Upcoding

In 2009, the U.S. Department of Justice began a nationwide investigation concerning whether Medicare claims for kyphoplasty had been billed improperly as inpatient procedures rather than outpatient.

Recognized as an effective treatment for vertebral fractures caused by bone cancer or osteoporosis, kyphoplasty is performed by inserting a balloon into the fracture, and then filling it with cement. Medicare rules do not always allow for reimbursement for the procedure when it is done on an inpatient as opposed to an outpatient basis.

The government was tipped off to the improper billing practices when two former employees of Kyphon, Inc. brought a False Claims Act case against the company that developed the procedure. The whistleblowers alleged that Kyphon actively recommended that hospitals perform kyphoplasty on an inpatient basis, which increased the cost of the procedure by as much as $10,000.

In 2009, Endoscopic Technologies Inc. (Estech) settled the government’s allegations under the False Claims Act that Estech had urged hospitals to upcode surgeries using Estech ‘s surgical ablation devices.

The upcoding allegations were included among other claims that Estech marketed its medical devices for uses not approved by the FDA, that the company promoted high priced heart surgeries that required Estech’s devices when safer and cheaper alternatives were appropriate, and that Estech paid kickbacks to health care providers using the company’s products.

The allegations originally came to light when a whistleblower filed suit in federal court in Texas.

In 2008, the federal government and Cooper University Hospital in Camden, New Jersey settled allegations that the hospital improperly billed Medicare for “outlier payments.” Such payments are part of a special Medicare program that was designed to encourage medical providers to treat patients whose care results in great expense to the provider. Under the program, Medicare grants enhanced reimbursements, called “outlier payments,” to health care providers in addition to the usual reimbursements.

The whistleblower was an independent hospital consultant who alleged that the hospital defrauded Medicare for two years by inflating bills for inpatient and outpatient procedures to conform with special criteria for “outlier payments.”

In 2009, Johns Hopkins Bayview Medical Center Inc. settled False Claims Act allegations brought by two hospital employees. The whistleblowers claimed that for two years, hospital employees made a practice of reviewing inpatient charts that could be exaggerated or falsified with lab results to indicate the existence of additional medical problems.

Hospital physicians were then advised to make erroneous diagnoses in the patients’ medical charts. The phony diagnoses included malnutrition and acute respiratory failure. By inflating the severity of the medical conditions treated at the hospital, the facility was able to claim a higher reimbursement rate from the Maryland Health Services Cost Review Commission.

In 2008, Rockingham Regional Ambulance Inc. (“Rockingham”), located in Nashua, New Hampshire, settled an investigation into allegations that the company engaged in fraudulent billings to both Medicare and Medicaid.

The federal and New Hampshire governments had alleged that the ambulance company billed those programs for providing emergency advanced life support services when such services were not in fact required. In addition, Rockingham allegedly billed Medicare for giving emergency basic life support care, when in reality the company had provided non-emergency care.

In 2009, a Largo, Florida physician practicing internal medicine settled a False Claims Act lawsuit that had originally been filed by a whistleblower. The action alleged that the physician submitted claims to Medicare that reflected a higher level of care than the doctor had actually provided and that the doctor had billed the program for services not in fact performed.