Fifty-five hospitals in 21 states agreed Tuesday to pay the U.S. government more than $34 million to settle charges that they submitted false claims to Medicare for kyphoplasty procedures, the Justice Department said.
Kyphoplasty is a minimally invasive procedure used to treat certain spinal fractures that often are caused by osteoporosis.
"The Department of Justice is committed to ensuring that Medicare funds are expended appropriately, based on the medical needs of patients rather than the desire of medical providers to maximize profits," said acting Assistant Attorney General Stuart F. Delery, who heads the department's Civil Division.
In many cases, the Justice Department said, kyphoplasty can be performed safely and effectively as an outpatient procedure without any need for a more costly hospital admission.
The settlements resolve allegations that the hospitals frequently billed Medicare for kyphoplasty procedures on an inpatient basis, rather than outpatient, in order to increase their Medicare billings.
The hospitals that agreed to the settlement were located in Alabama, California, Delaware, Florida, Georgia, Hawaii, Iowa, Kansas, Kentucky, Louisiana, Massachusetts, Michigan, Mississippi, Missouri, Nevada, North Carolina, North Dakota, Ohio, Oklahoma, Tennessee and Texas.
"Whenever hospitals knowingly overcharge Medicare, critically needed resources are wasted and health costs are driven up," said Inspector General Daniel R. Levinson at the Department of Health and Human Services.
The Justice Department has now reached settlements with more than 100 hospitals totaling approximately $75 million to resolve charges they mischarged Medicare for kyphoplasty procedures. In addition to Tuesday's settlement, the government previously settled with Medtronic Spine LLC, the corporate successor to Kyphon Inc., for $75 million to settle allegations the company defrauded Medicare by counseling hospital providers to perform kyphoplasty procedures as inpatient rather than outpatient procedures.
All but four of the settling facilities were named as defendants in a whistleblower lawsuit brought under the False Claims Act, which permits private citizens to bring lawsuits on behalf of the United States and receive a portion of the proceeds of any settlement or judgment awarded against a defendant.
The lawsuit was filed in federal district court in Buffalo, N.Y., by Craig Patrick, a former reimbursement manager for Kyphon, and Charles Bates, a former regional sales manager for Kyphon in Birmingham, Ala.
They will receive $5.5 million from the settlements.
Annual losses from fraud and waste in the health care industry are believed to run into the tens of billions of dollars annually.
The General Accountability Office has reported that federal agencies reported an estimated $115.3 billion in improper payments in fiscal 2011, and more than half that figure was attributed to Medicare and Medicaid.
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