012 with the big question on admissions and the software used there and how doctors stated they were being pressured to admit people who maybe really didn’t need to be admitted.
Hospital Admission Rates at HMA Hospitals - Doctors Pressured to Meet Admission Percentages–Algorithms Pushing the Processes Requiring Explanations for Overriding & Not Admitting-Killer Algorithms Chapter 48
The Hospital company caught this in their own audit and will be sending $31 million back to the government and I’m sure will re-enroll the 11 hospitals when all certification requirements are met. The company operates 71 hospitals so keeping on top of all could be challenging as you think all is in place but again one software update could send it all down the river. Back in 2001 some doctors and hospitals had to wait to attest while GE fixed their software. BD
GE Centricity EHRs Need To Fix Their Algorithms (Math)-Some Customers May Not Be Able to Attest Until The End of November After the Software Update
NAPLES, Fla., Nov 05, 2013 (BUSINESS WIRE) -- Health Management Associates, Inc. HMA -0.08% ("HMA") today announced that it will restate its financial statements for the years ended December 31, 2010, 2011 and 2012 and the quarters ended March 31 and June 30, 2013 to correct the accounting treatment of approximately $31.0 million of Medicare and Medicaid Health Information Technology ("HCIT") payments recognized as income between July 1, 2011 and June 30, 2013. The Company intends to file the necessary amendments to its prior filings as soon as possible, following which the Company will file its Quarterly Report on Form 10-Q for the quarter ended September 30, 2013.
HMA participates in federal and various state HCIT programs pursuant to which Medicare and Medicaid incentive payments are paid to eligible hospitals and physician practices that implement and achieve "meaningful use" of certified electronic health record ("EHR") technology. In October 2013, based on the results of an internal review, the Company determined that it had made an error in applying the requirements for certifying its EHR technology under these programs and, as a result, that 11 of the hospitals it had enrolled in the HCIT programs did not meet the "meaningful use" criteria necessary to qualify for HCIT payments. The Company promptly notified the Centers for Medicare and Medicaid Services ("CMS"), the government agency responsible for administering federal HCIT programs, as well as the agencies that administer the various relevant state HCIT programs, of its determination.
The Company estimates that, between July 1, 2011 and September 30, 2013, it recognized as income HCIT incentive payments totaling approximately $31.0 million for the hospitals that did not meet the "meaningful use" criteria. Of these payments, the Company recognized as income approximately $8.3 million in 2011, approximately $17.3 million in 2012 and approximately $5.4 million in the first six months of 2013. On October 30, 2013, the Company withdrew the 11 hospitals from the HCIT programs and has repaid the majority of the funds to CMS. The Company is in the process of repaying the balance of the funds to the relevant state programs. The Company expects to re-enroll the hospitals in the HCIT programs and may be able to recoup some portion of the amounts repaid.
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