Nine hospitals in seven states–Alabama, Florida, Indiana, Michigan, Minnesota, New York and South Carolina–will pay a combined $9.4 million to settle a whistleblower suit in which they were accused of keeping patients overnight after having kyphoplasty, typically an outpatient back procedure, merely so that they could bill Medicare at a higher rate, the Department of Justice announced yesterday.

This story is copied from FierceHealthcare, a newsletter for healthcare executives.

Thanks to the same two former employees of the company responsible for the therapy–Kyphon, Inc., now part of Medtronic Spine LLC–several of these hospitals also were named in a 2008 qui tam suit involving kyphoplasty, netting the government a total of $20 million in recovered funds to date.

In addition, Medtronic paid $75 million in 2008 to settle allegations it defrauded Medicare by counseling hospital providers to perform the procedure on an inpatient basis, reports Main Justice. The whistleblowers, who worked in reimbursement and sales management for the company, will receive about $1.5 million as their share of the most recent settlement.

Most of the involved hospitals claim that the settlement is not an admission of wrongdoing. “The hospital was acting in the best clinical interest of these patients based upon information available at the time of these procedures,” said Will Henderson, spokesman for Indiana’s Ball Memorial Hospital, which paid the DOJ $1.9 million.

South Carolina hospital officials released a similar statement: “Based on the physician’s judgment of medical necessity at time of admission, Palmetto Health kept patients in the hospital overnight.” But Phillips & Cohen, the law firm presenting the case, maintained that by billing Medicare for inpatient surgery, the hospitals “wrongly increased…revenues thousands of dollars each time kyphoplasty was performed.”  The DOJ agreed, concluding that there was not enough documentation in patients’ records to justify overnight stays, according to South Carolina Newspaper The State.

The government stepped up the fight against Medicare fraud in 2009 with 77 people going to prison and $2.5 billion recovered for the Medicare Trust fund.  The U.S. Department of Health and Human Services (HHS) announced these results and described expanded efforts to fight fraud in the Medicare system.

Medicare Fraud Strike Force teams, which are joint operations between the Department of Justice, Health and Human Services and state and local partners, have been expanded to seven communities with high levels of health care fraud: South Florida; Los Angeles; Houston; Detroit; Brooklyn, N.Y.; and Baton Rouge, La.

During Fiscal Year (FY) 2009, the federal government won or negotiated approximately $1.63 billion in judgments and settlements according to HHS.

The Health Insurance Portability and Accountability Act of 1996 (HIPAA) established a national Health Care Fraud and Abuse Control Program (HCFAC) which was charged with investigating and prosecuting Medicare fraud.  According to HHS, some of their recent accomplishments include:

• Deposits to the Medicare Trust Fund totaled approximately $2.51 billion in FY 2009 as a result of these efforts, a $569 million, or 29 percent, increase over FY 2008.
• In addition, more than $441 million in federal Medicaid money was transferred separately to the U.S. Treasury – 28 percent more than in FY 2008.
• The HCFAC account has returned more than $15.6 billion to the Medicare Trust Fund since its inception in 1997.  During the past 3 years (2006-2009), the return-on-investment from the HCFAC law enforcement activities that form the primary focus of this annual report has averaged approximately $4 returned to the Trust Fund for every $1 of HCFAC funding provided for enforcement activities.

I wonder why there has been such an increase in the fight against Medicare fraud.  Perhaps it’s because somebody in government actually cares about this issue – finally.

In 2011, Medicare will require every Medicare Advantage plan to have an annual maximum-out-of-pocket (MOOP). This is good news for 30,000 or so seniors in Tucson whose Advantage plan does not have a MOOP.

A MOOP is a cap on expenses for co-pays and co-insurance, and the maximum limit is expected to be $6,700.  However, CMS (Centers for Medicare and Medicaid) encourages Advantage plans to have lower MOOPs and will reward plans that voluntarily cap members’ expenses at a lower amount, such as $3,400.

A MOOP is important when someone has a chronic illness or multiple hospitalizations during a given year. Co-pays for specialists ($35-$45 for each visit), co-pays for MRIs ($150), and hospitalization at $200 per day, can add up. So Medicare is going to require every Advantage plan to set a cap for its members’ annual co-pays.

Cancer is an illness that requires large co-pays for chemo and radiation treatment (20% of the bill) and can quickly add up to five or even ten thousand dollars.  An Advantage plan with a MOOP of $3,400 means that after the member has paid this amount “out of his own pocket”, he will have no more co-payments or co-insurance for the rest of the year. (Some plans have a MOOP but still require co-pays for doctor visits and labs after the MOOP is met.)

The Medicare Advantage plan with the largest enrollment in Tucson (over 28,000 members) does not have a MOOP. I recently got a call from a woman whose mother-in-law is in this plan and is being treated for breast cancer.  The co-pay for chemotherapy under every Medicare Advantage plan in Tucson is 20% of the bill.   So a person enrolled in a plan with a $3,400 MOOP would have their chemo cost capped at $3,400 through the end of the year.  A person in a plan with a $5,000 MOOP will stop paying at $5,000.  A person in a plan with no MOOP can only wait and see what their total bill will be.  I have heard of people whose 20% co-pay was $10,000.

I have a client who paid $7,000 for radiation treatment for cervical cancer.  That was three years ago.  She told me she charged her payments on her credit card.  She said she is almost finished paying off that credit card bill – three years later.  I cringed when I heard this, realizing she probably paid twice that $7,000 amount with all the interest she incurred over three years.

FOR MORE INFORMATION ON COMPARING MEDICARE ADVANTAGE PLANS, YOU CAN GO TO MEDICARE CHOICES OF ARIZONA.