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Beth Israel Deaconess Agrees to $5.3 Million Settlement for Medicare Fraud Allegations

On Monday, July 29, 2013, United States Attorney Carmen M. Ortiz and Susan J. Waddell, Special Agent in Charge of the Department of Health & Human Services, Office of Inspector General, announced that Beth Israel Deaconess Medical Center (BIDMC) has agreed to pay $5.3 million to the federal government to settle allegations that it violated the False Claims Act.
The claims in question were from patients admitted to the Boston, Massachusetts teaching hospital for brief stays between June 1, 2004 through March 31, 2008. According to a statement from the US Attorney, the two allegations against BIDMC were as follows:

1. BIDMC inappropriately submitted claims to Medicare for one-day stay inpatient admissions for patients with congestive heart failure, chest pain, gastroenteritis and nutritional and metabolic disorders. These claims should have been billed as observation services.
2. BIDMC submitted claims to Medicare for less-than-one day stays that should have been billed as outpatient or observation services.

The US Attorney’s statement implied that BIDMC overbilled Medicare to boost profits. Medicare reimburses hospitals at significantly higher amounts for impatient admissions versus outpatient or observation services. “When hospitals unnecessarily admit Medicare patients for short inpatient stays when the appropriate treatment would be outpatient or observation care, they improperly boost hospital profits at significant expense to taxpayers and patients,” said HHS-OIG’s Waddel. The government’s statement continued to say that the settlement “furthers two critical purposes: ensuring that precious federal health care dollars are spent appropriately and in accordance with the law, and emphasizing the patient needs, not the bottom line, must be the basis for treatment decisions.”

Despite the settlement, BIDMC maintains its innocence and has not admitted any liability or wrongdoing. A statement from BIDMC’s general counsel, Jamie Katz, states that “during the inquiry, BIDMC vigorously defended claims for an inpatient level of service delivered to patients whom physicians had concluded should be admitted to the hospital because of their condition under the settlement. BIDMC admits no liability whatsoever.” Katz explained that “the settlement is not a fine, penalty or other sanction” and that the amount will be paid from a reserve fund and “will have no effect on hospital operations.”

Given the subjective nature of the Medicare requirements for inpatient stays, which rely heavily on the admitting physician’s expectation that a patient will require 24 hours or more of hospital care, and considering the fact that admissions are not covered based on length of stay under the Medicare Benefit Policy Manual, this case should raise serious questions to the hospital community. In fact, many hospitals are currently successfully appealing short stay inpatient denials which the government contractors have denied.

To see the US Attorney’s full statement, click here.

For more information about this topic contact Abby Pendleton, Esq. or Jessica Gustafson, Esq. at (248) 996-8510.

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