Healthcare fraud is one of the most detrimental – and costly – forms of fraud, as it not only could increase premium rates for innocent policyholders, but can even compromise the quality of patient care. One of the most common forms of healthcare fraud involves illegal “upcoding” or unnecessary admittance of patients who are not in need of inpatient care. This practice typically involves a team effort between hospital management companies, physicians, and staff – and is an extremely costly enterprise.
In a recent False Claims Act settlement, California-based Dignity Health has agreed to pay $37 million to the federal government in order to settle allegations it defrauded two federal healthcare programs: Medicare and TRICARE. The former is a federally-administered health insurance program for seniors aged 65 and older. The latter is a federal healthcare program implemented for current and former members of the U.S. military and their families.
Details of Claims Against Dignity Health
Dignity Health is headquartered in San Francisco, California, and operates 39 hospitals across Arizona, California, and Nevada. The allegations against the company stem from over-billing issues occurring at 13 sites within California and Nevada only, and pertain to illegal billing procedures occurring from 2006 through 2013.
According to the Department of Justice, Dignity Health knowingly and intentionally overcharged Medicare and TRICARE for inpatient services rendered to covered patients who were not in need of such services and could have been adequately treated using less-costly measures. More specifically, the lawsuit alleges that Dignity admitted patients undergoing elective, relatively non-complex, cardiovascular procedures, including the placement or maintenance of a pacemaker or the installation of arterial stents. These procedures are historically outpatient in nature, assuming the patient does not experience a complication, and require minimal home-based recovery. Nonetheless, Dignity routinely admitted these patients for overnight stays and billed the government as a result.
Moreover, the complaint alleges that from 2000 through 2008, four of Dignity’s hospitals billed Medicare at an inpatient rate for elective kyphoplasty procedures – another process that is considered minimally invasive and not typically inpatient in nature. The government also alleges that Dignity routinely admitted patients for common medical issues that are almost always treated on an outpatient basis, resulting in unnecessarily costly submissions for reimbursement from the federal healthcare programs.
The lawsuit was filed by a former employee of Dignity Health who elected to exercise her rights under the False Claims Act’s qui tam provisions. As a result, she will collect $6.25 million.
The federal government remains committed to the fight against healthcare fraud, and initiated a concerted effort with the DOJ’s Civil Division, the U.S. Attorneys’ Offices for the Northern District of California, and the Western District of New York and the HHS-OIG.
According to Special Agent Ivan Negroni of the HHS Office of Inspector General’s San Francisco Office, “Hospitals that attempt to boost profits by admitting patients for expensive and unnecessary inpatient hospital stays will be held accountable….Both patients and taxpayers deserve to have medical decisions made solely on what is best for the patient based on medical necessity.”
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