(This story was updated at 2:30 p.m. ET.)
Thirty-two more hospitals have agreed to pay $28 million to settle allegations that they billed Medicare for kyphoplasty procedures as inpatient rather than outpatient services to make more money, the U.S. Justice Department announced Friday.
The settlements are the latest in a long-running whistle-blower lawsuit that alleged equipment-maker Kyphon encouraged hospitals to perform the procedures on an inpatient rather than outpatient basis to help pay for kits used in the procedures and pull in more cash for hospitals. In all, more than 130 hospitals across the country have now settled in the case.
The hospitals in this latest round of settlements span 15 states. They include, among others, the Cleveland Clinic, which will pay $1.74 million; five hospitals affiliated with Community Health Systems, which will pay $3.5 million; five hospitals affiliated with Tenet Healthcare Corp., which will pay $2.2 million, and five hospitals formerly owned and operated by Health Management Associates, which will pay $2 million.
The Cleveland Clinic said in statement it fully cooperated with the review and, “It is important to note that all of the surgeries performed at our institution were deemed medically necessary and benefitted our patients.”
Attempts to reach Community Health Systems and Tenet for comment were not immediately successful Friday.
Kyphoplasty is a minimally invasive procedure used to treat some spinal fractures often caused by osteoporosis. During the procedure, an inflatable balloon is used to create a cavity of air inside a compressed vertebra and the space is then filled with cement to strengthen the bone. According to the government, the procedure can be performed safely and effectively on an outpatient basis without the need for costly hospital admission.
All but three of the 32 hospitals that recently agreed to settle were named as defendants in the whistle-blower lawsuit. That lawsuit was filed by Craig Patrick, a former reimbursement manager for Kyphon, and Charles Bates, a former regional sales manager for the company. The two men will receive about $4.75 million from the settlements announced Friday.
The government has also previously settled with Medtronic Spine, the corporate successor to Kyphon, for $75 million.
The settlements do not include any determinations of liability, according to the Justice Department.
Tim McCormack, a partner at Constantine Cannon who represented the whistle-blowers when he worked at a different law firm, said he doesn't expect that the 32 settlements announced Friday will be the last in the case.
McCormack applauded the Justice Department for sticking with the case so long and pursuing hospitals even after a settlement had been reached with the company.
“The Department of Justice recognizes that to truly reign in corrupt behavior, you can't just look at a company that's pushing it or consultants that are pushing it. You have to look at who's benefiting, at hospitals that are benefiting,” McCormack said. “Deterrence is not going to be very effective if you don't hold the hospitals accountable.”
Matthew Smith, an attorney with Phillips & Cohen who is now representing the whistle-blowers, said the kyphoplasty case, first filed against the hospitals in 2008, may also have helped lead to other, later cases involving inappropriate patient admissions. For example, Community Health Systems settled cases against it in 2014 over allegations it billed the government for inpatient services that should have been billed as outpatient or observation services. Community Health Systems paid the government $98 million and issued a statement at the time saying the settlement included no finding of improper conduct or admission of wrongdoing by the company.
“I think it just brings an awareness to hospital admissions that are done for reimbursement reasons rather than the patient needing an inpatient level of care,” Smith said.
