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None of the hospitals, nor the makers of the devices, have admitted the wrongdoing alleged by two former Kyphon employees.
None of the hospitals, nor the makers of the devices, have admitted the wrongdoing alleged by two former Kyphon employees.

55 more hospitals settle in kyphoplasty overpayment cases


By Joe Carlson
Posted: July 2, 2013 - 1:00 pm ET
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Fifty-five hospitals announced settlements totaling $34 million in the long-running whistle-blower lawsuit that alleges that the maker of spinal-surgery equipment coached healthcare providers on ways to maximize revenue by overbilling Medicare.

More than 100 hospitals have now settled overpayment cases involving kyphoplasty, a surgical procedure in which an inflatable tube is used to create a cavity of air inside a compressed vertebra and then filled with cement to strengthen the bone. In many cases, kyphoplasty can be done on a same-day outpatient basis, but equipment-maker Kyphon is accused of encouraging hospitals to keep patients overnight to increase Medicare reimbursement.

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Hospitals have now paid about $75 million in False Claims Act settlements to resolve the cases. In addition, Medtronic Spine, which acquired Kyphon in 2007 for $3.9 billion, paid $75 million the year after the acquisition to settle the allegations.

None of the hospitals, nor the makers of the devices, have admitted the wrongdoing alleged by two former Kyphon employees in a 2005 False Claims complaint.

The 55 hospital settlements announced Tuesday were drawn from 21 states, and included 23 hospitals owned by for-profit chain HCA that are paying a collective $7.1 million. Five hospitals operated by not-for-profit Trinity Health are paying $3.9 million.

The individual settlements ranged from $552,000 to more than $4 million. The largest single-hospital settlement announced Tuesday was for $4.2 million from Atrium Medical Center in Middletown, Ohio. A full list of the hospitals that settled was posted on the U.S. Justice Department's website.

Hospital executives say the allegations are prompted by unclear Medicare rules on when spinal-surgery patients should be held overnight. And they note that even though the whistle-blowers and the government are targeting hospitals, the decision to admit patients is usually dictated by the treating physician.

“We are pleased to see new clarification of industry care standards, which help physicians make decisions regarding kyphoplasty patients,” HCA spokesman Ed Fishbough said in an e-mailed statement Tuesday. “We are confident as a result that this issue has been resolved.”

Tim McCormack, a Washington-based Phillips & Cohen lawyer representing the Kyphon whistleblowers, disputed hospitals' characterizations of what led to the alleged overbillings.

“This isn't a case of simple paperwork errors or innocent misunderstanding of Medicare rules," McCormack said in a news release. “Hospitals across the country misrepresented the type of treatment they provided to patients so they could bill Medicare for expensive inpatient stays.”

HHS Inspector General Daniel Levinson, whose office worked with the Justice Department on the cases, said in a written statement that healthcare costs are driven up “whenever hospitals knowingly overcharge Medicare.”

Follow Joe Carlson on Twitter: @MHJCarlson


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