A Chicago hospital headed by a controversial physician has agreed to pay the highest fine to date in the government's ongoing investigation of how hospitals bill Medicare and Medicaid for treating pneumonia.
Doctors Hospital of Hyde Park, a 200-bed for-profit facility, agreed to pay a $4.5 million fine to settle allegations that it upcoded, or manipulated billing codes to overcharge Medicare and Medicaid for cases of pneumonia from January 1993 through June 1997.
Under the settlement, the hospital admitted no wrongdoing. But it did agree to a corporate integrity plan to prevent billing problems. The U.S. Justice Department signed off on the agreement May 10. It announced the deal last week.
At deadline, hospital executives had not returned several phone calls.
Doctors Hospital is owned by a limited partnership headed by James Desnick, M.D., a Chicago ophthalmologist with ties to prominent Illinois figures, including the Rev. Jesse Jackson, former U.S. Sen. Alan Dixon, who has been on the hospital's board, and Willie Barrow of Chicago's Rainbow/Push Coalition, for whom a hospital center is named.
Between 1984 and 1994, Desnick ran as many as 12 eye clinics before divesting them in the face of a state and federal probe of the clinic's business practices.
Desnick's partnership purchased the bankrupt hospital, then known as Hyde Park Hospital, in 1992. The alleged billing fraud began a year later.
Desnick, who is president of the hospital, approved the settlement on March 18, according to the agreement.
The investigation at Doctors Hospital was sparked by a 1996 whistleblower lawsuit against about 100 hospitals. That suit focuses on whether hospitals bill Medicare or Medicaid for rare strains of pneumonia, which carry a higher rate of reimbursement, when patients actually were treated for more-common forms of pneumonia, which are reimbursed at a lower rate.
According to an analysis of Doctors Hospital's billing records done by the whistleblower-a Doylestown, Pa.-based computer software firm called Health Outcomes Technology-the percentage of the hospital's pneumonia cases billed as complex jumped to 79% in 1994 from 39% in 1993. Nationally, the percentage for that period averaged 3% to 4%, according to the lawsuit.
The settlement is the second since the government joined the whistleblower case as a plaintiff two months ago, after unsealing it in U.S. District Court in Philadelphia. Three hospitals settled pneumonia billing cases before that, dating back to November 1997.
Earlier this month, Palm Springs General Hospital of Hialeah, Fla., a 190-bed privately owned, for-profit hospital, agreed to pay $2.4 million to settle similar charges without admitting wrongdoing.
Palm Springs Administrator Carlos Milanes said the coding inaccuracy "represents less than one-half of 1% of all Medicare payments to Palm Springs General Hospital over the five-year period" audited-less than $200,000 a year out of more than $150 million of Medicare reimbursement, he said. The remaining settlement amount represents penalties under the federal False Claims Act.