Hospital billing consultant knew exactly how to blow the whistle — and gets $613,000 for his trouble.

Brookhaven Memorial Hospital Medical Center in Long Island, NY will pay the federal government $2.92 (excluding interest) to settle Medicare billing fraud allegations involving outlier payments.

What’s the problem with false claims for outlier payments? Part of the Medicare-provided reimbursement to hospitals is the “outlier payment,” which is basically an additional reimbursement paid to cover unusually expensive treatment and procedure costs incurred by the health care institutions. Brookhaven allegedly overcharged “for cases that were not extraordinarily costly and for which outlier payments should not have been paid,” stated the Department of Justice in a news release.

Who was this ‘professional whistleblower?’

Whistleblower Anthony Kite, who originally filed the qui tam lawsuit in 2005, was a former hospital billing consultant from New Jersey. The false claims act rewards the qui tam relator by giving him a share in the recovery, and Kite will get about $613,000 plus interest as share in the settlement proceeds for the Brookhaven settlement alone. Kite was not a Brookhaven employee, but rather, “appears to be a professional whistleblower working with a Washington-based law firm specializing in qui tam whistleblower cases,” according to The Health Care Bulletin, published online by Bricker & Eckler LLP.

Kite implicated several other New Jersey-based hospitals with the same outlier fraud allegation, including Warren Hospital in Phillipsburg, Bayonne Medical Center in Bayonne, Cathedral Healthcare System in Newark, and Raritan Bay Medical Center in Perth Amboy, according to the Bulletin. These institutions have since settled their cases.

As of November 2009, four other hospitals had settled the qui tam cases brought in by Kite. These are:

- Cooper University Hospital in Camden, New Jersey (settled for $3.85 million);

- St Vincent Hospital in Erie, Pennsylvania (settled for $1.9 million);

- St Joseph Healthcare System Inc in Paterson, New Jersey (settled for $1.75 million).

Available on CD: How to protect your health care organization from Kite and his ilk.

CEO says human error played a role in the alleged violation.

What may have been only one coder’s mistake has ended with Connecticut-based Johnson Memorial Hospital paying the federal government $191,193 to settle allegations of fraud, the US Attorney’s Office District of Connecticut said in a press release.

The hospital is alleged to have violated the False Claims Act between 2000 and 2005 when it overcharged Medicare for infusion therapy, chemotherapy administration, and blood transfusion services. During this period, only one unit of blood transfusion service was permitted per day, but on many occasions, Johnson Memorial Hospital billed Medicare for between two and eight units.

By settling the case, the hospital did not admit liability. Peter J Betts, Johnson Memorial Hospital’s interim president and CEO, cushioned the allegations with what he called an honest mistake, reported the Hartford Courant. In particular, he put a finger at the possibility that a coder may have picked the wrong code from “the hundreds of billing codes that you use when you bill Medicare.”

“You can be overpaid or underpaid. We would not knowingly overbill,” he added.

Even a seasoned health care professional can have a difficult time understanding and applying the J codes in HCPCS. If you don’t train you coders the right way, chances are they could make the same kind of mistakes that got Johnson Memorial Hospital in trouble.

You can prevent overbilling by employing a number of measures, including:

• training your coders regularly;
• auditing your billing software;
• keeping your information bank updated and your billing team up-to-date.

Does infusion coding and compliance scare you so much that you undercode and don’t get the reimbursement you deserve? Learn the rules so you can confidently claim what’s rightfully yours.

Faulty physician documentation was an Achilles heel in the case.

Three patients who stayed multiple days in Wheaton Community Hospital in Wheaton, MN as inpatients — yet received only oral pain meds and PT during their hospital stays — is an example of alleged medically unnecessary services in a false claims case recently settled by the hospital, a physician, and the Department of Justice.

Wheaton Community Hospital, the City of Wheaton, Minn. and Dr. Stanley Gallagher agreed to pay $846,461 to settle the false claims allegations, according to a DOJ release. Neither the hospital nor the doctor admit wrongdoing as part of the settlement. The qui tam relator will collect $203,150.

The 15-bed hospital agreed to pay $563,461 toward the settlement and $469,539 in legal fees; Gallagher will pay $283,000, reports The Minneapolis-St. Paul Start Tribune. Federal investigators began looking into the hospital’s claims in 2004 when Dr. Steven Radjenovich, another physician who had worked at the hospital previously, filed a whistleblower lawsuit.

The feds randomly audited 170 hospital records and, from that sample, concluded that a lot of Dr. Gallagher’s patients had been admitted unnecessarily. The complaint focused on three elderly patients who were admitted for pain, but received nothing but oral pain meds and physical therapy, The Tribune reports.

Lesson learned: Document, document, document. Gallagher tells the paper he took good care of the patients, but investigators say his documentation of the cases doesn’t support that claim.

Reference: United States ex rel. Steven Radjenovich v. Stanley Gallagher, et al., Case No.: 04-4538 (D. Minn.).

The settlement comes on the heels of a flurry of late-December DOJ settlements in the health care arena, including $669,413 to settle E/M upcoding allegations in a cardiology practice, $9.5 million to settle false claims allegations from a group of home-visit physicians, and $13 million to settle allegations that an Oklahoma hospital submitted false claims resulting from anti-kickback and Stark violations. The Oklahoma settlement was the end result of the hospital’s self-disclosure of possible anti-kickback and Stark issues.

Don’t let Stark problems cause your health care organization big FCA trouble. Learn the latest rules for Stark compliance in this audio training event with attorney Wayne Miller.

At issue: The antipsychotic drug Risperdal & fair market value.

