Greenville Memorial was one of seven hospitals that agreed to pay a collective $6.3 million as part of the fourth round of settlements involving federal allegations that they overbilled Medicare for kyphoplasty.
“Basically, they were saying that they would come in and look at every one-day stay that we had for a number of years,” Diller said. “The word ‘fraud' is pushed around, but to me, fraud is an intentional act. There was no intentional act. Basically, we were forced back into a corner to settle for economic reasons.”
So far, 25 hospitals across the country have paid a combined $26 million in settlements in the ongoing national investigation being conducted from the U.S. attorney's office in Buffalo, N.Y. In each case, the hospitals agreed to pay the civil settlements without admitting liability, and the American Hospital Association has asked federal officials to review the policy basis for the ongoing investigation.
Not all of the hospitals have rejected the allegations outright.
Officials with Ascension Health's 425-bed Seton Medical Center Austin, Texas, said they decided to pay $1.2 million after a self-conducted audit discovered cases in which the hospital did admit kyphoplasty patients for inpatient care, even though they could have received the treatment in a less-lucrative outpatient setting.
“There was never a question about the medical necessity of the kyphoplasties performed at Seton, only appropriateness of setting—inpatient vs. outpatient,” Seton Communications Manager Adrienne Lallo said in an e-mail.
AHA officials met with Justice Department prosecutors in November to reiterate concerns that the kyphoplasty cases appear to rely on data-mining techniques that assume liability under the False Claims Act based on billing errors and utilization patterns.
“As the Department of Justice explained to Congress … the FCA does not apply to billing errors, mistakes, or even non-culpable over-utilization,” AHA President and CEO Richard Umbdenstock wrote Sept. 7 to HHS Secretary Kathleen Sebelius and Attorney General Eric Holder.
Kyphoplasty is a procedure in which collapsed vertebrae are inflated with a surgical balloon, and then concrete is injected into the resulting gaps in the bone. The procedure is considered minimally invasive, and can be performed in outpatient centers, but hospitals receive higher reimbursements from Medicare through inpatient treatment.
In May 2008, the maker of kyphoplasty kits—Kyphon, later acquired by Medtronic Spine—paid $75 million to settle allegations that it counseled hospitals on how to increase their Medicare billings by performing the procedure on an inpatient basis. That settlement came about after two former Kyphon employees filed a False Claims Act lawsuit against the company outlining the alleged scheme.
“These actions not only protect taxpayers and the integrity of the Medicare program in the short term, they will in the long run help ensure care for Medicare beneficiaries by insisting that medicine, and not money, be used to determine the best course medical decision for a given case” Buffalo U.S. Attorney William Hochul, Jr., said in a statement.
The AHA said Hochul's office has been sending out form letters to hospitals across the country strongly urging them to audit themselves as a prerequisite for “double damages” settlements if the hospital “cooperates” with authorities, according to the AHA. The False Claims Act allows for fines of up to triple the actual damages.
“Understandably, some hospitals have elected to settle FCA claims rather than to force DOJ to prove its allegations,” Umbenstock wrote in the letter.