On the eve of trial, Sacramento, Calif.-based Sutter Health agreed to pay $46 million and unveil its charges and costs for anesthesia services to settle a lawsuit with the state insurance commissioner.
Yet the billing practice at issue—charging for anesthesia services that critics say are already reflected on other bills—is common among California hospitals. The state hospital association says as many as 90% of all hospitals in the state use the same billing method for anesthesia, though that's likely to change as a result of the lawsuit.
Auditing firm Rockville Recovery Associates filed the 2009 whistle-blower suit in Sacramento Superior Court after concluding that many of Sutter's two dozen hospitals in Northern California were regularly submitting false or misleading bills for anesthesia.
The firm said Sutter hospitals charged patients for services provided by employees who were not actually present for the procedures by adding another billing code on top of operating-room charges. Rockville also said Sutter officials negotiated contract terms that prevented payers from analyzing and contesting such charges.
Sutter officials framed the case differently, saying the hospitals billed for anesthesia services through a “time-based” method, as is common among hospitals. As a result of the settlement, Sutter will now switch to a flat-rate system.
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