Last week, the Department of Justice announced that nation’s largest nursing home pharmacy, Omnicare Inc., will pay $98 million to settle False Claims Act allegations. IVAX Pharmaceuticals (now a subsidiary of Teva Pharmaceuticals) will pay $14 million to settle allegations regarding its role in the kickback scheme. Now two large nursing home chains — and their principles — are facing kickback allegations for their roles, according to a DOJ release.

The DOJ “has intervened and filed a complaint against two large nursing home chains, Mariner Health Care Inc. and SavaSeniorCare Administrative Services LLC, both of Atlanta, and their principals, Leonard Grunstein, Murray Forman, and Rubin Schron, for accepting a kickback from Omnicare in return for pharmacy services contracts,” says the release.

Background on the Omnicare settlement: The Johnson & Johnson (J&J) antipsychotic Risperdal is the drug at issue, and the case just settled involved Omnicare accepting kickbacks from J&J to recommend that physicians prescribe Risperdal.

Why the SNFs are in the hot seat …

As this was going on, Omnicare was paying kickbacks to Mariner and SavaSeniorCare to induce them to refer their SNF patients to Omnicare for pharmacy services, prosecutors allege. The kickbacks took the form of Omnicare providing consultant pharmacy services for the nursing homes at far below fair market value.

FMV is the smoking gun in another action: The DOJ also alleges that “Omnicare, Mariner Health Care, SavaSenior Care, Grunstein, Forman, and Schron conspired to arrange for Omnicare to pay the nursing home chains $50 million in exchange for the right to continue providing pharmacy services to the nursing homes, which together constituted one of Omnicare’s largest customers,” the DOJ release says. According the the complaint, the conspirators set up a $50 million acquisition of a small, 2-employee Mariner Health Care business unit that was worth far less than $50 million.

The Fair Market Value 411: A Stark and Antikickback Compliance Must. An audio training event with attorney Wayne Miller.

Texas Medical Center

Lesson Learned: Health care providers in medical centers harbor fraudsters in their midst —and increased federal scrutiny.

If you’re a health care provider near a university medical center or big city hospital system, get ready to take some summer HEAT. CMS’s and the Department of Justice’s “Health Care Fraud Prevention and Enforcement Action Team is looking for big money in false claims that come out of urban areas like Houston, Miami, Detroit and Los Angeles, reports The Houston Chronicle.

In one week, six health care scams in urban areas made headlines, and together, the cases represent $285 million in false billings. “This is an astounding amount,” said Houston’s FBI spokeswoman Pat Villafranca. The $285 million is more than four times the amount stolen during robberies of U.S. banks during all of 2008, she added, according to the Chronicle.

HEAT is taking aim at areas with the highest number of billing anomalies, because there’s more money saved when they stop a scam. “The Texas Medical Center may attract individuals intent on committing fraud who think they might more easily ‘blend in’ among the legitimate practices,” FBI officials said, according to the Chronicle.

The 3 scams uncovered in Houston: a pill mill that submitted false Medicare claims, a PT clinic that paid patients to sign blank Medicare forms, and a psychologist who billed for services he never performed on 67 patients … More from The Houston Chronicle.

J. Heuser: Atrial fib ECG compared to sinus rhthym

Here comes more kickback allegations involving medical device makers.

Salespeople who used to work for certain medical device makers allege that their employers paid kickbacks to heart surgeons to use their surgical ablation products in patients, according to lawsuits unsealed by the federal district court in Houston. Ablation treats atrial fibrillation (irregular heartbeat) by destroying bits of heart muscle. The devices are reimbursed by Medicare.

The lawsuits are related to a Department of Justice inquiry involving four medical device manufacturers— AtriCure Inc., Medtronic Inc., St. Jude Medical Inc. and Boston Scientific Corp., reports The Wall Street Journal. Two salespeople are plaintiffs in the suit, and one plaintiff alleges her employer marketed off-label … More from The Wall Street Journal.

Snake charming? No, thank you.

Texas hospital pays nearly $10 million for inflated outlier charges

If your health system has increased charges to potentially increase outlier reimbursement, you’d better have the documentation to stand behind the increase. The DOJ is waiting to pounce.

Lesson Learned This Past Spring: A Texas hospital agreed to pay $9.99 million to settle allegations that it improperly inflated charges for inpatient and outpatient care to obtain outlier payments from Medicare, according to a March 26 Dept. of Justice (DOJ) press release.

This settlement is just the latest in a string of allegations that the DOJ has made regarding outlier payments. Earlier this year, a New Jersey-based consulting firm paid nearly $3 million to resolve allegations that it advised its hospital clients to increase charges to raise outlier payments.

There is nothing wrong with charging for higher outlier cases in accordance with the supplemental outlier payment system which Congress enacted to incentivize hospitals to provide care for patients with unusually high treatment costs, says Gregory Piche, Esq. with Holland & Hart in Denver. “If the hospital inflates its costs to obtain a higher reimbursement rate from the government, however, that is fraud.”

‘The Consultant Told Me To Do It’ Isn’t a Valid Defense

Although some hospitals insist that they billed the inflated outlier payments at the recommendation of a consultant, “it is hard to imagine a consultant would recommend defrauding the Medicare program,” Piche says. “That is like kissing a cobra. Some snake charmers have gotten away with it, but the result for most is likely to be unpleasant.”

However, if the consultant does offer you such advice, you can’t plead ignorance. “A hospital must take responsibility for its billings regardless of whether billings occurred based on advice obtained from a consultant,” says Margaret Davino, Esq. with Kaufman Borgeest & Ryan in New York.

“There have been numerous examples of hospitals that hired consultants who assisted the hospitals with projects involving charges or billing, which charges or billing were later challenged by the government,”  Davino says. “Although the hospital often proffers a defense of ‘the consultant told us it was okay,’ the government takes the position that ultimately the hospital is responsible for its decisions and actions,” Davino says.

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