Piedmont Healthcare will pay $16 million to settle two False Claims Act allegations involving overbilling and kickbacks.
The Atlanta-based health system allegedly billed Medicare and Medicaid for unnecessary care and paid above fair market value to acquire Atlanta Cardiology Group in 2007, incentivizing referrals, according to a 2016 qui tam lawsuit filed by a former Piedmont physician that was unsealed last week.
Piedmont's case managers allegedly billed government healthcare programs at the more expensive inpatient level of care from 2009 to 2013 even though treating physicians recommended outpatient or observation level of care. The health system also inflated the physicians' pay to induce referrals, which deterred productivity and harmed competition, according to the complaint, which outlines four counts of fraud.
"Our watchdog agency will continue to aggressively investigate healthcare providers that attempt to boost their profits by billing Medicare and Medicaid for medically unnecessary services and engaging in kickback schemes," Derrick Jackson, special agent in charge at HHS' Office of Inspector General, said in prepared remarks. "We will not tolerate such greed-fueled schemes, which bilk taxpayer-funded healthcare programs and undermine the public's trust in the healthcare industry."
Piedmont said in a statement that every health system from 2009 to 2013 was grappling with whether a hospital patient should be classified as an inpatient or on observation status, noting that the government has since updated the confusing two-midnight rule.
Piedmont assigned patient status best it could, in part with the aid of an "industry leading third-party vendor," the company said.
"In all cases, our doctors and nurses made their decisions based on the best interest and health of their patients—just like they always have and always will," the organization said. "Our decision to settle is not an admission of liability, simply the best way to end a costly and time-consuming investigation so we can continue to focus on caring for the communities we serve across Georgia."
The complaint detailed a range of Piedmont's cardiovascular care that could have allegedly been performed on an outpatient or observation basis rather than inpatient, which yields 300% to 400% higher reimbursement.
Piedmont typically admitted patients who had pacemakers and defibrillators implanted even though inpatient status is only required for "patients who require more intensive monitoring, intravenous hydration, medication titration and extended nursing or physician care," the plaintiff claimed, citing the Heart Rhythm Society guidelines. Another tactic allegedly involved "physician churning," where multiple specialists are called in to consult a case and order a host of unnecessary tests.
Piedmont allegedly did not have a consistent policy for refunds of overpayments nor one for notifying the business office not to bill an admission when there wasn't medical necessity. The provider repeatedly billed for observation stays that exceeded 48 hours, which should be "rare occurrences," the complaint said.
The plaintiffs cited a recovery auditors' investigation into Piedmont's billing practices, questioning why many hundreds of cardiology patients were billed as inpatients and looked for documentation related to the changing of patients' status from overnight observation to inpatient.
Many physicians did not know those patients were being billed as inpatients rather than outpatients, the whistle-blower said. He was allegedly coerced, along with his peers, to create exaggerated explanations about a case's complexity and threatened if he did not comply, describing it as a "Spanish Inquisition-like campaign."
Management forced physicians to sign off on cardiac catheterization lab diagnostics without scrutinizing the merits of the tests, which could have endangered patients, the whistle-blower said. The organization also ordered cardiac catheterizations and stenting, pacemaker implants, among other procedures, when they weren't necessary, he said.
In addition, Piedmont allegedly falsely coded the place of service for imaging and diagnostics at hospital-owned outpatient departments rather than physician offices, yielding a higher facility fee.