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Six Hospitals Pay $8.3 Million in Medicare Spine Surgery Case

Cheryl Clark, for HealthLeaders Media, September 30, 2009

Updated October 2—Three hospitals in Alabama and three in Indiana have agreed to pay $8.36 million to settle allegations that from 2002 to 2008 they kept spine fracture repair patients overnight in an effort to increase their Medicare billings, the Department of Justice announced Sept. 29.

The hospitals, and three others in Minnesota, which settled similar allegations in May, were investigated for keeping patients overnight for kyphoplasty procedures, which federal officials contend can, in many cases, be performed safely through less-expensive outpatient stays.

"Hospitals that overcharge Medicare drain critical funds from the Medicare program and increase healthcare costs," said Daniel R. Levinson, Inspector General for the U.S. Department of Health and Human Services. "This settlement demonstrates the federal government's resolve to address this kind of fraudulent conduct."

Kathy Mehltretter, U.S. Attorney for the Western District of New York in Buffalo, said, "By keeping patients overnight, without regard to medical necessity, hospitals could seek greater reimbursement from Medicare and make much larger profits on kyphoplasty."

Pamela E. Jones, chief legal officer for St. Francis Hospital & Health Centers in Beech Grove and Indianapolis, IN, however, said in a statement Wednesday that "the ‘necessity’ of the inpatient stay was not the issue. The government does not contend that the stays were unnecessary. The issue is that the documentation did not support the inpatient stay–not that it was unnecessary.”

Jones also rejected the suggestion of fraudulent conduct. "The Department of Justice investigation at St. Francis was focused solely on our lack of documentation to support the treatment in an inpatient setting. The DoJ has never said it was a "scheme to defraud.”

In the settlement, St. Francis Hospitals agreed to pay $3,158,629; Deaconess Hospital in Evansville, $2,110,034; and St. John's Hospital System in Anderson, IN, $826,256. The Alabama hospitals are St. Vincent's East Hospital in Birmingham, $1,459,395; St. Vincent's Birmingham Hospital, $422,748; and Providence Hospital in Mobile, $381,713.

In a statement Tuesday, St. Francis said that it "cooperated fully with the government and took immediate action to investigate its practices. It is important to note that the probe had nothing to do with quality of care, patient safety or medical necessity."

In a statement Wednesday, Deaconess Health System in Evansville said, "This matter involved inadvertent billing and documentation errors and did not relate to the medical necessity of the underlying kyphoplasty procedure or the quality of care provided to the patients."

Kyphoplasty is a minimally invasive technique to remedy painful fractures often linked to osteoporosis. The short procedure involves insertion of a balloon-type of device to restore the height and shape of the vertebrae, and insertion of a bone-strengthening cement product in the spine.

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