It can be financially costly for hospitals to submit claims for inpatient surgical procedures which can be performed safely and effectively as an outpatient procedure.
The Department of Justice recently announced a settlement in which 55 hospitals in 21 states agreed to pay a total of $34 million for performing kyphoplasty procedures on an inpatient basis rather than as an outpatient procedure. Kyphoplasty is a surgical treatment for spinal fractures. The procedure can be performed safely as an outpatient procedure, without any need for a costly hospital admission.
Over an extended period of time, Kyphon, Inc., a medical device maker which manufactured a device used in the kyphoplasty procedure, approached numerous hospitals and urged them to admit patients for what traditionally had been an outpatient procedure, so that the hospitals could bill higher facility fees and for other inpatient charges. Not every hospital approached by Kyphon agreed to the scheme. Some hospitals were outraged and called Kyphon to complain.
But many hospitals did seize on the opportunity to generate additional revenue by admitting patients and having the procedure performed on an inpatient basis. Those hospitals which succumbed to Kyphon’s marketing efforts and performed the procedure on an inpatient basis were forced to pay substantial dollars to settle the government’s false claims allegations.
An attorney for the whistle-blowers who initiated the lawsuit said the case “sends a strong message to hospitals, that if you admit patients purely for revenue purposes, the government may catch up with you, and you’ll have to pay that money back and then some.”
A spokesperson for the American Hospital Association had a different view, urging the government not to use its enforcement power to prosecute the industry for “billing mistakes or legitimate differences in medical judgment.”