Hospitals Pay $9.4 million in Medicare Fraud Settlement

Nine hospitals in seven states–Alabama, Florida, Indiana, Michigan, Minnesota, New York and South Carolina–will pay a combined $9.4 million to settle a whistleblower suit in which they were accused of keeping patients overnight after having kyphoplasty, typically an outpatient back procedure, merely so that they could bill Medicare at a higher rate, the Department of Justice announced yesterday.

This story is copied from FierceHealthcare, a newsletter for healthcare executives.

Thanks to the same two former employees of the company responsible for the therapy–Kyphon, Inc., now part of Medtronic Spine LLC–several of these hospitals also were named in a 2008 qui tam suit involving kyphoplasty, netting the government a total of $20 million in recovered funds to date.

In addition, Medtronic paid $75 million in 2008 to settle allegations it defrauded Medicare by counseling hospital providers to perform the procedure on an inpatient basis, reports Main Justice. The whistleblowers, who worked in reimbursement and sales management for the company, will receive about $1.5 million as their share of the most recent settlement.

Most of the involved hospitals claim that the settlement is not an admission of wrongdoing. “The hospital was acting in the best clinical interest of these patients based upon information available at the time of these procedures,” said Will Henderson, spokesman for Indiana’s Ball Memorial Hospital, which paid the DOJ $1.9 million.

South Carolina hospital officials released a similar statement: “Based on the physician’s judgment of medical necessity at time of admission, Palmetto Health kept patients in the hospital overnight.” But Phillips & Cohen, the law firm presenting the case, maintained that by billing Medicare for inpatient surgery, the hospitals “wrongly increased…revenues thousands of dollars each time kyphoplasty was performed.”  The DOJ agreed, concluding that there was not enough documentation in patients’ records to justify overnight stays, according to South Carolina Newspaper The State.

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