Hospital Loses Shell Game; Owes Government $20 Million Under Anti-Fraud Statute

An Indiana hospital played tried to play “hide the surgery”
from the Government, but
the Government won. According to a DOJ press release, Community Health Network (ACHN) of
Indiana claimed that surgeries were being performed at the hospital, when
actually they were being performed in free-standing ambulatory surgery centers.

Why does that matter? Under Medicare and Medicaid rules, when a surgery
is performed at an ambulatory surgery center, or “ASC,” Medicare
and Medicaid pay a certain rate per surgery. If the same surgery is performed
onsite at a hospital, however, Medicare and Medicaid pay a higher reimbursement
rate for the surgery. So by claiming that all of the surgeries were performed
at the hospital, ACHN got paid more for each surgery.

Pretty sneaky. But not sneaky enough, apparently. Community Health Network,
a non-profit health system, wound up paying the Government $20,324,902.22
to resolve allegations of
upcoding medical services – or at least wrongly coding them – under the False Claims Act.

The Medicare Rule

DOJ says that Community Health Network was trying to do an end-run around
the Medicare regulation. ACHN entered into contracts with a number of
ambulatory surgery centers that were not associated with the hospital.
It sent its patients to these ASC’s, and the patients had surgery there.

So far, so good. If the ASC’s had billed the surgeries, they would
have been reimbursed the lower amount, and that would have been the end
of the discussion – no healthcare fraud involved.

Instead, says the Government, Community Health Network tried to pretend
that the surgeries were done on the hospital premises. Knowing that the
surgeries would be reimbursed at a lower rate if they were performed at
an ASC, the hospital devised a plan to pump up the revenue for these surgeries;
it coded the bills to make Medicare and Medicaid think that the surgery
had been performed in the outpatient department at the hospital, instead
of at an ASC. Since the outpatient rate was higher, DOJ says that Community
Health Network collected more than it should for each of the surgeries.

Apparently that extra amount added up, because in order to settle the FCA
allegations, Community Health Network has agreed to pay the Government
more than $250 million.

What’s the Long-Term Solution?

The Department of Health and Human Services has suggested a permanent solution
to the fraud: stop paying hospitals more for surgeries. The Office of
Inspector General for
HHS issued a report in April 2014, and the title says it all: “Medicare and Beneficiaries Could Save
Billions if CMS Reduces Hospital Outpatient Department Payment Rates for
Ambulatory Surgical Center-Approved Procedures to Ambulatory Surgical
Center Payment Rates.”

The report says that Medicare saved $7 billion between 2007 and 2011 by
paying ambulatory surgical center rates instead of hospital rates, and
it’s set to save another $12 billion between 2012 and 2017. But
the report had an even more eye-opening number: Medicare could save another
$12 billion by paying hospitals the same rates it pays ASCs for the same
procedures.

What’s The Right-Now Solution?

But unless and until the rule changes, there is a much quicker way Medicare
could save money: it could stop paying hospital rates for surgeries that
don’t even take place there. Eliminating fraud is the quickest and
easiest way Medicare can save money.