Rex Hospital to settle Medicare fraud case with $1.9 million ?ne

Rex Hospital — a branch of UNC Hospitals — is among the latest in a string of hospitals accused of Medicare fraud.

The hospital, while denying the allegations, has agreed to pay the U.S. government a total of $1.9 million in an out-of-court settlement.

The government alleges Rex Hospital billed Medicare for cases of inpatient care instead of outpatient care. Medicare guidelines state inpatient care should be used in events of medical necessity.

“We pursue cases like this because when hospitals submit false claims in order to increase their Medicare reimbursement, as we allege here, it artificially drives up the cost of health care, leaving taxpayers to foot the inflated bill,” said Tony West, assistant attorney general for the U.S. Department of Justice Civil Division in a press release.

These accusations of Medicare fraud are nothing new.

The U.S. government has recently been involved in a string of cases against hospitals that overcharge Medicare for reimbursements.

Joan Krause, professor in the UNC School of Law, said these recent lawsuits are part of the Obama Administration’s attempts to reduce health care costs.

“It is hard to justify losing money to fraud, especially when there are so many people who don’t have health care services,” she said.

Rex Hospital was also accused of submitting unnecessary inpatient claims to Medicare for other “minimally-invasive procedures” between 2004 and 2007, according to a press release issued by the U.S. Department of Justice.

The recent allegations against Rex Hospital focus on a surgical procedure known as kyphoplasty.

Kyphoplasty is designed to stop the pain caused by a spinal fracture, to stabilize the bone and to restore some or all of the lost vertebral body height due to the compression fracture, said Lisa Schiller, spokeswoman for Rex Hospital.

This procedure was classified as inpatient by Medicare until 2007, she said.

“We followed the rules in place at the time,” Schiller said. “The federal government changed the rules, and then went back and penalized hospitals retroactively.”

Despite rejecting the allegations, Schiller said the hospital decided to settle with the government because settling would cost less money than fighting the case in court.

Rex Hospital has already paid the full settlement, she said.
“Even though we’re in the right, it would cost us significantly more to fight the government,” she said.

The cases involving kyphoplasty nationwide started when two former Kyphon employees brought action on behalf of U.S. in 2008 under the whistleblower provisions of the False Claims Act. The two employees are receiving $80,000 for claims relating to kyphoplasty.

Krause said protections to whistleblowers, who are primarily the people who report Medicare fraud, have made it much easier for them to successfully file cases. This has increased the incentive to report abusive practices, she said.

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